What's going on in here?!

Long time no chat again!  Sheesh.  My daytime life (the well-paying one) and my real life (the cute cuddly smiley one) have taken over and quite honestly I am just skating by in the long-term wealth short-term frustration life.  J  I'm not even sure where I left off…I think with the rehab project, we had just closed with the ridiculous bank restrictions and last minute eff-ups.

WELL.  The landlord life has continued in much the same way except that our previous few years of relative ease and low maintenance have come full circle and this is the year of the fix.  5 fridges and 3 stoves in less than 4 months people!!  That is not cool.  Not to mention a furnace, a sewer backup, and a new roof as well.  Yay for tax deductions?  Sigh. 

I've been having some minor tenant issues as well.  My sweet hottie in the attic at Sanford turned out to be a rather unpleasant drunk (only when drunk, so it took me totally by surprise) who caused quite an uproar in the neighbourhood, including bylaw infractions for noise and disturbing the peace.  Fun stuff.  Eviction went amazingly smoothly, though, he was out when I asked, and even THANKED ME.  Weird.  And the place was relatively clean (tenant clean, not clean clean) when I went in there.  Only some very minor damage. 

It actually worked out really well, because 3 days before he was out, my basement girl at Spadina 1 gave notice (sick of living in a basement, and I don't blame her).  Then the very next day, her sewer backed up, just to be a jerk.  YAY SEWAGE!!!  The serendipity gods were smiling on me, because all she had to do was stay with her mom for three days and I slid her on over into the hottie's attic, which she LOVES.  And she took back her notice, so phew, I didn't have to show the attic.  I hate showing the attic.

One of the units on the rehab (Spadina 2) is finished and looks FAB.  All new ceramic tile floors through the bath, kitchen, and hallway, new kitchen cabinets and fixtures, new fridge, new bath fixtures, new paint on every wall.  It looks amazing.  I'm showing it right now, since our first tenant barely made a dent and only stayed 4 months as school transferred her co-op to a different city. 

The second floor unit remains to be done, and it will be a similar re-do – kitchen, bath, floors.  A bit more flooring as we have to do ALL the rooms.  We are thinking hardwoods in the bedrooms and living room and tile everywhere else.  The kitchen is small but serviceable, and there's a weird second entrance door that needs something done to it. 

Then we re-finance the puppy and pay off some of our massive debt! YAY! 

On the homefront, the three of us are still crammed into our dilapidated one-bedroom while we wait…and wait…and wait…for construction to start on our own little townhouse.  I'm so excited!

FIVE HOUSES

Phew.  We're done.  We now own FIVE houses – two of them on the same street, which for some reason absolutely thrills Rob.  Funny guy.  This was not an easy purchase at all, and I think that it will continue to get more complex as time goes by.

 

First off we ended up getting CMHC approval on the property, much to our surprise!  Probably because it was ridiculously cheap.  But either way, our rate is fantastic, 3.69% fixed over 5 years.  On the last day before conditions had to be removed we find out that CMHC is requiring an appraisal be done on the property because IT IS TOO CHEAP.  Shouldn't they be happy about that?  But they are worried that they may be insuring a mortgage on a pile of crap, so they need an appraisal.  Bah.  Of course the appraiser we hire tells them exactly what they want to hear, but too slowly.  SO we actually lifted the conditions (bought it with or without financing) BEFORE we knew for sure that we had a mortgage.  That was exciting.

 

Then, because the appraisal said that the house had been converted to 3 living units, CMHC made it conditional that the zoning be legal.  YIKES.  So not the case.  It is a legal property under the fire code, but the zoning hadn't been changed from single family.  It took us two weeks and a lot of finagling to get that condition removed…they ended up accepting that we could rent the house out as a single family.  Again, they are just getting what they want to hear…anyone with a brain would know that we are going to rent it out as a triplex.

 

Finally it looked like we were all a go…conditions met, income letters provided, commitment signed.  And then nothing.  No word from the bank.  Our little underwriter, Kaylee (or twit as I like to call her), completely dropped the ball.  They took ages to turn anything around, asked for the same stuff more than once, lost things, forgot to write stuff down (for instance, they needed to actually speak to my boss but then when they did it wasn't recorded and then they asked me again the day before closing to speak to my boss.  NO.).  Needless to say, closing day arrived and still no mortgage instructions.

 

Our broker was on the ball though and browbeat the bank into settling their crap and getting it done.  I got the keys at 4:45 on closing day…talk about down to the wire! Yikes!  But it's finished, phew.

hiccups

Well we must be real investors now! Financing on the new property has gotten interesting. We are still trying to get CMHC financing so we only have to put down 5%. Everything was looking great until yesterday when they decided that the house was UNDER valued. Isn't that interesting? They are concerned since we got TOO good a deal!

So all in a scramble we got an appraiser in to review the property and get this mortgage secured. But it still looks like we'll be lifting the conditions without a commitment in hand. Yikes!

house #5!

Well, negotiations are over! After our 125 offer, the bank came back with 149 (asking was 154900 down from 167900). We took that as a strong sign so we came back at a solid 140, expecting another write-back splitting the difference. They accepted!! We just bought a triplex in decent shape for $14000! Unheard of. But totally awesome. Now of course we have to secure financing and get our inspection but I'm not expecting any surprises.

People ask why we offer low (like the 125) when we know it's not feasible. ALWAYS make a low first offer. Any sensible seller will at least write it back...they'd be foolish not to, even just writing it back at full asking to make a point. But by making a low offer you can get a real feel for where the seller is willing to go. For instance, in this case, if the bank was really eager to sell fast, they may have come closer to our 125 offer. By writing it back at 149 they made it clear that we needed to come up in order to buy it from them. But if we had offered 138 or something equally reasonable, we would have finished around 145 instead of 140.

Of course, there are some exceptions. Heck, we made a full asking offer on 31 Spadina. But in that case it was a turn-key property priced well below value. There were 6 other appointments the next day to see it. By making the full price offer with a 30-day closing period, it encouraged the seller to accept quickly and cancel the other viewings. But in my opinion that was still offering low since the house was undervalued.
Financing has gotten interesting too. I'm not sure we'll get a conventional mortgage for this one. We are right on the border of what CMHC will accept for our total debt ratio. But just when we thought we were toast, we learned about short-term seconds. But baby is calling so I'll discuss that another day!

house #5?

Well, the King St property was a total bust. We saw the rest of the interior and it needs thousands in repairs, and not minor stuff. We're talking plaster replacement, flooring, bathrooms. Yikes. He is going to lose the place...he owes 240K min and you'd be stupid to pay more than 180 in its current condition. Poor old house. Maybe someday the bank will own it and let us make a reasonable offer but until then it's off the radar.

However, we are putting an offer in on another project, which has already been taken by the bank! Its directly across the street from the one we own on Spadina. 2/3 vacant, needs lots of lipstick. But it has new roof, windows, and furnace. It needs a new fire escape though, which will run in the neighborhood of $10000.

But here's the fun part. We have offered only 125K for it, we expect to finish around 140. It will EASILY appraise for 210 and if we re-fi for that we could pocket 42K in cash.

I love bank sales.

long neglected Blog...

Wow! It's been 2 months since an update. But I have been busy and all I guess. Ha. My last little update was about the busted property on king. He did not accept our offer. We are sitting tight to see If he'll be more amenable to a low offer in a few months - he hasn't had even a whisper since our offer and the building is not getting any better. I think one of his tenants has moved out also and yesterday we saw a city notice to comply for the trash piled in the alley. I'm thinking he'll be a bit more desperate in a few months.

In the meanwhile though we've just been to see a 23-unit building. Hahahahaha. But seriously, financing is getting to be a challenge no matter how big the mortgage so why not go for 3/4 of a million? LOL. That's insane. Either way I don't think this one is for us. But we are definitely going to be looking soon for something a bit bigger than the Victorians. Yikes.

On the tenant front, I have an impending turnover in the basement at Spadina. It was easy though and the new tenant will be moving in in February. She's very young but has financial support from CAS until she's 21 and still in school. Here I go again being a social service as well as a landlord but I just can't help giving these kids a shot in life. We both feel like we could possibly make a difference in their lives - maybe starting out in our cute little place will make the difference between success and failure in her life - and change the pattern that put her in foster care and living on her own at 18. I'm probably bring idealistic. We also have this fantasy about meeting a kid like this who really proves that she wants to work hard and succeed - and we can help a bit more than just rent to her - sort of be a benefactor type deal.

Crazy, I know. I just think there are so many people who would be in a different life if not for just a tiny hand up...either the existance of the hand up or the lack thereof.