I made it 12 months as a first-time homeowner and landlord! Huzzah!
Location, Location, Location
You know that old real estate adage “location is key”?
It’s true. It’s so true.
Less than a mile from me there is a huge park with its very own conservatory, rose garden, and lagoon. It’s a beautiful place to stroll around in both winter and the summer. The houses there are immaculately kept historical houses that command a very high price when selling.
A mile in the other direction is a bluff overlooking the river. The houses there are sprawling mansions built by former river boat captains and other town notables. The houses in the neighborhood behind those bluff houses, while not quite so sizable, are still wonderful examples of turn of the 19th century architecture. It’s a very in-demand neighborhood and it will cost you a pretty penny to get a property there.
In between those two neighborhoods you have my house. A beautiful Neo-Georgian Revival style house built by a talented carpenter and his sons in 1910. The woodwork is incredible and the craftsmanship would be hard to beat in this day and age. She’s a solid house for being 108 years old.
And yet, if I were to put it on the market, I would be lucky to get a fraction of the price as houses in the other neighborhoods around me, just because of where I’m at.
It’s not the greatest of neighborhoods. There have been multiple instances of law enforcement being called in the year I’ve lived here. Recently, a guy decided to shoot up the house directly behind me. My property and people were fine, but the property manager of the house behind me has some drywall patching and window replacing to do.
(sidenote: my Reolink security cameras caught the whole incident and the cops were very impressed with the quality of the video. you could even see the puff of dirt fly up from where a bullet missed the house and hit the ground instead.)
This location has made it tough to find quality tenants. I was lucky enough to inherit two tenants when I bought the place, so it took me a while to figure out just how difficult it would be to get good tenants. The tenant I managed to find in December paid his rent for two months, and then abandoned the lease for a new job. I’m out one months rent, and more while I attempt to fill it. At least this time cleanup was minimal.
Last time I looked for a tenant I papered the internet with the listing. Facebook got a lot of interest, but the quality of the applicants was very low. I do not have the listing up on Facebook this time around so interest has been low, but better quality.
If I’m struggling to find people to pay rent, finances can’t be doing so hot, right? Well.… they’re not as great as they could be but they’re not terrible. I’m not making buckets of money like I thought I would, but I’m not really losing money either.
If you recall, I paid $85k for the house, and rents were $600, $500, and $385.
After a year, I’ve paid off 2% of the mortgage and I now owe $75,762.73 on the property. Rents are now at $575, $625, and $500. I brought the rent down $25 for my good tenant as he will be the “lead tenant” in the house when I move out. He’s an awesome guy and has always paid his rent not only on time, but a few days early. Unit #2 is the one bedroom. I raised the rent $125 when I kicked the first guy out to $625 which worked for a few months. My unit, the studio, was going for $385 a month when I moved in, but I raised that to $500 based on comps from the neighborhood.
I’m happy I found someone to take over the studio! This will definitely help ease my anxiety. He seems like a really nice guy too.
I should be set financially based off those numbers, but that is not the case. I’ve been taking up space in the property so no rental income from me. The other unit needs a solid tenant. And there’s also all the repairs I’ve had to do to the property: things like attempting to paint the outside, replacing the front porch and turning over the after my gross former tenant moved out. Let’s take a closer look at the numbers:
So down about $7k. Not great.
But wait, this doesn’t include the housing costs I saved myself by living here. I would’ve lived in a house or apartment that cost at least $1k a month, so I’ve got an extra $12k to add to the line. That leaves me up about $5k for my first year. I wish I could’ve done better but that’s what it is.
After the shooting happened next door, I just wanted out. I didn’t want to have to care about this drafty pile of wood in a dodgy neighborhood. But it doesn’t look good to sell a house after only a year, so I’ll keep it at least another year. The numbers also don’t make sense and I don’t want to be out that much money.
I am going to find a property manager, though. Hopefully not living in the house, dealing with the day-to-day stress, and having someone else collect the rent and find tenants will make this an easier process.
I also have at least one more major repair. The back stairs and deck were not built to code and won’t pass inspection anymore. The whole kit and caboodle are getting replaced this spring. It will cost at least $10k to get that replaced. I’m having the same guy who did my front porch last year do the project. He does great work and charges a reasonable price. I say starts at $10k, because neither he nor I know how the deck was attached to the house and he could find rot that needs addressed.
I hope he doesn’t find anything. The more money I have to pay to replace the deck, the shorter my financial runway after I quit my job. However, getting a $10k bill has lit a fire under my butt. I’m even more determined to work hard and make it now.
This house is the biggest liability I have.…. but also my biggest asset. Wish me luck with this property in the next 12 months!
Thanks for reading! Landlords, any recommendations for me? If so, sound off in the comments below!