Checking in. Husband & I are putting in an offer on a SFH today. We plan to buy it, fix it and sell it. If we get it, I'll post the numbers.
I'm not WICKED excited about it because the neighborhood has me a little cautious. It's on a very busy road, and the quieter neighborhood roads around it are a little run down. So taking that into account our re-sale value would be lower than normal.
But I think the house will compensate for the neighborhood shortcomings. It is a 3000 sq ft craftsman bungalow (HUGE for a bungalow), 4 bedrooms, 2.5 baths on a double sized lot. You just don't see that anywhere in the city.
Its a For Sale by Owner where the owner grew up in the house. His parents converted it from a side by side duplex to a SFH. That is why it's so huge.
And awesome for us- the owner has a "For Sale by Owner" sign in a place behind some bushes that is really hard to see from the road. And it is a busy road where people are going about 30 mph. So if you blink you miss the house. The house is nowhere on the internet. My realtor happened to see the sign while searching for an MLS listed property a few blocks down the road. She immediately thought of us and I think we really lucked out.
Real Estate in our price range has been moving overnight. We tried to bid on 3 houses so far to find that another full price offer came in before we could offer. We actually put in a full price offer sight unseen one time the day it came on the market. We got the house! But it was so termite infested the floor had crashed in and an exterior wall..had a lot of sunlight coming through. So we backed out of the contract the next day.
Anyways, this property has been listed for sale for a little while and we are the first to offer on it. I'm pretty sure no one knows it exists.
So we'll see. But we are excited. I'll let you know!
Viewing the 'Investing' Category
My brain started going last night. I couldn't turn it off. I was thinking about something. Something that might be... BAD? Mean? Or it could be AWESOME.
So the California chapter is slowly closing and I'm optimistic we will recover the remaining debt owed.
Last night my mind turned to the other colossal financial mistake I made recently.
That would be the rental property that I bought, renovated, turned it into a FANTASTIC rental and then gave it to my FIL for exactly what was paid so he could get into rentals.
Where it got completely F---ed up was the fact that FIL couldnt afford to buy it from me for exactly what I paid.
Ugh. The problem was that FIL was going through a huge divorce and he was panicked about money. He was the primary breadwinner and it was looking like they were going to liquidate all assets for losses or break evens (during the real estate downturn), the wife was going to get half the pension and a large chunk of cash for several years beyond his retirement. He was really panicked and we were feeling really bad about it all.
FIL makes almost a quarter of a million a year.
We were into the property for $155k.
So FIL asked if he could have this brand new fantastic property because it would be his salvation. It had already appreciated like crazy, and it is bringing in $1800 a month.
We thought we would take the $155k and find a new property.
But FIL paid me in small and large chunks of cash as he got it. $30k here...$4k there...$1k today...$1600 next week...
The chunks made it hard to track, and REALLY hard to save, and IMPOSSIBLE to re-invest in another property.
Its been over a year now and:
*We have spent all money FIL gave us towards the purchase. Not sure where it all went...some was spent in California, we had our roof replaced, bought a truck, ...not sure where the rest went.
*FIL divorce finalized. He's not coming out as bad as he thought.
*FIL still owes me $44k for the purchase.
*For the next 2 yrs FIL has to pay MIL yearly payments of $40k and then alimony is paid. So he owes MIL $80k and then he is out of the divorce.
*FIL has found a girlfriend, and PURCHASED a house in another state for girlfriend and him to live in (she does not work). FIL had to borrow $32k from a relative to use as down payment for this house and is on a 2 year repayment plan to pay it back.
*FIL has bought a $10k boat.
*FIL was just visiting us and is discussing buying a new truck. His truck is unreliable and he is debating buying and financing vs lease.
*FIL has decided the remaining $44k will be paid back through the monthly rent the property collects. So after expenses, the property collects about $1400/month and when it reaches $44k- that money is mine and property will be transferred into his name. So new payoff date is January 2016. -2016- So this property will have been tied up for 4 YEARS by the time it is finalized.
*Shortly after "buying" the property from us, he asked my husband's opinion about if he should sell it (it has appreciated about $75k). Husband was outraged and told FIL he can NEVER sell the property because it is a cash cow and the reason we agreed to the transaction was that we are planning to inherit it. (we had not thought that far into the future...but yeah- we were expecting it to stay in the family, otherwise we would have sold it at a profit) FIL agreed to not sell it. We have since told FIL he can never take out a HELOC on it either.
*FIL is taking the $1800/month rental income into consideration when discussing his retirement plan (he plans to retire in 2 years).
So those are the variables that have gone down since this whole thing started last year.
Needless- we assumed FIL would pay us within a year considering he makes so much money. But that didn't happen and its my fault I made assumptions instead of plans with FIL. It didn't occur to me this could get so messy. It didn't occur to me he would be so cash poor. It didn't occur to me he would also borrow from other family members to rebuild and now owes money to 3 different people.
So this whole thing weighs on me. Daily. Makes me angry. Frustrated. Bitter. Hearing about his plans to finance a truck this week made me upset.
Ok, here is where my mind went last night:
If I pool all my liquid cash from different accounts, including our tax refund, collecting the remaining Cali money owed to me, and some money coming in February...I can pull together $107k.
We "sold" the property for $155k. FIL still owes $44k. So FIL has paid us $111k.
We actually could offer to BUY THE PROPERTY BACK from FIL.
This could be awesome.
FIL owes $32k to a relative.
FIL owes ex wife $80k.
FIL wants to buy a new truck.
$111k could pay off a good chunk of that debt.
Husband and I NEED to increase our monthly income. We don't have enough liquid cash to re-invest in another property. Even when FIL pays us his debt in 2 years we still wont have enough to re-invest in a property.
Neither of us is working- so we do not qualify for a mortgage or HELOC to get us anything extra to buy a property.
Husband and I cannot save liquid money. Our track record is terrible. If we dont re-invest this $107k it will get spent on frivolous things. I need to tie it up in an income producing investment before it gets spent on stuff.
This property brings in $1800/month and neither FIL or us is getting the money. It's getting placed in an account to be paid to me when it reaches payoff amount. So for 4 years neither of us is really utilizing the rental income.
I brought up the option to approach FIL with a request to buy the property back and husband doesn't think FIL will be interested. Its such a cash cow that it would be stupid to unload it. The property pays for itself in 5 years and is in good enough condition that things wont start needing repairs or replaced for 5-7 years.
But maybe FIL has been kicking himself for taking on such a debt during a time when he needs liquid cash? Maybe he thinks about it daily and he gets upset thinking of how he really needs that cash that he has been paying to us? The same way I think about it daily and get mad that we gave away such a large monthly income and we cannot afford to replace it?
So...how can I approach him about this?
Is it a SHITTY SHITTY thing for me to approach him about?
Long term this is a great investment. And I feel I would be manipulating him/taking advantage of his current debts owed to people to take the long term earning opportunity away from him.
But I REALLY want the property back. Husband and I are really disappointed and angry about how this transaction became so dirty.
So opinions? Be honest. Convince me not to pursue this if it is going to cause bad blood.
Here it is. Does not help that I am REALLY emotionally attached to it.
"It is always better to owe someone than to be owed." This was the newest mantra that my ex-business partner spouted off one day when he showed up to do some work.
He was never good with money. But he is smart and likes to learn/emulate from people he admires.
The night before he had been hanging out with an acquaintance whom he really admired. The acquaintance had a big successful business and my ex partner thought he had nailed down a good business formula. (Which ended up being one of the problems with our business, the formula was not right for us and what we could handle, when it was modeled after the acquaintance's business).
Anyways, that particular morning, ex partner came in to make himself some food and said "It is better to owe than to be owed." I immediately looked at husband with a "Do not buy this crap" look and waited for the elaboration.
"Because when you owe people, you have all the money. Your plan might go bust and you cant pay it back as promised, but you have the power because you have the money. If you are owed, then you have no money and you are at the mercy of people with money". That was his logic.
I wasn't in the mood to really refute him or think it was going to be a turning point of information so I halfheartedly talked about how I would rather live debt free so I don't have people breathing down my back. I mused that it was the creditors that were always wealthy while the debtors were seen as broke and vulnerable. I think husband and ex partner continued to talk money theory and then moved onto video games. I moved on to do the laundry.
Anyways, that motto stuck in my head and gnawed at me for a while. Probably because ex partner started LIVING it. Our 50/50 expenses split became wildly unbalanced as he was crying broke and expecting us to carry the load. We kept expecting him to catch up and he never did.
One day I realized why that motto was stupid. Because a debt owed can be collected at any time. Whether you are ready for it or not.
I remembered a snippet of history where the Donner Party (the pioneers trying to cross the Rocky mountains to get to California but got stuck in the mountains over winter and most starved, froze and ate each other.) would sell supplies to one another on their journey. The wealthier families would sell off cows and supplies to others in the caravan because they had more supplies to begin with. They sold on credit, with the buyers promising to pay back in California.
Well when everyone was trapped in the mountains and dying, the wealthy family came to collect from the poorer family. Stating they wanted their cow back. "but the cow is gone. We don't have it anymore." So the wealthy family said "then we are taking stuff that is the equivalent of that cow's worth." Even though they knew they were signing a death warrant to the other family, the wealthy guys took blankets, food and clothing to pay themselves back for the cow that had been sold. They came to collect on their debt and the debtors were not prepared to pay it back.
I relayed that story to husband and told him that's what was wrong with the "It is better to owe than to be owed" line of thinking.
Well weeks later when we had the falling out with ex partner it was because we felt we were carrying way too much of the expenses and ex partner shouldn't be entitled to half the profit. We knew ex partner NEEDED half the profit because he had borrowed to actually put into the business. So he owed us and them and husband was determined that we were getting paid back first. The argument escalated to threats, and changing of locks, and partnership/friendship ending.
I was crying and asked husband afterward why he did that. He said "I am collecting on the debt he owes us, you yourself said we can collect at any time."
I appreciate that husband did a real life Donner Party re-enactment (that he really respected and listened to me), his timing wasn't great, because running the business by ourselves was way too much work and we quickly realized we couldn't do this on our own. So we sold everything as soon as we could to halt the misery and money hemorrhaging. We didn't get our money lent into the business on ex partners behalf back, we worked out a payment plan with the new owner to recoup it. So basically we lent it to someone else hoping they were more responsible to pay us back.
Since that all went down, that motto has still stayed with me. Perhaps because we have a person out there that owes us money. We have not really been able to collect on it, he is definitely the one with all the money. Mostly because we are now across the country and husbands original tactic of changing locks and keeping inventory are not applicable. Instead we are going with the mr. nice guy approach and also appealing to empathy to get our money.
Although our ex partner apparently worked out a side deal where he would get paid in full right away (rather than a payment plan we agreed to), and he has been paid in full the amount he invested into the business. But he is still in Cali so maybe its a proximity thing.
Anyways- Do YOU think its better to owe than be owed? What is your take on this perspective?
I am humbly returning after 4-5 years away from this website. I was never in better control or in a better frame of mind than when I was regularly blogging here.
For the veterans of this site, this is Gamecock returning. New identity, fresh start. I am sorry I disapeared unexpectedly so long ago- I got caught up in large decisions and big purchases. I don't think I wanted to go through the daily "is this the right thing to do?" that a blog will produce during time intensive renovations and large purchases. Especially since I was uncertain to begin with.
To catch everyone up- buying a 1900 rowhouse, gutting it and building it from the studs up was a GOOD DECISION. This house is AMAZING and has appreciated instantly. This house has given us a good amount of equity.
After this project was completed, we made another GOOD decision to buy a rental duplex. It was a foreclosure in pretty good shape and has brought in a substantial amount of income every month.
After that duplex, we made another GOOD decision to buy a single family house (SFH) as a rental. It has turned out to be a GOLDMINE.
You see why I thought I didnt need this website or blog?
After that, I snowballed a few BAD decisions to get me where I am today.
A week or so after buying the GOLDMINE SFH, my FIL asked if he could have the property so he could get into the rental business. He said he would pay me exactly what I put into it (it was undergoing $45k/2 months time in renovations to finish it out). I said okay and thought I would reinvest the money in another. Well, FIL paid me in small and large chunks at various times over the last year and it was difficult to track and difficult to save. He still owes me about 1/3rd of the money- but the 2/3rd he gave me has been spent. Not re-invested, but SPENT. poof. gone. I finally told him this summer to pay me the remaining amount IN FULL when he has it. What did he do- put small chunks in a bank account with my name in it so I can access it. I think at this rate he will have paid in full in another 12 months.
After that terrible decision, I allowed husband to talk me into taking a large chunk from his payments and invest in a business across the country with our good friends. To give me credit, it took him a YEAR to talk me into this. But sigh. I took most of our liquid cash and put a down payment on a business in California. Our friend was going to be the brains, we were going to be the money. Everyone was going to make TONS of money.
Except our friend was less brains than we expected. Costly mistakes ensued that slowed down profit timelines by WEEKS and exploded the budget.
Except the initial budget was totally inadequate. The realistic budget was 4 times as much as we expected, and we spent EVERYTHING to keep afloat, and racked up $50k in credit card debt to get us through to the first payday.
Except that we were so SURE we were going to make TONS of money that we bought new furniture for our place in California and splurged on high end items, putting them on store charge cards. Then we had to pay thousands of dollars to bring those items back to our fully furnished home in GA and craigslist stuff for a fraction of what we paid.
Except that I trusted husband to run the business and I checked out from the beginning. I had no interest in the industry and I was promised that I didn't have to work and I took advantage of that promise. So I just wrote checks and trusted everything was okay.And I was promised a horse. I never got my horse and I'm bitter that I was manipulated by the promise of a horse.
Except that we got in a GIGANTIC fight with our business partner/friend and promptly everything fell apart. We no longer speak to our good friends that we moved across the country with which to partner up.
Except that I HATED California. I found nothing to like and I was unhappy/homesick/bored every single day. And I was pregnant too. And there are WOLF SPIDERS in CA. They are the size of an actual baby wolf and like to crawl up my drain pipes and hang out in sinks and bathtubs. The internet tells me they are non venomous so I learned to see them and ask them to not be there the next time I entered the room. Usually they would stick around just to add stress to my day. I'm not going to discuss the rattlesnake population that caused husband to buy rattlesnake protectant boots that he never used because we never saw a rattlesnake. But we saw some small wildfires and heard about decimating wildfires nearby. California is NO JOKE.
Except that we sold our interest in the business to someone for exactly the price that we had borrowed and took a verbal promise from this investor that we would get paid the rest of our investment to break even in certain sums over the next 10 months. We have received 1 payment so far 4 weeks later than agreed on and for less than half the amount agreed. Our former business partner negotiated to get himself paid back IN FULL PLUS $16k out of the deal.He negotiated this on the side unbeknown to us and we found out when our first payment was delayed because the guy paid the ex partner so much already.
But as of 3 weeks ago we are back in Georgia and back in our HOME! There is value in quality of life, and my life has dramatically brightened since coming home.
So that is where I stand today. $30k in credit card debt. $5k in the bank. A roof that leaked while we were gone causing $10k in damage. A baby coming in 5 weeks. And a husband that LOVED California and is convinced that if we just move to a different area, we can run the business successfully and make TONS of money. He muses about this on a semi-regular basis and if he really pursues it I might divorce him. True- infuriating-story.
Neither of us are working right now. This is the first time we will be DEPENDENT on the rental income rather than using it as a supplement. So this will be interesting.
But you know what? In California we spent 5 months FLOATING bills. We were making partial payments on everything from electricity to credit cards just to get through until payday. Guess what? In Georgia we can pay our bills IN FULL. It feels SO GOOD to not avoid the mailbox, to not feel dread as I open the bills. It feels SO GOOD to mail off payments in full now.
ok, so that's my story. Looking forward to coming back to this blog and returning to the GOOD decisions that this website instilled in me and taught.