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The Mystery of the Haunted Duplex

27 Mar

MysteryI get an email first thing in the morning from a new tenant asking me to call her back about an important matter, pertaining to some incidents that have happened at the property.

I call her back, and she is IN TEARS describing a series of strange events over several days, most of which happened the night before. We meet up with the tenants to get the full story that evening:

  • She wakes up the sound of a man screaming, but can’t be sure whether it was a dream or not.
  • They crate their small dog overnight in the living room, and she walks down the hall and finds the dog shut in the bathroom instead, scratching at the door to get out – crate is still in the living room. This has happened multiple times.
  • She walks into the kitchen, and all the upper cabinet doors are wide open
  • The woman and her daughter leave for the day, a little creeped out, and her boyfriend (a US Army soldier) takes a shower. In the middle of the shower the lights turn off (switch down) and the bathroom door closes.

I don’t think Angie’s List is going to solve this landlord problem. We have a plan to get to the bottom of this mystery.  More to come…

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Kicking Off 2013 with a Second Investment Property

4 Jan

We did a lot of saving in 2012, and we’re pleased to announce that we’re now under contract on another duplex!

IMAG0196

We’ve become more confident since our first investment purchase in 2011, as evidenced by our willingness to realize greater risks for greater rewards:

The Risks

  • Empty Units to Fill – because this property was a foreclosure owned by Fannie Mae, the previous tenants’ leases were not renewed – which means the duplex will be unoccupied at time of closing. This will be my first attempt at filling a vacancy, which is a little intimidating but also an interesting challenge. Which brings me to…
  • Smaller Population – this property is located in a much smaller town, which means a much smaller pool of prospective tenants. This is my largest concern about the deal, but I do think this property shines compared to others in the area – so I’m still confident it will rent regardless. I might just have to get a little scrappy when looking for a tenant. 🙂
  • Distance – located about 45-60 minutes away from our apartment, the location will change the way we manage this property. Definitely more outsourcing of labor and repairs, but it is nice that we can visit nearby family when we do make the trip. We will have the option to hire a property management company if we get to that level of frustration, but I’m not so sure we’ll need to anytime soon.

The Rewards

  • Better Cash Flow – compared to 2011, the real estate investor market has really heated up in my area. There are fewer properties to choose from and prices are increasing. We considered ourselves lucky with the cash flow of our first property, and chalked it up to great timing never to be seen again. But surprisingly this deal exceeds the cash flow of our original investment property! I’ll be sure to post the full balance sheet after we close.
  • Newer Construction – built in 2007, you can’t hope for much better in a duplex consider our low-maintenance landlord strategy. The tenant-friendly, stained concrete floors on the lower level are a nice perk.
  • Future Appreciation – as I mentioned before, the town is quite small – but growing rapidly. The population of the metropolitan area is expanding outward, and particularly along the I-35 corridor. The are also indications that the city leadership is investing in infrastructure like water, schools, and post offices to anticipate a growing population. We intend to keep our properties for decades, so we may actually be able to reap the benefits of this projected growth, and it could later help mitigate the risk of a smaller surrounding population. 

At the time of this writing we’ve finished inspection and are working towards a late-Jan closing date. More to come!

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Tip: Using Google Alerts to Monitor Rental Rates

30 Jul

This is a system I use to keep an eye on the fair market values of our rental property – both rent price and property value.

First, I create a new Google Alert of the street, city, and state of my investment property.  You can create a different alert for each property, or create alerts for multiple streets in the area if one street doesn’t give you enough data points. In my case I’m lucky: the entire street is lined with duplexes that get rented out and they were all built around the same time, so they interior conditions are probably similar.

Now Google Alerts will send me an email when it detects a new mention of this street on blogs or websites.  They arrive occasionally, and typically contain a combination of for sale listings, for rent listing, and garage sale announcements.

This list of Google Alerts Tips will help you refine your alerts.  For example, I could add -garage to my search query to remove garage sale listings from appearing. Or if the street name has two words, you could put the street name in parenthesis to limit the search to the entire phrase instead of inadvertently receiving listings for similarly-named streets.

As I get new rental rate data points, I add them to this on-going Excel chart:

Unit Rent Bed Bath Sq. Feet Price per Sq. Ft. Source
1 $995 3 2 1150 $0.87 hotpads.com
2 $1,050 3 2 1387 $0.76 hotpads.com
3 $1,095 3 2.5 1319 $0.83 realestate.yahoo.com
4 $995 3 2 1319 $0.75 txpropshop.com

I can then take the average price/sq. feet of the street or neighborhood and apply that to the square foot of my unit.

Using the above data as an example: $0.8925 / sq. feet average * 1199 sq. feet of my unit = $962 fair market rent. This is great news for us, because we’re currently receiving $875/month per unit. When we do impose a rate hike, we can include this information in the notice letter so tenants can see they’re getting a fair deal, and exceptional tenants can see they’re still getting below-market rent. 

An added perk of this system is that I now have a list of websites in my back pocket to use when I have a vacancy to fill.

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Rental Landscape Watering; Summer DriWater Test

23 Jul

There is a noticeable gap in rental landscape expectations – apartment complexes care for the grounds, while smaller properties leave it to the tenant. Understandably, an apartment complex can share the cost of landscaping over more units, and the continual search for a tenant provides the motivation to put their best foot forward. Still, I think we can do better. This post is a part of my on-going search to find a middle ground that allows respectable rental landscaping that scales for a small real estate empire. 

As a follow-up to my landscaping projects from earlier this summer, I continued my weekly weekend watering, but it wasn’t enough for the new shrubs.  Despite my best efforts, I’d come back a week later to find droopy, lifeless plants. In retrospect, summer was not the best time to establish a new root system…

So began my quest for a self-watering solution that could help keep these shrubs alive during the summer, with specific criteria in mind: cost-effective, a 30+ day timeline, and attractive.  Several products would get the job done, but left unsightly globes, 2-liter bottles, or water beds in the lawn.

I eventually found DriWater, a gel substance that slowly turns into water when it reacts with enzymes in the soil. There are several products with different timelines and applications, but I pieced together my own technique that lets me use the cheaper 32 oz refill packs and keeps the product hidden from view. Cost including shipping: $23.20 for 5 packs.

DriWater in action.

First, I cut a slit down the length of the plastic casing which exposed a portion of the gel to the soil, and then buried the entire product next to the plant, slit down. Cover with soil and mulch and the product is entirely hidden from view. This should provide supplemental watering for roughly 60 days, which will be enough to survive the summer. I’ll provide an update when I’ve gotten a better feel for how they’re working.

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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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Marketing Rental Vacancies with Inexpensive Door Hangers

13 Jul

cheap door hangerWhen I arrived home this evening, a door hanger was waiting on my door.

On closer inspection, I noticed it was created by hand as an affordable alternative to a printed door hanger. This method is ideal for low-quantity efforts (100 or less). Compared to online services that will print a professional door hanger for  about $.75/hanger, this can be made with materials you might already have around the house.

How to make a cheap door hanger:

  1. Print information on the front and back of a sheet of paper.  The beauty of this method is that you have complete flexibility on the paper weight, size, and color vs. black and white printing.  I believe the brochure on my door was created using legal paper, which provided a wider surface for content. 
  2. Fold the paper in thirds to create a brochure.  If I was using a thicker paper like cardstock, I would probably use a scoring board to make sure the edges were crisp. 
  3. Before stapling the door hanger together, align the rubber band in-between the prongs of the staple.

do it yourself door hanger construction

Easy peasy!  This could be a useful tool for creating some word-of-mouth by announcing a vacancy to the surrounding neighborhood.

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