I’ve now been a landlord for 8 months, 4 days, and 23 hours.*
I never would have imagined learning so much about myself, other people, and how the world operates in just a few months, but I’ve crammed what feels like a lifetime of knowledge into that time frame.
Neighbor interactions
I was a bit hard on my neighborhood when I moved in, but you know, it’s not so bad. Certain neighbors have moved out and the area could almost be called peaceful. Almost. I don’t feel like I need a gun or self-defense classes anymore just because I live here.
The neighborhood is on the cusp of a major transformation. I’ve noticed houses around me getting fixed up and looking nice since I started improving my property which only benefits us all in the long run. It makes me happy to hear the work being done and to see the shabby houses look better. They’re beautiful old houses and deserve to be treated nicely!
Contractor Interactions
Dealing with multiple contractors as I tried to get the house looking nice was an eye opening experience, to say the least. I dealt with the bad contractor and learned a lot of lessons from that experience. It wasn’t enough that she was licensed, insured, and bonded. Contracts, scope of work, and checking out recommendations from previous clients are all must haves. I will not be making mistakes like that on the next time around.
Tenant Interactions
Kicking out my tenant this summer was one of the hardest things I’ve ever done. I liked him as a person, but I couldn’t handle all the other things he brought to the house, such as, ya know, meth. I definitely made a rookie mistake (ok, more like 5) when dealing with him. I should’ve got the rent before I gave him his verbal warning. I should’ve left the paper on his door in addition to mailing a certified letter.
I should’ve moved faster on renovating the apartment. As it stands, I finished it shortly after I got back from FinCon which meant I started looking for a tenant in November. Not an ideal time to be finding a tenant as most people are settled in and focused on the holidays.
However, it only takes one person to fill my unit and I’m happy to announce I’ve succeeded!
Yes, that’s right, my house will be at full occupancy once again!
The location is perfect for him as it’s centrally located to all the places he usually goes. As he works second shift Tuesday-Saturday, I won’t even see very much of him. He seems like a nice guy and he is very grateful to have found a nice place to live.
What’s Next?
Now that I have a tenant lined up I can focus on the future.
Ideally, I would be saving up money for a down payment on my next property.
Instead, I’m saving up money for future repairs. I have two main renovations I want to accomplish on the property in 2018. The first renovation is to get the back stairs and deck replaced. The wood was never stained, so it is very slippery when it rains. The handrails are starting to rot. It’s barely wide enough for appliances to be hauled up it.
Most importantly, the supports were never attached to the concrete footings. They’re just sitting on top of the concrete. Well, the ones that haven’t started to slide off are on top, I should say. I also have no idea how the whole structure is attached to the house and that makes me incredibly worried. Given the track record of past repairs on the house, I’m going to say it will need more work than anticipated. The contractor who replaced my front porch will be doing this project as well and gave me a quote last year that started at $6k. Not too shabby for demolition, removal, and complete replacement of a lot of wood.
The second project will happen after the stairs are replaced. I would do it before the stairs, but I anticipate the exterior needing a bit of work done after the work is done. I need to get the house repainted. I will be going with the reputable and highly recommended house painting company this time. I will get another quote from them before I go with them.
I want to get a second quote because the scope of work will be different. Instead of using them as a general contractor for the whole thing, I will be the general contractor and find people to do the various parts of the project. I need some shingles replaced and some wood work repaired, new seamless gutters (NOT the widest ones offered at Home Depot), and the entire façade scraped, sealed, and painted correctly. Wood work comes first, then paint, then new gutters.
I was hoping the craptastic gutters put on by the bad contractor would last, but they’re already starting to fail and fall off. At least my front door still looks nice!
Overall, I’m anticipating the work to run about $20k. This is about the amount of money I can expect in rental income from the property if it’s fully rented out. I’ll be able to write off the repairs and not pay taxes on the income, so I’ve got that goin’ for me, which is nice. (Tax people: that’s how that works, right???)
I’m optimistic I’ll be able to purchase another property in 2019. That should give me plenty of time to save up and gain some more landlord experience points. The good thing about making all these mistakes is the knowledge I’ve gained, and the knowledge I’ll never make that same mistake again. I’m sure there are plenty more to make, though I hope to avoid them by talking to my real estate pro friends and consulting places online like BiggerPockets and landlord Facebook groups.
Let’s hope the worst is over and things start to go better for me in the future!
*as of writing. It’s been longer now!
Do you have any wish to be a landlord? If you are one, any interesting tales lately?
Love the Caddyshack inclusion! And I like your attitude about being in the learning stage and just plowing on. Do-fix-do-fix. It’s a great attitude to have in life!
Thanks Accidental FIRE! It’s gotta get better.…. right??
Get everything in writing and signed… That’s what I’ve learned over the past 8 months.
Thanks for sharing your story!
Excellent advice that I wish I had followed then!
The only thing you have to watch for taxes is the difference between repairs and improvements. I finally bought the NOLO tax deduction guide for landlords and it’s really helpful (although not really a page turner!) Large improvements need to be depreciated on your taxes just like the property value, except of course, it’s different depending on the type of improvements. Ugh.
Thank you for this, Jillian. Seriously. I will look at the differences and make sure I note them properly!
I would consult a CPA. That’s what we do. There are many nuances and rules when it comes to deductions, and that 3rd party helps a lot when you’ve got many moving parts. You also learn things. Like last year we found out about a new rule that repairs under $2,500 are deductible 100% in year #1 — even if they’re normally depreciated (like appliances, for example).
This sounds like a kick in the teeth… Glad its starting to turn around but what a huge headache…
Wait til you hear about my latest episode. It’s called: gas plumbing. Woo!
I would love to get into rentals! I don’t have the capital at the moment, but hopefully someday I will be able to 🙂
You sound like me 2 years ago 🙂
Oh the joys of being a landlord. I’ve been at it for almost ten years and certainly have some stories.
The repairs you have in front of you are a financial hardship, but seem to be needed. Especially the stairs. You don’t want a tenant that falls and then sues you for negligence. That would not be fun!
Especially as the reason the stairs had to be replaced in the first place was because someone fell through them and got seriously messed up. I would like to avoid that for sure!!
Keeping all of your lessons in mind as the wife and I start shopping for our first property in the new year! Thank you for helping our learning curve without hurting our wallet haha!
Good luck! That’s why I write- so others can learn from my mistakes without the financial hit!
I just have zero interest in being a landlord. Honestly I want to get as far away from renting as fast I can as soon as I can! I’m typing this while my neighbour has another crying fight with his girlfriend 🙁
Biggerpockets rocks! My goal is to stack money and be able to buy a multi unit property to gain some economies of scale. Thanks for sharing your experience this far.
Or you could apply some non-skid treads to the dodgy stairs, buy a house in 2018, and fix the stairs in 2019. You have one unit, which means your vacancy rate ranges from 0% to 100%. A lot of variation. If you get a multiplex in 2018, your vacancy rate will have softer swings. I’ve found the mix of a duplex and fourplex manageable while holding down a full-time job. You have to remember that your rental business is a business and the pride of home-ownership is a temptation to spend money improving the property more than necessary. Make everything fixed and good. Not better or perfect.
Hey, Gwen. You’re a braver soul than I. Mrs. G and I dabbled in real estate and landlording for a number of years after we moved to Charlotte. For three of the four properties we owned we had lousy tenants. But thankfully they left when we asked and we didn’t have to go through the eviction process. Add in the slight profit we made on the sale of those three properties and the few months of lost rent was covered. Our final property had great tenants. But the husband got arrested for drunk driving in 2015. Upon his arrest it was discovered that he had immigration issues. So he was shipped off to an ICE holding facility in Atlanta. His wife was a stay-at-home mom with three small kids. In other words, there was no way she was going to pay the rent. So what were we to do? Kick them out? Start the eviction process? There was no way we were going to do that. We told the mom to forget the rent and even gave her some money to make sure she had money for food. I even went by every week and cut the lawn. Thankfully, the husband was out of jail in four months and he eventually got a green-card extension. Anyway, even though we were never terribly burned by our tenants, we learned that we didn’t have the temperament for being a landlord. Just too much drama. And we didn’t have the heart to run our rentals like a business. Well, that’s my story of woe, Gwen. Thanks for sharing your trials and tribulations in real estate. It’s nice to hear that I’m not the only one has some real estate horror stories.
Dealing with tenants could certainly be hard. Sorry you had to deal with the meth guy.
I wonder if hard money would be an option for you on the renovation then do a refi. This would free up your capital to buy another house.
I find it much easier to find better quality tenants, treat them well, not nickle and diming them. It pays off in the long run.
Good job Gwen, you seem to handle all of this pretty well.
I could never be a landlord. My parent does property management and it all honestly sounds like a prolonged nightmare. That you’ve been able to overcome your setbacks as a landlord really shows your resiliency. Best of luck moving forward!
I can’t understand your goal as a landlord. Is it to fix up the house to sell? Are your reno’s Forcing appreciation? Because from what I can see is that your rental hasn’t made you any money? What am I missing? I attribute our early retirement to real estate investing, and have used different strategies to do so, including renovating to force appreciation, but that only works if you sell. Currently have 4 rental properties, but we buy properties that need a bit of elbow grease, as in cleaning, painting, maybe replacing a floor etc. But if it doesn’t generate income in the first year.…it isn’t a good deal. Sometimes it is better to pay more and start making money as opposed to being bogged down in repairs.
I would have to second these questions — real estate can be a huge money suck depending on the specific rental/tenants.
It will definitely be a whole new ballgame once you’ve moved and aren’t living right there as well. Why it’s so important to get some stellar (hopefully) long term rentals in there now!
This is really a wonderful article and comment section on the real estate topic. I would like to read more about these topics.