This month was a piece of cake. Here’s the rental property report for September 2016.
Self-Managed Rental Property Report:
Rent Collection
Another month of smooth sailing in the rent collection department. Three out of four sets of tenants paid on the 1st using their deposit-only ATM cards, and the fourth set of tenants paid on the 2nd.
On the night of the 1st, I could see that 3 of the 4 had paid. I texted the fourth set of tenants and reminded them that the 2nd was the last day to pay rent without a late fee. The tenant paid the next day. She didn’t respond to the text at all, so I hope she wasn’t offended by the reminder. But at least she knows I’m on top of rent collection.
Maintenance Issues
Another month with no maintenance issues. Woo!
Other Tenant Issues
The Tow Company FINALLY Puts Up the Sign
Last month, I mentioned that one tenant was having an issue with other people on the street parking in her assigned parking space. I had to arrange with a towing company to have them come out and post a sign. That should have been easy, but wow, was it difficult getting a towing company to just get it done.
I had to call the towing company multiple times to get them to send the contract. When they finally sent it over, I saw that they wanted the signature of each person who was authorized to have vehicles removed from the property. That wasn’t going to work. I wanted each of the tenants to have the right to tow someone from their space. But I didn’t want to have to collect nine signatures before the tow company could start enforcement.
The office person said the signatures were necessary. I didn’t think they were. I finally got a hold of the owner of the company, and he said they didn’t need the signatures if I just sent them a list of all the tenants’ names. Phew.
They came out and installed the sign on the building. They did a bit of a sloppy job, and left silicone goobers on the wall. Ugh. At least it’s stucco, so I think I can either try removing them with a heat gun or paint over them and it will blend in okay.
New Parking/Tow-Away Rules
The tow company was also nervous about each tenant being authorized to tow cars from the property. Normally only a manager is authorized. They were concerned that the tenants might start towing each other’s cars and start a war among themselves. I’m not worried. My tenants are pretty awesome.
Just to be safe, though, I sent everyone an email letting them know about the new towing contract, and telling them that they would have to pay the towing costs if they towed a neighbor’s car without justification.
One of the more detail-oriented tenants asked for specifics on what would constitute justification. I was hoping to not have to make a bunch of rules about it. But maybe it’s better that he brought it up, so at least there are clear expectations.
I wrote up a basic code of conduct, giving the tenants flexibility for loading/unloading and encouraging courtesy, but letting the tenants know that if they double-parked and were gone for longer than a few minutes and/or were unreachable to move their car, they could be towed. Pretty basic stuff.
The Flies!
Those same detail-oriented tenants emailed me later in the month to say they were having problems with flies inside their apartment. They were cautious about keeping doors and screens closed, but some days they would come home to 15 or more flies inside the house.
Neither of them could figure out where the flies were coming from. The tenants emptied the kitchen trash and scrubbed the can. They thought that once they might have smelled a dead animal of some kind, but didn’t smell it again later. They asked if anyone else was having trouble, or if I had any ideas.
No one else has reported any fly problems indoors. (One mentioned flies on her outdoor patio, but there’s nothing I can do about flies outside.) At first, I worried that maybe a dead mouse carcass was inside the walls or the attic from the former tenants. But if they only smelled a “dead animal” smell once, and not again, that couldn’t be it. It must just be that one or more flies is sneaking in the door, and then breeding in the trash can or something.
I told them that I couldn’t think of anything specific, but if they pinpointed it to a source and it was something I could help control, to let me know.
Trips to the Building
ZERO! OK, I sort of cheated. I last went to the building on August 31st, and I was planning to go once a month to collect laundry income. But September 30th fell on a Friday, and I didn’t feel like sitting in an hour-plus of traffic after work, so I pushed off the building visit one more day, which took it into October. 😀
Conclusion: It Was Worth it to Manage Myself this Month
I spent probably 2 to 2.5 hours dealing with the towing company and the tenant issues this month. By managing those issues myself, I saved about $637.50 (10% of the rents). That’s $255 per hour for 2.5 hours of work! It was totally worth it to manage the building myself this month.
Nice work Yeti! That’s really great of you to set up the parking situation where each tenant has the right to tow somone who’s in their spot. I used to live in an apartment complex where we’d have to rely on connecting with the PM and just hope it gets resolved in a timely manner. No maintenance months are the best! Will the monthly rental reports be a regular thing?
Thanks! Yeah, with no resident manager, it would have been really crappy to require them to contact one designated person to have a car towed. I want them to be able to get it handled ASAP. I’m tough on rent collection, but apart from that I really do try my best to make their lives as easy as possible.
Yep, I do plan to do these monthly reports on a regular basis. That way if someone’s wondering what it’s like to manage their own property, they’ll have a fair look into the good and the bad of it in real-time.
That is awesome you had so little work this month. $255 an hour is incredible!
Also funny the towing company thought tenants might tow each other’s cars. That must have happened before!
Yeah, the $255 per hour rocks! It’s enough to offset all the hours I spend working on this blog for 17 cents an hour! 😀
Given how nervous the towing company was about it, I’m 100% sure it’s happened before. Hilarious. One of my tenants even joked about having his roommate’s car towed from their own space because he drank the last of the OJ. Haha!
It’s always a positive sign when a monthly report is brief and $255/hr?! Great job!
Thanks, George! Let’s hope there are many more months like this!
Wow, $255 per hour! That’s awesome. You look like you had an easier time collecting rent this month than Ms. FP did collecting rent from her roommates when she was renting out the other rooms in her house. That situation was awkward since you’re forced to ask people for rent, but you also live with them too so you don’t want to seem rude.
Thanks! Ooh, collecting rent from roommates that you live with has gotta be really hard. I think it’s way easier to be offsite.
Nice work! If you can manage your properties on your own, the savings are huge. In my case, I look forward to being my own part time property manager for our rentals, after early retirement. As for the flies – that’s a tricky one. We get ants here in MN. One good thing about our winters is the extermination effect. ?
Thanks, AC! I hadn’t thought about the winter extermination effect. I guess that’s one positive on the pros and cons list for living in a snowy area. But the ants must not all die off, right? They must just hibernate or something? Otherwise you’d think they wouldn’t come back the next year.
Awesome report! I love seeing people succeed in real estate investing! I am closing on another triplex in Utah in less than a week! My final loan disclosure showed that my monthly payment with taxes and insurance will be just under $600 per month. The total rental income is $1,575 per month. After all operating expenses, I should see about $650-$700 per month in cash flow! 3 more cash flowing units added to the portfolio! Too many benefits of real estate to not invest!
Thanks! Those sound like fantastic numbers on your new triplex! You’ll have to let us know how it goes for you.
$255 an hour is not bad work if you can get it 🙂 Congrats on the minimal time investment this month.
Thanks, Mustard Seed!
Nice work… all 2.5 hours of it! Although I don’t like to manage my own properties myself, I have the utmost respect for people who do.
If you tenants ever do get into a parking war, it’s time to call the reality TV producers and start earning some revenues off that! 😉
Thanks, Michael! OMG, you’re brilliant. I love that idea about the reality show. You should write a post about how to get double the earning potential out of your rental property! 😀
Awesome post! I am looking into getting into rental properties, but am a bit scared given all the horror stories out there. However, posts like this make me excited! Thanks for sharing, and including both the ups and downs.
Thanks for visiting and commenting! I totally understand your fear. There are a lot of horror stories, but it’s because not enough people talk about the everyday successes to counter-balance that. I’m hoping that by reporting regularly on both the ups and the downs, more people will see what a normal landlording experience looks like, and they’ll be encouraged to jump in. Keep us posted if/when you decide to pull the trigger! And if you have any questions or things you’d like me to post about, give me a shout.
I love that you are sharing these and that you had a great month. I think it is really useful to see the variety of months you can have as a business-owner.
Thanks, ZJ!
Good for you. What is the long-term strategy? Are you holding to pay off the mortgage? Southern California can boom and bust pretty quickly with appreciation. I believe you guys are in a rapid appreciation cycle right now…..so I assume you have lazy equity in the property. If so, are you planning on refinancing, harvesting equity, and buying another building? Or are you thinking of doing a 1031 and exchanging into a larger property to take advantage of economies of scale and increased stability?
Thanks, Dennis! My long term strategy with this building is to hold and pay off the mortgage. With this property, I have some lazy equity, but not a ton, because I just bought it in February. Most of my lazy equity is a result of the rehab I did on the building, which resulted in the big rent increases. I estimate that I generated about $200k in equity as a result of $108k in rehab expenses, based on the added income from the new rents.
I might do a cash-out refi later to buy another building. I definitely want to get one more fourplex. My current end goal is to end up with two fully paid-off fourplexes which, combined with my other investments, would throw off enough income for me to retire very comfortably. If I get bored, I could add a third fourplex, but we’ll see.
I’m less likely to do a 1031 exchange to trade up to a bigger building, because there are a lot of advantages (financing-related) to sticking with a four-unit building. I would probably only do a 1031 exchange if I moved out of the region for retirement and wanted to switch to properties that were more local to where I was living. Based on the depth of your comment, I’m sure you know that there are still a lot of transaction costs with a 1031 exchange, so it’s not a “free” swap by any means. As long as I’m in accumulating mode, I figure I might as well do it by avoiding the sale/purchase transaction costs of trading up.
How about you? What’s your long-term strategy?
Good for you.
I started in residential as well. At my peak I had 7 quads, 1 triplex, and a single family home. Not in Southern California or I wouldn’t have had as much. I didn’t like property management and I hated the volatility of the cash flow. It always seemed like I was one vacancy away from negative cash-flow. So I moved away from active investing and started doing passive investing in larger properties on a fractional basis (where like-minded investors pool their money together to buy big properties).
Ultimately I love real estate as an investment. I can’t think of any other investment that pays the investor four different ways (cash-flow, appreciation, principal pay down, and tax-advantages). And I also enjoy your blog.
Wow, that’s a lot to juggle! I’m interested in looking into fractional basis ownership and/or lending for real estate projects, too. RealtyShares has reached out to me about it, and I’m thinking I might give it a try and maybe post about it later, if it goes well or seems like it might be interesting to people. If you have any tips on that or you want to link to a post on your own blog where you talk about your experience with fractional interest investing, feel free. 🙂
I think you totally hit the nail on the head regarding the advantages of real estate investing. And thanks for the compliment!
If you end up going the crowdfunding way, let me know how it goes. I’ve avoided that myself as I wonder why a private real estate company would need to hire a middle-man (crowdfunder) to raise money for them. I’ve always assumed that they must be newbies or syndicators who have failed in the past.
As for information on the subject, I think my two best pieces for people who want to learn about it are:
Multifamily 101
http://nesteggrx.com/mfam-101-replay
and
Evidence Based Investing
http://nesteggrx.com/evidence-based-investing
They are bent toward doctors, but you certainly don’t have to be a doctor to view the information. Hope that helps.
That is a pretty dreamy month! We are just getting started with our very first rental income property and the only thoughts people like to share with us are all of the horror stories they have heard about being a landlord. Nice to hear a positive one!
Ha! Stick around, Amber! Hopefully there are a lot of good months to come. 🙂 The horror stories out there are awful, and I’ve got a few myself, but for the most part, if you screen your tenants well and manage your property well, it should be pretty smooth sailing. Please check in again and let us know how your rental property is doing!
Nice work! If you can manage your properties on your own, the savings are huge. In my case, I look forward to being my own part time property manager for our rentals, after early retirement.
Thanks for reading and commenting, Noel! What do you have for rentals?