Archive for the ‘fixer upper houses’ Category

Security in Retirement with Fixer-Uppers

Monday, February 20th, 2012

Are you like me and never socked much money away for retirement? We are not alone. The Employee Benefit Research Institute’s Annual Retirement Confidence Survey found that pre-retirees (Americans between the ages of 55 and 65) greatly underestimate how long they are likely to live and how much money they will need in retirement.

Experts say that we need to change our mindset from “assets” to “income” in retirement planning. It’s not enough to know how much money we have in savings; we need to know how much income our savings can generate over time.

There is no better way to change our mindset and our portfolio from “assets” to “income” than by investing in real estate. If we invest wisely before we retire, and can have a stable of reliable rental properties that generate steady monthly income. We can look forward to a retirement that provides security instead of uncertainty.


Don’t rely on politicians to provide you with retirement security. If you want it done right, you must do it yourself.

Property Inspection and Due Diligence

Saturday, January 28th, 2012

Although I used my handyman friend to inspect the first fixer upper house that I bought, in later houses I hired a professional property inspector to go through the house and to provide me with a complete inspection report.

The Value of the Inspector’s Report

The inspector’s report can be used to help you negotiate a lower price on the house if they uncover anything in the house that is in need of repair. Hiring a qualified property inspector is a good way to make sure that you are really getting what you pay for in a house.

Due Diligence Allows You to Correct Deficiencies

Once you have made an offer on a house and it had been accepted by the seller, the “due diligence” period begins and you have until the close of escrow (or completion of the sale) to check out the physical and financial condition of the property. If you discover that the property has problems, but you think the deal is still worth pursuing, the seller may be willing to correct any deficiencies, or give you money to complete the necessary work yourself.

Two Key Components of Due Diligence

There are two key components of due diligence process:

1. Review of books and records
In my case, there are usually no records to review. Most of the houses that I buy have been fixer-uppers repossessed by a bank, the Veterans Administration or HUD, and the owner is long gone.

2. The physical inspection
When there is no owner present this makes the physical inspection all the more important.

The due diligence period is your last opportunity to either:

1.) complete the transaction, or

2.) cancel the escrow, have your money returned, and look for another property.

“Carve Out Your Niche” TV Interview Monday

Efficient Design – Green adds Green

Tuesday, January 17th, 2012

This is a guest post by: Erik Braunitzer of Douglas Elliman Real Estate Company, agents for NYC Apartments.

The bathroom is an essential part of most every home. However, the bathroom is also an area that is often neglected when it comes to creating an environmentally friendly and green space. Luckily, when designing or remodeling your home, the nation-wide renewed focus on green living has opened up an entire marketplace full of green items.

And what most homeowners and contractors don’t realize is that going green really boosts the value of your home. Things like geothermal heat, 95% efficient furnaces and walls made with reclaimed materials are just a few examples of expensive but worthwhile home investments. One of my favorite areas of focus is the bathroom.

Recycled Glass Tile: Tile is a commonly used throughout the bathroom, from floors and shower walls to backsplashes and accent work. Consider using recycled glass tiles, which come in a wide range of colors, shapes and sizes. Recycled glass tile is installed in the same manner as regular tile, and can come in pre-spaced squares allowing for easy installation and grouting.

Sustainable Harvested Woods: Wood is often used for vanities and even flooring for bathroom spaces. However, many wood products require the use of environmentally unfriendly or even illegal logging practices to supply the material. Choose products with a Forest Stewardship Council approved sticker on them, or choose more environmentally friendly products like bamboo, cork or wheat straw. Storm-feld tree products are also an option for a greener bathroom. Avoid wood products made from particle board, which often contains formaldehyde.

Recycled Metals: Recycled metals can be used in your bathroom from cabinet pulls to fixtures. Look for products such as recycled metal counter tops, vessel sinks made from recycled metal, recycled aluminum tiles, salvaged brass faucets, and recycled bronze metal hardware.

Composite Terrazzo: Another way to use recycled materials for vanity countertops is through composite terrazzo products. These counter tops are made from a wide range of different materials, such as recycled glass, which is then combined with an epoxy binder or cement to create the hard and formed surface of the countertop. Because there are different types and colors of materials used in each piece, you get a unique finished look to the product you install.

Salvaged Products: Whenever possible, try to use recycled salvaged products in your bathroom remodel. Often times home owners will get rid of light fixtures, cabinets or sinks that are still in style, but that do not fit their own current personal style. Purchasing these products from salvage stores reduces the chances that the product will find its way into a landfill, as well as can provide a unique or vintage look to your bathroom space.

Windows: Install windows in your bathroom to bring in natural light. The more natural light you have flowing into your bathroom, the more open it will feel and the less electricity you will need to use, which reduces your energy waste and brings down your electric bills. Install Energy Star rated windows to help reduce the loss of heat or cold air during the winter or summer months.

Toilet: Toilets make up a significant portion of water usage in most households. Each flush can waste gallons of water, even though newer toilet designs can provide the same performance with less water. Look for toilets made to the HET Standard (or High Efficiency Toilet) which guarantees you’ll be using less water with each flush.

While these steps may seem small, every choice helps create a better world for you, your family and generations to come. By making these simple choices, you can make a positive impact on the environment, all without sacrificing style or function in your bathroom.

Fix em up Rent em Out

Background Checks for Tenants

Wednesday, December 28th, 2011

This is your way to verify that the impressions you have of your applicants are true. Everyone who wants to rent my house has to fill out an application form. I will select usually the top one or two candidates, based on the processes mentioned above, and then call all the references and former landlords listed on the application form.

Always try to verify the references by telephone. You wouldn’t be the first landlord to be given a fake reference, and people will often give more candid opinions when you speak to them.

I don’t run credit checks, but I do like to see copies of their paychecks. I do a criminal background check by searching county court house records, and I check the sex offender’s registry list.

A high priority for me is that they make enough money to pay the rent. Don’t go by what they say; go by what their paycheck says.

They may say, “So anyway, my wife/girlfriend is going to get a job in a couple of weeks, and we operate a successful E-bay business, so the rental payments won’t be a problem.” Weeks turn into years and all the while they will have trouble making their monthly payments. Someone who has a stable, good paying job is an ideal tenant.

3 Books that Changed My Life

Are You Big Enough to Pay it Forward?

Avoid Perfectionism with Fixer Upper Houses

Wednesday, July 6th, 2011

Govern a great nation as you would cook a small fish. Do not overdo it.
–Lao Tzu

A key to fixing up a house is to know when to stop fixing up. You want the house to look good, yet you know that people are not going to care for your house the same way that you would. For rental properties, I don’t purchase the most costly, or even new, materials. I do a lot of my shopping at stores that recycle construction materials, like Habitat for Humanity’s Re-stores. You can get bargain basement prices on things like doors, kitchen cabinets, hinges, toilets, paint.

Need I say more? It’s a fixer-upper person’s paradise.

If I know that I am going to sell the house I may install higher grade of materials, especially where it really counts, like the kitchens and bathrooms. As Lawrence Dworin says in Profits in Buying & Renovating Homes:

“It’s easy to get carried away on renovation projects – wasting time and money on repairs that buyers won’t pay extra for. I assume you like to do good work. We all do. And we’d like every finished project to be a showplace. But you can’t make money that way. Your buyers have a limit on what they’re willing to pay. That’s why you’ve got to limit repair costs. In this business, you concentrate on fixing code violations and creating a clean, safe, livable house.”

Avoiding Pitfalls When Buying Fixer-Upper Houses

Wednesday, May 25th, 2011

Pitfalls to buying fixer-upper houses, such as broken plumbing systems, worn out electrical wiring, and cracked foundations can be avoided with the help of a professional inspector prior to purchasing a house. Once identified, these conditions can be laid before the seller, who must either fix the problems to the satisfaction of the buyer, or the buyer can pull out of the deal.

Of course, it takes hard work to find a house, make all of the repairs, and learn how to deal with tenants. If it were easy, everyone would be doing it. You’ll learn not to take life, or tenant problems, too seriously. Shakespeare said, “A light heart lives long.”

The good news is that you learn valuable technical and people management skills that are useful in many other aspects of your life. You are also rewarded with a feeling of satisfaction in your accomplishments, a stronger sense of financial security, and the peace of mind that accompanies it.

The Secret to Success (video)

Friday, January 21st, 2011

The secret to success in life and business (even the fixer upper house business), according to Napoleon Hll and Ralph Waldo Emerson, is to be persistant and to follow your intuition.

Control Your Thoughts & Reach Your Dreams

Monday, October 25th, 2010

What things do you actually have control over in your life?

When you think about it, there are actually very few things that we can control.

For example, I was forced to give up my dream of boxing. I ruined my hands in the ring. The referee kept stepping on them.

We are required to buy insurance for our cars and houses. The kids must go to school and have supplies and clothes. We choose food, cars and most consumer goods based on the advertisements we see on television. Different levels of government and social pressures decide many things for us, or leave us with limited options to choose from.

And, it doesn’t get any better as time moves on. It seems the older we get, the fewer choices that we have. Men still chase women when they get older, but only downhill.

The One Thing We Control

Napoleon Hill says that we have control over but one thing, the ability to control our own thoughts. This is the most significant and inspiring of all human traits. It is part of our divine nature. This divine tool is the sole way to control your own destiny.

Mind control is the result of self-discipline and habit. You either control it or it controls you. The most effective way to control your mind is by keeping it busy with a definite purpose, supported by a clear plan.

The Ultimate Question

A lot of people I know have read Think and Grow Rich, and they say that they think it is a great book. But, very few know the answer to the following question.

What does Napoleon Hill say that you must do twice daily in order to make your desires become reality?

On page 36 of my copy of Think and Grow Rich, Napoleon Hill says that you should have:

1.) written a concise statement of what you want,

2.) how you plan to get it, and

3.) when you will get it,

then you should read your written statement aloud twice daily, once before retiring at night and once after arising in the morning.

What Does This Have to Do With Real Estate?

In the early 2000′s, I thought my job was going to be cut and I that would be unemployed. I decided I needed a steady second income so I wouldn’t have to rely on my 8:00 to 5:00 job to bring home the bacon .

After I concluded that buying fixer upper houses and renting them out was the best second income for me, I wrote down my desire on a piece of paper and carried it around in my wallet.

I wrote, ” I will find and buy a fixer-upper house in the next 60 days.” In less than a month, I found and bought my first fixer upper house, and that was my start in this business.

That was the first time I experienced the power of this technique. I have had many subsequent successes with the technique as well.

Like most of us. you have ideas and dreams. But, if you go beyond just identifying them and you write them down, and put your passion into them, they are more likely to come true.

Confessions of a Fixer-upper-holic

Do tenants pay utilities, and how much for damage deposit

Saturday, October 16th, 2010

Here is another letter that I recently received that asks some pertinent and common questions related operating a fixer upper house business, that I would like to share with you.

Dear Terry,

We’re moving along towards renting out our first rental house…and I was reading your month-to-month lease agreement from the Never Sell Your Home book– it looks very good and we plan on using much of it, but I did have a few questions:

1) What % of the monthly rent do you require as a security deposit?

2) Should the Lessee(s) be responsible for all utilities, or should I pay the utilities for them?

Thanks for your help – !

Steve Klausman
Santa Fe

Dear Steve,

Congrats on your progress in preparing to rent our your first house. Don’t get discouraged if it’s rough sledding at first, the first house is the one that you learn the most from.

Security Deposit

In answer to your first question, the amount that I charge for security deposit is the amount of one month’s rent. So if the monthly rent is $900, the security deposit is also $900.

Some tenants may have trouble coming up with both the rent and the security deposit at the same time, in this case, a tidy sum of $1,800. So, I sometimes let them pay the security deposit over the course of 2 months, to make it easier on them.

Since you are just starting in the business, something to do from the beginning is to keep the security deposit and the monthly rental money from your business in a separate bank account from your personal bank account. The IRS doesn’t like to see the funds mixed together.

Who Pays Utilities?

In answer to your second question. I always have the tenants pay all the utilities themselves. Not only does it encourage them to conserve, but it vastly simplifies the process for you. Also, I have the tenants put the utility accounts in their own name, so that I’m not liable for their expenses.

In most states, you can sign up for a “Landlord Agreement Account” with the utility companies that allows you to switch the accounts to the tenants and back, with less paperwork and expense.

As you move along feel free to send me more questions as they arise.

Your (self-appointed) personal rental-home consultant,

Terry

Letter on Selecting Tenants