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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.¬† ūüėą

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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Make Ready Checklist with Auto-Populating Fields

12 Jan

There’s no way around it, make ready work is full of details to remember:

  • Will the electricity automatically transfer?
  • Is the trim painted the same color as the wall?
  • Do any fence pickets need replacing?
  • What size are the air filters? How many are needed?
  • Is the drill battery charged?
  • Are any doorstops missing? Light bulbs? Shower curtain rods?

Each misstep is another trip to Home Depot or another loose end to button up later. To complement my grab-and-go kit, I needed a make ready checklist.

Rental Make Ready Checklist

How it Works
The checklist needed to be universal in some ways (light bulbs, lawn care) and property-specific in others (paint colors, window dimensions). I also didn’t want to update 6+ separate documents every time I made an update.

My solution uses an Excel spreadsheet with a drop down list of properties. The drop down selection triggers vlookup formulas that auto-populate the property-specific fields with data from the last tab. Since we have duplexes, our data is separated by unit instead of property.

Rental Make Ready Checklist Drop Down

Once you’ve tackled the initial data input, you simply select the rental property (or unit/apartment) in the upper left-hand corner and print the first 2 tabs. Voila!

Tab 1 – Make Ready “Prep” List
I found myself distinguishing between tasks that happen during vs. immediately before a vacancy. The first tab addresses errands that begin a week or two prior: transferring utilities, charging batteries, pulling together supplies, and ordering discounted gift cards.

Rental Make Ready Checklist Clipboard

I also included a section to remember unit-specific projects that had been saved for another day/vacancy. For example, we provide a fire extinguisher in each of our units, but we haven’t bought a set for our newest property¬†yet.

Tab 2 – Make Ready Checklist
My pièce de résistance. Selecting the property (or unit) in the upper left-hand corner will auto-populate:

  • Air filter quantity & size
  • Wall & trim paint color
  • Date of last dryer duct cleaning
  • Quantity of fire detectors
  • Fire extinguisher expiration year
  • Drip pan quantity, size & brand
  • # of bags of mulch¬†needed
  • All window dimensions

This make ready checklist is COMPLETELY over-engineered – but I love it. ‚̧

Printable Make Ready Checklist for Rentals

My list intentionally excludes cleaning tasks since we hire that out. I also added some blank spaces for vacancy-specific tasks – like damage, prioritized improvements, and infrequent maintenance items.

Using the Make Ready Checklist
During my last vacancy, I printed a fresh copy each evening so I could translate that day’s notes and reminders into tomorrow’s shopping list and to dos.

The final copy is filed with my property-specific paperwork. Now if the refrigerator shelves go missing, I can reference the last checklist and be certain they were accounted for during the previous vacancy.

Feel free to download the make ready checklist template here. The document is partially-locked to help prevent inadvertent formula breaks, but the more adventurous are welcome to unlock it and customize (there’s no password).

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2015 Real Estate Resolutions

29 Dec

I hope everybody is having a wonderful holiday season. Santa was generous this year and left¬†a Black & Decker Trimmer/Edger with Mower Deck under the tree –¬†I’ll be sure to let you know how it works¬†on¬†the duplex lawns!

A table-sized tree, not a Godzilla-sized cat ūüôā

Due to other financial priorities, we do not have plans to purchase a property this year. Fear not, we are 100% committed to the real estate empire, but that just means our 2015 goals will focus on the existing portfolio instead:

  • $10,000 Extra to Mortgage #2 ‚Äď we anticipate¬†a good bit of¬†discretionary cash flow that can be applied to our pre-payment efforts. Averaged across the year, that $833/mo. will save an additional $16,668 in interest and shave just over 4 years off the mortgage!

  • Setup Umbrella Policy ‚Äď with the addition of property #3, we know¬†an umbrella insurance policy is in order. I’ve been putting this off because I really hate dealing with insurance agents, but it needs to be done.
  • Streamline¬†Insurance Quotes – Did I mention I hate insurance agents?¬†Like cable companies,¬†customer loyalty is often¬†penalized so regular price-shopping is a must.¬†Resigned to my annual fate, I have a project in mind that should¬†help expedite this process.¬†I also want to consolidate my separate landlord policies under a single agent.
  • Tackle Some Deferred Maintenance – Some repairs need to be addressed immediately, and some need to be addressed… eventually. This year¬†we’ll suck it up and prioritize¬†(1) a new exterior paint job on duplex #1 and (2)¬†some minor roof repairs recommended by the inspector when we purchased duplex #3.

Roof Tab Repair

  • Plant a Cedar Elm – Our apartment balcony has slowly turned into a rental-friendly tree farm. We’re currently growing a Texas Ash and a Cedar Elm from saplings, and the latter is now ready to be planted if the right opportunity (vacancy) presents itself.
  • Take a Vacation! – We’d like¬†to prioritize¬†some time, money, and¬†reward¬†points¬†towards a vacation (or two?) next¬†year. All things considered, it’s hardest for us to prioritize the time.

All of these goals are important-but-not-urgent – i.e. things that should get done but could easily get put off without a plan to stay on-track. I’m dreading some of them, but all the more reason to apply blog accountability. ūüėČ

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2013 Recap – Adventures in Real Estate Investing

26 Dec

Season’s Greetings! As 2013 draws to a close, I wanted to take a moment to highlight some of¬†my favorite rental realities¬†from the past year:

Purchasing Our Second Duplex
We started January strong by doubling our¬†rental empire. With a little planning and a lot of luck, we were able to buy¬†a¬†HomePath foreclosure¬†at a great price. In retrospect, I¬†wouldn’t specifically recommend buying a duplex with two immediate vacancies to fill, but it worked out alright in the end.

Duplex Interior

The Mystery of the Haunted Duplex
After some unexplained events, our tenant was reporting paranormal activity.

An update: our tenant¬†borrowed an infrared camera, which is¬†used to photograph wildlife¬†– or in this case an¬†active kindergartener who¬†was keeping busy at night.¬†And¬†all issues disappeared completely while her daughter was¬†spending the weekend at grandma’s –¬†so¬†worst case the daughter is¬†haunted, which is officially outside of my obligations¬†as a landlord. ūüėÄ

wildlife cam

Installing Staircase Handrails
It was a labor of love, but the new handrails came out great.¬†We relied¬†on the good graces of my in-law’s by occupying¬†their garage (and sanding arms)¬†for a few weekends straight.

handrails 3

Investment Property Bookkeeping
After leaving readers hanging since my original post in Nov. 2011, I finally finished documenting the rest of my bookkeeping process. This 3-part series discusses bank account organization and budgeting, the binder system, and monthly closings using Excel.

Binder

Here’s my 2013 binder after a year of managing 4 rentals, which has been upgraded to¬†the 3″ variety – and even then it has become a little cumbersome to manage. I also added a 6th section for management company statements. Next year I’ll make a greater effort to fit more receipts on fewer pages.

Hiring a Property Management Company
After a few back-to-back vacancies wore me out, we hired a property management company to help out. The series includes the benefits, costs, selection criteria, and our ultimate decision.

Earn $1,000,000 in 13.3 Years with Investment Property
This BiggerPockets.com¬†article¬†provided¬†the momentum we needed to¬†kick-off our mortgage pre-payment¬†efforts. I think¬†people could dismiss this article on the surface as “too good to be true” but my own calculations support a lot of these assumptions. We’ve already trimmed a¬†solid 7 months off the first¬†loan and we’re just getting started.

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Installing Staircase Handrails

20 May
Installed Handrails

“After” Pic of the New Handrails

When we purchased our recent property, improvements were necessary¬†to get the place ready for new tenants. Early candidates included the handrails installed along the staircase leading to the 2nd floor. A previous owner had used two closet rods back-to-back on each staircase, and didn’t even bother to drill into the studs. The result was a wobbly accident-waiting-to-happen. We purchased¬†two 14-ft handrails from Custom Hardwoods, LLC in red oak to match the kitchen cabinets.

The hardest part involved correctly installing the returned ends to each rail to give it a finished appearance. The curveball came when I opened the box and found a collection of parts and screws with no instructions of how they were even remotely related to the installation. YouTube.com to the rescue:

 

Spoiler alert: the video makes it look a lot easier than it actually is for mere mortals. I burned through the better part of a weekend and 5 returned ends to get 4 attached correctly, and that 5th part can go back to the pits of hell from whence it came.

Once everything was attached, we stained (Minwax, Cherry finish) and added a couple coats of semi-gloss polyurethane, sanding¬†in-between coats. That gave¬†us¬†2 respectable handrails ready for installation. Indulge me for a moment while I gush over the Painter’s Pyramids that allowed me to apply coats on both sides in the same sitting. Super handy and surprisingly stable.

Stair Rail Staining

The overall installation strategy came from This Old House:

 

If I had to do it all over again, I would be tempted to try out the 45-degree cuts like they did in the video to create a corner that ends back at the wall instead of using the bolt kit to add end caps. I suspect it would be a little less work for more reliable results.

We used brackets like these to install the handrails, using 4 per staircase. Hard to say exactly, but I think the 2-part construction gave us a little fudge room with the angles that might not have been possible with a 1-piece bracket.

Wall Brackets

I’m very pleased with how the handrails turned out. The finish looks great, the installation height feels natural, and I expect they will stand the test of time.

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Choosing Landscaping for Rental Properties

17 Jul

This summer we experienced the very essence of sweat equity.

Some of our shrubs were casualties of the 2011 drought, so we set out to replace them with something more attractive but durable.

Similarly affected plants in the neighborhood

Hubby with power tools

The bulk of the old shrubs were extracted with a reciprocating saw.¬† Removing the¬†roots was quite a feat, but made much easier by the wise advice of Mike’s Backyard Nursery. With¬†only a spade and¬†spud bar,¬†we¬†removed all 5 well-entrenched root balls in about an hour.We turned to the¬†city’s guide to native and adaptive¬†landscape plants for replacement advice;¬†I don’t expect the average tenant to water the plants regularly.¬† We¬†settled on the Golden Showers Thryallis, an adapted shrub described as “easy to grow; needs room to spread; little maintenance required”¬†that will¬†sprout¬†small yellow flowers in the warmer months.

After planting our wedding ceremony tree this spring, the¬†duplex was a little lop-sided, so we also added a second cedar elm for the other side.¬†¬†I’m¬†diligently watering¬†the 1st tree¬†until it gets established, so¬†it’s no extra work to water a 2nd tree while I’m there.¬† I’m pleased to see that several¬†trees have been planted¬†around the neighborhood recently.

Total cost of tree, shrub removal, new shrubs, edging, soil & mulch: $149.23.  Hopefully this is an investment that will pay off for many years, and put us in a better position to get top dollar the next time we have a vacancy.  The next challenge will be keeping these new plantings alive!

Planted thryallis shrubs with new edging and mulch.

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Repair or Replace a Rental Property Appliance?

29 Jun

A Failing Fridge
Our tenant mentioned her refrigerator seal¬†needed to be replaced…

Me: *opens door* Where is your refrigerator door shelving?

Tenant: We’ve¬†never had any.¬† Also, the¬†crisper doors pop off if you put anything in them.

Me: That is a problem…

Tenant: The ice maker stopped working a long time ago.  We told the previous owner, but they wanted to know how often we really used ice.

Bless her heart.¬†The sticker inside told me I had a 1999 “Tappan”¬†brand refrigerator and gave me a model number.

Option 1: Repairing with Replacement Parts
Lessons Learned: (1) AppliancePartsPros.com is awesome for replacement parts¬†and (2) replacement¬†parts aren’t cheap:

  • 2¬†Crisper Drawers – $249.06
  • 2¬†Door¬†Shelves¬†& Brackets – $91.96
  • 1 New Fridge Seal –¬†$68.80
  • 1 New Ice Maker – $69.37

I had to wonder whether it was worth it to sink $480 + shipping into a 13 year old off-brand refrigerator.

Option 2: Replacing with a New or “New” Fridge
I considered several replacement options:

New & Improved Refrigerator!

  • Scratch-and-Dent: offering new-but-blemished appliances for a discounted price.¬†I suspect there is a greater discount¬†for the higher end appliances,¬†but I was unimpressed at the cost of white, top freezer¬†refrigerators.
  • Used: there were some real possibilities here –¬†a bit less¬†than the¬†cost of¬†the repair, but buying a somewhat newer unit instead. You need a bit of luck to find a unit you want in stock¬†(several were already missing shelves and drawers).¬†For the real estate investor¬†who wants to¬†maximize profit, I would definitely recommend.
  • New: I was lucky that the current refrigerator was still operational so I could wait a couple weeks until the 4th of July sales began.¬† After referencing Consumer Reports, I price-shopped the least expensive ‘Best Buy’ rated refrigerator at a variety of big box stores.

Another consideration –¬†our personal landlording¬†strategy¬†¬†to sacrifice¬†some profit for reduced hassle.¬† In the end we bought a new Frigidaire with free delivery and a free ice maker for $495 + tax.¬† Score!

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Tree Ceremony and Rental Property Improvements

10 May

The Wedding Tree Ceremony
We were married last month, and during the planning process our officiate suggested we make the ceremony longer Рapparently I took my abhorrence for mushy wedding stuff a little too far.  I found a tree planting ceremony online, which fit well with our park-setting.  The tree ceremony is essentially a metaphor on the nurturing of marriage:

Tree Ceremony During WeddingLike this tree, marriage must be resilient. It must weather the challenges of daily life and the passage of time. And just like the tree that they are planting, marriage requires constant nurturing and nourishment. As they provide the sun, soil, and water for this tree, they will provide the encouragement, trust, and love needed on a daily basis to consciously nurture and nourish their connection to each other.”

Which then begs the practical question Рwhat do you do with the tree afterwards?  Since we live in an apartment, we decided to plant it at our investment duplex.

Wedding Tree CeremonyPicking the Tree
With tenants in play, I needed to pick a variety that had good odds of living on its own devices.  I went to a local nursery to get some expert opinions with a few criteria in mind:

  1. Relatively Attractive –¬†for both¬†curb appeal and the wedding photos.¬† ūüôā
  2. Low Water¬†Needs / Heat Tolerant –¬†2011¬†saw a bad drought for Texas, so this could be the difference between the tree surviving the summer or not.
  3. No Acorns or Fruit Рwith rental properties, this could be a recipe for disaster.

The nursery staff was crazy helpful and knew their stuff Рshe understood exactly what I was trying to accomplish, recommended several trees, and introduced me to some city resources on native trees suggested for the area.  I ended up picking a small Cedar Elm.  Total cost for the tree: $4.32 Рwhat a deal!

Planting the Tree
YouTube.com is a great resource for DIY projects:

Cedar Elm Investment PropertyHere’s the tree in its new, permanent home.¬†¬†Now I just¬†need to keep it alive during the upcoming Texas summer – it sounds like the first year is the hardest and then I’m probably good.¬†

We intentionally planted it in the front yard so we could help supplement the watering as needed.¬† I expect I’ll make frequent trips to ensure it survives the summer, which will give me an excellent opportunity practice¬†tracking my driving mileage.

 

 

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