Posts Tagged ‘making repairs’

Save Money on Making Fixer-Upper Repairs

Thursday, August 21st, 2008

Every person who owns a fixer upper house business ought to learn to make repairs.

Take a look at my new ezinearticle entitled Save Beaucoup Money When Investing in Fixer-Upper Houses! 5 tips on Learning to Make Repairs.

Preview: Tip #1 is Stick to Experts Like Glue

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Confessions of a fixer-upper-holic

Sunday, December 16th, 2007

As we approach the holiday season, I reflect back on why I enjoy the fixer-upper and rental house business.

My philosophy is to buy houses in need of repair, fix them up, and rent them out, in my spare time. I first began doing it because the economy was shaky and my full time job was looking shaky too. I wanted some security so that even if my job went down the tubes, I would still have enough income coming in to keep floating. And, I wanted some security in retirement since I haven’t socked away much in IRAs and I have little faith in the stock market. I wanted to control my own destiny, rather than letting some distant fund manager decide my financial future for me.

Buying fixer-upper houses allows me to get into a property at a low cost, paying as little money as possible. I try to buy bad houses in good neighborhoods. I make money through monthly rents, appreciation of the house values (5%/year on average), and through tax deductions and tax credits.

Becoming a landlord is the major obstacle most investors face in this business. Tenants can be cause migraines and make life difficult for us. There are two approaches to deal with this drawback. First, remind yourself that you can learn to deal with tenants only by doing it. The more you do it, the better you get., and the financial reward makes it worth it. Secondly, the 1997 Taxpayer Relief Act home tax credit allows you to sell a house you have live in for 3 of 5 years, and pay no federal income tax. In this approach, you never deal with tenants, but you also lose one of the greatest advantages or home ownership – long-term appreciation.

This profession is fun, most of the time. I enjoy repairing properties. I’ve always enjoyed fixing things that are broken, although I never got really good at it until I started buying houses. It gives me a great sense of inner satisfaction to return a broken house to its former glory. And, I have grown a lot as an individual by learning to deal with difficult tenants. It’s one of those cases where, we are forced to do the thing we most dread, but then we wind up learning immensely from the experience, like marriage (yes, my wife rarely reads these blog posts).

Most of the time the fixer-upper business is on auto-pilot. Tenants send their checks in and my major responsibility is to deposit them. After the initial repair work on a newly purchased fixer-upper, the major work comes when there are 1) minor repairs, things like leaky faucets, leaky roofs or washing machine malfunctions, and 2) when tenants move out and my wife and I need to get it ready for the next tenant. We now have it down so well that we can usually have a rental house put back together and the “For Rent” sign in the front yard in 1-3 days. My wife, two boys, and I march into the place like worker ants, each one understanding his/her designated role, and before we know it we’re done.

My tenants have been people that I would normally never have come into contact with. We live in different worlds. In many cases I have enjoyed getting to know them. For those I didn’t enjoy so much, I learned new people skills. Or, perhaps better said, I was forced to learn skills in people management , or I would have gone out of business. I admit that there were several times during the first few years that I was so frustrated that I thought about giving up this dream. But, fortunately, despite the frustration, I kept plowing ahead with fortitude and didn’t throw in the towel. And, of course, when I didn’t have the fortitude to carry on, I used the next best thing – three-and-a-half-titude!

To me, one of the best parts of life involves growing and learning, and my spare time fixer-upper business allows me to do both,. It doesn’t hurt that I make some money as well, and have some security for the future.

Info on Terry’s Book

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Termites, a relentless foe in rental houses

Friday, November 16th, 2007

In the fixer upper rental house business, we must constantly monitor the status of our property.

I was reminded of this again when we discovered that we had termites in one of our bedrooms. This is a fixer upper house that we are living in as we make repairs; soon to be a rental house. My son bumped his foot against the floor trim and found that there was no longer any wood trim there. All that was left was the the shell of the paint in the form of the trim. The wood had been completely eaten by termites.

Hiring a Pest Control Professional

I usually like to do all fix-up type repairs myself, but this is a case where I let the exterminators (no relation to the California governor) do the work. The first few companies I called would not give me a quote over the phone. The one company that gave me a “rough estimate” came in at a budget busting $1500 to $2,000 for a 1600 sq.ft. house. The job must be based on the square footage of the house, so it’s not rocket science to calculate the cost. It makes it impossible to compare companies if they all have to come to the house before they can give me an estimate! They think that after you invest the time to have them come over, you’ll just fall for their sales pitch, rather than spend any more time finding the best deal (and at the same time you’re concerned that your house is crumbling from the relentless termite onslaught).

So, I kept calling. After several more calls I connected with A-OK Termite and Pest Control and they really were “A-OK” because they gave me a bid of $650 without a house business. They did the job last Saturday.

Termite Living Habits

Yikes! Termites

Here in the desert southwest, we have subterranean termites, which I believe are the singlemost common type. They live in colonies deep within the ground, sometimes to depths of 25 feet. Termites work their way up through the soil from their nest and enter any wood they can. Termites can gain entrance by crawling up the sides of foundations, building mud shelter tubes to shield them from light, or they can go up hollow sections in block foundations or up cracks in the poured concrete foundations.

Every 48 hours or so termites must return to the soil to get moisture or they will die. The exterminator (again, no connection to Arnold) sets up a barrier of chemicals in the soil that the termites cannot pass through. They usually inject chlordane into the the soil every eighteen inches around the entire house. The same procedure can be done inside the house.

Even if only one part of the house is infested, the entire house must be termite-proofed or the termites will migrate to the untreated parts.

The time it takes termites to do serious damage varies from only a couple of years to 10 or more years. So, if you think you might have termites, don’t put off taking care of them too long. If it’s been 5 years since the last treatment it’s time to have the house inspected.

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Completing repairs on fixer upper house

Monday, October 15th, 2007

Repairs on the fixer-upper house that we are living in and repairing on Calle Canis continues. As mentioned previously, my wife and I bought this fixer-upper in order to live in it for at least two years and then sell it. We will pay no federal capital gains taxes for the sale because we are following the steps to receive the exception under the Taxpayer Relief Act of 1997.

There isn’t that much left to do, but often it seems like the closer we get to the end, the further away it moves from us. The list of final repairs include,

1.) refinish two permanent wooden cabinets, one in the kitchen, one in the hallway;

2.) paint new indoor doors;

3.) applying a little more mud (joint compound) to cracks in guest bathroom and paint it;

4.) finish painting outdoor trim of house;

5.) fix cracks, paint, install pump and fence in swimming pool;

6.) spray for termites (we just discovered that we have them).

Presently, I am working on the guest bathroom and my wife is painting doors. We mostly operate early in the morning while the kids are asleep.

Sometimes, when we have to focus on our rental houses, it pushes back the work on this house. But, except for a few extended breaks, we have made pretty good progress on repairing this house.

This is a 4-bedroom, 2-bath 1600 sq. ft. house that we have completed the majority of repairs on, including landscaping the front and back yard, floor tiles on bedrooms and bathrooms, new (or almost new Re-store) kitchen cabinets, wood planks in the TV room, rebuilt master bathroom, ceiling fans in all rooms, new room for the washer/dryer, fixed wall cracks, paint all walls and ceilings, and other odds and ends.

Kitchen before repairs:

Kithecn after repairs:

Mostly, we just fixed or replaced what was broken or missing. Since we plan to sell the house, we are spending a little more to make it look good than we would if we were going to rent it. With the weak market, I sometimes ponder keeping it as a rental until the market perks up again, but we don’t have to decide right now. As Lincoln said, ‘we’ll jump over that ditch when we get to it.”

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