My last blog post detailed the story of our first retail flip, which eventually sold the conventional way, netting us a nice profit. But not until after several price reductions and some serious doubts that it would sell at all. It was on the market for only four months before it sold, but those four months felt like an eternity! After all, I’d watched all the A&E reality shows on house flipping – weren’t we supposed to have multiple full-price offers within a week of listing?
As August turned into September turned into October turned into November without a serious offer, my anxiety birthed a rather interesting idea. Actually it was double-anxiety: we had two flips on the market, neither one getting many bites as winter drew near. Conventional wisdom knows that nobody buys a house in the winter. Nobody wants to move over the holidays! Unless…
November 3, 2014
FOR IMMEDIATE RELEASE
CONTACT: Kelly Rafuse
Direct cell: (570) 237-1866
[email protected]
jpeg images available on request
HOME FOR THE HOLIDAYS: LOCAL LANDLORDS TURNING RENTERS INTO HOMEOWNERS
Two open houses planned for newly remodeled single family homes being offered to tenants who want to pay rent toward owning their own home:
Sunday, November 9th 12-4pm at 1228 Main St., Avoca
Sunday, November 16th 12-4pm at 15 Ridge St., Ashley
LUZERNE COUNTY - Good People Good Homes is a small but growing local company started by husband-and-wife team Steve Franco and Kelly Rafuse. They've been in the business of buying, renovating and renting properties in the Wyoming Valley since 2008. Now, they want to turn some of those renters into homeowners.
Rafuse says, “We started with the mission that if we purchased some older, deferred maintenance apartments, fixed them up and rented them to good, well-screened tenants we'd be doing our part to bring up the neighborhoods.” But Rafuse and Franco believe the area needs more homeowners.
The economy has made home prices drop to more affordable levels, but two major obstacles are keeping families from taking advantage of this buyers' market.
1- mortgage lenders have tightened their standards to the point that even people with average credit scores (in the 600s) have trouble getting a loan to buy a house.
2- the housing stock in Northeast PA is older, and most affordably priced homes require more rehab and renovation than the average new homeowner is prepared to take on. And banks don't want to write mortgages on homes that need a lot of work.
“Our company is acquiring single family homes that need serious rehab and updating – from new roofs and furnaces to modern kitchens and bathrooms,” Franco says, “We're widening staircases to accommodate today's furnishings. We're opening up small enclosed spaces into the modern, more open design for today's family living. We're converting small extra bedrooms into nicely sized second bathrooms. We're building closets into bedrooms where none existed before. We're replacing any unsafe wiring, plumbing, crumbling porches, etc. These homes are move-in ready.”
An interested tenant-buyer could negotiate the final sale price of the home, agree to a monthly rent payment toward the purchase price, commit a down payment and move right in, in time for the holidays.
Two homes are currently available, one is a 1,735 square foot, 2 story, 3 bedroom, 2 bath home at 1228 Main St in Avoca. The other is an 1,194 square foot, 2 story, 2 bedroom, 1 bath home at 15 Ridge St in Ashley. There will be an open house at the Avoca property this Sunday, November 9 from noon to 4pm. An open house will take place in Ashley the following Sunday, November 16 from noon to 4. The homes can also be shown by appointment by calling the management office at (570) 798-7051.
Rafuse says, “A growing region needs a good mix of homeowners and renters. Pride of ownership makes better neighborhoods. And that's why Good People Good Homes, while still in the rental business, has moved into offering some of our properties for sale, with a rent-to-own model that makes this American Dream affordable in Northeast PA.”
END
###
Everything I learned in my Public Relations class at Emerson College came rushing back in a fit of inspiration. I do know how to spin a situation! That’s why I have a B.S. degree, after all…
We took out ads for the open houses in the two local newspapers and Craigs List in the Houses For Rent section. Then I drew from my Marketing classes at Emerson, and drew up these flyers:
As August turned into September turned into October turned into November without a serious offer, my anxiety birthed a rather interesting idea. Actually it was double-anxiety: we had two flips on the market, neither one getting many bites as winter drew near. Conventional wisdom knows that nobody buys a house in the winter. Nobody wants to move over the holidays! Unless…
November 3, 2014
FOR IMMEDIATE RELEASE
CONTACT: Kelly Rafuse
Direct cell: (570) 237-1866
[email protected]
jpeg images available on request
HOME FOR THE HOLIDAYS: LOCAL LANDLORDS TURNING RENTERS INTO HOMEOWNERS
Two open houses planned for newly remodeled single family homes being offered to tenants who want to pay rent toward owning their own home:
Sunday, November 9th 12-4pm at 1228 Main St., Avoca
Sunday, November 16th 12-4pm at 15 Ridge St., Ashley
LUZERNE COUNTY - Good People Good Homes is a small but growing local company started by husband-and-wife team Steve Franco and Kelly Rafuse. They've been in the business of buying, renovating and renting properties in the Wyoming Valley since 2008. Now, they want to turn some of those renters into homeowners.
Rafuse says, “We started with the mission that if we purchased some older, deferred maintenance apartments, fixed them up and rented them to good, well-screened tenants we'd be doing our part to bring up the neighborhoods.” But Rafuse and Franco believe the area needs more homeowners.
The economy has made home prices drop to more affordable levels, but two major obstacles are keeping families from taking advantage of this buyers' market.
1- mortgage lenders have tightened their standards to the point that even people with average credit scores (in the 600s) have trouble getting a loan to buy a house.
2- the housing stock in Northeast PA is older, and most affordably priced homes require more rehab and renovation than the average new homeowner is prepared to take on. And banks don't want to write mortgages on homes that need a lot of work.
“Our company is acquiring single family homes that need serious rehab and updating – from new roofs and furnaces to modern kitchens and bathrooms,” Franco says, “We're widening staircases to accommodate today's furnishings. We're opening up small enclosed spaces into the modern, more open design for today's family living. We're converting small extra bedrooms into nicely sized second bathrooms. We're building closets into bedrooms where none existed before. We're replacing any unsafe wiring, plumbing, crumbling porches, etc. These homes are move-in ready.”
An interested tenant-buyer could negotiate the final sale price of the home, agree to a monthly rent payment toward the purchase price, commit a down payment and move right in, in time for the holidays.
Two homes are currently available, one is a 1,735 square foot, 2 story, 3 bedroom, 2 bath home at 1228 Main St in Avoca. The other is an 1,194 square foot, 2 story, 2 bedroom, 1 bath home at 15 Ridge St in Ashley. There will be an open house at the Avoca property this Sunday, November 9 from noon to 4pm. An open house will take place in Ashley the following Sunday, November 16 from noon to 4. The homes can also be shown by appointment by calling the management office at (570) 798-7051.
Rafuse says, “A growing region needs a good mix of homeowners and renters. Pride of ownership makes better neighborhoods. And that's why Good People Good Homes, while still in the rental business, has moved into offering some of our properties for sale, with a rent-to-own model that makes this American Dream affordable in Northeast PA.”
END
###
Everything I learned in my Public Relations class at Emerson College came rushing back in a fit of inspiration. I do know how to spin a situation! That’s why I have a B.S. degree, after all…
We took out ads for the open houses in the two local newspapers and Craigs List in the Houses For Rent section. Then I drew from my Marketing classes at Emerson, and drew up these flyers:
What we learned from our rent-to-own open houses
The first was Avoca. The turnout was pretty good – a lot of people were just curious to see it. It was flattering having people oooh and ahhh over my kitchen, but there weren’t a lot of serious customers. People took the flyers and brochures I had printed up, but almost no one had $5,000 in the bank to put down. And there were lots of people who just didn’t understand the concept of “rent-to-own.” We got quite a few offers to just flat out rent it, which got me thinking about a market for high-end rentals. (That’s a discussion for another blog – we haven’t moved in that direction yet, but it may be something we do in the near future!)
Much the same happened in Ashley at the open house. People were curious about our rent-to-own model. They liked the houses. But they didn’t understand the concept of rent-to-own, and no one had money saved up for the down payment. And at least one person thought we were running a scam!
If our rent-to-own model was going to work in Northeast PA, it would require educational outreach.
Joining forces with other investors for a rent-to-own business model
Even though my Home For the Holidays campaign did not result in a sale, it gave life to an idea. This is an idea I have yet to execute – it’s why I love writing this blog! It may be time to take this idea out of the back of the closet, dust it off and get it going at last.
I believe in this idea. I believe it is good for Northeast PA and the older housing stock that proliferates our towns. I believe it is good for hardworking, decent people who want to own a home but are stuck renting because of stringent bank lending criteria. And of course, it’s good for real estate investors like ourselves, who love to buy these old houses and take great joy in redesigning them. We get to do what we love and make a living from it. And there is nothing about that that’s a scam, folks. That’s pure capitalism, what America is all about! We are using our talents to provide a product and a service to fill a need. The market determines the price. No scam.
I set out to make a presentation at Steve’s December investors meeting December 10th, but Mother Nature decided to send a snowstorm that night. I ended up sitting around with four of Steve’s investor friends just tossing this idea around. Here’s what we came up with:
We could band together as investors and come up with an inventory of homes to offer consumers as rent-to-owns.
We could pool our money and put on an educational seminar for consumers, using the discounted radio advertising rates in January to generate interest in our program.
As I write this, I find myself really wanting to make this program a reality in 2016!
The happy ending to this particular rent-to-own story. Our flip at 1228 Main St. Avoca sold outright to a conventional buyer at Christmas. I detailed that story in my blogpost How It All Began Part 8.
15 Ridge St. Ashley sat through the winter without any serious offers, even though we’d dropped the price. Then in January a power failure kicked off the furnace, and a pipe froze and burst, causing a major interior flood! A neighbor called 911, then Steve’s business number on the rent-to-own sign when he saw water cascading out of the windows!
This sounds a lot more dramatic than it actually was.
Water was cascading out the windows because a pipe in the second floor bathroom had burst, and was leaking through the floor, along the walls that contained the windows the neighbor saw. There was no tidal wave washing over Steve when he opened the front door like in the kids’ cartoons. There was about $3,000 worth of damage, not covered by insurance. Investors’ tip: vacant property insurance covers fire and vandalism, not damage from broken pipes. If your flip is going to be empty in the winter, consider draining the water, because even if you keep the heat on disaster could happen!
$3,000 of unplanned repairs certainly sucked. But it did not break us. We hired a remediation company that specializes in water damage and they fixed it up, even better than before because they used better quality materials on the flooring that had to be replaced. It really looked nice! (This company will remain nameless, because we ended up using them on some other projects, were not happy with the results and felt like we got screwed. So no free plug for you – ppppfffffttttt)
The happy ending for Ashley came in the spring. We dropped the price to $69,900, but still no serious offers. Then we landed our rent-to-own buyer. He wanted some additional improvements – for instance a first floor half-bath – that he negotiated into a final sale price higher than what we were asking. The final terms: $5,000 down to move in, $800/month “rent” that includes the insurance and taxes that remain in our name, for 36 months. The final sale price is $72,400, due at the end of the 36 months. We are charging around 10% interest to “hold the note” which is more than a bank would charge, but mitigates our risk. As a couple of working Joes, Steve and I can’t afford to take as much risk as a bank, so we charge more. Our tenant-buyer is free to go to a bank and refinance that loan anytime he wants, he doesn’t have to wait three years. But our program lets him move into a nice house now as opposed to later when he gets his finances straightened out. Win-win!
And now, after 9 blogs detailing “How It All Began” for our little real estate venture, you are all caught up to the summer of 2015. A lot has happened over the past nine weeks, a lot that I couldn’t talk about in this blog which is why I decided to go back and recount our history instead. Next week, I’m ready to start spilling it.
The first was Avoca. The turnout was pretty good – a lot of people were just curious to see it. It was flattering having people oooh and ahhh over my kitchen, but there weren’t a lot of serious customers. People took the flyers and brochures I had printed up, but almost no one had $5,000 in the bank to put down. And there were lots of people who just didn’t understand the concept of “rent-to-own.” We got quite a few offers to just flat out rent it, which got me thinking about a market for high-end rentals. (That’s a discussion for another blog – we haven’t moved in that direction yet, but it may be something we do in the near future!)
Much the same happened in Ashley at the open house. People were curious about our rent-to-own model. They liked the houses. But they didn’t understand the concept of rent-to-own, and no one had money saved up for the down payment. And at least one person thought we were running a scam!
If our rent-to-own model was going to work in Northeast PA, it would require educational outreach.
Joining forces with other investors for a rent-to-own business model
Even though my Home For the Holidays campaign did not result in a sale, it gave life to an idea. This is an idea I have yet to execute – it’s why I love writing this blog! It may be time to take this idea out of the back of the closet, dust it off and get it going at last.
I believe in this idea. I believe it is good for Northeast PA and the older housing stock that proliferates our towns. I believe it is good for hardworking, decent people who want to own a home but are stuck renting because of stringent bank lending criteria. And of course, it’s good for real estate investors like ourselves, who love to buy these old houses and take great joy in redesigning them. We get to do what we love and make a living from it. And there is nothing about that that’s a scam, folks. That’s pure capitalism, what America is all about! We are using our talents to provide a product and a service to fill a need. The market determines the price. No scam.
I set out to make a presentation at Steve’s December investors meeting December 10th, but Mother Nature decided to send a snowstorm that night. I ended up sitting around with four of Steve’s investor friends just tossing this idea around. Here’s what we came up with:
We could band together as investors and come up with an inventory of homes to offer consumers as rent-to-owns.
We could pool our money and put on an educational seminar for consumers, using the discounted radio advertising rates in January to generate interest in our program.
As I write this, I find myself really wanting to make this program a reality in 2016!
The happy ending to this particular rent-to-own story. Our flip at 1228 Main St. Avoca sold outright to a conventional buyer at Christmas. I detailed that story in my blogpost How It All Began Part 8.
15 Ridge St. Ashley sat through the winter without any serious offers, even though we’d dropped the price. Then in January a power failure kicked off the furnace, and a pipe froze and burst, causing a major interior flood! A neighbor called 911, then Steve’s business number on the rent-to-own sign when he saw water cascading out of the windows!
This sounds a lot more dramatic than it actually was.
Water was cascading out the windows because a pipe in the second floor bathroom had burst, and was leaking through the floor, along the walls that contained the windows the neighbor saw. There was no tidal wave washing over Steve when he opened the front door like in the kids’ cartoons. There was about $3,000 worth of damage, not covered by insurance. Investors’ tip: vacant property insurance covers fire and vandalism, not damage from broken pipes. If your flip is going to be empty in the winter, consider draining the water, because even if you keep the heat on disaster could happen!
$3,000 of unplanned repairs certainly sucked. But it did not break us. We hired a remediation company that specializes in water damage and they fixed it up, even better than before because they used better quality materials on the flooring that had to be replaced. It really looked nice! (This company will remain nameless, because we ended up using them on some other projects, were not happy with the results and felt like we got screwed. So no free plug for you – ppppfffffttttt)
The happy ending for Ashley came in the spring. We dropped the price to $69,900, but still no serious offers. Then we landed our rent-to-own buyer. He wanted some additional improvements – for instance a first floor half-bath – that he negotiated into a final sale price higher than what we were asking. The final terms: $5,000 down to move in, $800/month “rent” that includes the insurance and taxes that remain in our name, for 36 months. The final sale price is $72,400, due at the end of the 36 months. We are charging around 10% interest to “hold the note” which is more than a bank would charge, but mitigates our risk. As a couple of working Joes, Steve and I can’t afford to take as much risk as a bank, so we charge more. Our tenant-buyer is free to go to a bank and refinance that loan anytime he wants, he doesn’t have to wait three years. But our program lets him move into a nice house now as opposed to later when he gets his finances straightened out. Win-win!
And now, after 9 blogs detailing “How It All Began” for our little real estate venture, you are all caught up to the summer of 2015. A lot has happened over the past nine weeks, a lot that I couldn’t talk about in this blog which is why I decided to go back and recount our history instead. Next week, I’m ready to start spilling it.