The last time we spoke about our experiences, we stopped at a house that we purchased in 2002. We still have that home and rent it for a couple hundred dollars cash flow per month.
We then decided to purchase another house with the same partner in the same city. A couple months went by, and we found a VA foreclosure with 5 bedrooms, bath and a half, off street parking, and in a great area for only $36K. Again, we put too much money into the home (we sent the same investor out again to repair the house(!?!), and rented the house out. We spent huge amounts of money finishing the hardwood floors in the living room, installing carpet in the bedrooms and the hallway, laying linoleum in the dining room and installing laminate in the kitchen. The whole house needed spackle and paint (there was paneling on all of the walls downstairs), all new lights and ceiling fans, remodeled kitchen and bathrooms, and then the outside needed work as well.
Would we do that again? No way! As in any endeavor that we as humans take on, we make mistakes. The key is: not to make the same mistakes twice! We made many mistakes on this particular home. First and foremost, is the partnership situation. Whenever you decide to run a business of any sort, you need to make certain that if you are going to have a partner, then both you and the partner needs to be compatible. You need to have the same goals, principles, and techniques. It is every investors' goal to make money on their investment. It is their method of achieving this goal sometimes that can be the deterrent for initiating a partnership with them . This was our situation. We, my husband and I, were very different from our partner. His ideas and experiences, we did not share. It is also very important to map out your expectations of one another from the very beginning. We did not do that.
Another mistake that we made, is buying a huge house that needed lots of work. Granted, most of it was cosmetic, but it was still lots of time and money. Some of the repairs were mechanical, and they had to come out of our pocket. Also, large houses have more liabilities from many view points. First and foremost, the larger it is, the more money that you spend. Secondly, if you rent out the house, it will be to large families. That means more wear and tear on your walls and flooring. Thirdly, if you sell the house, most people are looking for a three to four bedroom home, not a five or more bedroom. Because of the size and amenities, you will be listing the home for more money. This will throw those people who are looking for lesser payments, out of your market.
Speaking of repairs, this would be a third mistake. Always interview many contractors, get estimates, and do not hire them by the hour, unless they are trustworthy, and you have known them for a long period of time. Try to visit the project frequently, and keep them on track. Keep in mind that time is money! The more time they put into the project, the more money that you spend. That was the gist of our third mistake. The contractor who worked on that project, was constantly shopping at the big box stores (for the house), constantly taking breaks, smoking cigarettes, and finding someone to talk to.
We have built new criteria for houses that we look at in the future, based on the mistakes that we have learned from in the past. We now have a crew of contractors that we feel comfortable with, and we buy the materials needed for the house, not the contractor. We now buy houses by ourselves, without a partner. That is not to say that we would not have a partner, if the right situation arose. The numbers have to work for these houses before we buy them, and we never buy row homes.
Let's talk more about this again. See you later.
We then decided to purchase another house with the same partner in the same city. A couple months went by, and we found a VA foreclosure with 5 bedrooms, bath and a half, off street parking, and in a great area for only $36K. Again, we put too much money into the home (we sent the same investor out again to repair the house(!?!), and rented the house out. We spent huge amounts of money finishing the hardwood floors in the living room, installing carpet in the bedrooms and the hallway, laying linoleum in the dining room and installing laminate in the kitchen. The whole house needed spackle and paint (there was paneling on all of the walls downstairs), all new lights and ceiling fans, remodeled kitchen and bathrooms, and then the outside needed work as well.
Would we do that again? No way! As in any endeavor that we as humans take on, we make mistakes. The key is: not to make the same mistakes twice! We made many mistakes on this particular home. First and foremost, is the partnership situation. Whenever you decide to run a business of any sort, you need to make certain that if you are going to have a partner, then both you and the partner needs to be compatible. You need to have the same goals, principles, and techniques. It is every investors' goal to make money on their investment. It is their method of achieving this goal sometimes that can be the deterrent for initiating a partnership with them . This was our situation. We, my husband and I, were very different from our partner. His ideas and experiences, we did not share. It is also very important to map out your expectations of one another from the very beginning. We did not do that.
Another mistake that we made, is buying a huge house that needed lots of work. Granted, most of it was cosmetic, but it was still lots of time and money. Some of the repairs were mechanical, and they had to come out of our pocket. Also, large houses have more liabilities from many view points. First and foremost, the larger it is, the more money that you spend. Secondly, if you rent out the house, it will be to large families. That means more wear and tear on your walls and flooring. Thirdly, if you sell the house, most people are looking for a three to four bedroom home, not a five or more bedroom. Because of the size and amenities, you will be listing the home for more money. This will throw those people who are looking for lesser payments, out of your market.
Speaking of repairs, this would be a third mistake. Always interview many contractors, get estimates, and do not hire them by the hour, unless they are trustworthy, and you have known them for a long period of time. Try to visit the project frequently, and keep them on track. Keep in mind that time is money! The more time they put into the project, the more money that you spend. That was the gist of our third mistake. The contractor who worked on that project, was constantly shopping at the big box stores (for the house), constantly taking breaks, smoking cigarettes, and finding someone to talk to.
We have built new criteria for houses that we look at in the future, based on the mistakes that we have learned from in the past. We now have a crew of contractors that we feel comfortable with, and we buy the materials needed for the house, not the contractor. We now buy houses by ourselves, without a partner. That is not to say that we would not have a partner, if the right situation arose. The numbers have to work for these houses before we buy them, and we never buy row homes.
Let's talk more about this again. See you later.
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