The Truth About Real Estate Investing...Part IV
…It’s not as easy as the Gurus make it out to be.
Part IV: New Landlord
After moving into my new home, I started working on renting out my first. I bought yard signs, and posted them in front of the house. I put out signs on the major entrances to the neighborhood. I even listed it on Craigslist.
I got several bites, and talked to them all. I had no idea what screening was, or how to do it. I only knew what I’d read in the few not-so-great investing books I’d invested in up to that point.
I settled on the family of a traveling minister. They signed a lease I’d picked up at the local office supply store, wrote me a check for the deposit and the first month’s rent, and moved in the next day.
I was excited because I’d come from a single sailor with no savings and horrible credit, to a homeowner, and now a landlord. All within two years after deciding Real Estate investing was for me. I’m living the American Dream!
The rent was about $300 more than my mortgage, so I thought I was doing well. I had no idea what CAPEX, Repairs, Vacancy, etc. would cost me down the line, but in the moment, I was happy.
Two months after the family moved in, the minister told me they had to move due to reassignment. Okay, I’ll find a new tenant. I wasn’t required to give back the deposit, but I did because he’s a minister, and I’d feel bad otherwise. I “lucked” into a new tenant that was able to move right in, so no loss of income. Same type of lease, same deposit and rent, just new person.
Then the calls started coming in. The refrigerator stopped working. The disposal stopped working. There was a leak in the bathroom. After a half-dozen calls, I decided it was time to hire property management. I found the local mom and daughter management company that would charge a flat 10%. I hired them and turned over management of my new needy tenant, and started sleeping at night again.
Within a couple of months, that tenant left. Not only am I now spending 10% of my rental income on management, but now I’m spending money on advertising, and I’m losing rental income. Luckily, my new management company was able to sign a new tenant within a few weeks, so not too shabby. They also raised the rent quite a bit (the benefit of knowing the market). Now I’m good. New tenant (properly screened this time), higher rents, and no phone calls.
About a year after starting to rent the first house, I got married, and promptly received orders overseas. I signed a contract with the management company to start leasing the second house when I transferred.
Starting my new life with my new wife in a new land, two houses rented, both making money (sort of), and now I’m never home. Luckily I married the right person. She managed the property manager while I spent most of my time at sea. Everything appears to be on track…Or so we though.
Come back later for Part V.
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