Archive for the ‘real estat investing’ Category
Wednesday, May 22nd, 2013
By Terry & Angy Sprouse
We (Terry & Angy) are partners in both marriage and in real estate business.
Who says married couples can’t be business partners? And the great thing is we have never considered divorce . . . murder sometimes, but never divorce. Well, never murder, really, but maybe forcing each other to watch, in an uninterrupted viewing, the horrifyingly bad movie, The Clan of the Cave Bear.
In reality, this business has been a bonding experience, not only for us, as husband and wife, but also for our two boys, who have been active participants in the business from the very beginning.
9/11 Attacks Take the Starch Out of Us
We started in real estate investing following the terrorist attacks on the World Trade Center. The ensuing economic recession forced our hand. The hours at Terry’s job were drastically reduced. We realized that for the security of our family, we needed to have a business on the side—a business able to provide regular cash flow in case Terry’s 9 to 5 job suddenly went away.
This led Terry to experience a very intensive period of soul searching and in-depth research (accompanied by gratuitous whining and moping). We decided that a rental house business was the best way to go. We were excited to find the rental business was an easy business to learn and to start. This business required no special license, degree, or training. And the results tempered the most important source of Terry’s whining. The rental business offered the potential to make money.
We Jump In and Hope the Net Appears
We essentially just jumped in with good intentions and very little practical knowledge. After we made up our minds that this is what we wanted to do, we simply bought an inexpensive fixer-upper house, one that had foreclosed and been repossessed by a bank. We moved into and lived in the fixer-upper house while we did the necessary repairs.
But most importantly, we did not sell our original home. We rented it out.
Angy Puts Her Foot Down – On Top of Terry’s Foot
It took a little adjustment to move into that first fixer-upper house. The first thing we did was to get one of the bathrooms back into working condition. Angy’s negotiating stance on that topic was, “I’m not living in that house unless at least one bathroom is fully operational!” At that, who could argue? Marveled by a mother’s logic, together Terry and the boys nodded their heads and dropped the labeled empty plastic bottles they held in their hand into the Recycle Box.
As we went forward with the repairs, we changed bedrooms frequently. Moving from room to room, we cleared out of one bedroom to install tile and then moved again out of the next to make room to install carpet. Huffing and puffing, we moved furniture from one side to the next as we worked through the house painting all the walls. We replaced the cabinets in the kitchen, the fixtures in the bath, the leaky plumbing and the outdated lighting.
Group Hugs
Preparing meals required serious creativity. Entertainment and rest required the same. But the support and flexibility from all family members, and a few timely “group hugs” (some through gritted teeth), got us through.
Tags: how to turn your home into a rental property, investing in fixer upper houses, Terry & Angy Sprouse, turn your home into a rental house, turn your home into a rental property, turn your house into a rental, turn your house into a rental property
Posted in buying fixing renting rehabs, fixer upper houses, fixer uppers, fixer-upper business, fixing rental houses, house repair, house repairs, how I got started in fixer uppers, how to make money renting housing, purchase second home and turn current home into rental, real estat investing, rehab, rental, rental house improvements, rental houses, rental properties, rental property, repair, repairing properties, repairing rental houses, repairs, turn my home into a rental, turn your house into a rental, turning a primary into a rental, turning an owner occupied home into an investment property, turning my home into rental property, turning your home into a rental property | 3 Comments »
Wednesday, May 15th, 2013
Although it took a little longer than we anticipated, “Turn Your House Into a Rental House Instead of Selling It!” has finally popped out of the incubator and is available as a paperback book.
In a nutshell, what is this book about?
With my charming wife and business partner, Angy, as co-author, we have created a guide on how to find properties, live in them, and then turn them into a rental house, instead of selling them.
According to the “American Association of Realtors,” the average American purchases seven houses during their lifetime. Angy and I believe that those seven houses should be converted into rental houses and held for the rest of our lives. They are valuable assets that will generate monthly income for the hard years to come, and provide further assurance of long-term economic family security. Like the old folktale says: “Don’t kill the goose that lays the golden eggs.”
How does this book help the average Joe?
We show the average Joe where to find the best properties, how to pay for your houses, property inspection, the nitty-gritty steps on how to prepare your new rental house for tenants, how to attract and screen tenants, managing tenants, and complying with EPA regulations. The appendix includes samples of leases, property inspection sheets, tenant selection rating sheets, and many other valuable forms to get you started in your rental house business.
What do millionaires do that most people don’t do?
Go into politics?
Buy their own Starbucks?
Become a bearded recluse?
Well, those are some of the things they do, but according to Thomas Stanley, in The Millionaire Next Door, most American millionaires own their own houses, and they own at least one rental property.
Our perspective is, “If it works for millionaires, it ought to work for us too.”
Our hope is that this book will inspire you to buy a rental property and to receive the enormous benefits from that one bold action. Even if you buy just one rental property throughout the course of your entire life, your economic picture will almost immediately get better.
You may wonder, as we did, “Why didn’t we do this a long time ago?”
Where do we order this book?
Click here to order the book through Amazon.com.
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Recommended reading:
The Short and Sweet Guide to Target Retirement Funds at Fearless Men
Creating an Outsourcing Master Plan For Your Business at Louisville Gals
Top Sights In Australia For The Adventure Seeker at Untemplater
Is There Right Time to Buy Real Estate? at KrantCents
How To Easily Reduce Your Utility Costs | 5 Simple Steps FRugal Habits
How Big Should Your Emergency Fund Be? at Work Save Live
Working Towards A Debt Free Lifestyle In 8 Steps at Canadian Budget Binder
Help Me Spend $1100! at Eyes on the Dollar
How You Can Start Freelancing at the End of This Article at Modest Money
Tags: how to turn your home into a rental property, turn your home into a rental house, turn your home into a rental property
Posted in how to turn your home into a rental property, purchase second home and turn current home into rental, real estat investing, real estate books, real estate investing, real estate principles, rental houses, rental management, rental properties, rental property, rentals, renting, turn my home into a rental, turn your house into a rental, turning a primary into a rental, turning an owner occupied home into an investment property, turning my home into rental property, turning your home into a rental property | 14 Comments »
Thursday, November 15th, 2012
Freud
Sigmund Freud said, “Dreams are often most profound when they seem the most crazy. ”
But what really are dreams? Fearless Men shares a tantalizing glimpse in What Dreams Mean: How To Know What Your Dreams Are Saying To You.
As a fervent believer in investing in fixer upper houses, I also like Fearless Men’s article Investment Properties Offer a Long-Term Source of Income.
Book writing and self-publishing is another passion of mine and I read with great interest Should I Create An eBook? at untemplater.
Here are some other favorite posts from the precious week:
Wholesaling Do’s and Don’ts at Louisville Gals.
Are Large Companies Immune to the Fiscal Cliff? at Frugal Rules.
First Cruise Ship? 5 Big Ticket Items To Watch Out For at iheartbudgets.
5 Simple and Odd Things I do to Save Money at Frugal Habits.
PerkStreet Financial Review – The Best Online Checking Account at WorkSaveLive
Our $50K Duplex Is Worth $97K – Why? Part 2 ar Planting Our Pennies.
Old Buildings That Go Untouched at BlueCollarWorkman.
Being Thankful, Not Just For Thanksgiving – Giveaway at ModestMoney.
My Best Financial Tip at Canadian Budget Binder.
Choosing organizations to donate to: What do you factor in? at Young Adult Money
The Amazing Power of Debt at Club Thrifty
Being Thankful and a $100 Giveaway! at Eyes on the Dollar.
No Picnic for Young People, Either at AnyShinyThing.
Waking Up Early Black Friday? No Thanks at Pelican on Money.
_____________________
Coming VERY Soon!
- How to Turn Your Home into a Rental House, Instead of Selling It
Tags: blog articles, dreams, fixer upper houses, self publishing, Sigmund Freud
Posted in best blog posts, blogs, book publishing, book writing, fixer upper houses, fixer uppers, fixer-upper business, fixing rental houses, real estat investing, self publishing, Uncategorized | 21 Comments »
Wednesday, October 10th, 2012
I’d like to share with you a recent question that I received from a reader of my blog. The question was:
“I lived in my primary home for two years and now it’s a rental, can I sell it without paying capital gains?”
My “short” answer is:
That depends on how long the house has been a rental.
No need to push when selling your primary residence
By Way of Background Information
The 1997 Taxpayer Relief Act was a great boost for average people who wanted to sell their home and buy a new one. It was also a great boost for investors. Couples are allowed to exclude up to $500,000 of the capital gain on the sale of their primary residence. Single individuals can exclude up to $250,000.
In other words, the sale of the house is never reported on your federal IRS forms if the capital gain is less than the $500,000 and $250,000 limits.
This exclusion is based on compliance with two requirements:
1.) The home must have been the primary residence for both spouses during two of the last five years. The two years do not have to be consecutive but if you rent out the primary residence for more than three years you would be required to occupy it again for two years.
2.) The exclusion is available only once every two years.
What if you sell you house and your capital gains exceed the established limit?
Capital gains above $250,000 for singles and $500,000 for couples are taxed at the applicable rate.
What if you sell your house before meeting the two year requirement?
If you qualify under one of the “unforeseen events” listed in Internal Revenue Service Publication 523 Selling Your Home, such as a job change, illness or an unusual hardship, you can still qualify for a prorated exclusion.
The Ideal Strategy for the Pathologically Conservative Investor
Typical conservative investor.
Utilization of this tax exemption is the safest investment strategy for the conservative investor who wants to take few risks. This is the type of investor who wears both suspenders and a belt to hold up his pants. They like to play it really safe.
Under this strategy, the investors can qualify for the least expensive type of loan, the owner-occupied loan. There is no need to worry about tenants destroying your rental property or not paying the rent. You completely control the investment by living in the property yourself. When you sell, you have the opportunity to make up to $500,000 tax-free profit every two years.
So, following that long-winded, yet surprisingly informative, background spiel, my “final” answer to the question is:
If you have lived in your house 2 of the last 5 years, you are entitled to take the exemption.
Coming Soon!
- How to Turn Your Home into a Rental House, Instead of Selling It
Tags: 1997 Taxpayer relief act, capital gains tax when selling a rental house, real estate investing, tax exemption when selling a house, Terry Sprouse
Posted in invest real estate repai and sell or rent, investing, investing in real estate, investment house, investment property, investments, investmet properties, real estat investing, real estate, safe ways to invest in real estate, tax, tax exemption, Tax Tips, taxes | 17 Comments »
Friday, August 10th, 2012
Tthe Arizona Network of Real Estate invited me to give a presentation to their group about my book “Fix em Up Rent em Out.”
I thought the video might be available to the general public but it looks as though that’s not going to happen.
However, so that no one feels left out, I am going to provide a summary of the key points that I hit during the presentation. As someone who was regularly picked last for teams in gym class, I’m sensitive to people feeling left out. Casting modesty to the wind, I am also including exclusive photos of the event.
So here are:
The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants (based on an article by Andrew Stefanczyk)
1. Choose the Worst Possible Area
Location will determine the kinds of tenants you will attract, and how much rent you can fairly charge.
Do you want these bearded wonders as tenants?
The best approach is to identify target areas in your city where you would like to focus your purchases. I like to focus on “transition zones” (where there is a mixture of housing types) which are good for investors because we can purchase properties at lower prices, and there is high demand to live in these areas.
2. Put in the very best of things when fixing up an investment property
Use new and expensive sinks, doors, refrigerators, light fixtures, etc. Never shop at stores that recycle construction supplies. Spare no expense.
Of course, the problem is that tenants will not take care of our properties as well as we would,
Habitat Store
so we end up with many broken or worn out items. The better alternative is to shop at used building supply stores, and to purchase good, inexpensive, supplies for our rental houses. One such store is the Habitat for Humanity store.
3. Make sure you have absolutely no experience in make basic repairs
Not knowing how to change electrical outlets, unclog drains & toilets, and replace broken windows will cost quite a bit down the road.
The better way is to:
A. Learn as you go, and comply with EPA regulations
B. Take construction classes at junior college
C. Learn from handymen and contractors
D. Take the Zen approach to house repair – learn to do everything yourself
5. Utilize fix-up books, investing books, & YouTube to find answers on how to make house repairs
4. Do not screen your tenants
Being as uninformed as possible about who you rent to may be the best way to lose money as a landlord. Do not ask for or check references. Do not call previous landlords and ask questions like, did they pay rent on time? How was the condition of the house or apartment when they left? Did they ever disturb neighbors with loud music or shouting matches? How often would you have to make special trips for repairs? Being as uninformed as possible about whom you rent to will make a huge difference and will increase the chances that you will get tenants that will trash your property and refuse to pay rent.
However, the better way is to:
A. Use a checklist for tenants. Decide what kind of tenant that you want ahead of time.
B. Look at their paycheck to verify income.
C. Check county records to see what illegal activities they’ve been up to.
D. Know the Fair Housing Act. Never select tenants based strictly on “race, color, national origin, religion, sex, familial status or handicap (disability).”
E. To find new tenants, use Craiglist, put up arrow signs, and host an “open house.”
5. Make sure you have not learned about your rights as a landlord
Be completely unfamiliar with the eviction process to guarantee long, drawn out disputes with tenants. Don’t keep up to date financial records or copies of correspondence with tenants. Most states provide online information about tenant and landlord rights so avoid reading these.
The better way is:
A. Get an authoritative legal guide like “The Arizona Landlord Deskbook” by Carlton Cassler.
B. Copy forms and letters from your legal book to send to tenants.
C. Comply with legal ways to deal with bad tenants.
D. Use memos to communicate with tenants so you have a record of correspondence.
E. Use a month to month lease instead of long-term lease to more easily scrape off bad tenants like barnacles.
F. Reward tenants for paying on time by discounting their rent $25. 
G. Send good tenants Target gift cards for Xmas.
In Conclusion
Share Your Knowledge
“Each of us has cause to think with deep gratitude of those who have lighted the flame within us.”
–Albert Schweitzer
Carve Out Your Niche Update
My award-winning book on self-publishing, Carve Out Your Niche, is now available in Kindle format.
The Midwest Book Review called Carve Out Your Niche,
“Invaluable for anyone seeking to successfully write, publish, and market their own work.”
Tags: Arizona Network of Real Estate, avoid losing money with rental houses, buying rental houses, carve out your niche, construction materials, do it yourself, Habistore, Habitat for Humanity, landlord rights, learn to make repairs, managing tenants, screen tenants, share your knowledge, target areas, transition zones, Zen
Posted in Arizona Landlord Deskbook, book review, book review real estate investing, book reviews, buying real estate, carve out your niche, create wealth in real estate, do it yourself, excellent real estate books, finding tenants, Fix em Up Rent em Out, fixer upper book, fixer upper houses, for rent, home buying, house buying, house repair, house repairs, how to make money renting housing, How to manage tenants, How to start your own house fix up and rental busines, investing in real estate, investment house, investment property, investmet properties, landlording, learn repair skills, learn to invest in real estate, learn to make repairs, legal information, making repairs, managing tenants, maximize rental profits, month to month lease, mortivation, opportunity zone, places to advertise for a tenant, presentations, quirky tenants, real estat investing, real estate books, real estate investing, real estate principles, rental house improvements, rental houses, rental management, rental properties, rentals, renting, repair, repair books, repairing properties, repairing rental houses, repairs, selecting tenants, share your knowledge, success, tenants, tenents, transition zone, Zen of Real Estate Investing | 14 Comments »
Thursday, April 5th, 2012
The fixer-upper house business is a great business to be in these days. But, if you are just starting out, and are as green as a gourd, as I was, you need some help.
To speed up the learning processes, you need to have a collection of reference books on home repair, buying and selling houses, rental properties, tax law and all other aspects of real estate.
If a home without books is like a body without a soul, then a fixer-upper business without reference books is like a cook without a cookbook.
You may not know everything at the start of your new business and you may need help in some areas, especially in the initial stages. However, each time you pay to have someone do work for you, or go through some new process, you should observe everything, ask questions and learn the process.
That way, the next time you will be able to do it yourself, or at least perform a larger part of the project. The key is to keep doing things over and over until you master how it works. You will eventually reach a point where you make decisions of where to make repairs and which houses to buy based on your instinct.
Books will help you to reach that point sooner.
Here are some books that I have found particularly useful to have on hand:
1. Fix em Up, Rent em Out, by yours truly. Yes, believe it or not, I read my own book! Anyone who says otherwise, is just itching for a fight.
2. Investing in Fixer Uppers, by Jay DeCima. His first, and still my favorite, of his books.
3. Investing in Real Estate, by Gary Eldred.
4. Arizona Landlord’s Deskbook (or the equivalent for your state.) by Carlton Casler.
5. Real Estate Debt Can Make You Rich, by Steve Dexter.
6. Wiring 1-2-3, by Home Depot
7. Plumbing 1-2-3, by Home Depot
8. Tiling 1-2-3, by Home Depot. Are you getting the impression that I like the Home Depot books? In addition to mastering the art of tile installation, I made my first grout repair after reading this book.
9. Fix it Yourself Manual, by Reader’s Digest.
10. Upside Up Real Estate Investing, by Bob Zachmeier (teacher of the first real estate class that I took).
Tags: Fix em Up Rent em Out, fixer upper houses, investing in fixer upper houses, investing in real estate, real estate books, upside up real estate investing
Posted in Fix em Up Rent em Out, Fixer Jay, fixer upper book, fixer upper houses, fixer uppers, fixer-upper business, how I got started in fixer uppers, how to make money renting housing, how to start a real estate business, How to start your own house fix up and rental busines, investing book, investing in your spare time, real estat investing, real estate books, real estate investing, rental house improvements, repair books, repairing properties, repairing rental houses, reviewing books and records, turn my home into a rental, Upside Up | 13 Comments »
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.
Tags: rental house, rental property, renting properties, retirement with real estate
Posted in buyer's market, buying real estate, create wealth in real estate, Fix em Up Rent em Out, fix up houses, fixer upper houses, fixer uppers, fixer-upper business, how I got started in fixer uppers, how to make money renting housing, how to start a real estate business, How to start your own house fix up and rental busines, invest real estate repai and sell or rent, investing financial independence, investing in real estate, investing in your spare time, investment house, investment property, investments, investmet properties, learn to invest in real estate, lower home prices, real estat investing, real estate debt, real estate debt can make you rich, real estate investing, real estate principles, recession and real estate, rental properties, rental property, rentals, retirement, safe ways to invest in real estate, small investor, start small, Uncategorized | 3 Comments »
Tuesday, February 14th, 2012
Yep, that's me painting a fixer-upper house
If your circumstances are such that it is impossible for you to start investing in real estate today, you can start by just meandering in that direction. You can program your mind to pay attention to anything related to real estate. Cut articles out of the newspaper, buy books at book sales, ask friends and co-workers how they purchased their house, watch for free classes or seminars.
If you don’t start following your dream now, you may never do it. There’s a lot more to life than just making a living by working at an uninspiring job.
Start to Prepare Yourself
You can be constantly learning and preparing for the day you will purchase your first fix-up property. Virtually anything you need to know is available to you through books, audio recordings, workshops, seminars, public education programs, consultants and training programs.
I meandered for approximately 11 years before purchasing my first investment property. Now I wish I had started sooner, but you can’t begin until you have the desire and the knowledge. Sometimes, desire and knowledge can be acquired simply by observing someone else operating a successful business.
Reason to Not Invest and Reasons to Invest
There are always reasons not to invest in real estate. The most common reason used to be that people thought house prices were too high. Now, the situation has reversed itself and housing prices are at historic lows.
The time is ripe to start meandering in the direction of Fixer Upper Houses.
See What’s Happening in Your Neighborhood
You might want to check out how low houses are selling for in your neighborhood. You might be surprised.
You can find housing prices at Zillow.com or on the multiple listing service (MLS).
Tags: Fix em Up Rent em Out, fixer upper properties, investing in fixer upper houses, Terry Sprouse
Posted in Fix em Up Rent em Out, investing in real estate, investing in your spare time, investment house, investment property, investmet properties, learn repair skills, learn to invest in real estate, learn to make repairs, making repairs, maximize rental profits, overcoming obstacles, painting, prosperity, real estat investing, real estate debt can make you rich, real estate investing, real estate principles, recession and real estate, Terry Sprouse | 1 Comment »
Wednesday, January 4th, 2012
Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. This includes driving costs incurred for rent collection, meeting your tenants to handle their problems and going to the hardware store to buy tools and materials for repairs.
In my case, I travel to my rental properties frequently, usually just to do a drive by and make sure everything looks like it should.
I used to drive by one of my properties on a daily basis, because I was having trouble with the tenants. They were pretty good tenants for the first two years that they were there, then things started to slowly unravel the next two years. They started paying their rental checks later and later. They weren’t keeping up the front yard. They were having large parties.
Finally, the cops had to come to the house and break up a party, and that was the last straw. I evicted them (by simply canceling their month-to-month contract). Now, I don’t drive by the property so frequently, because we have more reliable tenants.
To claim these travel tax deductions, you must keep a travel log, and just write down the milage each time you travel for landlord related business.The travel claim is made on Schedule E of your tax forms.
You allowed around 50 cents per mile by the IRS. The amount changes over time on the tax instructions, so you must verify how much it is each year. You just mulitply the number of miles that you have driven by the amount allowed per mile, and that is the amount you enter as your deduction.
The Best of Carve Out Your Niche 2011
* * *
Tags: income tax, tax deduction, traveling to rental properties
Posted in investment property, investmet properties, real estat investing, tax, tax exemption, taxes | 2 Comments »
Sunday, January 30th, 2011
Opening up the old mailbag again, I am printing my response to a recent fixer upper email question that I received.
Hello Terry,
I’m writing you with a somewhat specific question.
I am looking at a house at xxxx Star St. in Duluth, MN. It’s a vacant house (so many are nowdays) and the listing price 39k. Repairs look to be 10.9k plus a fee of 1,100 for re-registering it as occupied.
I walked through the house, visually it’s fine. I like the house, don’t get me wrong. New windows, carpets, paint, etc. But the repairs are mostly plumbing etc. Should I put in my bid for 39k EVEN or throw it down for 29k?
It’s in a fairly low crime area, but across the street is a halfway house for prisoners just getting out into the world…Prior values in the 200k for this area before the Great Collapse….
Thank you for your time,
Malcom
Dear Malcom,
What I see is a red flag that should influence your decision.
The location of the house across the street from a halfway house is going to considerably limit what you can do with the house. Regardless of whether you are going to turn it into a rental or flip it, you have a very limited pool of potential tenants or purchasers. In my opinion, most people would not want to live there.
Consider, if you had a tenant who had a choice to rent your property, or one in another neighborhood nearby that did not have a half-way house across the street. Which would they choose?
Granted, the purchase price is low. However, in my opinion, it’s better to spend a little more money for a house that doesn’t have a glaring defect.
There are a lot of properties on the market right now, and many at bargain basement prices. If I were you, I would consider looking around for another one.
Donald Trump said, “Sometimes your best investments are the ones you don’t make.”
Best of luck in your business.
Best regards,
Terry Sprouse
Tags: buying ugly houses, Fix em Up Rent em Out, investment properties, rental profits, rental properties, Terry Sprouse
Posted in buying fixing renting rehabs, buying foreclosures, buying real estate, finding real estate, fixer-upper business, investing in real estate, investing in your spare time, investment house, investment property, investmet properties, real estat investing, real estate investing, real estate principles, rental properties, rental property, rentals, safe ways to invest in real estate | 6 Comments »
