Fabulous Financials

The stress is over…or starting again, depends on how you look at it. LOL

After showing my townhome at least two dozen times, dealing with no shows, laughing at people who wanted me to ‘work with them’ on the security deposit and rent amount, giving the *side eye* to the young engineer who wanted five roommates, expressing concern to the disabled man who insisted that living in a 3 story townhome with 2 flights of stairs wouldn’t bother him, gasping in shock at the single mom who wanted me to falsify Section 8 documents, rolling my eyes at people who demanded that I ‘lower the asking price for rent’ as if they were doing me a favor, and completely ignoring countless other nutcases – it’s ALL over now.  Thanks to the best real estate agent/friend in the whole wide world, I selected a new tenant and they signed a one year lease, effective today.

A married couple, relocated from another state, new jobs, and two young children with pets.  Nice lady (didn’t meet husband, he’s not moving until Oct), well mannered children, good vibe.  The only thing that concerns me is the pet situation, but I collected a separate non-refundable pet deposit, so it’s enought to calm my fears.  Besides, I tried to learn from my mistakes of last year, so I did quite a few things differently.

• Other than the standard background, credit, and employment check – I also checked their rental history and chatted with their previous landlord.  Of the two listed, I was only able to get a hold of one.  He was the most recent so that was ok with me.  They were his tenants for four years, paid late two times, and left the property in decent condition.  He expressed concern about one of the children (autistic), but reported that they were good people.
• I provided a copy of the 500+ page HOA handbook and addressed major nuances based on experience with previous tenants.  I walked the neighborhood with the new tenant to identify extra parking spaces, the community center, and explained what NOT to do.
• We also discussed responsible pet ownership, yard appearance, maintenance calls, etc.
• Rent is to be paid via direct deposit only.  No cash, checks, OR money orders.
• I will schedule and commit to quarterly inspections with 48 hours notice.  Even if I can’t personally attend, my maintenance guy (along with my RE agent or next door neighbor, if necessary) will conduct the inspections on my behalf.

With all of these corrections, I don’t expect a repeat of last year’s issues.  However, it is very possible that I will experience new issues (and possibly, a few repeats of old issues), but at least I’m prepared this time and know how to manage my expectations.

Slowly but surely, I’m losing my personal connection to this home and it’s all starting to feel like a business transaction, which is a good thing.  As of today, my bank account is $3,000+ heavier and I have monthly cash flow again.  Yay!

*Lord, please help me through another year – Amen*

I received a small pay raise of ~3% that will increase my bi-wkly net income by ~$80. I refer to it as “small” because I’m used to double digit raises, but this salary adjustment wasn’t tied to performance, so I can’t complain. However, I am looking forward to my first semi-annual and annual performance review like a kid on his way to the toy store.

Now that I have a little extra change, what am I going to do with it?

1. Tax Adjustment: This small raise forced me to do something that I’ve been putting off since July – oh just call me the Procrastinating Queen Bee. I’ve been meaning to adjust my tax exemptions because I’ve had zero rental income since June and more business expenses than anticipated. So the first thing I did was increase my federal exemptions to 7 [I'm not a tax professional so please don't ask me how many exemptions you should claim].

2. Savings: I also reinstated a payroll allotment that was previously canceled when I achieved my eFund goal. I was supposed to redirect all extra income to my non-retirement investment goal. Remember that $5,000? Unfortunately, this summer alone, I’ve spent almost the same amount on rental property expenses. Needless to say, I probably won’t reach that goal this year. *shrug* It’s ok though. I’ll keep my eye on the prize, but I can’t worry about it right now. I’m just thankful I had the money to cover ALL rental property expenses without incurring debt. Therefore, the reinstated allotment will deposit $100 bi-wkly to a savings account that is earmarked for future rental property expenses.

Based on the above, I expect my bi-wkly net income to remain the same as pre-raise. “Every little bit helps” has proven true in this situation. The small raise made a big difference because it will help me prepare for the financial unknown(s) associated with this rental property.

Wish it could help me deal with these psychos submitting rental applications. Pure comedy! LOL

In March 2007, I accepted a new job, relocated to a new state, and contemplated what to do with my first home when I wrote To Sell or Rent – That is the Question.

Once I made up my mind to rent my home, I went on an All-Star Tenant Search.

In less than 30 days, I found suitable tenants and was pleased with my selection. They paid the rent on time and I was a happy landlord. That is, until 5 months later when they threatened to break their lease…right in the middle of the Thanksgiving/Christmas holiday season!

When problems in paradise are mixed with affairs of the heart, the result is a bunch of ish gone wrong. Unwilling to intervene in private matters, I kindly informed my tenants of “their” legal obligation to me and told them to make a decision ASAP. Fortunately, an interim solution allowed 1/2 of the dueling duo to honor the remainder of the lease.

After the full 12 months, they were gone. Whew! And I conducted my very first rental property move out inspection. Boy, was I in for a surprise! Dirt, crap, and more crap.

After the repairs and clean up began, I received a rental property update from my maintenance guy. Things were so bad, it took him almost an entire month to repair, paint, and clean the property to make it “good enough” for rental again.

The total damage? Read more »

My rental property is STILL vacant because my handy man is STILL working. Although I gave him a deadline of August 1st, he said he discovered way more crap after he began the repairs, cleaning, and painting. Ugh!

At the rate things are going, this is going to cost them their entire security deposit and a scathing rental reference from me. As I enter a second month of vacancy, this means I have to pay another mortgage with no rental income. Ugh x 2!

On my way home on Friday, I was thinking about how much I should pull out of my emergency fund for additional carrying costs. As of today, I estimate needing about $1.6k to cover immediate expenses (assuming we don’t go into another full month vacancy). Also, as of today, the e-fund sits at $20.9k. However, all excess over $20k was supposed to go towards the $3k I need to open my Vanguard account. Ugh x 3!

Oh, well. Gotta do what I gotta do. Vanguard will be on hold until I get this property rented.

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I just completed my first year of being a landlord, so the move out inspection was very shocking to me. Probably more so than it would have been to a seasoned RE investor. When I pulled up to what used to be my “home,” this is what I saw:

FRONT YARD

The front yard was a mess, but I have little expectations when it comes to a renter doing yard work. I’m going to make sure it is a requirement in my next lease – especially for the front yard. There are weeds growing around the flower beds, overgrown bushes near the front door, and spider webs everywhere. The landscaping on the right side was COMPLETELY washed out. My maintenance guy said it was probably due to the heavy rains. The rain gutters (??) on that side were missing, so that makes sense. But where did they go? I have no earthly idea.

BACK YARD

The backyard was not terrible, but it wasn’t as I left it either. I can tell they never watered the grass. There are dry, dead patches all over the yard. The grass was cut, but I can also tell they never took the time to trim against the house or around the fence. It’s about 3 inches high. Ugh!

GARAGE

They left all kinds of crap in the garage. The garage door does not lock. They did not leave the two automatic garage door openers or the two garage door keys. So I need to order new openers and keys and have the lock on the door fixed.

ENTRY/FOYER

When I entered the place, I saw a huge dark stain of something splattered on the floor in the foyer. WTF!! I have no idea what it is, but there are tiny stains of the same color throughout the first floor hallway. And they had the nerve to leave a broom and mop near the front door. Geez, thanks assholes!

BASEMENT

Other than the carpet and walls, this area wasn’t too bad. The electricity was disconnected so we couldn’t check the condition of the washer & dryer. The entire room was really dirty though. Even the ceiling! WTF???

CARPET ON FLOORS 1 & 2

The carpet on the first floor (basement), staircase, and second floor (living room) is sooo dirty, it may need to be replaced. I mean, big huge DARK stains. My maintenance guy is going to spray the deep soiled areas with an industrial cleaner to see if they lift.

BATHROOMS 1 & 2

The first floor (basement) and second floor (living room) bathrooms appeared as if they were rarely used, but they were not left in the condition they should have been.

KITCHEN

The kitchen was NASTY. The counter tops weren’t even wiped down. They left mix match dishes, silverware, and a frying pan on the counter. They left crap in the cabinets and drawers. They left a laundry basket and other crap in the corner. The mini blinds on the kitchen door is broken. The light and cover under the range is broken. It’s barely hanging on a limb. The garbage disposal doesn’t work (no electricity, but noted this during a quarterly inspection). And worst of all, they left food in the fridge/freezer, which spoiled. Now there is a horrible smell in the kitchen and tiny bugs are flying everywhere. *sigh*

CARPET ON FLOORS 2 & 3

The carpet on the second floor staircase and third floor (bedrooms) was not that bad. A few stains here and there, but they can be cleaned.

BEDROOM 3

The third (smallest) bedroom was not bad. It just needs to be cleaned and painted.

BEDROOM 2

The second (BabyGirl’s) bedroom was not bad either. Her walls were previously painted with a glossier paint and it held up very well. They hung a shelf on the wall and a hook (?) in the center of the ceiling, both left behind. Otherwise, the holes would have shown white drywall against purple paint. The shelf is cute, so I’ll leave it up. I may get my maintenance guy to remove the hook and install a cute ceiling fan (all the bedrooms were pre-wired). Like the 3rd bedroom, this one just needs a really good cleaning.

BATHROOM 3

The hall bathroom between the two bedrooms was NASTY. And they had the nerve to leave cleaning supplies under the cabinet. Ugh! The toilet seat is barely hanging on, so I may need to replace it, if it can’t be tightened. The shower rod was missing and the tub was gross.

BEDROOM 1 (MASTER)

The master bedroom was interesting. There were a BUNCH of holes all over the wall. What in the hell were they hanging in the bedroom, of all places? I can see where they tried to fill the holes, but they did a terrible job. They also put up a ceiling fan, which I approved in advance and told them they couldn’t remove once installed. It’s so ugly and filthy, I may take that shyt down anyway.

BATHROOM 4 (MASTER)

The master bath was also NASTY. More shyt left under the cabinets. They also installed a shelf behind the toilet, which is kinda cute, but they did a terrible job installing it. It’s wobbly and it blocks the toilet bowl cover. If my maintenance guy can’t fix it, it’s coming out.

WALLS

The walls need to be painted throughout, which was expected and no big deal. I’m going to upgrade from the cheap builder’s paint and use a paint that can be wiped down when dirty. I’m also going to use a glossier paint in the bathrooms and kitchen.

KEYS

Even though I gave them two house keys and two mailbox keys, they only left one of each. So I have to change the lock cylinders on the front door and back doors, and I need to call the post office about the mail box keys.

FINAL DAMAGE

During our walk through, my maintenance guy created a list that turned out to be four pages long. His previous career was as a maintenance supervisor for a large apartment complex, so he said the list wasn’t a big deal.  He said “after a good cleaning and some new paint, it’ll be all new again.”  Hmph!  I guess his experienced opinion should make me feel better, but it doesn’t.  I think I’m still attached because this was MY first house…and I built it from scratch. :-(

As my RE investor friend told me, I need to disconnect emotionally because this property is now a real estate investment.  I also need to lower my expectations because no one is going to take care of it like I would.  Once I’m able to let go, the move out inspections will be less painful.  At any rate, my maintenance guy is going to review the list this weekend and give me an itemized estimate on Monday morning. After his work is done (yard, inside repairs, and painting), he’s also going to coordinate and supervise the cleaning.

Before I left him, I bought two 5 gallon containers of paint, two bags of gravel, several bags of mulch, and other miscellaneous items. Some things will have to be ordered.  I also wrote him a check for $100 for other things that may come up and told him to save ALL receipts.

CLEAN UP AND REPAIR PLANS

He’s working on the front and back yards this weekend. On Monday, I need to have the electricity reconnected (hopefully there isn’t a balance) so he can get started on the inside. Because he has a full time job, he’s going to work on my house in the evening and weekends, but I gave him a deadline of July 27th.

Next week, I’m going to renew all of my rental ads with a goal of having the property rented by August 1st. Each day it is vacant is more money out of my pocket.