A day in the life of The Biker Who Buys Houses

Folks,
I was going over my files here, figuring we’d take some older articles and journal entries, and post them here, since they hold some value.
The spacing/formatting stinks, but the content is here. Take a look, this was from nearly 7 years ago…enjoy, things haven’t changed all that much, aside from having some systems in place that now do things for me, instead of me doing them.
With age, we should all strive to work smarter, not harder……..something I try to live by.
Without further adue, here’s the old journal entry, no laughing……..

Journal Entry from May 27th, 2002.
Hello all, I had a seller meeting today. I woke up a little late, as usual. One of these nights I’ll get to bed before 4:00 a.m., maybe. Anyway, after getting up and ready, I checked messages on the phone. There were only two, from other investors just wanting to talk. Checked e-mail, there were a few, and two seller submissions from my website. Neither one is even close to me. One is in Nevada, and is a OLD MH, no thanks. The other is upper New York state, and the sellers main concern according to the form, is “Cash for my equity”. Not something I’ll even pass on to another investor. It is now about 1:30 p.m. and I am pulling a mapquest direction sheet to the house we are going to see. I’m still a little shaky at times with my driving directions in this new town. We arrive at the house right at our appointed time, 2:00 p.m. The seller is not there, so we get out to walk around the structure and observe the neighborhood. It is a lower income black neighborhood, with the houses split 60/40, well kept versus total wrecks. The usual for this area. The house we are looking at is certainly not pretty. It is a wood frame house, but built up on a block foundation. It needs paint from the outside, as well as a couple of broken window panes replaced. Several of the storm windows are held on by twisted wire, they will need screws. There is not central air, or heat. Really not something I’m thrilled about at all. I prefer nicer houses in nicer areas. We look thru the windows, and notice the inside does not look that bad. Dirty, and in need of carpet, and paint, but surely fixable. There is also no grass in the front yard, it is all dirt. Nothing some grass seed and water will not fix. The seller arrives just after 2:15 p.m., and we greet him with a handshake and brief hello’s. He takes us over to the front door, and pulls a pair of plyers from his pocket, while laughing and saying, “this is the key”. He opens the screen door, with the shoestring attached as a handle, and proceeds to unbend a nail that is thru a hasp on the main front door. This looks like one of those heavy duty hasps that HUD uses when they get a foreclosure house secured. Something to make note of…..be SURE to check title thoroughly. He finally gets the nail unbent and we go inside. As we enter the house, we can immediately see into the kitchen and living room area. The place smells stale. The hard wood floors look salvageable, until we notice a section on the far side of the room has been replaced with plywood. No big deal, carpet will cover this, the floor is solid. Paint is needed, as well as an exterminator. There are dead roaches all over the house. The seller claims to have just had the house treated a few weeks ago, and explains this is why there are dead roaches all over. I’ll still add exterminator costs to my offer formula. I notice the broken windows again, nothing too bad, and cheap to fix. But, the kitchen has several missing cabinet doors, and the cabinets are painted LIME GREEN! The kitchen also needs flooring, and probably a faucet, after the sink is blasted clean. No refrigerator, and the stove looks like it needs replacing……fine, I have a new one here now in my garage. A freebie a seller gave Matt and I some months ago whe she bought her new construction home with a brand new stove. She wanted the old one in the old house, and gave us the other to replace it. Of course our T/B’ers had their own stove, so I kept it. Looks like I can now use it for something. It is till wrapped in plastic. The heat on the place is a gas heater in the main part of the house, the seller claims this is only one year old and works fine. It looks clean, but you never know, we’ll have it checked before use. No A/C, so we’d need to either add central, or get a couple of window units. Probably will go with some cheap window units. I know someone who fixes used ones, and can get me two for about $150 total that will cool the whole house just fine. Another expense with this house to consider. The bathroom is trashed. It needs new flooring and fixtures. Almost a total remodeling of the bath is in order. Again, something I can do, but would not be thrilled doing. I just really do not like physical work, unless it is working on my HAWG, or…..well, I’ll get another one soon enough. You can take the bikers HAWG away, but you cannot keep him from getting another. (I’ll shop online a bit tonight for those…man I miss my scoooter.) Anyway…… After looking around the house, we then came back to the living room. I wanted to get outside, the smell was not getting any better, but it was raining. This turned out to be good, because we got to see that at least the roof does not leak. It appears to be in good shape. I verified what the seller told me about the financing. I’m glad that I did, I either misheard him on the phone, or he said it wrong, but the monthly payments on this house are only $285. I thought he had said $385……only a hundred dollar difference, but in the right direction. I know I can clean this house up nice for under $2k, and it will rent for at least $450-$500/month. So, it will cashflow. The note balance is not the best. He owes about $30k. I’d much rather buy this thing for about $12k, but with the financing in place, it might just work out, we shall see. I need to run some better comps for this area. I already have houses here from $35k-$70k, so I need to narrow them down, now that I’ve seen the house. Should I be able to get comps to indicate this is worth $50k or more, then we probably will take it sub2. The seller has stated that he will do what ever it takes to be done with this house. I’ll do my best to try and get him to make a few more payments, like 3-5 of them. Settle at 3 as my minimum. It is vacant, so we will spend a week or two trying to sell it “as is” “rent to own, handyman special”. If that does not work, we will talk to other investors in the area about taking it. There are a few that pay higher prices, if the financing is good, and they just fix them, hold them, and rent them out. Here, they could just give me a few bucks, spend a few fixing it, and immediately rent it out for postive cashflow. I’m a nice guy, I’ll sell it to them for $40k, and carry the paper on a wrap around agreement for deed type of situation. This would be ideal for that. And the last possible exit strategy I have in mind now, is to simply fix it up myself, and hold it as a rental, or L/O it out. Either way, as long as the seller signs what I have in mind, it is a workable deal. Certainly not my typical “pretty house” deal, but a deal that will make money. We leave the seller meeting telling the seller that we need to run some numbers on the house, and check with contractors about the work needed. We will get back to him in two days tops. I ask him before leaving, “if all the numbers check out, and we are able to just take over your payments in a few months, while we work on the house now and try to get is sold, does this work for you?” The seller said, “yes, call me, I’m ready to be done with this house.” The seller seems very open to whatever I propose. He just does not want to ever have to step foot near the house again, or make payments for years to come. He claims to be able to handle the payments, but cannot make them and fix the place up. And in steps Jim with his plan of action that fits perfectly for this…..if all the numbers verify out. So, the deal is mine for the taking if I want it. Due diligence will now be done for the next two days on this house. We leave the seller meeting now, and head over the the store to grab some food. As we are on our way home, the business line which we had forwarded to the car phone rings. Just another tire kicker. About all I expect on a Memorial Day holiday like this. One where we did not have our signs to place out. I expected to have them, but they did not arrive in time, and will not be hear until at least tomorrow, perhaps later in the week. Surely having signs out over this holiday weekend would have brought some calls in. But, I’m patient, I can wait for the signs, because they are not only paid for already, but I know the results we will get when they go out. We plan on placing at least 100 out right as they arrive, and to get no less than 4 or 5 deals from them ASAP. So, back to my day…… I’m now back at the home/office, and will grab a quick bite to eat. When done, I’ll head into the office for some research and paperwork. I will begin with of course checking e-mail. It is now about 6:30 p.m. and I’m in the office. I’m procrastinating a bit here. I decided to write some e-mails and respond to some posts before doing any actual work. A few student inquiries, but nothing earth shattering. A local investor has sent me a list of the club meeting dates and speakers for June, asking why I never attend the club meetings. Since he goes, and does not seem to mind them, explaining why I do not attend to him would be a waste of time. Our club is small, very small, and lacks organization. I just do not have time to attend weekly REIA club meetings, especially when to be frank, I gain nothing from going. Before getting completely into my work, the phone rings. It is one of my other partners Art. He works part time on the business, and contributes quite a lot. Frankly, he may be reading this, so hopefully this won’t upset him,……. me saying the following……..But, Art is a GREAT negotiator. He just does not know it. There are times he and I have met sellers, and I thought there was no deal to be had. Art has a way of being the kind of guy everyone likes. This has helped on more than one deal. He is also completely dedicated to working to build our enterprise. Plus the extra added bonus that he has lived here for years, and knows the area VERY well. He helps prevent me from being too lost in my somewhat new enviroment. Once in a while he even has a good creative idea for us…just kidding, I’m sure he will read this. Anyway, on to get some more comps for this house we looked at today. I noted some addresses of houses like this one while out there, so I have reference to look up. I’ll be logging on to our local county records website and check sale prices there. They are not always accurate, but we can get as good feel for the area with this. After this, I check on some comp websites I use that cover my local area. Basically MLS portals with limited info, but all I need are sales prices. So far, the house after repairs, in good shape, with no A/C looks to be worth about $55k, tops. A conservative estimate would place it at $50k-$53k, just to be safe. We very well may be able to make this one work. I need to re-verify market rents for this area first. I’m now headed over to the other county records website to see what the chain of title on this house looks like. Sure enough, the county shows only the seller on title. A good thing. I also am not able to find his name indexed, or this address indexed anywhere but with the deed from when he bought this house, and the two times he financed it, once to buy, and the latest, a few yr old refi apparently. He should be in this thing for the $30k balance he talked about according to what I see. Tomorrow I’ll call the lender to verify that info. The taxes are current as well. One thing in my notes here that I just remembered, this house is not insured at the moment, so we’d have to get that right away as well. Another expense to add into the formula. The elctrical system is fine, plumbing seems to work, except with the broken bath fixtures. So, this deal will sit until tomorrow when I gather more info on it. I’ll also order a title search, after I call the seller and set an appointment to sign the house up. No point paying for title til the seller has signed, and we are in total control. I’m now basically done for the day with business. I will of course do some reading online, and some books I have here now. My partner has a nice libary as do I, so there is never a shortage of things to read related to our business. I will be setting up a print job later for some flyers. We have several people this coming week who will be passing out flyers for us, so I want to have them ready. We are also eagerly awaiting the arrival of our signs so we can crank up the marketing again. We have a full page insert in the local FSBO mag now as well, thanks to one of the people working for us. Completely on their own they went out to all the machines in the area the day they were stocked with new issues, and placed one of our flyers into each one, for about half the stack. While this may seem somewhat shady, I could not really ask them to go remove them all. So, we will take any calls we get from those, and if the publisher calls, we’ll apologize and explain it was just an overzealous employee who did this. We will also tell the publisher if they call that the person who did this has been rebuked. Sort of…..if it brings in leads, I’m not totally against it, I guess. I also heard from a friend on the phone today that one of the larger investors in the area has flooded the local shopping district with bandit signs. Since we are currently not placing these out, I’d imagine the few calls we would have gotten today are ringing in their office. I’m not worried, they are not really our competition. I do admit that I watch other local investors activities from time to time. It helps me see my market from several different angles. There are a ton of investors here in this area, and surrounding. Florida is the land for them I guess. There are no less than 10-15 ads in the paper daily, and several more than that on weekends. I’m not one of them at the moment. The newspaper ad ran out, and I canceled it because it was not pulling for the last 4 months or so. There are about three investors in this area that seem to dominate. One of them is of course, Homevestors, with their dozens of “We Buy Ugly Houses” billboards in the area. But, after having met the owner, I know that they are only buying junkers for rehab, all cash, and passing on many other potential deals according to him. One of my newbies that works here for me knows the owner over at Homevestors and has indicated to me that they often over talk their activities. The newbie claims that this large high dollar overhead franchise investor only buys about one house every 3 months, if that, and is struggling. The other investor who appears to have a lot more traffic than the other little ones in the area, is an operation somewhat like mine. I’ve had dealing with them, and honestly, do not feel they are competition. While they have worked this area for a few years, after I arrived, I saw their business decline quite a bit. After meeting with SEVERAL sellers who had called them first, I knew why. These guys were shady, and not very good with people skills. One of my sellers that I signed was all ready to sign the same type of deal with the other investor a few months ago. While the other investor was their, he kept getting lost in his presentation, and gauking at the sellers wife’s posterior. He was so blatant, the seller threw him out of the house. We signed the house up sub2, and I never once looked at the guys wife’s rear end. I was too busy looking at the house and listening to the seller. I have to admit, I was having a hard time not laughing as the seller told me about this other investor. This was just one of the stories I’ve been told about these other investors. I do once in a while check to see if they’ve bought anything lately, especially with the last month or two being a little slow for me. Heck, if someone else is out there signing deals, then I’m doing something wrong. I still may be, but the good news is that my volume of deals, while not where I want it lately, is still greater than all the other investors in my area. Why? I chaulk it up to three things: 1. Marketing, I do a lot, even without the signs, there are at least 500-1000 flyers weekly, business cards, and 4 vehicles with signs on them driving around. Plus of course our billboards. We still have 5 out there, until the sign company sells them to someone else or takes them down. The city and the billboard company just settled a 7 yr lawsuit which means most of the billboards within city limits will be gone within the next 90 days, and these were the ones I was using. I really don’t feel a billboard along the interstate will help me all that much. Unless I want to begin buying far away properties. No thanks. Anyway, my partner here just informed me that he grilled dinner for my family, and it is time to go eat some burgers and things. After that, I’ll do more of my little “to do” list of busy work, read a bit, perhaps work on the new sub2 course writing a few more pages. And of course, prepare for tomorrow, verifying all appointments in my book and gather what ever I need for them. My partner, wife and I will also probably sit down and go over what we have planned for the week, as well as a brain storming session. We do those all the time on the spur of the moment. Some of our best ideas come out this way. So, that is my day so far, in a nut shell. Not very exciting, but such is life. See ya tomorrow, Jim May 27th, 2002 @ 7:45 p.m.
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Hope you enjoyed it,
Jim
The Biker Who Buys Houses