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The realty market conditions in Tulsa where a a low point when we put the last property up for sale. The government rebate had expired, people were still cautious about the economy, and houses were just not selling. We only had the house on a market for a month when we decided to rent it out. The good news was that we rented it the first day we advertised on Craigs List. It turned out to be a great decision. In the six months since we rented it, none of the comparables in the area have sold. All of them  are still sitting with for sale signs, even with reduced prices. We found good renters and are very happy with the decision.

The bad news is our capital was tied up in the rental property.  We were somewhat limited to how we could finance a next project. Under the current banking market, loans on rental properties are quite tight. Since this is our first rental property we don’t  have enough track record for a banks to loan us the full value of the rental. A retail loan was possible, but only for half of what we originally paid for the house, since we had it less than a year. We finally went with a small commercial loan with a 3 year balloon to finance the next project. The rental income will easily service the loan and allow us to continue. This will give us three years to sell one of our properties. I’m confident this will happen, although we could easily pay off all borrowed funds in the next 10 years with rental income from the next project house.

Since our funds were limited we looked in a new direction. We ended up purchasing a Fannie Mae property at national auction. This property had been on the market for close to 6 months before they put it up for auction. This isn’t a typical auction though. Before the auction begins,  Pre-Sale bids are accepted a week before the auction, then they take actual auction bids for about 12 days. However it is nowhere close to over after the auction ends. Once it ends, post auction bids are accepted. If you are the high bid then you begin negotiations with Fannie Mae until an a preliminary agreement  is made. Once you get to this point you need to prove to Fannie Mae that you have the funds available to purchase the property and you have to give them other information about who you are and what you plan to do with the property. Only then will they actually look at your bid. That’s the government way.

In our case we placed a bid on the property. We were outbid in the last hour of the auction. We made a post auction bid which the previous high bidder did not counter. This bidder also had bids on other properties at the time. We had to wait 10 days for the post auction bids to end. No other bids were offered, so a preliminary acceptance was given. We submitted a buyers contract, proof of funds, personal information; and then waited. At this point we were confident that we had won the property, but this wasn’t the case. Since there was a Pre-Sale offer and other criteria was or wasn’t met, our bid was rejected. Fannie Mae requested a “Best and Final” offer which we submitted and it was eventually accepted. The whole nail biting process took about a month. Once the offer was accepted we closed three days later. This was very much a “wait to hurry up situation.”

Not sure exactly what we plan to do with the exterior. It has nice curb appeal as is, but improvement will happen. We will need to add a deck to the french doors on the back and do some minor repairs.

This is what the living room looked like when we got it. The floors and windows need to be redone but it is in pretty good shape. Carri would like to put stained glass in the upper window pain on the front window and maybe in other places around the house.

The tile is peel and stick on top of oak. We will refinish the oak floors and add wainscot around the walls.

The previous owner had started on the kitchen. We will finish it by adding crown molding, stain and finish the cabinets, and open the doorway to the right. We plan to add a bar in its place.

The stairs have oak treads but they have been painted. We will sand and finish the treads and add an oak handrail.

The bedroom floors and woodwork, and windows will be redone.

The main tasks will be renovating the windows. At the moment we plan on removing all of the sashes, restore them to original condition and re-install, but that could change. We already have the pier company scheduled to stabilize the chimney. We are really excited about this project. We plan to do a track the development here on the blog as well as add a few Hot-to videos. Sign up for the live feed or track us on Facebook. Hope we can make the experience interesting to others.

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