photo credit: JohnHallAssociates

This last week I was given some unfortunate news about a investment condo I was interested in purchasing for a rental property. My agent contacted the sellers agent and asked if any offers had been made on the condo. He learned no offers had been made, but the sellers agent did ask if I was going to be occupying the condo or make it an investment property. The condo has 100 units and only allows a small percentage to be rental units. The sellers agent is going to find out what the exact percentage of rental units is allowed under the current HOA restrictions. If the percentage is close, I could purchase the condo and sit on it until the numbers are lower, but risk my investment return. Also, if another unit doesn’t convert to an owner occupied condo, I could lose out on my investment completely.

Another option is to petition the HOA and show them that I’m willing to increase the value of the property and have them screen tenants. This process would take time and I might lose the property to someone who is planning on making the condo a primary residence. It’s looking like I need to move on to another property and put this one behind me. It has been a fantastic learning experience and I’ve learned much more about HOA rules and regulations. At this point I’ve invested nothing buy my time, so I feel fortunate compared to some recent stories shared by my Realtor.

I spoke to my Realtor about four potential investment condos when he shared an interesting story about a client of his. The client purchased a condo several years ago and decided to move to a bigger home nearby. He contacted his HOA for another set of keys for a common area for a new tenant that just signed a rental agreement. The HOA admin game him a shocker when they stated that he was not allowed to rent his unit under the HOA rules. The client had to petition the HOA for several months and meet with the current board to plead his request. To make matters worse, the HOA President was also his next-door neighbor and did not want his neighbor to become a renter. The client finally was able to rent out the condo, but lost out on 6 months worth of rent, or $8,000.

After hearing this story, my plan is to contact any HOA and receive a written letter authorizing the purchase of the condo for investment purposes. I can’t imagine buying a rental property and finding out it can’t be rented out. I feel that this has been a wonderful learning experience and another passive income investment property will be found. This week I’m going to be looking at several condos around the same part of town and my Realtor will pre-screen them with the sellers agent to make sure they are available to investors. But, I’m still going to demand a letter from the HOA if an offer is made.

Do you have restrictions on your condo HOA? Have you tried purchasing a condo for an investment property?

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This week I’ve had the privilege to join an amazing new group of personal finance bloggers called the Pecuniary Associates. These bloggers help challenge the way I think about spending and saving money. I was also able to guest post and read some other amazing personal finance articles from around the web.

Pecuniarities wrote Our Financial Lent: Giving up Chocolate and Ice Cream for a Month to Save $14. I’ve been able to stay the course and not spend money at Starbucks for my daily cafe Americano and scone. I have slipped once or twice, as we have a Starbucks at our Target store. I figure by brewing my coffee at home we’ve managed to save hundreds, if not thousands each year.

Living Well On Less wrote Losing weight can save you money and I’ve found some cheap ways to exercise with the family include riding our bikes and playing tennis. I love all the free and inexpensive ways we can all stay fit and have fun as a family.

Financial Nut wrote America’s Cheapest Family: Raising 5 Kids On 35k Per Year. I am always inspired by families like these who have a philosophy of establishing saving goals and sticking to them.

Counting My Pennies wrote Friends and money don’t mix. Having a roommate can certainly put stress on your budget if you don’t have a plan for community expenses.

Greener Pastures: Personal Finance wrote It’s EPA Fix a Leak Week. Once small leak that drips every second could waste up to 3,000 gallons a year. Time to do a spring checkup around the house.

Personal Finance Carnivals

Green Panda Treehouse hosted Carnival of Personal Finance#196: Music Edition

Good Financial Cents hosted Money Hacks Carnival- March Madness Baby!

Remodeling This Life hosted Festival of Frugality #169: St. Patrick’s Day Edition

Great Personal Finance Blog Reads:

The Greenest Dollar wrote Cut Your Electricity Costs With An Energy Monitor. I’ve looked at purchasing the Kill A Watt with a friend to help find out what appliances use the most power and if we should upgrade any older units.

Smart Passive Income Blog wrote How to Publish an Ebook Series - Part 1 - Hard Copy vs. Ebook. Pat offers some wonderful insight to creating an ebook.

Passive Family Income wrote Cutting out Wasteful Spending from the Budget.

The Almost Millionaire wrote How I Shaved $30,000 From My Family Budget. I also appealed our property tax bill and was granted an $800 reduction.

Guest Blog Post

This week I wrote a guest post for Yielding Wealth called Passive Income Opportunities In Your Job

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photo credit: Phillie Casablanca

Maybe your are at a cell phone store talking to a salesperson, when you find out that you can upgrade to a new phone and contract. You really just wanted to keep your existing contract, but that new iphone or Blackberry would be really amazing. What do you do when faced with a tough financial choice like this one? Do you make a quick decision, tell the salesperson you need to think about it, or call a frugal friend for advice? You might consider yourself frugal, but when faced with a choice, you sometimes like to splurge. You could probably find 10 reasons right now why you want a new iphone, but do you need one? Your frugal friend could be a mother, father, aunt, uncle, cousin, or even your spouse. Have you ever thought of calling a frugal friend to help with a tough financial decision?

What are some ways calling a frugal friend can help save you money?

1. Negotiating prices. If you are buying a car or large ticket item, it might be wise to call a frugal friend and get a second opinion. Buying a car can be very stressful and many numbers are thrown at you all at once. A friend can help you think through the purchase and make sure you are not buying some extras you don’t need. Do you need a security alarm installed by the dealer or used car warranty? Maybe you could find a third party who is cheaper.

2. Signing a contract. You utilize a real estate professional or attorney in some states when purchasing a home. Do you utilize a professional or third party when signing a cell phone contract? Do you understand early termination fees, text messaging rates, or internet usage charges? Many people are surprised by these fees and might have avoided them if a friend helped you read through the contract before signing.

3. The upsell. You might not even now it is happening, the upsell. Now you shouldn’t call a friend when you are being upsold at the movie theater. The typical upsell involves asking the customer if they want to purchase the large Coke for only 25 cents more. It’s a brilliant strategy, and I admit to falling for it. What about at the electronics store? Did you buy the warranty for your new pair of shoes? It only cost $10, but did you read the contract? Does it cover normal wear and tear, or only defects?

4. Jewelry. If you are buying or selling jewelry, do you know how to negotiate? If you are buying a diamond engagement ring, do you take a buddy with you that’s married. A married buddy has already research diamond rings and can offer you some invaluable money saving tips. Knowing your personal budget and making sure you have a plan for paying off this purchase is probably your first step. If you are close with your buddy, you can discuss your budget and spending limit before entering the jewelry store. You will probably be shown some rings that are out of your price range, and your buddy can give a nudge or cough to bring you back to earth. You and you new wife will feel much more happier starting your marriage off debt free.

5. Customer service. Next time your frustrated with a poor customer service call or situation, call a friend and calmly discuss the situation. I had a co-worker who was also a wonderful friend offer to help me deal with a car dealer. The dealer would not offer to fix my car as they said the damage was a pre-existing situation. I new I had never been in an accident, but couldn’t prove it to the dealer. My co-worker had a similar situation and took it to another independent dealer to examine the damage. I took the car to another dealer and they found that the car had been in a severe front impact accident and I then took the report to where I purchased the car. They fixed the damage and gave me a loaner car during the repair process. Listening to my frugal friend helped me emotionally and financially.

Many of us live busy lives and don’t think twice about signing a contract or buying something nice for ourselves. But, what if a quick phone call to a friend who is also frugal and has your best interest in mind. Most people wouldn’t care if you purchased an iphone and didn’t really need it. A friend who cares about your financial health might be able to offer you a second opinion on your larger financial decisions. I have benefited from having wonderful friends when looking at real estate or researching home loans. I would imagine my frugal friends have saved me thousands of dollars over the years.

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photo credit: allaboutgeorge

This week I’ve been researching real estate in our local area trying to find an opportunity for an investment property. Three condos caught my attention as they were priced aggressively and were all under $100,000. I utilize Zip Realty and have a search setup to scour a 5 mile radius from my home for condos or town homes. Ideally, it would be great to find a single family home but the prices are out of range for an investment property. My goal is to find a property that can generate positive cash flow and also have the potential to increase in value. Every since I purchased my first home, I’ve had a dream of investing in an investment property that could provide passive income for my family. Real estate investments have the opportunity to earn passive income through rent paid by the tenant. Once the property has been purchased, the income derived from the property is mainly passive. My plan is to manage the property myself, so I do anticipate handling any repairs or tenant questions.

I met with a friend who is a local Realtor and we discussed investment properties and what to keep in mind when looking at a property. Much of the meeting was a sobering reminder of the current economic climate facing the real estate market today. He reminded me to be patient and not to get frustrated with banks, as the buying process can last for months. The property we looked at today, he explained, could take up to 5 months to close because it’s a short sale. He was going to contact the sellers agent to find out if it was a bank approved short sale. If not, it could take months. The property was listed at over 50% off it’s purchase price from 2003 and the bank might not want to budge on the price.

The condo has only been on the market for 6 days, and my Realtor expects that it might have several offers already on the table. I was surprised when he said that so calmly, as I thought the real estate market was soft in our area. He explained that the market for high end properties is soft, but very aggressive for single family homes and condos right now. Again, he told me to be patient and prepare to wait it out. The selling agent might have also priced the condo below market value to encourage multiple bids. I thought, wasn’t this the same tactic used during the real estate boom? Why not price a property at what the bank would approve? It seems that if a seller doesn’t get a banks pre-approval, the buying process will only become more complicated.

Just as with any other investment, have a walk away price. My friend told me not to get emotional amid the potential bidding frenzy and to stay focused. Plenty of properties will be coming up over the next few months and this condo isn’t the only potential deal. I’m sure glad my buddy is conservative as well. He explained, even if we bid on the condo, the bank could take several weeks or months to review the offers.

What about a normal condo sale? Actually, it’s difficult to find a condo in our area that is not a foreclosure or short sale. Maybe sellers are waiting to see if the market rebounds before trying to sell. I would like to look at other condos in our area, but have to do more research on HOA and neighborhoods first. I would like to find a condo near our home so that it makes the research much easier, as I know how to market the schools and shopping opportunities. Although, I might also find some better deals further out.

It’s has been an interesting week, and I’m anxious and excited to learn as much as possible about investment properties. Have you started looking at investment property recently? If you purchased a short sale, how long did it take?

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photo credit: Rob Lee

This week I’ve found some great personal finance blogs and one in particular made me laugh out loud. You’ll find it among the wonderful articles found in my Google reader this week. If you are new to The Passive Dad or a regular visitor, I hope you consider subscribing to my blog and receive free updates via email or RSS reader.

Living Almost Large wrote Hip to Clip? about the trend she’s noticed of shoppers using coupons. I’ve been clipping now for about 2 months and enjoy interacting with other shoppers. I’ve managed to help out some shoppers when I had an extra 20% off coupon that I didn’t need.

If you are looking for a great source for coupons, be sure to checkout Coupon Dad before your next grocery trip.

The Family Wallet wrote Freezing Meat to Save Money and I’ve actually done this recently. We had a local store advertising tri-tip for $2.77 a pound and I bought several packages for our freezer. We bbq almost every weekend and we’ll use it up this spring and summer. Do you freeze meat or veggies if you find a good deal?

Money Ning wrote The Secret to Having More Time and Being More Organized and asks how you spend your time each day. Do you accomplish more if you stay busy throughout the day or if you have more down time?

One Frugal Girl wrote Real Numbers: Eating at Home Saved us over $130 this Month and shows how eating at home can really add up.

Not Made Of Money wrote The Tightwad Gazette – 4 Things I Learned from the Queen of Thrift and mentions how precious space can be in your home. It feels like I’m always having to find another way to store kids clothes in the garage. Currently we have the plastic stacking bins with different ages and clothes marked on the outside.

No Debt Plan wrote How to Start the Drug Store Game and walks through the process of saving money utilizing coupons and money saving programs. I’m looking forward to following Kevin’s progress.

Nancy Zimmerman wrote the funniest post I’ve read all week called Friday Fun: the Taco Bell mgr who wouldn’t accept the $2 bill as payment. You’ve got to read this perfect narration of what happened when she tried to buy a burrito. It seemed that Taco Bell thought she had “funny money”. Have you ever had someone reject a $2 bill before?

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