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Our current focus is on houses without foundation problems simply because we don't have a comfort level in dealing with foundation issues - *yet*. We will freely admit that our trepidation toward buying houses with existing foundation issues is grounded more in irrational fear than in rationality. Having said that, we want to ease into investing in houses with foundation issues because they present an opportunity to buy the house very cheaply, thus giving us an edge over most owner occupant buyers and probably even most investors.
Over at Equity Scout they have a good discourse on foundation issues and investing.
Not all foundation problems are created equal
I agree with him that foundation issues can present opportunities to buy low if you have experience and a comfort level to deal with them. In our area, the vast majority of homes built from the mid to late 1960's on are concrete slabs. In the late 1980's the building code was changed so that when the slabs were poured they had post-tension cables embedded within them. These cables help hold the foundation together a little better, but it does not prevent all problems.
Right now, our parameters for what we look for do not include houses with foundation issues. In the future though we would like to start, but as Chris illustrates, a structural engineer would need to take a look at it. Our first foundation issue to deal with will ideally be a house with one corner of a bedroom settling a little... an area of the slab where there are no pipes running to have to deal with slab leaks. Once the issue is solved our comfort level will hopefully go up. Key to all of this will be a good foundation contractor on our team that works with investors and is recommended by investors. These foundation companies that advertise on the radio don't interest me - way too much markup.
It may work out that we never buy a house with foundation issues, and that's OK with me as there are plenty of deals out there with no issues. But how nice would it be to gain that extra edge?
Of course, once you have a house you want to maintain the foundation. The primary means of keeping a foundation sound is to keep a steady supply of water applied especially during the hot/dry months of July/August/September in our area. The preferred method to do so is with soaker hoses strung around the perimeter of the house at about 18 inches away from the slab and buried a few inches below the ground. Here is a good diagram on how to build an automated soaker hose system:
Do-It-Yourself Foundation Watering SystemThe next preferred method is to have an automatic sprinkler system installed, so you can set it and forget it. A rain/freeze sensor will help so you don't have to remember to turn the system off during nights when it gets below freezing.
This article is open for comments, we would like to hear from you landlords on how you handle maintaining your foundations on your long-term rentals and how your tenants respond to it.
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Ok, this post is more of a question to landlords out there who have more experience. Is there an easy way to deal with the transition of utilities (water/electric/gas) when a tenant moves out other than calling each one to arrange service again? This is a tedious process and one I would like to refine/automate in some way to streamline the process. I asked the electric company once about this and they do have some program, which I don't remember the name of it, where the power will automatically be switched over to your name when the tenant switches it off. I was warned however that in the event your tenant gets behind on bills and is disconnected for non-payment, guess what? Power stays on but is now in your name. Don't want that!
I've been thinking a lot lately about the movement that has been going on about how science is continually advancing and disproving God. This same science that does an about face and reverses itself every 10 years or so? Folks, we are imperfect/finite beings... just because a large group observes something and comes together to form a consensus does not (at all) mean that they have found 'truth'.
Let me backtrack a minute, just what is science and how does it come about? The scientific method happens when a group of people (mostly with good intentions) individually study and observe (many times through experiments) a particular thing, then they come together and form a consensus based on their findings. A good analogy would be if 10 people were placed in a very dark stadium with no lights but each gets a flashlight, then they come to an agreement on the nature of where they are based on what they've seen. It's doubtful that their little flashlight will not shine bright enough to see the top of the stadium, nor will it be able to take in enough at one time to get any type of idea on how many seats there are. They will not be able to see the forest because all they will see will be the trees (if you'll allow me a little cliche here).
Science has come up with good advances, I don't deny that... but those advances are in small fields such as medicine or other more 'useful' branches of science. I submit that the few advancements that we've been able to accomplish are purely by accident (I use the word 'accident' tongue in cheek, there are no accidents or coincidences, these accidents - or trial and error - are bits of knowledge handed to us by God, technologically we are just where He wants us to be to serve His own purposes). When it comes to the branches of science that try to tackle the big questions like cosmology or evolution, they come up woefully short. A scientist who studies medicine will take their flashlight and focus in extreme detail on one seat in the stadium - thus coming up with useful things to know. The cosmologist tries to see the whole stadium with their low powered flashlight (an analogy for our finiteness) which will be impossible to see the intricate details on how the stadium was made or it's nature.
There *is* an absolute truth out there, but it will not come to us through science. It is good that we want to know the truth, but we need to know the One who is Truth. We as humans can only see the trees, tap into God and ask Him for truth. He is the one that knows the nature of the forest!
Image courtesy I.D.E.A.
If your counter tops are structurally OK, just worn out looking, and you don't want to go to the expense of installing granite countertops (especially for a rental unit) - instead of replacing them consider just tiling over them. We recently had a white Formica top get stained from a tenant and since we were tiling the floor anyway (more permanent that replacing the carpet from the dog urine) we just had our handyman take the same floor tiles and tile the counter tops.
It gives it a nice upscale look for cheap, just have your guys use the same tile with smaller grout lines and dark grout. Then use grout sealer to seal the grout lines (although I have a question about grout sealer's effectiveness... I've sealed grout before just to have it become stained.) The main way you will keep stains from showing up is to use dark grout, but the sealer helps a little I suppose.
Image courtesy Wallflower Designs
This relates to all areas, not just real estate... but if you desire to 'break' into a certain area of real estate but can't because of lack of experience, then consider volunteering.
Obviously we can't list all volunteering opportunities out there, you need to get creative in looking for areas to volunteer that are in the skill sets you want to develop. Perhaps your volunteer position doesn't even exist, but with your desire you can convince one to be created.
For example, a few months ago an opportunity to serve on our city's Planning and Zoning Commission came up. Before that I had no idea really that all you had to do to get involved in city government was just volunteer. In this case I had to apply and interview, but that may be different in your city. Check with your city secretary about the various boards and commissions your city has and how you can serve.
What are we learning on Planning & Zoning? We are learning how city governments work, which indirectly affect our real estate investments. How certain zoning changes affect residential areas positively or negatively. How knowing a city's future plans for itself can factor in your decision to invest in that area.
Most of the lessons learned are indirect lessons related to investing in single family houses, but we are directly learning things which can help us in the future if we decide to switch our focus from holding single family homes to real estate developing. We're learning what one has to go through to get things to happen on the city level. Example, you buy a parcel of land and want to develop it but need to change the zoning, or ask for a variance on the current zoning. But perhaps most important, we're making contacts. Contacts which we may not know right now how they can help us or we help them, but may become more apparent in the future.
Plus, giving of yourself feels good/right. If you have accepted Christ's gift of forgiveness, you have been saved *for* good works, not *because* of good works.
In part I we talked about playing games as a valuable tool in teaching kids about money. We've just had our first experience with Girl Scout Cookie sales and I'm very impressed with the number of lessons that have come from the experience.
- Goal setting/sticking with it - This our first year, we weren't aware of the amount of work it would take to reach X number of boxes. So our daughter set her goal based on the prize she wanted. One of two things can happen, the realization that it isn't worth it and stopping short can teach a valuable lesson on counting the cost before entering in. Or, after digging in and seeing how much work it is, tenacity can kick in and keep her going which is an obvious good lesson.
- Public speaking - Speaking with/answering questions with people you don't know and aren't familiar with. Much of a child's life is spent with those they are familiar with and can talk up a storm... but it isn't so easy with those they don't know.
- Exchange of money for a product - why are people giving us green paper or other colored pieces of paper (checks) for these cookies? Ah, those green pieces of paper have different numbers on them and when they give us higher numbers on those papers, we give them more cookies (value). Sometimes we give them cookies and more pieces of paper with smaller numbers on them back (change).
- Counting money/making change/accounting - They owe us $10.50 but they gave me a $20, what do I do? Oh, that's why math is useful! Wow, at the end we have lots of these green papers and checks, we have to add them all up? They have to match what's on the sheet? If it doesn't match, we have to go back through it - ah there's the problem. Admittedly, for us this lesson will probably come in later years... the accounting piece is a little big for a girl just starting out. But at least they have some exposure to why their parents work so hard with numbers at tax time.
- Finding/planning good areas to sell and how to identify/avoid the not so good areas - In picking which streets to work, the customers will give you clues. In the case of these cookies, those clues were obvious. If we heard at the first house or two: 'someone has already come by, but we'll buy a box from you'... not a good street, change. If we heard: 'man, we've been waiting for someone to sell us cookies'... ding ding, you have a winner.
I think getting involved in GS cookie sales is very valuable and an experience for that age group you can't get many other places. These cookies sell themselves and in going door to door we have rarely been rejected (maybe one in ten times)... I am of the feeling that when you first start any venture, you should set yourself up for some successes so discouragement won't overwhelm you. Yes our kids will need to learn about rejection, but not too much too young...
Image courtesy Quail Ridge Country Club Realty.
Mar 4:26
He also said, "This is what the kingdom of God is like. A man scatters seed on the ground.
Mar 4:27
Night and day, whether he sleeps or gets up, the seed sprouts and grows, though he does not know how.
Mar 4:28
All by itself the soil produces grain-first the stalk, then the head, then the full kernel in the head.
Mar 4:29
As soon as the grain is ripe, he puts the sickle to it, because the harvest has come."
This is very appropriate to real estate investing. A little action - a lot of waiting.
From Seed Time And Harvest:
SOWING, RESTING AND REAPING
- 1. We can sow the seeds.
- 2. We then must rest.
- 3. Growth is a process.
- 4. Ripening precedes harvest.
- 5. We reap at the appropriate time.
We don’t know how the seed sprouts and grows. For the earth yields crops by itself: first the blade, then the head, after that the grain in the head. What is the mystery? How does this happen? God gives the increase!
You must have patience to invest in real estate, impatience and wanting riches too early will cause you to make wrong decisions. If you will look at buying houses as seeds that will produce crops for you for the rest of your life, then you will have a proper perspective. The returns are low in the beginning, but you are building to larger returns in your future.
This goes for any other business venture as well. There is a time of toil and careful attention, then after time the business starts to operate on it's own and needs less attention.
Although we are new to blogging here at TREIJ, we can see how a majority of new bloggers get discouraged and quit due to lack of traffic. BlogAdviser states that a new blog needs to persevere through at least the first 6 months to a year with little to no blog traffic. You need to focus on creating content and almost ignore the results, put your head down and charge on.
You do your little bit of work *first* then relax and let God do the supernatural work behind the scenes.
Hey folks, we have a treat for you today. For some time we've known how funny Jeff Allen is but today we stumbled on a video of him giving his testimony. We wanted to put together this tribute post to give you a glimpse at him.
Everyone has heard the statistic that 9 out of 10 businesses fail. What a horrible statistic! That's a 90% failure rate! But wait - what if we looked at it this way:
All you need to do is fail 9 small times to get to the one giant success.
OK, so that may be over-simplifying things a bit. No one wants to fail, failure is painful. Emotional pain, financial hardship etc etc. When you listen to most successful businessmen you hear one common thread: yes, they are successful today beyond what they could even imagine when they started, but they have a trail of financial messes and failed start ups behind them. Perhaps it has happened, but I would venture that it is *very* rare for someone to succeed in business their first time.
Let me ask you a question: would you rather have (relatively) small failures in your story-line yet one day be wildly successful? Or would you rather avoid the failures and live small your whole life, no failures to have to re-live and no successes to enjoy?
Image courtesy How to Bankrupt a Start up
An update to our situation: we're still waiting for tenants in the house mentioned here and here. And in our other house we've just had to evict our previous tenant due to non-payment of rent... Sounds bad eh? I'm not worried... we built in to our plans on the front end consideration for situations like this. That is a major key to success in real estate, being able to foresee all of your expenses and 'gotchas' and account and plan for them. Part of our short term goal is to survive, weathering down times like this is a part of that survival. Our long term goal is more rosy, but you can't get to the long term goal if the short term cuts you off at the knees.
You must have reserves to draw upon to get you through these times and still make your mortgage payments.
Most of all, God is our provider and these are really His houses. There is great freedom (i.e. not losing sleep at night and constant worrying about stuff) when we're able to say: "God, these are your houses, you will fill them (or not fill them) when you want to. You haven't brought us this far to fail and since we've earnestly sought you (for years in our case) on investing in real estate, and used wisdom before making any moves... you will bring us through."
Also, I must say that blogging here has been a nice diversion from time to time to get my mind off of the situation, if you don't manage your mind the waiting can get to you. Lots of what happens in RE is a process... if you can't wait properly, your head will get the best of you.
Image courtesy Pilgrim's Progress
