St. Joseph, A new way to sell real estate

Always looking for the most innovated way to market ahome is what most good real estate agents do. Some, however, are turning to a tactic that has been around for quite some time. Homesellers and real estate agents alike are buying statues of St. Joseph and burying his likeness in the yards of their homes for sale. St. Joseph, apparently, is a patron saint of homesellers due to the fact that he was a carpenter long before he was the step-father of Jesus. While not being opposed to prayer to sell a house, I object to any short-cut to hard work that homesellers and agents are known to take. I wonder what the buyer's are doing in this market named after them. Do you see them burying statues hoping a house will magically appear to them? No. My educated guess is that most buyers are waiting for some hard working real estate agent to get off their lazy butts and market the opportunities that exist in today's real estate field. Alas, they will have to wait because those agents are too busy burying statues or ordering them online so they can have a ready supply when homesellers come calling for their assistance. I can just hear the marketing plan: "So, what I'll do to sell your home is to 1. Put a sign in your yard, 2. Put a lockbox on your door, 3. Put it in the MLS and most importantly, 4. Loan you this wonderful statue of St. Joseph with instructions on where and how deep to bury him." Good luck with that.

Contribution from Larry Refsland, real estate agent for 13 years in the Twin Cities of Minnesota. Larry is currently working at a bank in Federal Way, Washington, where he is seeing just how much of a buyer's market we are in. Please feel free to comment!

My House Caught on Fire: Aftermath, Insurance, Contractors

My house caught on fire March 17, 2007. Happy St. Patrick's Day, right? I was in Mexico when it happened. This is the story of a house catching on fire, how to deal with the ashes, the insurance company, and the contractors. And your sanity. As I'm posting this, many Californians are dealing with their own houses and fires; hopefully, this information will be helpful to the fire victims of San Diego and beyond.

Aftermath
Ok, so the damage wasn't that bad at my house in Reno, Nevada. There were 13 houses hit in the fire. Apparently it was started by some kid (firecrackers, cigarettes, or some other illegal flame-inducing object). I'm not sure who was more to blame though: the kid or the out-of-control brush. And I'm not sure who is to blame for the brush. Although I have some ideas...

The roof, the shed, the fence, the yard was destroyed. The house was still live-able.

I was in Mexico. I got an email from my housesitter. Yikes.

I thought I would be able to handle the matter from afar.

Think again.

First, I had to rack my brain about who my insurance agent was. I didn't know any agents when I bought the house so I went with the realtor's recommendation. Found out that the agent had quit months before my claim, and passed her files onto some poor unsuspecting fool.

Poor girl.

The house was insured through Safeco, who proved to be a hassle. No one likes to hand out money, but seriously--my house caught on fire! And it's insured!!

Hassle #1: My name wasn't showing up as an "insured." My ex-husband's name was, though. You know how they always list the guy's name first? Apparently they just listed one name and then said, "Good enough."

Hassle #2: My mortgage company wasn't listed as an "additional insured." The insurance company never got the memo that my mortgage was sold almost immediately after I closed.

Hassle #3: My last name had changed.

I wasn't able to fix any of this stuff from Mexico. I wasn't able to track down a contractor by email, either.

Made it back to The States at the end of April. Got to work on fixing names and mortgage companies.

Hassle #4: I was now in Minnesota, visiting my family. New address.

Somewhere in here I got the Insurance Commission involved. They were able to get my ex's name off the insurance in a day (I had been trying for weeks).

Lesson #1: Get the Insurance Commission involved sooner, rather than later. They are government workers, so don't expect miracles. Ask questions. Is this normal? What happens next? How do I go about this?

Safeco issued a new check sometime in June.

By now I had found a contractor; but he was a young guy who had never worked with an insurance claim before. [And, he probably never will work for one, again!]

Lesson #2: As horrible as this sounds, hire someone who is better at dealing with insurance companies than they are at dealing with construction.

Awful, I know.

My contractor did excellent work, but is still waiting on more money. I've paid him everything I got from the insurance company, plus the deductible and depreciation.

Depreciation
If you do not understand how this works, call your insurance agent TODAY, and get a thorough explanation of depreciation of recoverable and non-recoverable items. I'm not sure I fully understand it still. Ask your agent to give you hypothetical scenarios: If my house catches on fire, and half of my fence burns down, and all of my shed vanishes--how much money will I get? And how much will I have to pay?

Some items get depreciated. Wood fences, for example (through Safeco, anyway). So, they don't give you the replacement cost; they give you what the fence, being so old and worn, is worth today. Try giving THAT to your contractor when he's done with your pickety goodness.

Not a happy contractor.

Lesson #3: I didn't really learn this, but it was confirmed. Make sure you have enough money sitting around somewhere to cover your deductible and all the costs associated with a house catching on fire (increased cell phone bill, increased heat bill from windows missing from firemen antsy to get into the house, veterinarian bill from dog getting attacked by coyote since fence is missing). Don't expect the insurance company to pick up the tab on anything. But do keep receipts just in case!

Just because you have a check, doesn't mean you have any money.

Had to finally make a two hour drive to get to a Countrywide Bank to get my final check endorsed. UGH! Countrywide wanted me to send an endorsed check for 20+ grand in the mail. Then they were going to DEPOSIT it into an account, inspect the property, and upon approval, send a new check. Certifiable.

Lesson #4: This is the best way to get a manager on the phone. Call, ask representative to speak with a manager. When they respond with, "I need more information so that I can send you to the right manager," just respond with silence. They'll finally ask, "Mrs. So and So? Hello?" Reply back excitedly, "Oh, hi! Are you the manager?" You'll be connected immediately.

Limit contact between your contractor and insurance company.

Apparently, insurance field estimators are trained in being vague to the point of deceiving contractors and claimees. Do not allow any contact between the contractor and the insurance company without your presence, either by a conference phone call or at the job site.

Be there!

Just because your contractor says the job will take $50K to do, doesn't mean the insurance company will agree or comply.

Ask for it in writing.

Some members of the Insurance industry are very good about only communicating in written form. With email, you can get a lot discussed (and recorded) with the insurance company.

Field Estimators, however, don't spend much time on the computer. They jot down little notes on their little clipboards, and then make up numbers when the time comes.

Slight exaggeration.

I get sick to my stomach every time I think about Safeco, hear the word Safeco, or type the word Safeco.

I think I'm going to puke.

Long story short, my house looks great. Safeco cancelled my policy upon their final inspection. Of course I'm not living there anymore! As good as the fence, roof, shed and yard look--it's still a reminder of ... I can't say it. But, actually, I was living there when they cancelled it. That was funny. Parked in the driveway with my bus. Using the laundry room, bathroom and kitchen.

I switched ALL of my house policies to a friend at Farmer's. So they lost two properties, three units.

Not that they care.

I want you to feel empowered by this post. Go review your insurance policy with your agent. Make sure the improvements you made last summer are covered. Make sure the correct names and spellings are on the policy. Make sure the mortgage company is correct.

And then go to sleep soundly at night.

Wait--check the batteries in your smoke detectors first.

Ok, now go to sleep!

Church Remodel: Lessons in Connections, Divorce, Construction, and Demolition

My current big fat real estate project is "saving the church." I know, it's big to try and save the church; I mean, the church is in the business of saving, so for me to save it, is... crazy.

connections

I purchased the church with my now ex four years ago. My dad happened to be the pastor of the church when it was a church. Because I was always a good listener I knew about the details surrounding the church's purchase from the previous church (this church has been around for more than 100 years, so it's survived more than one congregation). Basically, it was in the church's purchase agreement that the church could not turn around and sell it at a profit (because they were getting such a good deal on it, and the old church wanted to see the new church continue as a church for a good while). So, 10 years later, I ignored the listing price on the church, and made an offer that shocked the realtor. The price was for what the church had paid for it PLUS an estimate of repairs and improvements that had been made over the years.

The realtor was even more shocked when the sellers agreed to the offer.

So we bought it; had to take Rich Dad's advice about trying every bank in town. Finally found a local bank that didn't laugh at us when we said, "We want to buy a church." Had to borrow some money from family, the lender had to do some magic (in-house commercial loan), and we had to really be persistent to make the thing close.

Turned around and rented it. We were trying to get another house rented; the tenant was not interested. I said, "Well, I do have one other property available, but... it's.... well, follow me across the street and I'll show you."

The tenant was thrilled about living in a 4000 square foot old church (crosses still in tact). He promptly filled half of the square footage with JUNK. How do I know this? Because I was a part of the cleanup crew upon his departure.

We love tenants!

A year later we started the process of remodeling the church into a 4plex. An architect friend drew up some great plans for us. We hired a local youthgroup to begin the demolition.

divorce

As we were trying to get financing to get started on building, and to ultimately finish the project, we saw that coming up with the money to get the financing was going to be harder than keeping our relationship together. The two really had nothing to do with each other; I was just attempting to make a clever analogy.

Divorce commences.

He got the church in the divorce. He was in Minnesota, I was in Reno, I didn't want it, he didn't want it, he got the movie collection; and therefore had to take the church.

Ok, it wasn't exactly like that, but except for still being on the loan, I thought I was done with the church.

I got a call this summer. The ex informed me that he was no longer going to make payments on the church. He was prepared to let it foreclose and watch his credit (and mine) go down the toilet.

Further, my name was still on the title, as the Quit Claim Deed I signed never went through, due to delinquent property taxes.

I really didn't like the idea of bailing on the bank that loaned to us based on our character (and credit), and my family connections (fame and good looks). I also didn't like the idea of having a few thousand dollars in back taxes sitting on a website for all to see.

Oh, the shame! Joking!

construction

Needless to say, the church is suddenly my problem. In order to keep my karma and credit safe (and because this church thing just doesn't seem to want to leave me alone) I'm putting blood, sweat, tears, and Mastercard into this aggrevating project.

My business partner and I have been in Minnesota for a couple of months, reviewing building code, insulating, sheetrocking, sanding, plus the whole blood, sweat, tears thing.

Seriously. We had a "nail through the finger" incident today.

We've thrown the architects original plans out the new window we just installed. His plans were for a San Francisco-style apartment complex with loft-style apartments. We did a market analysis, to see what our tenants looked like, what the town wanted, and what was easy and affordable to build.

We also decided to just do one unit for now. If we can finish one unit and get it rented, then I won't be losing so much money every month. I'll probably still be at a loss, but it will be a smaller loss.

We're doing the "easy" unit, in what used to be the lobby of the church. This part of the church was an addition, built in the 70's. The walls are a little bit straighter than the walls in the 100 year old section. This was supposed to be a handicap-accessible unit. A ramp was already there. But, the ramp is not to code. So we opted instead for a 2 bedroom, 2 bathroom character-filled apartment. The bedrooms are connected to the bathrooms; so it's more like we're building 2 master suites. It's designed for roommates.

We could probably rent the whole thing for $600; or rent the rooms separately for $350/each.

Good thinkin'?

I polled several tenants (homeowners did NOT give good feedback, but they're not my target market, now are they?). I asked what the most important things are in an apartment. One tenant had a really intelligent comment, "The good things in a house don't necessarily attract good tenants, but they will keep good tenants."

1. Lots of natural light

2. Storage space

Those were important. Very important.

After one survey I made some big adjustments to our plans. I added a couple windows and a 4'x8' closet.

All the tenants polled LOVE the ramp. It was comical that homeowners and builders thought the ramp took up too much space; and tenants saw it as an easy way to move in and out, as well as an architectural bonus.

demolition

I have to write about demolition last because it wasn't something I had any advice on until hindsight came into view.

1. Do NOT demolish a building until you have financing in place

2. Do NOT demolish until you have a very very very good idea of what you're building

3. Do NOT let anyone demolish your building withOUT your supervision

4. Go to a home improvement store and memorize prices; THEN begin demolition, keeping in mind that EVERYthing in your building has value

Value can mean that items can be resold, reused, OR you're going to have to replace it. In other words, everything has a positive or negative value. Try to reuse as many materials as possible, so that you get the positive value. You may be able to resell some items, but chances are you'll be too busy with building to be able to market and sell doors, windows, decorative trim, etc.

now

In some ways I may have been better off using my credit line to pay off the taxes and get my name off of the church property. But then I would still have the loan to deal with. And while it is possible to clear up bad credit, I'm not looking forward to that route. So, I will keep you informed on the future of my real estate investing endeavors.

May God bless me and keep me sane.

-Gertie