Archive | 2015

Protecting Rental Properties with Umbrella Insurance

7 Oct

The following is based on my own experience and understanding, but I’m certainly no expert on the subject. Please be sure to consult with an insurance professional when contemplating your options. Best of luck!

After purchasing our 3rd duplex in May of last year, we felt the time was right to get an umbrella policy – and we’re finally getting around to pulling the trigger.

How Does Umbrella Insurance Work?
An umbrella policy picks up where your other policies’ liability ends. For example: if your auto insurance has $300,000 in liability coverage, a $1,000,000 umbrella policy provides a combined total of $1,300,000 in liability coverage in the event of an auto insurance claim.


(photo by Andreas Schalk)

I also believe our particular umbrella only extends coverage that is already granted by the underlying policies. For instance, if pit bulls were a restricted breed on our homeowners insurance, I wouldn’t expect the umbrella policy to cover that liability instead.

Do I Need Umbrella Insurance?
Not necessarily. This was a personalized decision that took into consideration our assets, lifestyle, and risk-tolerance. My general philosophy is that insurance shouldn’t cover inconveniences like cell phones and windshields – but the really big, bad, life-changing stuff that could take you down financially.

Some people are relatively judgement proof (i.e. there’s not much to take, or what you have is protected in retirement accounts) so the consequences of a no-good-really-bad-day aren’t as extreme. On the other hand owning multiple rental properties probably makes us a greater target for litigation – in the event of an auto accident, it wouldn’t take a personal injury attorney long to find our real estate via public records.

Why Not Use an LLC Instead of Umbrella Insurance?
My (somewhat uneducated) impression is that an LLC is a little overkill for us at this point. I see an umbrella policy as the next step of an asset protection continuum, with LLCs offering greater protection and privacy in exchange for greater cost and hassle.

I also wonder if LLCs are better suited for paid off properties… I’ve read about investors who move mortgaged properties into an LLC with no issues, but I also know a Realtor who had a client get their mortgage called for the same reason.

Shopping Around for Umbrella Insurance
For most carriers we asked, each duplex counts as 2 properties – which means our liability exposure effectively boils down to 2 vehicles + 7 residential properties (which includes the apartment we live in). This exceeded the underwriting limits of many household name carriers, and we ultimately had better luck finding compatible umbrella policies via independent agents.

Often the insured is required to have an auto or homeowners policy with the same carrier, but there are “stand-alone” umbrella policies too. I found the combined offering a little more affordable, but I also wasn’t eager to consolidate our insurance under a single carrier. Agents were much less enthusiastic to work with me once I expressed an interest in stand-alone policies, so I imagine the commissions aren’t as enticing for them.

Comparing Umbrella Insurance Quotes
The odds of paying out are pretty slim, so insurers can offer substantial coverage for a few hundred dollars. We received 4 quotes for $1,000,000 umbrella policies:

  • $200/year (required another policy)
  • $257/year (stand-alone policy)
  • $327/year (stand-alone policy)
  • $460/year (stand-alone policy)

There was also a fair bit of variance in the underwriting requirements that wasn’t apparent until we received the applications. Each policy had around 3-15 questions that acted as pass/fail criteria – some of which could be deal breakers depending on your situation. For example, one policy disqualified locations covered by subsidized housing. Another policy required no construction or renovation in the previous 12 months and the next 12 months.

Our Umbrella Insurance Policy
We selected the $257/year stand-alone policy after taking into consideration cost, flexibility, and the application criteria. I’ll report this expense on our Schedule E and set aside $21/month from our excess cash flow to cover the annual premiums moving forward. If we choose to in the future, we can also increase the coverage in $1 million increments up to $5 million.

This policy counts 1-4 family units as 1 property each, so on paper we represent 4 properties (including our apartment). We can acquire 2 additional properties with similar terms at a higher cost, but 7-10 properties will cap our umbrella coverage at $1,000,000.

I suppose that would be a good problem to have. 🙂

Minimum Liability Requirements
Before we could finalize the umbrella, we had to update the underlying policies to meet the liability minimums:

  • Auto – $250k/$500k bodily injury & $50k property damage
  • Renters – $300k personal liability
  • Homeowners – $300k personal liability

These requirements will vary by policy and carrier. There were also some relatively trivial costs associated with adjusting the individual policies.

Considering this process was a bit more difficult than I was initially expecting it to be, I’m very content with the price and terms of the policy we found – and pleased that it should serve our needs for the foreseeable future.

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Monday Mixed Bag – Flooding, Appraisal Protests, and Prospecting Letters

10 Aug

I hope everybody is staying cool out there! We’ve been keeping plenty busy this summer – I recently got back from a trip to South Padre Island to pre-celebrate my sister’s wedding.

South Padre Island Beach

For the most part our rentals have been blissfully business-as-usual, but I do have a few notable highlights worth sharing:

Memorial Day Weekend Floods
You may have already seen this on the news: Central Texas experienced some extraordinary rain and flooding over Memorial Day weekend. On one hand we could use the rain, but things got a little cray cray there for a bit.

My cousin in central Austin!

My cousin in central Austin

Luckily our properties were not affected, but it did give me reason for pause at the time. We have homeowners policies but nothing that covers flooding – should we have a flood policy? Then again, this was a pretty darn good stress test and the properties passed with flying colors, so we ultimately decided to keep our current coverage.

On a related note, many moons ago an insurance agent shared this nifty website that estimates flood risk using a map interface. I don’t know how legit it is, but it might be worth a peak when considering a new property.

2015 Appraisal Protest Results
After last year’s unbridled success, Corey tried his hand at protesting our tax appraisals again. The proposed year-over-year increases were… steep.

Property 2014
2015 Proposed
% Change

Duplex #1 $179,362 $239,473 34%
Duplex #2 $149,488 $164,749 10%
Duplex #3 $151,313 $191,984 27%

Good-ness. But compared to our latest comps (and the appraisal district’s) the proposed values were reasonable – we simply didn’t have a lot of contrary data points to work with this year.

Corey still managed to knock a few thousand off the appraised value and saved $157 in taxes. Once that is applied to our mortgage pre-payment goal we’ll save another $255 in unpaid interest for a total savings of $412.

Reducing Competition in a Seller’s Market
As you’ve probably deduced, our real estate market is really hot right now. You might recall we were competing against multiple cash offers when we purchased duplex #3 last year.

We were recently the recipients of some crafty prospecting letters that were attempting to find duplex sellers BEFORE the competition can get involved:

Dear [Name], My wife and I live in the [city] area and we are interested in purchasing a duplex on [street]. If you ever consider selling your duplex, please let me know.

Would have been a little more convincing if there wasn’t a 2nd letter in our mailbox asking about a different duplex and claiming they live in a different part of town. 🙂  4 months later we received another letter (just one this time) from the same couple, with a refined message:

Dear [Name], My wife and I are interested in purchasing a duplex in [city] and came across your property on [street]. We are pre-approved with a local Austin lender and can close within 30 days of contract. Minor repairs and issues do not represent a problem for us. Please contact us if you have thoughts about selling.

Little white lies aside, I do wonder if there’s any merit to this tactic. It would be easy to recreate if you had a few neighborhoods in mind, and then cross-referenced those addresses against the county appraisal district’s website to get owner addresses.

Looking Forward
We’re gearing up for 2 vacancies in September and October. For the first time ever we’re going to let our property management company handle the majority of the make ready work, but I’ll still take a day off to inspect things for myself and tidy up loose ends. I find vacancies a LOT of work, so I’m looking forward to seeing how this higher cost/less hassle trade-off treats us.

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Investment Property Balance Sheet – 2015 Edition

23 Jun
Duplex Balance Sheet

(photo by frankieleon)

Our annual look at rental income and expenses, averaged across 12 months. We own duplexes so these numbers represent 6 units across 3 properties, purchased between 2011 and 2014.

We also perform this analysis when seriously vetting a new rental property to help spot unexpected surprises (property in a flood plain? outrageous HOA dues?) and verify cash flow.

Duplex #1

  • Total cost: $181,350, latest comp $245,000 (Feb 2015)
  • Down Payment: $45,350 (25%)
  • Mortgage: originally $136,000, currently $127,830
  • Estimated Equity: $117,170

Duplex #2

  • Total cost: $144,000, latest comp $189,000 (Apr 2015)
  • Down Payment: $36,000 (25%)
  • Mortgage: originally $108,000, currently $93,223
  • Estimated Equity: $95,777

Duplex #3

  • Total cost: $201,000, latest comp $216,000 (Apr 2015)
  • Down Payment: $61,500 (30%)
  • Mortgage: originally $139,500, currently $137,395
  • Estimated Equity: $78,605
Revenue Duplex #1 Duplex #2 Duplex #3 Monthly Total
Unit A $1,025 $975 $1,050  
Unit B $1,095 $950 $1,050  
-$41 -$37 -$40  
Total Income $2,079 $1,888 $2,060 $6,027
Principle & Interest $699 $531 $738 $1,968
Taxes $352 $365 $365 $1,082
Insurance $69 $76 $63 $208
$150 $150 $150 $450
Carpet Fund ($800/5yrs.)
$13 $26 $26 $65
HOA $50 $0 $0 $50
Property Mgmt (10%) $212 $193 $210 $615
Leasing & Releasing (30%-60%) $80 $72 $79 $231
Umbrella Insurance $12 $13 $13 $38
Tax Prep
$12 $12 $12 $36
Total Expenses $1,649 $1,438 $1,656 $4,743
Cash Flow $430 $450 $404 $1,284

Some Highlights & Observations:

  • Stagnant Cash FlowLast year I predicted our cash flow to slowly increase past our typical $400/property/mo. average because I thought most expenses had been accounted for – but we found a few more. 🙂 Technically it has risen because we got property #3 to market rate, but we also added additional protections and conveniences like umbrella insurance and tax preparation fees. Maybe next year!
  • Rent Appreciation – While cash flow remained stagnant, property #1’s rent has increased 27.5% since our first balance sheet in 2011 – bringing in $457 more income (the cash flow equivalent of having a whole other duplex). Unit A is currently under market rate, so if you assume $1,095 for both sides that would be a $527 increase!
  • Average Cash Flow vs. Actual – Since spending tends to have peaks and valleys, I’ve been charting my actual monthly cash flow throughout 2015 so I can share that perspective in the future. The $150/property/month is really a best guess… some months are SURPRISE! and others months nothing remarkable happens at all – cha ching!
  • Umbrella Insurance – I was hoping to have an umbrella policy setup by now, but no dice – so this is merely a conservative estimate using the most promising quote I have at the moment. I’m guessing insurance agents must not make a lot of commission on umbrella policies, because they sure don’t seem eager to provide quotes for them.
  • Tax Prep Fund – This was the first year I realized we could deduct a portion of our tax preparation fees on our rentals’ Schedule E. Previously we’d been applying it as a miscellaneous itemized deduction… fat lot of good that did us. Oh well, live and learn. I cringe paying a professional for something I used to do myself with online tools, but I still don’t feel reasonably qualified to handle rental tax details like cost basis calculations, depreciation schedules, and improvements vs. expenses.
  • Vacancies & Leasing/Releasing Fees – A guestimate that assumes 1 unit from each property will be vacant for 2 week a year. Using these same vacancy assumptions, I budgeted one renewal fee (30%) and one releasing fee (60%) per year, per property.

Previous Statements:

“Plan specifically so you can implement flexibly.”  – Dallin Oaks

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Protest Alternative: Hiring a Property Tax Consultant

28 May Property Tax Appraisal Protest

Note: the information below is definitely Texas-specific, and possibly county-specific – so please take caution when applying it to your local area!

It’s that time again – property tax appraisal season.

Last year we shared Corey’s first-timer experience protesting our property tax appraisals (and saving $1,454) for two rental properties:

  1. Received Appraisal Notice, Reasons to Protest
  2. Filed Notice of Protest, Requested Appraisal District Documentation Letter
  3. Compiling the Evidence
  4. Informal Meeting & Outcome

A recent article by the Austin American-Statesman analyzed Travis County’s 2014 tax season: 74% of all protests resulted in reduced appraisal value, but once you account for withdrawn protests then 97% of those who completed the protest process saved money.

But I also accept that some property owners simply aren’t going to represent themselves. Maybe you’re busy, intimidated with the process, or don’t think the hassle is worth the benefit.

Property Tax Appraisal Protest - Agent vs Self Representation

Fair enough, but the good news is that many of you probably have access to a convenient and cost-effective alternative – hiring a property tax consultant.

What does a property tax consultant do?
A coworker told me about a service that handles his protests on a contingency basis – i.e. he only pays if they save him money. I’m sure the average homeowner is capable of doing it themselves, but consultants have the time, expertise, and data to navigate the protest system for you.

Call me naive, but I didn’t even realize this industry existed. I did a little research and found if they do lower your appraised value they get a cut of the tax savings – I’ve seen anywhere between 33-50% depending on location. That might sound like a lot, but remember you were going to pay more than that in taxes if you didn’t protest at all.

Property Tax Appraisal Notice

Using last year’s numbers as an example, we would have saved $1,454 in taxes and paid $480-$727 to the consultant for a net gain of $727-$974. That’s no chump change. Of course if you ARE willing to protest your own taxes you can pocket that consultant fee, but it’s a win-win either way.

Find one by searching your city or county name + phrases like:

  • Property Tax Counselor
  • Property Tax Consultant
  • Property Tax Consulting
  • Property Tax Professional
  • Property Tax Representation
  • Property Tax Appeal Service
  • Property Tax Service
  • Property Tax Agent

Sometimes the property tax consultant saves my coworker money and sometimes they tell him he doesn’t have a good case this year – either way he doesn’t pay anything unless they get a reduction.

If you’re tempted to try this for yourself, don’t delay – I know the deadline for our county is June 1st, which is right around the corner!

“A penny saved is worth two pennies earned . . . after taxes.”  -Randy Thurman

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Recent Reading: Income Taxes Explained in 100 Pages or Less

5 May

Note: this post uses referral links, but I was not asked to read this book. You don’t have to use our links, but we’re very grateful when you do!

Inspired by the recent tax season, a solid recommendation from Afford Anything, and the impressive tax savings by Root of Good, I set out to better educate myself on the US tax system. Lately I’ve had this nagging doubt about whether I should be taking more proactive steps to minimize my income taxes… somehow.

To that end, I picked up “Taxes Made Simple: Income Taxes Explained in 100 Pages or Less” and was immediately in love with the concept. What a great way to get a basic foundation about an otherwise complicated and intimidating topic. I’ve filed my own taxes before (though not since our first rental property), and even then only with the prompted assistance of online tools like TurboTax.

Bonus: at the time of this writing this book was FREE as a part of the Kindle Owners’ Lending Library – which allows Amazon Prime members to digitally “check out” books on Kindle devices.

My Personal “Aha” Moments:

  • Source of Income Matters, A Lot – I never appreciated how much a dollar of earned income ≠ a dollar of self-employment income ≠ a dollar of qualified dividend income ≠ a dollar interest income. I don’t know if there’s anything I’m going to do differently with this information, but I do now understand why some think the game is rigged!
  • Above-the-Line vs. Below-the-Line Deductions – I already knew this was relevant to the home mortgage interest deduction, but I gained more clarity on how all the parts fit together. I suspect many people claim deductions that offer no tax benefits whatsoever and don’t even know it.
  • The Disappearing IRA Deduction – While contributions to a traditional IRA do not have an income cap, the valuable above-the-line deduction does (IF you or your spouse have access to a retirement plan at work). I consider myself pretty retirement account savvy and I had no idea.

This material should be required reading in high school, and this particular book will now join Suze Orman’s “The Money Book for the Young, Fabulous & Broke” as my default graduation gift (I know, I’m fun at parties too).

Income Taxes

(photo by Alan Cleaver)

Our key takeaway is to reconsider our above-the-line deductions, specifically traditional IRAs and HSAs. On one hand, we’re hesitant to reduce our tax exposure at the cost of tying up our money until retirement age – money that could otherwise be invested in rental properties. Still, this could definitely be useful if we find ourselves at risk of getting phased out of Roth IRA eligibility and want to take proactive measures to reduce our AGI.

I sure hope the author writes a rental property-specific book someday. Eventually I’ll also check out “Independent Contractor, Sole Proprietor, and LLC Taxes Explained in 100 Pages or Less” from the same author. LLCs and rental properties seem to go together like peanut butter and jelly, but I still have a lot to learn before I’d be comfortable committing.

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Laminate Floor Water Damage & Mid-Lease Replacement

23 Apr

Since I tout the benefits of rental property, it’s only fair that I also share when things don’t go according to plan. This is totally one of those times.

Last spring a leased washing machine overflowed, destroying the laminate floors in one of our rentals. Our tenants had already contacted the appliance company, who agreed to cover the damage (via their insurance). Now we needed to replace the flooring… while the tenants were still living there.

Water Damaged Laminate Floors

I suspect I could give this scenario to 5 different landlords and I’d get 5 different opinions on next steps. Here’s how it went down for us:

  • It took months for (1) the appliance company to file a claim with their insurance and (2) the insurance company to send an appraiser to inspect the damage. When insurance denied the claim the appliance company decided to pay us directly while they appealed the decision – a darn classy move on their part.
  • We requested two 2 flooring quotes – one for laminate and one for ceramic tile. The less expensive laminate estimate was provided for insurance purposes with the expectation that we’d add some money of our own to replace the floor with tile instead.
  • Movers helped us reallocate the tenants’ belongings to the kitchen, garage, and a rented storage pod. The next day, the flooring company began the process of removing the laminate and installing tile.
  • Meanwhile our tenants camped at a nearby hotel. It annoyingly took a day and a half longer than originally estimated, but at least the flooring company discounted the bill to compensate for the extended hotel stay.
Tile Floor Installed

We paid a little extra (~$300) to have the tiles installed diagonally – looks great!

What an ordeal. Our floor replacement costs:

  • Moving Help – $235
  • Storage Pod – $329
  • Hotel (3 Nights) – $519
  • Tile and Installation – $5,136

$6,219 Total – $4,864 Reimbursement = $1,355 Out-Of-Pocket

Some silver linings:

  • I never particularly cared for that laminate flooring in the first place, but it was already installed when we purchased the property and we couldn’t justify replacing it for aesthetics alone.
  • All things considered, $1,355 is a great deal for new ceramic tile flooring. I dare say we came out ahead, especially since we were probably going to upgrade the flooring to ceramic tile someday.
  • Could we have gone after the tenants to recoup some of these costs? Probably. All-in-all this was a good example of all parties (landlords/tenants/appliance company) being a little flexible to make the best of a bad situation. Any of us could have taken a hard line with demands, but didn’t. Well… except the insurance company.  😈

For the most part I figure surprises like this come with the territory. It was a lot of hassle and uncertainty – but nothing we couldn’t overcome with patience, perseverance, and our rental emergency fund.

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New Water Heater Regulations – Investigation & Decision

14 Apr

In my previous post I wondered whether we should buy a replacement water heater now in anticipation of new energy standards beginning April 16th. The higher efficiency rating would likely increase the size of the new units, which may or may not fit existing locations.

Since Consumer Reports suggested it was “likely” we wouldn’t be too negatively affected, I wanted to investigate whether our specific properties could accommodate these changes. We have 6 water heaters between 3 duplexes; I used inspection reports to piece together our current configuration:

Property Unit Tank Size
Duplex #1 A 40 Gas Attic
Duplex #1 B 40 Gas Attic
Duplex #2 A 55 Electric Closet
Duplex #2 B 55 Electric Closet
Duplex #3 A 55 Electric Attic
Duplex #3 B 55 Electric Attic

I’m not too concerned about Property #2 because I think there is plenty of room in the closets, but I am skeptical about attic access for #1 and #3.


(photo by Bill Smith)

From what I’ve read online, a standard access opening is 22″ x 30″ – some sources adding a quarter inch to each side for trim (21.5″ x 29.5″).

Home Depot didn’t have any compliant models in-stock yet, so I noted the diameters of current models instead – substituting 50-gallon measurements because 55-gallon wasn’t available:

  • Gas, 40 gallons – 17 3/4″
  • Gas, 50 gallons – 20 1/4″
  • Electric, 40 gallons – 17 3/4″
  • Electric, 50 gallons – 19″

Now if I assume the new standards will add 2 inches…

  • Gas, 40 gallons – 19 3/4″
  • Gas, 50 gallons – 22 1/4″
  • Electric, 40 gallons – 19 3/4″
  • Electric, 50 gallons – 21″

I’m most interested in the 40-gallon gas and 50-gallon electric models since that’s what property #1 and #3 are using, respectively. Compared to a 21.5″-22″ attic opening it would be a REALLY tight fit, but doable.

I also don’t see any reason why we couldn’t downgrade to 40-gallon tanks if we run into trouble. We’ve never gotten any complaints about property #1’s hot water, and it services the same number of bedrooms/bathrooms/people as the other properties. The Rheems brand water heater packaging seems to agree:

Gallons # of People
40 2-4
50 3-5

Something else to consider – if we did want spares we’d need to buy at least 2 since the properties use different power sources. Given these gut checks and knowing we have a cost-effective plan B, we personally decided not to pre-purchase any water heaters in anticipation of the new energy standards.

One decision down, plenty more to go.  😉

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New Water Heater Regulations – Should We Pre-Purchase?

7 Apr

(photo by Brian Cantoni)

The Department of Energy is enforcing new efficiency standards for water heaters starting April 16th – prompting speculation on how these changes will affect consumers.

A lot of the negative press is coming from local plumbing companies, making it difficult to determine whether they are merely scare tactics intended to generate sales.

The higher standards will almost certainly increase the size and cost of the newer units to some extent, but the greater concern is whether those larger water heaters will still fit in small closets and attic access hatches.

Because the regulations affect manufacturing specifically, existing water heaters can still be purchased and installed after the deadline. This means homeowners could choose to (1) replace an older water heater now or (2) buy a current model and store it until needed.

Is this something landlords should consider too?

Consumer Reports covered the new standards last month with relatively tame conclusions about their impact on consumers:

“Simply put, if you’re replacing a water heater that holds less than 55 gallons, the new one may be an inch or two larger and can likely be placed where the old one was unless it was in a very tight spot such as a closet. But if you’re replacing a larger water heater, you’ll have to do your homework as the new units may need more space.”

Tanks larger than 55 gallons might be good candidates for pre-purchase since they will experience the greatest alternations, incorporating more drastic technology changes (PDF download) and stricter energy requirements.

My take: I suspect most rentals are using the smaller tanks and the vast majority of homeowners can already accommodate these 1″-2″ changes. Manufacturers want to sell products to the greatest number of consumers, and that means adding energy efficiency in the least disruptive way possible.

Then again, if we’re wrong or unlucky our options include:

  • moving the water heater
  • installing a water heater with a smaller tank
  • replacing with a tankless system
  • increasing the size of the existing space or access point

By comparison, buying a spare unit sounds like relatively cheap insurance and postpones any growing pains for another 8-10 years.

What do you think? Does it make sense to buy a “classic” water heater or two for future replacements?

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Monday Mixed Bag – Debts, Deals & Dishwashers

30 Mar

Real life has been extra distracting lately, but we’re grateful to have a property management company in place to keep things humming along when we need to step back for a couple weeks. Since I’ve been a little MIA recently, I wanted to share an update of recent rental happenings:

Multiple Tenant Renewals
I tend to err on the side of keeping good tenants at current rates but this latest batch didn’t shake out that way:

  • Renewal 1 – $995 -> $1,025
  • Renewal 2 – $1,095 -> $1,095
  • Renewal 3 – $950 -> $975

Renewal #1 was $150/month under market rate and we were having a hard time justifying the $1,800 opportunity cost over the course of a year – so we ultimately decided to raise the rent $30/month (an amount I wouldn’t feel too bummed about if it was my rent increase).


(photo by

Renewal #3 originally wanted a 6-month lease so they could buy a house, which would have incurred an extra renewal fee (~$270) – so the original thinking was to offer a short-term lease option at $25 more to split that additional cost with the tenant. Somewhere along the way they decided to renew for 1 year at the new rate instead.

Considering one other lease doesn’t expire until 2016 – that leaves only two potential vacancies in 2015, which is awesome.

Mortgage Pre-Payment Progress
Now that our rental property emergency fund is replenished, we have been DESTROYING our $10,000 mortgage pre-payment goal:

  • Jan – $1,408.19
  • Feb – $1,755.03
  • Mar – $1,022.66

The $4,186 in extra principal payments have saved us $7,744 in unpaid interest, and shaved 22 months off the mortgage. We also set aside another $500 from February and March’s cash flow to raise the rental emergency fund to $16,000. April’s payment should be relatively sparse since those 3 lease renewal fees will probably hit around the same time.

A Difficult Decision
Recently I’ve been observing and advising a friend who is vetting his very first rental property. I’m not sure there’s ever a perfect property and this one is no exception – repairs will need to be made, priorities considered, and risk tolerance gut-checked.


(photo by Sasquatch I)

I’m a huge cheerleader of rentals and I think he has his eye on a solid property, but I don’t envy his decision – it’s never without some doubt or anxiety when your investment decisions have that many zeros at the end of them.  🙂

New Equity Estimates
Because of some pending duplex sales on the market, we should be getting updated sales comps for all 3 of our properties soon. We use Google alerts to notify us of similar properties for sale, and then “favorite” those properties on so we’ll receive email notifications after closing with the final price.


(photo by Dan Moyle)

If the equity becomes tempting enough, I’d like to consider a cash-out refinance of property #1 in the next couple of years and apply it to a new rental. If I play my cards right, I’m effectively getting a free rental property – which is absurd to even think about.

Before then, I’d like to see the rent increase a little more (that under-market-rent tenant isn’t helping!) so I can more or less pull off the same cash flow numbers I was getting when I first purchased the duplex.

Umbrella Insurance Obstacles
It seems like I’ve been trying to buy an umbrella policy for the better part of a month now. I’ll explain in more detail later, but we stumbled on some convoluted chain of events that went something like umbrella policy -> auto policies -> renters policy -> defensive driving. We JUST finished our online defensive driving class and received the certificates in the mail – so now we should be back on track. Good grief.

Recycled Dishwasher
Last Thanksgiving we inherited a dishwasher from my mother’s kitchen remodel, and a couple weeks ago it found a new home after the previous appliance started leaking. A good condition GE unit – and nicer than what we probably would have bought for a rental otherwise.


(photo by Joanna Bourne)

Unfortunately we now have a black dishwasher in a kitchen of white appliances, but beggars can’t be choosers and I’d estimate we saved ~$300 vs. buying new (thanks Mom!). I did look into white appliance paint, but I didn’t see finished results online that I was satisfied with – particularly in the detail work around the buttons and button panel.

That’s all for now – until next time, keep on keepin’ on!

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Apartment Balcony & Patio Policy Letter to Tenants

18 Mar

Corey and I live in an apartment, so we occasionally receive courtesy letters about upcoming crackdowns. The most recent letter pertained to the cleanliness of exterior spaces – i.e. patios, balconies, and breezeways.

Apartment Balcony

(photo by El gran sueño)

Because lease (or HOA) rules can be subjectively interpreted, the letter included a checklist of possible violations and the consequences for not addressing those violations. I’ve shared the template below for others to use.

I find this “educate-then-enforce” approach both fair and effective. While the management company might have the legal right to slap residents with violations on day 1, it certainly isn’t going to generate good will – especially if there is a misunderstanding about expectations.


Re: Balcony/Patio Inspections

Dear Residents,

In an effort to keep [community] an enjoyable place for all, we will be completing a balcony cleanliness tour on [Date].

Please review the checklist below carefully to make sure you are keeping your balcony and breezeway neat and clean! In the unfortunate case our team discovers any of the below items during our tour, we will be charging a removal fee for each violation.

  • Clothing or Rugs – Residents are prohibited from drying clothing or rugs on or over the balcony. Please clear breezeways as this is a common area. Up to a $20 charge per item removed or found by staff will be assessed.
  • BBQ Grills – This is against the fire code and can result in fines from the city! Electric grills are permitted, but gas or charcoal will be removed. Up to a $100 charge per item removed or found by staff will be assessed.
  • Holiday Lights – Please only hang outdoor decorative lights. Up to a $20 charge per item removed or found by staff will be assessed.
  • Trash including cardboard boxes, trash bags and trash cans – Up to a $20 charge per item removed or found by staff will be assessed.
  • Cigarette Butts – Please dispose of cigarettes properly – this is an extreme hazard! Up to a $30 charge per item removed or found by staff will be assessed.
  • Furniture intended for indoor use including couches, recliners, bed frames and futons – Outdoor furniture is acceptable. Up to a $200 charge per item removed or found by stuff will be assessed.
  • Tool Boxes and Coolers – Up to a $50 charge per item removed or found by staff will be assessed.
  • Common Areas – Please make sure any personal items or trash are not in the breezeways or stair wells. Up to $20 charge per item removed or found by staff will be assessed.

If you have any questions regarding this checklist please feel free to call us! Also keep in mind that if any of the above items are found and removed by our team, they will not be held.

Kind regards,

[Community Name]

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