fliprent

It’s been a while since my last post but I promise I won’t be long winded this time.  I’ve decided that I’m going to sell Old E Baltimore project.  The work has been done for over a month but with a few loose ends to tie up.  The house has a new furnace, hot water heater, toilets, tub, tile, refrigerator, oven, cabinets, carpet, deck, fencing, flooring, carpet, rails, and the list goes on.  It’s a great opportunity for an investor looking to get a rehabbed house with 4 bedrooms in the city.  Currently through section 8, the new owner could be looking at over 1100 dollars per month and a mortgage payment of less than $550.  My next post on this property will include pictures but if anyone is interested in seeing the house, feel free to click on the About Fliprent link at the top and click the Contact Me link to send me an email.  You can also leave a comment on this article if you choose to.

Ideas, Ideas.  I’ve decided to go forward with a business idea that I’ve had for a while.  I’m going to need to put some cash into it considering how difficult it is to get a business loan in the current economy.  Liquidity is a beautiful thing when you need access to quick capital.  There was a time, just a few years ago when a residential real estate investment was considered relatively liquid.  Today is another story. 

President Obama and Congress are finalizing an economic recovery bill that could be signed into law by next month. The bill has important implications for the Low-Income Housing Tax Credit (LIHTC).

The LIHTC is the nation’s largest, most successful affordable rental housing production program. But it has been hit hard by the financial crisis. Investment in the LIHTC fell from about $9 billion in 2007 to about $4-5 billion in 2008. It could drop even further in 2009.

Bringing the LIHTC program back to its full potential is one of the fastest ways to provide an economic stimulus while also assisting low-income working families, including victims of the foreclosure crisis.

BACKGROUND

The Low-Income Housing Tax Credit (LIHTC) is the nation’s largest and most successful affordable rental housing production program to date, financing more than two million homes since 1987 and about 120,000 annually in recent years. According to the National Council of State Housing Agencies, approximately 90 percent of all affordable rental housing is financed through the LIHTC. According to the National Association of Homebuilders, building 120,000 homes annually through the LIHTC supports 180,000 jobs annually. 

Source: Enterprise Community Partners

The never ending battle between contractor and real estate investor continues.  No matter how many times you seem to use a contractor there will almost always be a time when the contractor wants to be paid and the investor is not satisfied.  Well..that’s the nice way of putting it.  More than likely, it’s that the contractor wants money before he/she finishes the job. 

I will never understand why it’s so hard to find a tradesman that just wants to do the job the way it was agreed upon and THEN ask for the check. 

Yes, Yes I know… there are those investors that don’t pay on time (if ever), and the contractor has to look out for himself… Really?  So asking for money early somehow protects him against being ripped off?  I’m guessing asking to be paid prior to finishing, won’t help very much.  What are we to think is the real reason they want to be paid early?   Here is a “short” list of reasons:

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Unfortunately I have not been able to post in a while due to health issues.  I’m still not exactly sure what is going on.  I have been through many tests, to no avail but I’m still here… there’s a plus. 

Quite a bit has occurred since I last posted concerning the Hopkins Project and also the E. Baltimore project so hopefully sometime soon I can update you all on the full details.   While I have a few seconds before my head gets too crazy I’ll give you some updates. 

 The Hopkins Area Project

The city has made me a ridiculously low offer for the house…as if you expected better.  Obviously my attorney is now involved and it’s going to end up in court I assume.  The offer is less than what I paid to for the house in the beginning believe it or not.  Not to mention all the money I’ve poured into this house.  If you are new here and you want to read more about how the city can try and take your property and not even pay you  fair market value, follow the link.  Throw in the fact the this house is being rehabbed but they are trying to use a codemnation loophole.  Talk about abuse of power and stepping on the little people.

Old East Baltimore Project 

Since my health issues started around the same day I closed, I have not been able to do much on this one.  However, recently I have started working here.  The plumber is roughing in new gas lines and fixing minor plumbing issues left from the previous contractor.  The electrician is working on a new service. Permits are pulled and things are going somewhat smoothly.  Believe it or not the city is gotten themselves involved with this one as well.  Coincidence?  I think not.  This one is not even in a redevelopment zone that the city nor Hopkins have any documented interest in.   The drama continues.  I’m wondering if this whole real estate business is even worth it, at least not in Baltimore anyway.

I still believe that this is the best time to get into the real estate investing business.  However, the strategy used in this market may be the key to your success.  I’m not so sure that all of the creative strategies taught buy the self proclaimed gurus will work in this current market.  The differences in the strategies can make or break you as an investor.  For example, if you are looking for short term investments in which you control or own the property for less than 4 months, i.e. house flipping, this market should scare you some.  No one knows where the bottom is, including the gurus and even at a 20 percent discount (in today’s market) you could still be over priced in three months.  Wholesaling (house flipping on speed) may be a safer route to take since in most cases, you only control the property for a very short time frame.  The down side is you run the risk of not finding a buyer and potentially loosing deposits or down payments.  Don’t get me wrong I am still a proponent of house flipping, however only as one car in your freight train to wealth.

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I’m a firm believer in not placing all my eggs in one basket.  Diversification is not just another buzz word to me.  Investing in real estate has the added benefit of flexibility.  Buy and hold investors tend to have more freedom and for many, it’s really a side business.  House flipping can be a full time job itself, especially if you manage the projects or do the work yourself.   I believe that a strategy that involves both renting and flipping offer the fastest and most secure road to wealth for full time investors. 

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As a house flipper, you should be constantly looking for ways to raise money.  Friends, family and associates can be a great avenue to get started.  However, you will want to be careful on the amount and the terms used for the money you receive.  Lets say your grandfather wants to help you get started in your house flipping business.  He offers to give you money for this duplex that you just got under contract.  This doesn’t mean that he can just write you a check for any amount and of you go.  Uncle Sam may want his cut. 

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The Housing Choice Voucher Program (once called section eight) was put in place by HUD for low income families to rent property.  Many landlords choose this program for one reason…guaranteed rent every month on time.  Unfortunately, it’s not always that simple.  In some areas the tenant uses 30 percent of their income towards housing when enrolled in the program.  For example, if the tenant makes $25,000 per year they are required to pay $625 of the monthly rent.  If your rent is $900/month then the program only subsidizes $225/month.  The $225 is the only portion that is guaranteed by the government.   The rest must be collected from the tenant and there are no guarantees.   This is a common misconception of the section 8 program.  However, there are no guarantees at all when renting to anyone else.   If you have been a landlord for a while, you have experienced this first hand.

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As we all should know by now real estate is local.  Even in the midst of this bubble/crash or whatever they are calling it these days, there are still hot markets around the country.   Thanks to the military, some area markets are drawing tens of thousands of new residents and in turn real estate investments.  Why thanks the military you ask?  Well if you haven’t heard about the defense base realignments and BRAC, I suggest that you look it up.

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Real estate tax sales are another avenue to acquire investment property.  They can require some research and comfort with having your hard earned dollars unavailable to you for a period of up to two years in some cases.  The good news is that the rules usually require the original owner to pay the lien holder interest if they are able to redeem the property.  In some areas the interest can be up to 24%!!  That’s what I call a great savings account.  In fact many investors use them for just that. 

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