A lot of people are afraid to manage their own rental properties. They’re afraid that the tenants will be hard to deal with. They’re afraid they will have to evict tenants, and won’t know what to do. They’re afraid of midnight maintenance calls and having to drive out to the property a dozen times to fix things. The stress just seems like it isn’t worth it, right? Well, I hope to dispel some of those myths. This is my Self-Managed Rental Property report for July 2016.
If you’ve been reading here for a while, you know that I bought this fourplex in February that needed a ton of work. The tenants were generally awful because the old owner didn’t care and didn’t want to fix anything. One tenant was a bully, another had to be evicted, and two sets of tenants were super filthy and required a lot of negotiation and pressure to get them to freaking move out already. They finally moved out on May 8th.
Then the next part of the fun began: the renovation. From May 8th to July 1, I busted my butt (along with my contractor busting his) to get the building prettied up in order to raise rents and attract good tenants. You may be thinking “eh, no big deal,” but take a look at my to-do list. And that was just the starting point. There were other things that got added in along the way. I kept track of the number of trips I took to the building. (Pro tip: do this for tax purposes.) Between May 8 (bad tenants move-out day) to July 1 (good tenants move-in day), I went to the building THIRTY times. Thirty times in less than two months! OK, so the renovation was pretty involved. (But the results were Freaking. Awesome.)
Now, I have great tenants and things have settled into a more normal routine. So all of you people who were scared off by the crazy stuff that’s happened? It’s ok to come back into the room now. The scary part is over. (I hope.)
Self-Managed Rental Property: July 2016
Number of Trips and Time Spent
For July, I made a total of 2, 3, or 4 trips to the property, depending on how you want to count it. I’ll count it conservatively as 4 trips.
July 1st was move-in day for three sets of tenants. (One set of tenants moved in the weekend before.) I met one set of tenants that morning before work, and went back to the building after work to meet two more sets of tenants. Technically, this is two trips. You could see it as one trip because it’s one move-in day, or you could discount it entirely because move-in day only happens once a year or less. I’ll count it as 2 trips to keep it honest. It would have been difficult to coordinate all three sets of tenants to meet up at the same time to make it one trip, especially since July 1 was a work day.
However you count it, I wasn’t working at the building for long. Before work, I met with the tenants for about 15 minutes. I collected their first month’s rent and security deposit check, gave them their keys and garage clicker, showed them how to open their garage with the keypad, showed them how to open the laundry room with the electronic keypad lock, and gave them their deposit-only ATM card to pay their rent. Easy.
After work was the same drill with each set of new tenants. The only real work I did that day was to get copies of keys made and to clean out a few remaining items in the units (my ladder, shop vac, a hose, and some tools). Total time at the property that day was probably 1 hour 15 minutes.
The next time I went back to the building was July 23rd. I had to caulk the sink in Apartment C, give a roll of quarters to the guy in Apartment B who helped diagnose the washing machine problem, and paint the new railing slats on the stairs. Total time at the property was about 4 hours.
I went to the building again on July 27th. The new washer and dryer were installed that day. Since the old dryer was still working perfectly, I told the installers to leave it at the property, so I could pick it up and take it home. I’m going to try to sell it on Craigslist for a few extra bucks. I also fixed a couple of minor issues while I was there. Total time spent at the property was about 45 minutes.
Bottom line: a total of 4 trips to the property. Total time spent working at property: 6 hours.
There were a few maintenance items this month, but nothing major. The caulking around the kitchen sink in Apartment C only took about 5 minutes to fix. I reused the old stainless steel sink from the prior tenants, and it must have gotten a little warped when we removed it from the old kitchen countertops. I could’ve tried to hammer it flat, but the tenants were sleeping and it might not have worked, so I just used clear caulk instead. It should be fine.
I had to paint the new stairway spindles that were installed as a result of the insurance company’s inspection. The insurance company sent me a notice that the slats had to be less than 5″ apart, and they were spaced at 7″. The contractor just screwed new slats in between, so I painted them to match the rest of the staircase. Easy.
I also had to paint the trim around the new wall air conditioner that we installed in Apartment A. The only tricky part is that A is upstairs, and the wall AC hangs over the roof. I climbed over the upstairs railing (good thing my contractor rebuilt it so it was sturdy!) and walked out onto the edge of the roof so I could paint. I am not a small person. Fortunately, I did not fall through the roof.
A few days later, the tenants texted me from Apartment C and said the breaker kept tripping when the wall air conditioner was running. It was happening about once a day. Yikes. That could be a potential fire hazard. I researched online to try to figure out the issue. Possibilities: either a worn-out breaker or something more serious in the air conditioner. I texted my contractor to see what he thought. He said the breakers are pretty old, so he suggesting replacing the breaker.
I’ve never replaced a breaker before, but I figured I’d give it a shot. I watched two YouTube videos on how to do it, so I was basically a pro. 😉 The new breaker was $4.60 at Home Depot. It took me about 5 minutes to replace. Super easy, guys. The only hard part about it was that there was no main fuse on the breaker box inside the unit. That means that I replaced the breaker while the panel was still hot, although the fuse I was working on was shut off. Just don’t let your screwdriver hit the side rails inside the fuse box or “you’ll be deader than shit” according to one commenter on YouTube. I wasn’t planning to test that theory.
If I was more safety conscious, I would have gone outside to try to find the main panel and shut off the power. But that would have taken a while and I just wanted to give it a shot. (God, I sound like my grandpa right now.) Anyway, I didn’t die, so hooray!
The last thing I had to do was fix a cabinet door. These cabinets are brand spanking new, but the manufacturer used really short screws to attach the doors to the body. So far I’ve had the door pop off in two different units. I replaced the pulled-out screw with a longer one, and that was done. Two minute fix.
The washing machine broke this month, and pretty much everything involving washing machines is above my pay grade, so I hired a repair man. I knew the machines were old-ish and of fairly low quality (cheapo GE machines), so I figured there was a good chance the machine was just toast. The repair man confirmed my suspicions. I did some research online and signed up for an internet forum for coin laundry operators. After reading a lot of what the pros said, I had an idea of what I wanted to order. I called a couple of distributors and ended up paying $3,500 for a new washer and dryer. Ouch.
Oh, and one fluke thing happened. A tenant texted me early one morning with a photo of a glass filled with brown water. He said it came from the tap, and was worried that the pipes were rusted. I have copper plumbing, so there’s no way it would be rust. But I texted the plumber to see what he thought, and he said it might just be a little dirt in the line from a city repair. He said to run the tap for a minute and see if it clears up. I passed along the instructions to the tenant, and the water ran clear again. Phew!
Four trips. In future months, I hope to be going to the building once or twice a month on average (mostly to collect quarters from the laundry machines). I did a lot of renovation work to the building in advance, which I’m hoping will reduce the number of times I’ll need to go for maintenance trips. This month would have had two trips if it weren’t for the move-ins. It would have had only one trip if it weren’t for the last-minute painting that was really more of the wrap-up from the renovation project.
Time spent at the building was about 6 hours. Not bad, especially since the painting took probably half of that time. I don’t expect to paint again for a long time. Note: the time spent doesn’t include driving time to/from the building, but as my number of trips decreases, drive time will decrease a lot. I’m not tracking drive time, because your mileage may vary. Literally. It depends on the number of trips and the distance of the building from your home/work. It’s within your control when you decide to purchase a building, so choose carefully, and estimate time accordingly.
Time spent at home: probably an hour communicating with tenants, all told. Probably another 10 hours or so researching laundry machines and ordering them. If I had a management company, I would have saved the hour of communicating with tenants, but I would still have had to deal with the laundry machines. Technically, I probably could have let a management company handle that without me, but it probably would have cost me more money and I probably wouldn’t have been able to save the dryer and re-sell it. I also am a little bit of a control freak. I’m paying for the machines and I want them to last me a long time and be trouble-free. For a 10-year or more investment, I will spend some time researching the machines. The property manager would probably just get whatever was fast and available, and wouldn’t care as much about the cost because it’s not their money. Maybe I’m biased, but I think that’s just realistic.
Total cost for repairs: $3,509.27. But $3,500 of that was a capital investment (washer and dryer) and only $9.27 was actual repair costs. Leftover paint was free. Cabinet screws – free (I had some leftovers). Caulk for the sink was $4.30 including tax. The breaker was $4.97 including tax.
Should I Have Hired a Property Manager?
Property management would probably have cost about 10% of the monthly rents ($637.50), plus the first month’s rent for each of the units because they’re all new tenants ($6,375). Plus, a management company would have hired someone to replace the breaker and caulk the sink. That could be $50 for a handyman, or more likely, $50 for a handyman for the sink and $150 for an electrician call to diagnose and replace the breaker. Painting the railing/trim would probably be another $150 for a handyman to do it (3 hours at $50/hour). By managing it myself and fixing the little things—including taking a stab at fixing the breaker myself—I saved about $7,362.50 this month. The money I saved this month by managing the property myself paid for the washer and dryer. Twice over.
That amount of money savings won’t be true every month, of course. That only happens when you get a new tenant in. But the $637.50 per month will be a recurring savings amount, not to mention saved labor costs by attempting small fixes myself. If I’ve got to be at the building about once a month to collect the laundry money anyway, I might as well fix a couple things while I’m there.
Self-managed rental property isn’t for everyone. But if you’re willing to take a couple of risks and try new things, you can save yourself a lot of money by doing it. And you learn a lot, too. (I can install electrical breakers now!)
What do you think? Would you have managed the building yourself this month to save an extra $7,362.50?