I have a gas problem…

Last week it was time to fire up and test the second floor water heater. The only thing holding us back was the locked gas meter for the second floor unit – or so we thought... After giving Peoples Gas a call on their emergency phone line, they quickly arrived to the scene within 4 hours. The lock was popped off, a couple swift kicks to loosen the valve, and gas had been turned back on to the unit upstairs. The gas man marked the meter using a sharpie and stalked the dial like a hawk for movement. Ten minutes later and sure enough it had slightly moved. What did this mean? A gas leak….

When I first opened up and exposed the kitchen walls around two months ago I thought it was fascinating that my building still had the original 100 year old gas lamp lines. The lines were installed at the turn of the century before electricity had been wired to the house. The first pipes I noticed were the risers in the kitchen, upon opening the roof we found the piping ran to all the ceiling fixtures in the entire house and had been covered with new light electric fixtures.

After the gas man noted the leak he pulled out a fancy meter and started checking all the recent work the plumbers had done. No beeps. Our attention, as you may have guessed from my segway, quickly shifted to the 100 year old gas lines. Could it really still have gas running through the lines after 100 years of not being used? BEEEEEEEEEEEEEEEEP. Yeap.

What is scary about this is the fact that the leak was coming from an old ceiling fixture line that should have been sealed and capped off. Every time the light was turned off and on it was like playing a game of Russian roulette on whether my attic would be going up in flames.

While a huge fire may have solved my water damage problem, the gas man didn’t allow that option and quickly shut off (locked) the meter. The plumbers came out on Friday and traced the old lines to the basement, cut the pipes, and capped them off. After 100 years the house no longer has gas running through my ceilings and walls and is finally an all “electric” property. Thomas Edison would be proud.

Rain Rain Go Away

When I arrived into my home with moving boxes on Monday morning I experienced one of the most helpless moments of my life. I entered the front door and immediately had flash backs from my childhood of a waterpark called Wyandot Lake. This time however there was no laughing or sounds of kids enjoying their adolescent worry free life’s, just the echoes of free falling water as it saturated the 100 year old wood floors.

As I sit on a plane right now returning from a business trip in San Diego I can’t get the house out of my head. With recent storms that blew in again yesterday, saying I’m anxious to get home would be a colossal understatement. It has been a tough and emotional week as the roofers botched the tearoff and replacement of the flat roof when they didn’t cover it before the storm on Monday. It’s ironic that I write this post after my previous one on Angie’s list as this contractor was not an Angie’s list contractor. Since I can’t write a nasty complaint on Angie’s website, I’ll use my blog as both a sounding board about this company and a therapeutic release of frustration. To the owner of the construction companies credit he has accepted fault and created a plan to remedy all damages under his insurance policy. Nonetheless I’m now moved into the first floor unit while living under a huge tarp and and my time schedule for getting my second floor unit rentable is set back by at least 2 weeks. With a projected rent of around $1,400/mon for the unit this setback will cost me personally around $700.

A water restoration company entered the scene on Tuesday and have been working hard to remove moisture from the building. Over seven fans have been setup creating a hurricane effect on my second floor while turning my electric meter into a ferociously spinning top. Our hope is the original wood floors will not need replaced. The total cost for the roof replacement was budgeted around $11,000, an additional $2,000 was spent to replace the insulation, and $3,500 to replace all the decking with new plywood. In addition a mold company is to be paid around $4,000 for treatment and preventive spray in the attic while the roof was open. Needless to say this will all be ripped up and redone. The only portion of the project that will remain was the $6,000 of masonry work that was done to rebuild my north parapet wall and spot tuck the inner parapet walls for the new roof.

It has been an early lesson that investment properties are not a cake walk or for the light hearted. Tears will be shed, but the long term potential will hopefully outweigh the short term set backs. I look forward to getting back into town and regaining some sort of stability in my home life.

Original plaster ceiling will need torn down and redone

Steamy Hot

I spent some time debating on what type of water heaters to purchase for a rental property. On the cheap end I could likely get away with two 40G 6 year warranty tanks for around $700, on the higher end I could purchase two 50G 12 year warranty tanks for around $900. In the end I went with the better 50G 12 year GE tanks. It’s difficult deciding where to cut costs in rentals, but I feel like infrastructure is a place where quality will pay off down the road. The cost of $200 more for 6 years of piece of mind and knowing tenants won’t be complaining about cold water was justifiable. Plus, anyone who knows me knows I take ridiculously long hot showers in the winter so we could call this a bit of a personal splurge as well. If the strategy on this property was to flip I would have went cheap, a buy and hold strategy requires long term foresight.





Before



After

Let the Games Begin... Plumbing is up to bat!

It’s now been 4 weeks from my closing date and I’ve been anxious to get the construction started. Time is ticking, and with a rental property every week of vacancy is money out of your pocket. The masons and roofers have been at a standstill with the recent crappy weather, but I’ve decided to pull the trigger on plumbing.

I’ve selected Chicagoland Plumbing as they had excellent reviews on Angie’s list. Edwin and his crew have been extremely responsive, polite, and provided great workmanship. The project scope included the removal of all old ¾” and ½” galvanized piping and replacing all the supply plumbing to the first and second floor units with the copper. They are also installing two brand new water heaters (I have requested to purchase on my own separately) which will have separate gas lines run for corresponding Units 1 and 2. Upon completion they will hook up kitchen and bath fixtures as necessary. I have budgeted $5,000 (water heaters included) for this project and their quote for labor and material is around $3,500. I’ve allocated $1,000 of the budget for purchasing new water heaters from Home Depot.

Below is a link to their website and a picture of some of the shinny new copper in the basement utility room. I highly recommend Edwin and his crew at Chicagoland plumbing for anyone that needs great work done at great prices. Thanks Edwin!

http://www.chicagolandplumbing.net

Angie the Angel

One of the most difficult first steps I’ve encounter as a novice rehabber has been finding good contractors. I’ve had over 5 plumbers and 6 electricians over and all have offered different advice, pricing, and interpretations of City code. I cannot speak highly enough of Angie’s List service for finding contractors. It has been the best $7 I’ve spent thus far, and every contractor from this site has been very professional to work with. For those unfamiliar the site does the leg work of checking contractors for insurance, licenses, and even offers links to Better Business Bureau records to ensure they are a legitimate contractor. Users offer tons of feedback on the results they received, including prices, and the contractors are scored A to F in 5 areas. Poor work gets them put into a penalty box where they are shown in poor standing until issues are resolved. An amazing resource that keeps contractors accountable for their work and is available for areas all over the country! Check it out below.

www.angieslist.com


FYI- servicemagic.com also offers a similar service for free, however I’ve found the user feedback and larger database of contractors worth the few bucks. I’ve worked with two contractors thus far from servicemagic that have not met expectations. They will likely earn their very own writeup on this blog discussing their performance (or lack thereof).

Bids... Bids... Bids...

The last few weeks have been moving extremely quickly. Contractor bids have been flowing in and it’s almost time to get rehabbing underway. I fully intend to discuss in a future post information about how I got financing and more of the number crunching that went into my purchase, but for today a brief update on construction will have to suffice.

During my inspection process with the house it was noted that there had been some water damage inside the property, both from an old leaky roof and also busted supply pipes. The property has 3 water feeds in the basement, and was not properly winterized. The old galvanized pipes had burst and a half @ssed attempt was made by the bank to remedy the problem.

After opening the walls to assess the situation it was determined that the best move would be to replace all supply plumbing with fresh copper. I’m fortunate this is a relatively easy project, as in many Chicago two flats the kitchen and bath share a common wall leading down to the basement. Opening two walls is all that is needed to replace 95% of the plumbing supply lines, and the remaining cast iron waste lines I was told will likely last beyond my existence.

Below are some pictures of the common walls being opened up. Special thanks to the GF and my roommate for offering some assistance in destroying my first house. ;)

"Stripped Down"

It started 4 years ago with a couple investment books purchased from Half.com. After avoiding reading as much as possible during college, I decided testing my literacy might be a good idea. I quickly learned that my financial foresight needed to change from my college years. Pay checks were no longer to be exhausted buying cases of Natty Light on Tuesday nights; my retirement and financial freedom hinged on smart moves during my younger years.

After running the Morgan Stanley 401K investment tool at work it barked back and told me I had a 25% chance of retiring by 60. The odds seem to imply that betting everything on “Black” in Vegas when I hit 40 might be a better option. Even with contributing over the company match (before my company cut our matching program) the outcome seemed unacceptable and hopeless. The stage had been set to find a way to hedge against the standard “lemming” approach to saving for retirement. Pensions and Social Security seem to be things of the past and only wishful thinking for my generation. (Generation Y) The monotony of reading seemed to allude that real estate was a possibility worth exploring.

So why are you here? You may have stumbled upon my site though Google, or possibly some random facebook stalking while at work, or maybe you yourself are considering the jump into investment real-estate and are trying to learn the ropes. Whatever your reasoning may be I hope you find some beneficial information that helps you in your quest for financial freedom as well. If nothing else the sadistic vistors will enjoy watching from the sidelines as I struggle and share the story of my own quest.

This blog will feature a fully exposed “stripped down” view on my first attempt at preparing and running an investment rental property. The good, the bad, the ugly and all the financial numbers surrounding this new pet project. While other rehab blogs exist, few offer insight to the actual costs associated to these kinds of projects as well as the process of becoming a landlord. Over 2 years of research went into making my first purchase and I’m certain the learning is just beginning. As a previous spectator this site will offer information I wish I had two years ago. Enjoy and feel free to offer comments, opinions, or recommendations for topics of interest.