Partial Rent Received

I spoke with my PM today and she tells me that on Monday, my tenant paid $550 of the $750 rent due and he promises to pay the remainder by the end of the week. She told him he better or she will be at the courthouse on Monday starting eviction procedures. I agreed that I want him evicted if he hasn't paid by then. From everything I've heard, it's bad practice to accept a partial rent payment and, if it were me, I wouldn't have accepted it. However, I am going to defer to her judgment, since she does this for a living and I don't.

I also found out the repairs the tenant asked for are relatively minor: caulking around a sink, once of the electric stove burners doesn't work, etc. Nothing too major.

Rental #1 Apraises Lower Than Expected

My mortgage broker got the appraisal back today and it was lower than expected. I think the original appraisal I got when I bought the place was for $90,000. This one came back at $81,000. I guess that explains why the original appraiser was not willing to re-certify his previous appraisal. What this means to me is my refi loan cannot be as much as I wanted. (Well, if I wanted to exceed the 80% LTV ratio and pay PMI, I could still get my original amount, but I don't want to do that.) So I need to come up with an extra $2,000 at closing. Not a big deal, but not something I'm too happy about. I've re-run the numbers based on this new data and this is what I come up with now:

Purchase price: $77,250.00

Taxes: $82.42 ($989 a year)
Prop. Mgt: $75.00
Insurance: $34.92 ($419 a year)
Maintenance: $0 ($250 first year, pre-paid)
Mortgage: $403.75 (30 year, 6.75%)

Rent: $750.00
Monthly profit: $153.91
ROI: 12.31%

Let me explain the maintenance figure a bit. When I signed up with the property management company, I had to establish a maintenance deposit of $250 with them. Any repairs will be taken out of that amount. Since I had budgeted $20 a month for maintenance, this is pretty much the amount for one year I planned on, but since I had to pay it in advance, I'd added that $250 in to the purchase price for the calculations. I believe this more accurately reflects the situation.

The ROI figure is based on a $15,000 down payment, which includes all the closing costs. The interest rate has already been locked in, so I know that's a valid number.

Also, while pulling some past numbers for this analysis, I went and applied labels to some of my old blog posts that didn't have them. For some reason, this caused those posts to show up again at the top of my RSS feed. Sorry about that, but I don't think there is a way around that with Blogger..

Appraisal Done, Rent Late

I got an email from my property manager this weekend saying the tenant in Rental #1 had not yet paid his rent. She sent him a letter and also spoke with him and he claimed he would drop the rent off in the PM company's night drop over the weekend. No word yet on if he did or not. I asked if the PM told him he'd also have to include the late fees in his payment and haven't gotten a response to that email. I checked the lease and the late fees are $35 if not paid by the 5th of the month and $3 a day after that, so I figure he owes about $56 in late fees so far.

Those are pretty weak fees, if you ask me. Three dollars a day is not a deterrent at all. Unless there is some Oklahoma law I don't know about, I'll be increasing those fees when this lease is up in November.

I did get confirmation that the appraiser was able to get in and appraise the property, so the refi should be moving forward again. The PM also told me the tenant had some maintenance requests. I feel no obligation to do them until he's current on the rent, but there is probably some law about that.. Anyway, the PM felt they seemed like valid requests that an owner should be responsible for and not the tenant. She's getting quotes for repairs and will get back to me when she has them. I don't even know what the requests are yet...

Stop The Insanity!

After I tagged him yesterday, Kenric tagged me back. Bastard :-)

Five Reasons I Blog

1. Motivation. Back when I started blogging in July, 2004, I viewed the blog as motivation for me to follow through on my plans. I had a habit of starting things and not finishing them or only doing something once. I had just sold my first investment property and wanted something to drive me to keep up investing in real estate. The need for more blog fodder proved to be a good incentive for keeping me moving forward. I'd like to think I don't need that incentive anymore...
   
2. Education. Really, REI isn't that hard. The biggest hurdle I had to get over was taking that first step of buying a property - I was intimidated by the thought of being responsible for another mortgage. I want to show others that finding and buying investment property is not that hard, not scary, and provides great wealth potential. All you need to do is conquer your fears. Many of the books I read were great on motivational-type messages, but there was nothing that gave step-by-step instructions or details on the process of buying, renting, and selling properties. (And since every real estate deal is different, there really can't be a book that does this.) Being analytical by nature, I craved these details when I was starting out. My thought was, by blogging about every minute detail of my experiences, I might be able to help those like me who were motivated but still a bit scared. As I said, every deal is different (not to mention, each state has different laws), but there are similarities and hopefully my experiences can help others.
   
3. Networking. By nature, I'm a shy person. It's difficult for me to go out and meet others in a social setting. Since networking is an important part of real estate investing, the blog helps me find other investors in a way that is more comfortable to me.
4. Money. I don't make lots of money from this blog (on a good month, I'll get close to $50 from the Google ads), but it's extra money for me and I budget it towards things I would never spend my W2 income on - like my ludicrously expensive ice cream maker and my next frivolous purchase - a MAME cabinet. Truthfully though, I do make some good money indirectly from here - it's through this blog that I got some properties in Oklahoma.
   
5. Fun / To Kill Time. When I started the blog, I was working at a day job that wasn't very challenging. I had about 6 hours of free time a day. I needed something to fill up that time and I filled it by reading the message forums at richdad.com. From there, I started reading other blogs and decided to start one of my own, writing entries during the free time I had at work. Now, I have much less free time, but I still blog because I enjoy it.

The other meme I was tagged for was five things I obsess about. This is really tough for me because I don't think I obsess about anything. In fact, I've often felt I am not even totally committed to the hobbies I enjoy and if I was forced to give them up, I wouldn't lose any sleep over it. I'm a stereotypical Southern California native - laid-back about pretty much everything. I guess if I had to say I obsess about anything, it's cashflow. I want positive, passive cashflow every month and I look for investments that will provide that. Other than that, I sort of coast through life, enjoying a little of this and a little of that, finding joy in whatever comes my way.

Now that I think about it, I should ask my wife what I obsess about. I'm sure she could come up with a list!

And now, I will take it upon myself to stop the insanity and I will not tag any others for this meme :-)