The best thing you can hear as a landlord :) At least of course if they are *good* tenants, as my friend Lazy Man was quick to point out when I announced the good news on Twitter. I asked him why he’d even offer his tenants the chance to renew if they sucked so much anyways?, and he said they tried doctoring the contract so he had to take ‘em to court! Ouch! The joys of rental properties, eh?
But this post is about me, not him (sorry Lazy Man ;)) and I’m in the mood to celebrate! Opah! And this now closes out two large questions we’ve been mulling over the last two months as well:
- Where are we going to live this year?
- What are we going to do with our default rental property? (Our old house we used to live in, but don’t want to sell yet cuz we’re too underwater)
As you can see, #2 is now crossed off the list: our renters will remain for another year! And as for #1, well, we decided we liked it too much here in Virginia to leave anytime soon :) So we’ll be sticking around for at least another year ourselves too. Especially while baby #2 makes entrance, and the wife once and for all finishes that dang dissertation to complete her PHD. Meaning this time next year we’ll no longer be a single-income house! Double opah!
The interesting part about this whole house renting business, though, is how similar both homes in question are. For example:
- They’re both 1,700 sq feet
- They’re both on the same rental time-frame (which I guess makes sense since we moved out of one and into another, eh?)
- And they’re both set at $1,700/mo rent. Even though one’s far away from the city and one’s smack dab in the middle of one.
So it always feels like we’re playing Even Steven here, which again we continued forward when it came to the renewal rates. I’m not sure if it was a smart *business* decision, but emotionally it felt pretty good so we ran with it (ya’ll know I choose emotions over facts/money most of the time ;)).
We got the notice first from the house *we* rent, saying they wouldn’t be instituting a monthly rate increase, so when it came time to tell our tenants our offer to them, we decided to stay put and not raise the rates either. I just couldn’t see ourselves raising it when we were offered a similar deal, ya know? And our biggest fear of course is that they walk and decide not to rent again, effectively costing us a whole entire month’s worth of rent (the amount our property manager pays to secure a new renter from start to finish) – if not more.
So while the few hundred dollars extra this year would have been nice, it’s much nicer knowing we’ve got a good, solid, tenant staying put for yet another 12 months. Now had our landlord increased the rent instead? Who knows how it would have played out :) Even though the two shouldn’t have anything to do with each other at all…
Either way, we’ve now almost officially been landlords for a year! That was fast! We got off to a rocky start, but thankfully we haven’t heard a peep of trouble for the past 5+ months now which is music to our ears… Here’s what the numbers looked like for 2013 (starting in July):
- Total expenses (repairs, management fees, etc): $3,290.95
- Total income (rent collected): $10,479.15
- Total amount we paid in mortgage + HOA: $12,120.00
- Total loss for 2013: $4,931.80
And that doesn’t include the $20,000 we dropped to get the place up to par either, ugh…. But at least we were able to write it off for the year which helped us get back $11,000 like we did. And now all our major expenses are out of the way for the future too, which is good! (Knock on wood)
Still, we’re definitely not raking in any profits :) We’ll just be losing less every month going forward, which one day will even out and THEN start giving us some extra profit. At least in theory…
Here are some things we’ve learned so far being a landlord:
- No phone calls are good phone calls :)
- Managing a property can be emotionally draining
- But property managers help with this, as long as you’re okay with the costs
- It’s pretty awesome when someone else pays your mortgage for you!!
- Rental properties are a long strategy play
- And they aren’t for everyone (just like home ownership)…
We’ll see what the future holds, but I’m not a converted man just yet – only a more patient one ;) I think it would be much different going into investment properties when you actually do so ON PURPOSE than by default, haha… We’d have never bought our house when we did (or for how MUCH we did, for that matter) had we known we’d later become landlords. Definitely something to consider for all those looking to scoop up their first homes soon… It’s all fun and exciting except for when it’s time to pony up large buckets of cash you’d rather hold on to! So consider this a scare tactic! ;)
Anyways, you live and you learn and we’ll continue going along for the ride and seeing how things pan out… Maybe we’ll have a whole portfolio of properties the next time we talk about this and retire at 30 like FI Fighter? Oh wait… I’m already 34, dammit.
How are your properties going if you have any? Did they do better than mine? (HAH!) Did you keep rates the same this year, or is that only for suckers?
Share away in the comments if you would. We need all the help we can get :)
[Happy carrot by Cyn74]