I am in the middle of a somewhat major remodel on a rental property. It will require a few thousand dollars to get it back in shape. The renter was not too bad, and they lived there for over six years. They had good income, always paid on time, and left with proper notice. Unfortunately, they were big-time slobs.
Although I was not able to show the unit while they were in there, as it was a bit messy, I was able to rent it for June 1st. I rented it at a price $100 more to tenants without a pet, than the previous tenants rent that included a $25 pet fee.
Here is what I am doing to the property to turn it and prepare for future rentals.
A few months ago, I wrote a piece about another investment property purchase I was considering. If you want to make money as a landlord in real estate, you must be able to purchase rental property at a discount. As it turned out, that property never materialized, probably for the best. I was going to be a partner on a $1.4M property, put up $100K+, and be a partner on a $1M loan. I did not want to get stuck on a large loan, with limited mechanisms to get out.
As it turns out, all good things come to those who wait. Here is a recap of my recent investment property purchase. Remember, if you buy via the MLS, you are probably paying too much.
My rental cash flow and rent collections for March 2016 went very well. All but one was collected by 3/5, although I did have more difficulty than in previous months. One renter still needs to pay an additional $150, which will be paid on 3/18.
When a renter need to make the rent payments in multiple days, make sure you get a sizable chunk at the first of the month. Do not let a renter pay on the 15th, and more on the 25th. At some point, you will be evicting, and you will be a month behind.
I had another renter that may be an issue, and some vacancies coming up. The month was not as smooth as previous months, here is how the rental cash flow went…
I had the pleasure of being interviewed for a financial independence interview for blog called Even Steven Money. As I have done a few of them in the past, for other blogs, I find that they are always a great inflection of my own goals.
The questions make you think and put down some thoughts on paper. The interviews become part of your permanent “internet record” that you (and others..) can look back on and reflect.
In this interview, I go through some of my background, financial independence goals, motivations, and some random thoughts. As I wrote the answers to the interview, it did remind me of some of my past. I have some a long way from my start, just a kid that always thought I would wind up in jail at some point. (For the record, I have never been in a jail cell except for on a jail tour. Getting bailed out before you get put into a cell doesn’t count.)
You can read my full interview here
Let me know what you think of the interview? I may post more about my background in a future post, stay tuned.
This article is about how to fix a range heating element, but it is really about more than that. It is about maximizing your existing revenue stream. Making the most of what you have available to you.
When you own rental property out of state, you are at the mercy of everyone. You need someone to respond to calls, you need someone to fix minor things, you need someone to drive by the property periodically, etc. Every one of these events takes time and money. Your money. Your retirement and financial independence money.
This is a recent situation that happened to me.
At one time, I was just a working stiff. I still am, for now. Working a 8-5 job, sometimes on-call, weekends, and trying to climb the corporate ladder. I was a member of a hot shot team that was selected for future management. When you are climbing your way up, you have a tendency to make a lot of people happy, and some not so happy.
It’s fun when you are making a lot of money; but you know the money train cannot last. At some point, a merger may knock you down, a layoff, a boss that you cannot satisfy, or some other reason that you may not even understand.
Welcome readers of OurNextLife!
Regardless, you need to make sure you are prepared. An emergency fund comes first, then becoming debt free, then bringing in other forms of income. I already had the first two, when I started investing in real estate. Here is how I knew I finished the journey to be financially secure.
The Deck (at 50 degrees)
For those of you who follow my Blog, you know that my properties are very close to my own home. All are within a few miles; the furthest is seven miles away. It may not always be that way, and sometimes you will need to manage your properties from a distance. Even if your properties are close, if you move, perhaps to a retirement location, you will need to know how to manage out of state rental property
I wrote a previous article on long distance property management about this a while back. I also wrote about the disadvantages of having to manage out of state rental property.
The secret to managing any property is to have great tenants. Great tenants can think ahead, and can anticipate issues before they occur. They take action to avoid having a problem.
Regardless of where you live in relation to your properties, you need to be able to manage them effectively. Whether they are 7 miles away, or 700 miles away, you need to set yourself up so that you do not have to be on-site as often.
My recent trip to Florida will illustrate an example that can help.
More and more people are renting properties these days instead of buying. The reason behind this is the increasing cost of real estate properties. If you are thinking of renting an apartment or a condo, you are on the right track.
When making a budget, include premium for renters insurance. In case you don’t know what renters insurance is, it’s a type of insurance that provides coverage for a renter’s belongings.
The rental cash flow for all of 2015 was the best ever in my history of a landlord. I had several apartment turns, but minimal vacancy between the turns. I am hoping that my last (half) year of working at my full time job goes well, and the cash flow continues for many years to come.
I am still working on procuring the next rental, and we have run into some title issues that are being addressed. I have the property locked in, but it’s not final. It should produce a solid 15%+ cash on cash return, with room to spare. It should also add an additional ~$500 a month to my rental cash flow.
I was able to save a record amount in my 401K, IRA, HSA and after tax accounts. All my tax deferred accounts were maxed out. I saved enough for me to live on for a few years…
When you are a landlord, you can either hire out all the maintenance, or do some of them yourself. I do much of it myself, and it saves a TON of money. When you are in doubt about how to fix an item, odds are, there is someone out there, with a YouTube video, who has dedicated their life to helping you fox the issue.
This bit of maintenance to fix a shower faucet leak started simple enough. It was a quick text by a tenant saying her bathtub faucet was leaking. Then a phone call. When you get a text and phone call, it becomes a bit more serious…