Steve and Veronica's Journal

Steve and Veronica’s Real Estate Journal. I have said in the past, I did not want to post anything on a deal, until the deal closed. I felt that it is not a deal until it is closed. I see so many other DG Family members writing about offers they make trying to get a deal done and I realized that is part of the deal so I should write about our real estate experiences good and bad. I have a lot to say to catch up here with this first post.

We started with real estate back in 1985 my soon to be Father-in-law told me if I wanted to marry his daughter I had to buy a home for her to live in. To save money to buy this house, we built a room in my Father in-law’s garage for me to sleep in. For 6 months, I worked two jobs to save the down payment money. At this time, I did not earn enough money to go with a VA loan and we had to use a FHA loan with my in-laws co-signing. In Jan. of 1986 I bought my first house for 80k at 10.5% interest. Our payment was $850.00 a month.

I had to rent bedrooms out to friends to help pay the mortgage. Then in August of 86 we got married and Veronica moved in. With my wife working and me working two jobs, we still did not make enough money to pay the mortgage without renting to roommates. After a year of living with roommates, we decided to move back to Veronica’s Mom and Dad’s home and rent our house out to one family.

The last day of 1989 we were blessed with a little girl. I was from the Midwest and my wife and I thought it would be better to raise our daughter in Indiana where my family lived at the time. Veronica’s Dad told us he would give us 40k to buy us out of our home after one of his other homes sold. So off to Indiana we went. It took a while for my in-laws home to sell to give us the 40k and we were down to having no money, no job, and bill collectors calling. Veronica went back to California with our daughter to work and help get the house sold. I said I would not move back to California and I could make this work out here. One of my brothers in Northern Indiana said he could get me a job up there in Elkhart. Finely in December of 1990 our home sold Veronica came back to Indiana with our daughter and the money. We were able to get ourselves out of debt.

We moved to Elkhart Indiana and I started working at an aerosol packaging plant as a maintenance mechanic making good money. In 1993 we bought our first no money down home using a VA loan and seller paying all closing cost. It was a great place to raise our daughter but Veronica was getting tired of what she called "12 years of long winters." She wanted to move back to California. We left Indiana in 2002 with 60k from the sale of our home.

In 2002 the prices of homes in California were going through the roof. We bought a 255K home with no money down, again using a VA loan and seller paying all closing. The week after we closed on this house Veronica and I got laid off from our jobs, we worked at the same place. Veronica was able to get a job right away but it was harder to find a job that paid me what I was making as a maintenance mechanic. We still had money in the bank from the sale of our house in Indiana so we knew we would be okay for a month or so. I have worked for over 20 years without taking any unemployment benefits. So I took the school benefits and put myself through a 23 week Sheriff’s Academy. After I completed the Academy I worked as security at a mall until I was hired on at a Sheriff’s department. During this time houses in California were going up in value like crazy about 10k or more each month.

We moved to Northern California and sold our house in 2004 for 410k that was a 155k profit. We paid 17k in commissions to the real estate agent. We still had over 100k in bank. We bought a house in Northern California with 20% down for 385k. Due to not being on the job for 2 years I could not use the VA loan.
In 2005 the area we lived in was hard on Veronica’s allergies and we knew that if we were going to sell it would have to be very quickly because we knew that the housing bubble was about to burst. We sold that house for 399k. We moved closer to Veronica’s work and into a better high school district for our daughter. Again, we felt that the housing bubble was about to burst so we rented a home for the next three years. The house we rented was close to the high school which was convenient.

In 2006 we started watching Dean’s programs on TV and Veronica read Rich Dad Poor Dad. Veronica told me we needed to start buying homes and renting them out. By 2007 we had been to a 3 day class by Rich Dad but we did not want to pay the 24k-40k they wanted for their advanced training classes.
Veronica knew my Mom and Dad had never owned their own home and were great renters. Homes in the Vermillion County area of Illinois were not affected by the housing market like California was. We bought a house to rent to my Mom and Dad and in 2007 you could buy a house with no money down using a 80/20 loan. 80% on the first mortgage and 20% on the 2nd. We wanted my Mom and Dad to have a nice house to live in that they could feel that it was their own. My Dad takes better care of rentals houses than most homeowners.

In 2008 I bought the book Be A Real Estate Millionaire by Dean Graziosi. We paid $ 495.00 for a 3 day class by Rich Dad. Dean’s book cost $24.95 at the bookstore and had better information on real estate investing than the 3 day class we paid $495.00 for.
In the spring of 2008 our daughter graduated from high school and we felt it was time to buy a primary home for us again. Using Dean’s techniques we bought an REO home that previously sold for 655k we got it for 365k no money down with the seller paying 4% toward all closing cost and enough money left over to buy down the loan. The home was built in 2003 so it was only 5 years old plus it was a 4060 sq ft. We did not need a 4000 sq ft home but all the other homes in the area were smaller needed more work and were priced higher. This house was vacant for a year. The fence in the back yard was down from a windstorm and the neighbor's big dog had left big messes all over the back yard. So we told our realtor to request additonal money form the seller for for repairs. The REO bank said they would give us 1k for repairs in addition to having the fence repaired before closing. All the things Dean says to ask for on a deal the bank was saying yes to. We walked out of closing with so much money we had to have the seller put ther rest of the funds into an escrow account. I guess the seller cannot directly give money to the buyer at closing. However, we did get a check for over 1k at closing and the remainder was placed in an impound account wich was applied to insurance and taxes. Thanks Dean.

In August of 2009 we joined the Success Academy. The On Demand classes are great and the Coaching staff is terrific. We were on fire to get our real estate business going so now we opened a LLC and started making offers. We started with a duplex in the small town of Covington IN...FSBO. I have a sister that lives in that town and she looked at the property for us. The owner did not want to do seller financing so we talked to a small town bank about a loan. The bank said they would consider making a loan to us and needed a purchase agreement. The sellers were asking 38k for the duplex. We sent the sellers a purchase agreement that we printed from this DG site. We gave the seller 5 days to respond. The 5 days went by and we had not heard back from the seller. I called the seller and was only able to leave a message. Since there was no response to our voice mail my wife and I decided to move on to other deals. The seller called us back about ten days later saying she wanted a different contract. I had to tell her we have moved on from this deal. So we did not get that house. It was a duplex, one bed one bath each which had rental income of $550.00 a month together. After the mortgage payment it would cash flow around $150-200 a month. But we did not get this one.

We started working on a two home deal in Danville IL for 34k. I had my Dad go with the realtor to look at the houses for us. Remember we live in California. So my Dad said with a little work they would be good rentals. Both houses were two bed one bath homes that would rent for about $400.00 a month each. We had the down payment money and we wer talking to banks for the rest of funds. We got to the end of the time frame for the loan contingency and all the banks said our debt to income ratio was to high. That crushed us. ( Don’t let this happen to anyone of you reading this post.) We dropped out of the hunt for a deal for a few months.

We tried to see if the stock market would give us the capital to buy homes out right. That did not work out so well.

We refinanced our primary home and dropped our payment by $400.00 a month. I bought the book Profit from Real Estate Right Now. We were back in the game but I wanted to study the classes put on by the Academy and maybe get out of our comfort zone and try something else than just buy and hold. We bought the book Your Town Your Real Estate Profits and we are on fire again making this real estate business work.

I was talking to some coworker of mine about real estate and they said they would be willing to partner up for some deals. This was in May of 2010. We looked at a lot of houses and agreed to go for a house listed for 60k it is the worst looking property in the area in this part of California. The other houses in the area were selling for 150k. It was a two bedroom with one bath on a third of an acre lot. We put an offer in for 55k with the seller paying closing cost. The seller countered with 58k and we said OK. The bank we were working with told us they could not give a loan on this house due to a report of mold. We were dead in the water. We talked to a few so-called Hard Money Loan people and they wanted 30 to 40% down telling us there is no hard money 100% financing. Well with the mold issue which, in my opinion was not that bad we still decided to move on.

A few days later our agent called us and asked if we still wanted that house. The bank was willing to pay $2,100.00 for mold abatement if we would pay 60k for the house. It was worth it to us if the bank could give us something in writing that the mold was removed, so we said yes. Now our partner on this deal moved on to another deal so he would not be able to go through on this deal with us. Veronica and I decided to do the deal on our own. After the inspection report, we felt that there was too much work to be done to this house. The kicker was that the person the bank sent out to remove the mold ended up just wiping the walls down with bleach and not producing a clearance report for the removal of the mold. We countered with a 55k offer with a contingency that the house would appraise at 55k. The bank said no so we exercised one of our exit clauses ad canceled escrow. I just received information that we would get our earnest money back as I am writing this post. There are a lot of deals out there so we know that we don’t have to settle on just one house.

We now have the Set for Life program and are going to try some wholesale deals.

Sorry this was so long but we had to do a lot of catching up.

Steve and Veronica