Archive | March, 2015

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).

sss

(photo by blu-news.org)

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.

sss

(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 Redfin.com so we’ll receive email notifications after closing with the final price.

sss

(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.

sss

(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.


[Date]

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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