Second Month of Landlording a 4-plex Check-in

[Account Closed]

Hello everyone,

This is my second post to this community. Finally closed on the 4-plex and been property managing for the past 2 months. The community, podcasts and most importantly the book Rental Property Investing by Brandon Turner helped me a lot in these past few months.

Renters

3 out of 4 units are rented. This was the first anxiety that we had. I did my homework, from demographics, trends in the past 50 years (jobs, rental cost, population trend, vacancy rate), and so on and so forth. I know that the city has been consistently growing without missing a beat in past 30 years, vacancy rate is 3%, rent price was increasing in past 20 years, unemployment is consistently low at 3-5% at past 20 years and so on. But that wasn't enough to relieve my anxiety. I had to see it for myself.

Advertising Vacancy

I posted the ad on almost all platforms. I know this varies by community. I moved around, and in some parts of Canada, they love Kijiji (owned by eBay). Some parts of Canada, they love Facebook marketplace. Some love padmapper and similar apps. In this case, I exclusively got response in Facebook marketplace, as I expected.

The moment I posted the ad at midnight, I immediately got a response in next 5 minutes. Another in next 30 minutes. And after 10 hours, I had 10 requests. I lost track at that point.

I did a showing by just working from the empty unit all day long. I am a software engineering manager, and I work fully offline, so no problems at all. Kinda fun tbh.

I ended up having 2 people just from talking and lifestlye (pets, kids, jobs), I picked one as they have a more consistent income and did a vetting on credit/background for around $40.

Within 3 days, the vacancy was filled.

Renovation

No property is perfect. Most property out there have some problems when newly bought. This one is no exception. The problems:

1. No shed. Shed are necessary to store my mower, rakes, snow salts, and other maintenance items.

2. West side roof needs re-roofing. 

3. Need new washer as old washer is broken.

Renovation - Shed

I have 3 sheds from my home. I don't use one of them, so I dismantled it and placed it in my trailer and hauled it to the city. Assembled it there again. Done.

Renovation - Roofing

Most important renovation roofing. I got quoted from 8K - 10K. The roof is steep, so it is hard to work with. I thought, this will wipeout 75% of my expected net yearly profit. Having installed my own 14kw solar panel system on my own house without prior experience, I decided to do it myself on weekends and before and after work.

It was way steeper than my roof. As you can see in the photos, I placed stepping lumber so I dont fall, in addition to tethering myself to an anchor in the roof. It only took 1 week.

While reroofing:

Half way:

I finished just on time, a week before winter. I was not able to walk properly after lifting 2000+ lbs of shingles. It was worth it and I really appreciate it. Might or might not do it again on the next deals. I haven't made a conclusion if it was worth my time or not. If it is a small enough house like this and I do have not much to do, I can just drop my 1hr exercise routine and 1hr lunch walk to do this. If I score big in the future and have an 8-unit apartment or bigger, definitely going to hire.

The tally of all the receipts from new tools and materials is $2,000. I just saved 6-8K, with tax, 7-10K. I am very proud.

Renovation - New Washer

I researched so much on what to do. The option was to buy a coined washer for around $1500-$2000 or a normal washer for $100-$200. Obviously the former guarantees an extra $30 a month of income (in retrospect), but the latter is way cheaper and it will take, 50-66 months (4-6 years), to pay back. I ended up going for the normal washer and will add later but might buy the $400 product to take money and have a timer on the laundry/dryer. That one will only take 1year and a bit to payoff from the assumed $30 a month income.

Financials

I am not gonna discuss a lot here, but I'll try to discuss the important stuff.

My cap rate is 10.6% despite the rental rate is not the highest. Even in winter, when gas bills are significant, I am netting around 1.5K a month. That is after mortgage, amortized insurance, property tax and so forth.

Conclusion

I am very happy. If I am profiting in these bad times, imagine in low-interest times. We will buy more soon, and we are just giving our credits a rest and have 3 months' worth of new income records to show the bank for the next transaction. Hopefully in January. My company will get acquired again, so perhaps an 8-plex?! Who knows! I am very excited and cannot wait for next.