How can I Vacation as a Landlord?

beach-641548_1280-PDIt’s been a few days (weeks?) since the last post.  All things are going well, September rent is starting to come in already.  I was out of the area in International Falls, MN for a few days, and did not have much of a cell signal.

I was able to keep in contact with my tenants, although no major issues were encountered.  As I begin the mental (and financial) transition to living on rental income alone, I have started to document the process and thoughts as I go.

While this blog is important to me, it has a lower priority than my real job, or my rental responsibilities.  It’s even lower than my daily 3-mile walks with my dog and girlfriend.  The dog certainly thinks so.  I do try to keep life in perspective, especially over the past year, as my true few ‘free’ hours are often commandeered by another higher priority task with very little notice.  I am slowly getting into the retirement mindset.

Here is how my recent vacation as a landlord went.

vacationI was in International Falls, MN for a brief fishing trip.  In International Falls, Verizon has a cell tower and 5 bars.  I was up there with some relatives and the ones who had Verizon had no issue with calls.  I had (weak) WiFi access in the lodge, so I could get emails, but no calls or texts.  Not even 911 calls would work (which was an entire separate fiasco that involved getting pushed through a window…).  I always thought that 911 would work anywhere.

 

Cheap Mobile Plans are Not Always the Best

I was using Walmart Family Mobile, which is powered by T-Mobile.  It is a great plan for what I used it for until this trip.  It would probably be great for 90% of what I need.  It only cost $73.18 for two phones, all you can eat in terms of text, data and voice.  Free international calling, except where I was.  Maybe it was because my phone only had 4G, not 4Glte?  I was very close to Canada, but no connection.  I was on the phone for about an hour trying to get something set up, and even purchased an ‘extras’ pack for ~$11.  No luck.  I asked about Wifi calling, Family mobile does not offer it.

Once in a while, while traveling on the lake, I would get a random spot where a text would go through.  It was very sporadic, I would check my phone and a text would be there.  In one small spot we anchored, periodically I would get the text notification.  I could not make any calls, and the texting was very spotty.  Sometimes they would go out, sometimes they would fail.

I tried WiFi calling, but although T-Mobile has WiFi calling, if you are only “powered by T-Mobile”, you do not have it.  With WiFi calling, you may be in the middle of nowhere, but have a McDonald’s with WiFi, and be back in touch.  This is important of I want to manage rentals while I am on ‘vacation’.  Taking calls and making calls is easy.  Especially if there are no calls.  Paying someone not to take calls is expensive.

Cell Towers In Town can Save The Day!

Luckily, we were only ~10 miles from town, and I went into town at least once a day.  Once in town, I had 4 bars, and it was not an issue to communicate with the outside world.  From a McDonald’s, I was able to order a new plan from T-Mobile directly, so I could use WiFi calling on future trips.  Even if I am on a cruise I should be able to stay in touch, either at ports, or on the ship with the ships WiFi.  I do not need much, but a couple of check-ins a day is nice.  The tenants appreciate it too.

You can certainly manage properties from a distance.  On this trip, I received a few texts from tenants.  Once had a sticking toilet handle and loose towel bar.  Another was seeing a bunch of wasps and wanted me to see what I could do.  There was no wasp nest, so it is difficult.

Property managers take and make phone calls.  Schedule your vacations around vacancies and you can manage your own property, if it is close by.  Save a bunch.

I am not 100% sure why I need to feel ‘attached’.  One of the most relaxing vacations I had, was a cruise where I could not be reached back in the year ~2000.  Of course, I did not have any rentals at that time.  If an emergency arises, I want to address it relatively soon.

Back to Fishing

And the fishing was great with the Guide we hired.  We caught ~20 walleyes, most between 22” and 24”, which is 3-4 lbs.  Unfortunately, only walleyes under 17”, or over 28” can be kept on Rainy Lake.    When we kept some of those, it was almost lie they were too small.  We did catch enough fish for a shore lunch, which was great.  I did think that if we had a deep fryer in the boat, some of those larger fish would not be so lucky…

Planning the Next Vacation as a Landlord

I am now on T-Mobile, which was a small, painless transition.  I had to get my phone unlocked, which was free.  Then port my phone number over.  I will get Wifi calling, and possibly a better signal when I switch to a 4G LTE phone.  It may even be better for international calls when on a cruise ship or the next time I am near the border.  It is ~$30 a month more, just over $100 for two phones.

How was your most recent vacation?  How do you feel when you are out of a cell signal for an extended time period?

15 Replies to “How can I Vacation as a Landlord?”

    1. Thank you for reading George!

      The topic was more based on how to be able to do it as a landlord, not necessarily how I can do it myself. I have looked at property managers, and I find that most just do not have the skills to be able to manage as effectively as I can. It would probably cost $30K – $40K+ a year for me to have a PM. $30K+ to hand over the 15% management fee. With 10 turnovers in 2015, that’s another ~$10K. Not to mention all the money I save by doing the turns myself and responding to the several maintenance calls a month.

      As long as a landlord can stay ‘connected’, making the necessary additional phone calls to hire out the plumbing, electrical, handyman, etc. work, is not that difficult. Google and a short list of preferred contractors or handymen is all it takes.

      I do plan on starting to sell in a few years, as my investment accounts grow a bit more. Perhaps by the time I am 70, all will be sold. That’s one every other year, if I started now.

      1. I actually have lucked out and work with a boutique reality company that consists of one individual who does real estate investing for her family, foreclosures, rehabs, wholesaling, etc and manages a real estate portfolio of her own. And then the other Realtor in the same company does student rentals. Ie buys a tear down, puts a group of townhomes on it and then rents it to college students. Between the two of them they have a huge portfolio of trades folks that they have shared contact names. So plumbers, flooring, painters etc.

        I am not a handy as you are, at least when time between turns is of an essence. I mean I can paint, or do minor repairs, but sometimes knowing it is done fast and correctly is worth it to me. Even if it costs a little more.

        I am surprised you are set on selling the properties off over time vs just hiring a manager to maintain them into retirement.

        My wife and I are hoping to buy 4 or 5 properties (or more) and then have them paid off by retirement and use the cash flow as our retirement income. I particularly like the hedge against inflation that a rental should provide if we ever see inflation like we did in the 70’s. (I think we will see high inflation sooner rather than later)

        Thanks for the response I really find a lot of information in your blog. We just signed a contract to buy our 3rd property (one duplex and 2 single family homes) since June of ’13.

        1. I can generally do a turn without any vacancy, especially if the tenants vacates a few days early. I have two weeks of vacancy coming up in November, but my vacancy rate for 2015 will be 2.44%.

          I may keep the properties and hire a management firm at some point, but since I plan on spending more money and not leaving it to anyone, cash will be king.

          As the Stock Market has dropped significantly recently, it makes me realize how safe real estate really is. It even provides a part time job…!

  1. I, too, am surprised that you’re considering selling some of them off during your retirement. The capital gains taxes (with the net investment income tax) are soooo steep now. (I know a lot of people are laughing at me because cap gains used to be taxed as ordinary income. But still, it stings.)

    The current cap gains rates don’t sound so bad at 15% federal plus whatever your state is (I’m in California, so ouch — 9.3% for me), but the reality is often much worse. After selling off my old rental condo (not a good choice for an investment property), I got hit with the net investment income tax, and the capital gains were high enough that it also kicked me into the AMT category for another hit. I paid really, really conservative tax estimates and was still shocked when the total tax bill was calculated at the end of the year.

    There’s a lot you can do to minimize the tax hit, though. Installment sales, which would spread out the cap gains over several years. Or a charitable remainder trust that would give you a big tax deduction in one year, which could offset the sale of another property in that same year.

    Are you planning any creative things like that, so at least a huge chunk of your investment doesn’t go straight to the IRS? I’d rather leave some money to charity than give up all of it to the government.

    1. Thank you for reading Amy!

      While the tax implications are better if I just pass on the properties for the increase in basis, I do not want to pass on properties to distant relatives that may not know how to deal with them. I can also spend the money, rather than pass it on if I sell ;-).

      I will be looking at it very closely, as there may be ways to use different entities to step up the basis. Or I may have to move into each one for a few years…

      1. Thanks for blogging, Eric! I enjoy reading it. 🙂

        I completely understand and support you wanting to be able to spend your hard-earned investments! A comfy retirement is certainly well deserved, after all the labor you put in, and that would be far better than leaving the property to distant relatives.

        I would be interested to hear what you decide to do, tax-wise, when you start selling off the properties. Keep in mind that the rules changed for moving into properties and then selling them. It used to be that you could move in for a couple of years and then sell, and get the full $250k cap gains exclusion, but now there’s a complex proration that gives you only a fraction of the exclusion amount. I commented on the financial samurai blog about it, and Sam ended up making it the focus of his next post. If you’re interested, here’s a link to it: http://www.financialsamurai.com/tax-free-profits-for-home-sale-250000-500000/.

        I’m not promoting myself here, since I don’t even have a financial blog, but I just wanted to call your attention to it because the post is directly on point with what you said. The comments are especially valuable, particularly the one posted by Dave on 3/26/15 at 4:46 a.m. You prorate the amount of gain, but you can still get the full $250k exclusion if your gain is big enough that the exclusion ratio leads to a calculation of excludable gain in excess of $250k. (Reading that last sentence back, I realize it’s about as clear as mud, but hopefully you get it.)

        1. I will definitely have to look closer at this when I get a bit older. Right now, the rentals generate a decent sum, much more than the market. So I need to keep them. I am definitely unsure of this market, and think we may be in the Japan style doldrums.

          A 1031 exchange into a future home in a tax free state might be an option to saving some Minnesota state taxes on any capital gains. It would also allow me to get a place fixed up before I lived there.

          1. You have to do the 1031 exchange, keep it rented for ~5 years, then you can move into it. I believe you still need to capture the depreciation, but much pf the capital gains have the personal exclusion.

  2. I went on 6 vacations this year, some of which I got call from my tenants. But I’m still sticking to my budgeted phone plan:

    I, too, have T-Mobile, but I’m on the pay as you go plan. I paid $100 initially to get the gold plan, so my minutes can last for a year. After a year before the minutes expires, I’d add another $10 to keep my gold status, which will last for another year.

    For my main phone, which I use magicjack which now has an app that I can put on both my phone and my iPad. As far as I’m concerned as far if im in the road, I have no business talking on the phone or texting. If I’m at home, or at work then I have wifi to talk on the magicjack.

    T-Mobile offer 200mb data on iPad for free, so I hope they don’t stop. So occasionally, I’d get lost, I’d turn on the data plan, and search my way, or talk on magicjack to call Mr. I also carry a traditional GPS that works quite well and able to find restaurant and such, win-win situation. Keeping expense low is the key.

    People who come to me asking for money are generally have higher inflated lifestyle than I do. Premium tv plan, new phone every year, unlimited calling, texting, and data (in reality, they don’t even talk on the phone anymore, text can be free with tons of free apps, as far as data, they are afraid to use it anyway as the company throttle the speed after a gig or two).

    1. Thank you for reading!

      I just set up the Magic Jack app up on my own cell phone. I can dial from that number, whether I am at home, or mobile. I am still wondering what happens on a cruise ship. I think I can forward calls to my Magic Jack phone and answer them via the wifi. At least be able to check messages. I won’t be cruising for at least a year, but I had to get it set up now (haha).

  3. I just recently found your blog and have enjoy reading your posts/comments. My wife and I are semi-retired and have a small portfolio of 29 units. We manage 24 ourselves and have a PM company managing the other 5 as they are out of state. I do some of the minor repairs/maintenance but hire vendors for most plumbing/electrical/rebuild issues. This way we save on PM fees (I am not the best handyman around, nor the quickest!), but still get things handled in a timely manner.

    We have 2 kids in school so we mostly vacation during the summer and on school breaks, and have been doing so for a number of years. We have not had any major issues come up (knock on wood) that could not be handled by phone. This summer and last summer we were gone about 50% of the time and were not too concerned about being gone.

    We are both in our early 50’s and, like you, will most likely start selling off some properties in our latter 50’s early 60’s.

    If I recall, I originally came across you on early-retirement.org, a wonderful resource. Good luck with you transition to retirement!

    1. Thank you for reading!

      I am glad there are some people in the same situation as I am. I probably do more maintenance than you, but as I travel more I plan on farming more of it out. Much of what I see can be handled by phone too, although I save a TON of money doing my own maintenance. I do quite a few appliance repairs and do a bit of plumbing and small electrical fixes.

      I just got done showing an apartment, collecting a bit of rent, diagnosing a washing machine repair, and fixing a loose towel bar.

  4. I love fishing! When I retire early, I will spend a lot of time fishing I think and staying in the outdoors. Here in TX I mainly do bass fishing but when I get out to the gulf we go for reds. I caught a mackeral a few weeks ago over in Port Aransas and it was a nice one.

    Glad to see youre enjoying life!

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