Risky Business

Arkansas Realtor Beverly Carter's tragic, senseless murder has prompted me to reflect critically and heavily on my own trusting nature and the changes I'm making.  When I started out in real estate I was working distressed properties on a HUD team in neighborhoods all over the Kansas City metro area, including a lot of sketchy, high crime areas.  Don't laugh, here's my slightly flawed logic on how to remain safe:

1.  Try not to go by yourself.  If you must go alone, always let someone know EXACTLY where you'll be
2.  Go early in the morning, drug dealers and thieves sleep late since they operate at night
3.  Get in, do your business and get out, quickly
4.  If you encounter people, look them in the eye, speak to them and engage them
5.  Always be closer to an open door than whomever you encounter
6.  If the door isn't secured, don't go in, call for backup
7.  Most people look mentally stable, however, not all of them are
8.  Always carry yourself with confidence and make your presence known
9.  If you have a conceal and carry permit and a gun, carry them, both, I do.
10.  Listen to your gut, period.  Always.

The sad truth of the matter is...Beverly wasn't in a high risk area, she did what most of us do when someone calls and wants to look at a property, she agreed to meet him.  She did her job and lost her life doing what we all do, every single day in the life of a Realtor.

Rest in peace Beverly, your death will not be in vain, I will be more conscious and observant to operate safely AND I'll remind other agents to do the same.

Tax Lien Sale, Jackson County Style, Be There or Be Square

On Monday, August 18th 2014, the hottest day of the summer thus far, my friend and real estate investor (same person) and I trekked up to the Jackson County Courthouse Steps for their tax lien sale.  Why?  We're looking for investment properties with lots of potential return on investment.  The public notice published in the Kansas City Star consisted of 24 pages of properties for sale, all at least three years of property taxes in arrears, some as many as 10.

All bidders were supposed to have registered at least 10 days prior to the starting day and all winning bids must be paid in cash.  We were to arrive at 9AM, sale starts at 10 "on the dot".  Delinquent tax payers have until their properties actually go on the auction block to pay their past due property taxes.

You may say to yourself, hottest day of the year, surely they didn't/won't actually sell these properties "on the steps" of the courthouse.  Oh yes, they do.  This is an event folks, a serious event.  When we arrived there were at least 150 people in lawn chairs, perched on the steps or milling around, waiting for the sale to start.  Some in their Sunday best, others in their jammies.   I use the term "auction" loosely, as there is no auctioneer or auction etiquette utilized here.  I'm a farm kid, I know how an auction works, and this my friends is, well, NOT an auction.

Perched under a white tent with two co-workers, sits Carol, a very nice, extremely overwhelmed woman.
Here's the view from our vantage point in the middle, there are at least another 75-100 folks behind us.

Carol, bless her heart, goes through the list, property by property, skipping the ones that have been saved at the last minute. Here's the patience testing part.  In a very non-auctioneer style, she determines there are or are not bids, no going once, going twice blah blah blah, sold. We then wait collectively, me and my 300 new friends, as each buyer, approaches the tent, cash in hand, the office staff counts the funds (as little as $700, as much as $12,000 while we were there, WAITING), next property.  Each transaction takes approximately 10 minutes.  They break for lunch at 1PM.  At the end of the first day, they were on page 3.  Page 3 of 24, twenty four pages, did I say 24?  At the end of day two, today, they are through page 8.  At four pages per day, AND a holiday weekend, we may be through page 24 by next Tuesday.  Did I mention our properties of interest are on page 19 and 21?

I'm not judging, they're on a budget.  It's a great way to source investment properties, not an easy one. I do think there may be a better way to achieve the end result, with an improved, modernized process.

My heart goes out to the residents of Jackson county with delinquent property taxes that don't understand the process.  There were many I met that thought they were there to save their property.  I sincerely hope they were able to do so.  I'll report back on the remainder of the process, once we've made purchases.

Here's to real estate investment, a 105 degree index, and patience, LOTS of patience.  Carol, I'm praying for you girl!

Next Please...

The next property transformation is underway.  My plan is to follow this one while it's in process. Located in southern Olathe, renovations began this week.    This one has some foundation issues, so that's where we're starting.  Here are some exterior "before" pictures.

 

 

 

I sourced this property from the hudhomestore.com website, and watched it closely from the initial listing, knowing it fit our team criteria.  Here's what appealed to us about this one:  Purchase price (can you say BARGAIN), resale potential, profit margin, and location.  The cul-de-sac locations appeal to families with kids and this one has a GIANT back yard.  It has "family" written all over it.     

 

 

 

 

Feeling sorry for the foundation guys this week, hopefully they can stay dry and warm.  This is the second time we've utilized Norris Foundation Repair http://www.norrisfoundationrepair.com/ .  They are economical, have a quick turn around time and haven't tried to sell us something we don't need.  In short, we like them!  A shameless plug for great people (Dirk) doing a great job. Updates to follow as the renovation continues. 

 

 

 

Rental Scam, Seriously, I Couldn't Make This Up

HOLY COW!  Last weekend I received two phone calls regarding the property I currently have listed North of the Legends shopping area, which also happens to be the most recent flip we completed. The question was about renting the property.  My response, "not for rent, for sale, I'd be happy to show it if you're interested in taking a look."  I promptly drove to the property to ensure my sign was till in the yard, confirmed, hmmmm.  The plot thickens.

At this point I wasn't aware the property had become part of a rental scam and listed on zillow rentals. Thankfully, a very honest paralegal (thank you, Rachel), looking to rent in the area, called me on Monday morning with quite a story.  She said her first clue was the less than stellar english in the email correspondence. She never actually spoke to a person, but did leave a message at the number listed as the property contact person. Here's his number if you'd like to give him a call :)  661.424.7279.  It was listed on the website so I'm sure he won't mind.  

After emailing Zillow, I was pleasantly surprised how quickly the "rental" was removed from their site (within minutes).  I'm not sure what the process for listing properties on the rental site entails, but I'm guessing it needs to be refined.  I appreciate Rachel's help.  Next time I have an inquiry about renting instead of purchasing, I'll google the address to make sure it isn't listed for rent.  I'm thankful no poor soul paid this person an $800 deposit.  

 

The Misconception of HUD Properties

I am very thankful to have started my real estate career on one of the largest HUD teams. That experience has proven invaluable when purchasing HUD properties for my clients, the competition is fierce and I have an advantage, period.  I know the process, inside and out.

Last year, when I began working with investor clients, I quickly realized there was a huge misconception about the term "HUD".  Housing and Urban Development is the agency overseeing several federal housing agencies and their programs, one of which is the Federal Housing Administration (FHA).  The FHA insures home loans in qualified areas of the country to prevent default. In other words, it makes riskier loans a little more appealing to lenders by guaranteeing repayment.  Did that make sense?

The term "HUD property" refers to an FHA home mortgage that has been defaulted on.   

Is an FHA loan from the federal government?
Yes and no.  It's special because it's guaranteed by the federal government.  Meaning, if the loan is defaulted on, the federal government repays (guarantees) the outstanding loan amount to the lender. When the FHA repays (guarantees) the outstanding loan, the property is then owned by the federal government.

What does the federal government do with all those homes it owns?  They sell them - usually at less than market value.  hudhomestore.com is the website where all available federally owned properties are listed for sale.

Are the properties in bad shape?  Sadly, some are.  FHA loans cater to folks who may not have had an opportunity to ever buy a home, so there are many that have been neglected of regular maintenance, others have been absolutely destroyed and still others that aren't in bad shape at all.  Pictures can be very deceiving!  I recommend always checking out the properties in person.  I would love for you to always call me, however, the contact information for the listing agents on each property is listed at the hudhomestore.com website.

Insert personal "worst story ever" from working the listing side of HUD properties.  I had to put my shirt over my mouth in 100 degree heat, and make several trips in and out of a property to take pictures.  It. was. bad.  Trust me.  Fortunately, this type of situation is the exception to the rule.    

There are great deals to be had, for potential flippers/investors and for those referred to as owner/occupants (those that will live in the property for at least 365 days.  Please feel free to contact me if you have questions.  THERE ARE NO STUPID QUESTIONS!  PROMISE.

Third Time is the Charm-ing

The third time is the charm.  The processes, contractors and benchmarks have been set, and this flip went very smoothly.  Located just north of the Legends shopping area, it is currently on the market. The back story on this one, a HUD property, copper thieves broke in and stole from the property AND took the kitchen drawers to carry the copper in. 

BEFORE

AFTER

KITCHEN BEFORE

KITCHEN AFTER

BACK OF PROPERTY BEFORE

BACK OF PROPERTY AFTER

My favorite area of this home is definitely the great room, dining and kitchen.  Here's a picture of the view from the bay window in the dining room. LOVE IT!

View from Bay Window - Dining

Dining Room Before

Dining Room After

I'm loving the design part of the flips.  It feeds my creative side and for that I'm truly grateful.
This one is on the market and the next one has begun.  Located in Southern Olathe, I'll keep you posted.
  

Off to the Races

With the first flip successfully under our belts the team was ready to take on number two. I was unsure about my color choices, fixture choices and other selections. Then the feedback started coming in....the list goes on and on about my insecurities, but I KNOW I can remodel a kitchen and a bathroom that people (women) LOVE.  I am a real estate agent and so much more.  Interior and exterior designer, check.  Personal shopper, check.  Bargain shopper and chief negotiator, check.  Add landscape design and installation to the list on this one.

The Team:  

Rich & Deb - Funder of all of this FUN, financing the flipping endeavor for a profitable return on investment

Brandon - Phenomenal Contractor that makes stuff happen, reins us in when we want to move mountains and brings us back to reality - quickly

Various Contractors - HVAC, Carpet, Hardwood Refinishing, Inspectors, Cleaning Crew (personal friends)
Little Ol' Me - Realtor, interior design, shopper extraordinaire, emotional reassurance advocate, chief bs'r, did I mention domestic engineer (cleaning - because I'm OCD and picky)

I laughed and called the pre-flip bedrooms in this house, the Easter egg bedrooms, check out the gaudy before pics.

 Before

After

Bedroom 1 Before

Bedroom 1 After

Bedroom 2 Before

Bedroom 2 After

Bedroom 3 Before

Bedroom 3 After

There was soooo much potential in this house, the bedrooms had awesome built-ins and were good sized with large closets.  One of the fun things we do on the walk thrus is to try and imagine what the hell people were thinking when they did "THAT"!?  The post flip colors are chosen to be fairly vanilla so they appeal to a wider market of buyers.  I try to keep my selections as simple and clean as possible.  It has to "feel" good or it won't sell, and it's working!

3 bedroom, 2 bath purchased for $100,000.  Approximately $25,000 in renovations, flip complete from start to finish in 60 days.  Sold in the first 30 days it was listed for $156,000.  Buyer was an investor that is going to rent the property for $1500 per month.  Not too shabby!

Dining Room After

Dining Room Before

Kitchen Before

Kitchen After