Archive | Vacancy RSS feed for this section

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.

Want to be notified of new posts?

Join 175 other subscribers

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  
Vacancies
-$41 -$37 -$40  
Total Income $2,079 $1,888 $2,060 $6,027
         
Expenses        
Principle & Interest $699 $531 $738 $1,968
Taxes $352 $365 $365 $1,082
Insurance $69 $76 $63 $208
Repairs
$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

Want to be notified of new posts?

Join 175 other subscribers

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!

Want to be notified of new posts?

Join 175 other subscribers

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).

Want to be notified of new posts?

Join 175 other subscribers

2014 Goal Results & Highlights

22 Dec

Earlier this year I created goals for 2014 to keep me on-track. The results:

✔  Pay Down Mortgage Debt$3,522 applied to mortgage #2
✔  Expand Property Management – done!
✔  Mean Tenants – replaced with pleasant people at market rate
✔  Try Discounted Gift Cards – success!
✔  Another Property – technically, but we weren’t expecting a rental
✔  25 Blog Posts – squeaked in at 27 posts this year, yay!

Having goals was quite motivating – a way to ensure “someday projects” get prioritized. When reflecting on the past year, a few key initiatives stand out:

Buying Duplex #3
Our third purchase last May made three properties in as many years – not too shabby! It was also the second time we saved a down payment for a primary residence and ended up buying a rental property instead.

What can I say, we have a problem. 🙂

rental property living room 3

We stumbled on some legitimately good deals, but also wanted to maximize our advantage as DINKs (dual income no kids) while we could. It’s not hard to see a future where adult responsibilities stall our current momentum.

This acquisition was unique because the cash flow and appraised value were low for the purchase price, but our research suggested it still had potential. After a $200/unit rent increase (both tenants stayed!) and a new sales comp – we were back on track a mere 2 months later.

Series: How We Saved $1,454 on Our Property Taxes
Corey’s victorious quest to protest the tax valuations on two properties, broken into a 4-part series:

  1. Receiving a Notice of Appraised Value
  2. Filing a Notice to Appeal & Requesting Supporting Documentation
  3. Compiling the Evidence
  4. Appraisal District Meeting & Outcome

A good example of a financial skill that should be taught in public education, but usually isn’t. I group it in with preparing your taxes, the effects of compounding interest, and calculating student loan payments before a student chooses a college or major.

Aspirations / Running the Numbers
It’s fun to daydream about the future of our real estate empire. I noodled through hypotheticals like how many properties we’d need to retire and whether it would be faster to finance or buy outright.

day dreaming clouds

(photo by Kevin Dooley)

Turns out we could probably buy 13 leveraged properties faster than 5 paid off ones – all things being equal – while generating the same net income. Realistically, we’ll probably do a combination of both, and now that we’ve topped off our rental savings we’re cooking with pre-payment fire again!

Make Ready Kit + New Additions
I continue to adore our make ready kit, and got the opportunity to try it out in the field during a vacancy in November.

Make Ready Vacancy Kit Additions

Through trial and error, I’ve added to the inventory a bit:

Now the real question is whether to expand to a second bin….

Discounted Gift Cards
For those tempted to give discounted gift cards a try, I’d recommend waiting until just after Christmas. An influx of holiday gifts will likely upset the supply/demand model in your favor. More inventory = better discounts.

Also, a big thank you to those using our Raise and Cardpool links – any referral credits are going straight to our mortgage pre-payment efforts!

Cardpool Referral Credit

Previous Recaps:

“By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and Third, by experience, which is the bitterest.”  -Confucius

Want to be notified of new posts?

Join 175 other subscribers

Setting Expectations: Tenant Guidelines for HOA Success

17 Dec

Because HOA rules can be rather subjective, I recently met with an HOA manager to discuss lawn requirements for our rental property. It was a productive conversation, and I left with 5 key takeaways to share with our tenants and property management company. A few of these weren’t on my radar, so I’m glad we could prevent some misunderstanding and frustration.

I also created “Guidelines for HOA Success” that we’ll include with our tenant on-boarding paperwork moving forward. This should be more effective than referring to vague rules buried within pages of legalese. I’ll share the outline below in case this strategy is helpful to others balancing tenants and HOAs.

Finally, I plan to incorporate some light weeding during vacancies to help reign in other plant species that grow faster than the rest of the lawn. Most of the prior violations seem to be related to tall weeds more than tall grass.



Guidelines for HOA Success

These rules have been created to help our residents avoid HOA violation fines. The HOA has final say on violations, but these 5 rules should help you avoid the vast majority of complaints and fines. Please do not assume that you will receive a warning before getting fined; fines are allocated at the sole discretion of the HOA Manager.

If you have questions about compliance or a violation, please reach out to [property management company].

#1 – Keep Lawn Height Under 4.5 Inches

HOA Lawn Height Maximum

#2 – Only Outdoor Furniture is Allowed on Front Porch

HOA Outdoor Furniture Policy

Examples of Allowed Items:

  • Outdoor Furniture
  • Lawn Chairs
  • Grills
  • Exterior Decorations

Examples of Not Allowed Items:

  • Couches
  • Dining Room Chairs
  • Coolers
  • Trash
  • Cans & Bottles

 #3 – Lawn Should Not Cover Cement / Sidewalks

Crab grass in particular is a weed that likes to grow horizontally. Crab grass can be physically removed by the roots or cut back to ensure that it does not extend beyond the lawn.

Lawn Violation Edging Explaination

Edging is recommended, but not specifically required. Regularly removing the crab grass by the roots, edging, or trimming will usually resolve the problem to the HOA’s satisfaction.

#4 – Mow Thoroughly Under Shrubs

Please take extra care to mow under all shrubs/bushes so that the mower can reach any tall grass and weeds in the flower beds.

HOA Violation Weeds

(we removed the stones for easier access)

#5 – Trash & Recycling Should Not be Visible from Front Yard (except on trash day).

Please return all bins to the backyard by the evening of trash day.

Hidden Trash Can

Want to be notified of new posts?

Join 175 other subscribers

Removing Scuffs & Scratches from Stained Concrete Floors

11 Dec

The ironic thing about concrete floors in rental properties is that tenants might actually be more reckless on them because they assume the surface is indestructible… and they would be wrong.  🙂

Cement Floor Scuffs

During our last vacancy, I needed to address some marks in the floor – probably caused by dragged furniture. They were within the clear top coat, not physically scratched into the concrete itself. Almost like trapped air bubbles.

Being a concrete floor newb, I found a lot of conflicting information online – people suggesting polishes, waxes, or even a complete refinishing of the floor. I eventually stitched together an action plan with the help of my concrete flooring guy and the process ended up being WAY EASIER than I expected it to be.

First Things First – Type of Sealer Matters
Sealants come in several varieties based on the type of sealer (penetrating, acrylic, polyurethane, or epoxy) and distribution method (water-based or solvent-based). The floor in question had an acrylic, solvent-based sealant.

From what I’ve read online, you should NOT use this method on water-based sealers because xylene will compromise a water-based seal.

When in doubt, please test this method in a hidden area first. I’m new to concrete flooring, and I’d hate to inadvertently cause somebody’s floor to melt!

The Plan – Reset the Sealant with Xylene
Our flooring guy originally suggested using a paint roller and long pole to distribute a thin layer of xylene across the entire floor. For a smaller area, I could try a lint-free rag or a microfiber pad (be sure to wear gloves!). He was very confident, and said it would look as good as a newly-sealed floor.

The Euclid Chemical Company offers a handy “Concrete Cure & Seal Troubleshooting Guide” that provided some insight into how xylene works. From page 4, Instructions for Performing a Solvent Wash:

“Use steady, even strokes to apply the solvent. After a few minutes, the solvent will re-wet the sealer, turning it back to its original liquid form.”

Reminds me how manicurists can fixed a smudged nail by using a swipe of polish remover to “reset” the finish.

Supplies – Available at Home Improvement Stores

Xylene and Other Cement Floor Scatch Removal Supplies

This process has a pretty reasonable and affordable supply list:

  • Xylene (aka Xylol)
  • Microfiber Applicator Pads – I recommend one with grips
  • Disposable Nitrile Gloves
  • Solvent-Resistant Paint Tray
  • Safety Glasses

I already owned a pair of safety glasses, so everything else cost $15-$20.

 Note: solvents are a little more heavy duty than your average water-based paint. Everything on my shopping list was “for solvents” or “solvent-approved” per the packaging. If I were applying xylene to the entire floor, I’d be using a solvent-friendly roller too.

Xylene Application
Thoroughly sweep and mop the floor before you begin. I cheated – we have a cleaning crew come during every make ready, so I intentionally saved this project until after they were finished.

I’d recommend going outside to pour the xylene into the tray. The spout isn’t very forgiving, and I spilled this stuff everywhere on my first try.

I used the microfiber pad to wipe xylene on the floor and the scratches started to disappear before my eyes (we’re talking seconds, not minutes). This stuff is the magic eraser of concrete flooring!

Cement Floor Scuffs Before After

Pretty confident, I left the floor to dry and came back the next day.

Turns out it almost worked too well. If you look closely at the circled area you can make out the wipe marks where I applied the xylene. This was an unintended consequence of re-setting the sealant; the scuffs were gone AND the floor dried to the original high gloss shine – which was now much much shinier than the surrounding floor.

Cement Floor Restore Sealant Shine

Our property management company’s maintenance coordinator helped de-shine the floor with a blue scouring pad (the kind you wash dishes with) buffing in a circular motion. Alternatively, normal wear would eventually dull the shine to match.

Next time I’ll spot treat with the expectation that I’d need to buff 24 hours later, or apply xylene to the entire floor to get the high-gloss shine all over. I might alternate methods depending on how scratched the floor is and how long it’s been since the entire floor has been reset.

Want to be notified of new posts?

Join 175 other subscribers

An Unexpected Opportunity – We Bought a 3rd Duplex!

30 Jun

Big news – our rental empire just got a little bigger! We weren’t actively looking for another investment property, but we stumbled upon this little beauty and decided it was too good to pass up.

The Property
Compared to our investment property wish list, it checked off all the boxes:

  • Duplex – for easier cash flow and diversified vacancy risk
  • Expected monthly rent is at least 1% of purchase price (a.k.a. 1% Rule)
  • Newer construction – ideally built after 2000
  • Reasonable driving distance from where we live (trying for a 20-mile radius, but we’ve made exceptions before)

Both sides are rented with long-term tenants, but they are each paying significantly under market rent (~$400/month total). That means the 1% rule doesn’t apply just yet, but the long-term outlook is solid.

I also like that the duplex is in a 3rd city – just in case a certain part of town appreciates better or worse than others. We’re generally optimistic in the growth of the area – plenty of shopping, freeways, and the town is being considered for multiple industrial projects (*crossing fingers*).

Current Rent: $1,700 total
Market Rent: $2,050-$2,190 total
Purchase Price: $201,000
Current Rent-to-Purchase Ratio: 0.84%
Future Rent-to-Purchase Ratio: 1.02%-1.09%


A Calculated Risk
We found ourselves in a bidding war with 2 other buyers, both making cash offers. In order to be competitive with a mortgage, we paid slightly more than asking because we still saw value in the rent-to-purchase-price ratio. Additional funds were required to make up the small gap between appraisal price and purchase price.

We had the better part of a down payment already set aside for a single family home, so that was reallocated plus a little more from our personal savings. It was a bit of a financial stretch, but it worked out alright.

Down Payment: $61,500 (30.6%)
Mortgage (30 year fixed): $139,500


Next Steps

  • Get Units to Market Rent – We don’t have the luxury of keeping tenants significantly below market rate right now, so we’ll be upping the rent when leases expire – and dealing with the resulting vacancies.
  • Address Repairs – some minor issue were found during the inspection that can wait until we have a vacancy, but we don’t want to let them linger longer than we have to.
  • Replenish Savings – we like to have at least $5k per property set aside for a rainy day, so we need to beef up that account to $15,000 – ideally $20,000 if we can swing it.

Between the additional emergency savings, our recent make ready work, and this purchase, our mortgage prepayment efforts have come to a screeching halt. With all the moving parts, we feel a little financially exposed – so you might notice an uptick in money-related posts as I keep a closer eye on cash flow. 😉

Want to be notified of new posts?

Join 175 other subscribers

Sending a Security Deposit Accounting Letter to Tenants

10 Jun

Security deposits are a necessity, but they also require proper documentation to keep everything on the up-and-up. According to the Texas Property Code, landlords must provide a refund of the security deposit (if any) and an itemized list of all deductions within 30 days of the property being surrendered.

Security Deposit Deduction

An important caveat: the tenant must provide a forwarding address (in writing). In absence of one, we send the letter to their old address using certified mail, return receipt requested. It isn’t common, but there have been tenants who intentionally “disappear” so that it is harder for us to collect for excessive damages. The post office will either forward it on to them, or we’ll have documentation showing delivery was attempted.

Below is the template for our security deposit accounting letter. There are two variations for the “Resulting Balance” section, depending on whether the deposit was sufficient to cover any deductions.


Today’s Date: [MM/DD/YYYY]

Tenant’s Name: [Name]
Rental Property Address: [Address]
Lease expiration date: [MM/DD/YYYY]
Move-out Date: [MM/DD/YYYY]

Dear [Name],

The purpose of this letter is to account for your security deposit as detailed below.

Credits Received
• Security Deposit – $x
• Itemize any additional credits – $x

Total Credits – $x

Deductions
This is notice that the owner of the leased premises is deducting the following charges and expenses from your security deposit:
• Itemize individual deductions here – $x
• Itemize individual deductions here – $x
• Itemize individual deductions here – $x
• Itemize individual deductions here – $x
• Itemize individual deductions here – $x
• Itemize individual deductions here – $x

Total Deductions – $x

Resulting Balance
The balance due to resident of $x will be returned via [enter payment method].

Sincerely,
[Name]


If deductions exceed the deposit, use this text instead:

Resulting Balance
The balance due to Landlord of $x must be paid upon receipt of this statement.

Please make checks payable to [Name].

Mailing Address:
[Name]
[Address]
[City], [ST] [Zip Code]

Want to be notified of new posts?

Join 175 other subscribers

DIY Fun with the LintEater Dryer Vent Cleaning System

22 Jan


linteaterOur tenant reported issues with her clothing not drying completely, suggesting the unit was overdue for a vent cleaning. Before calling a service, we decide to try our hand at do-it-yourself dryer lint removal.

Enter the LintEater – a favorably-reviewed (4.7 out of 5 stars) gadget on Amazon.

The system includes a brush and 4 bendy poles (technical term) that attach end-to-end. A standard power drill spins the entire assembly, enabling the LintEater to self-feed its way through the vent system.

The LintEater in action:

Dryer Vent

For this particular duplex, we discovered the vent leaves the dryer, turns 90 degrees downward, runs through the foundation, and then reappears in the backyard. A lightweight “cap” under a fixed cover allows air to escape.

There we discovered our smoking gun: an ant hill had grown over the outlet, preventing the interior cap from rising and releasing the hot air. We ran the LintEater 12 feet from each direction, and the brush came back… wet.

We also collected a fair bit of lint:

DSC03301

This instigated a round of congratulatory high fives, but the drying time issue had not been solved. A week later a professional serviced the unit and provided this attractive photo:

Dryer Vent After - Copy

Again, LOTS of wet lint, which should be self-correcting now that air flow has been restored. This blockage exceeded the capabilities of a LintEater, but I am still optimistic it would work well for the average homeowner. Honestly, moving the dryer away from the wall was the hardest part of the process. We’ll incorporate a dryer vent sweep during vacancies for an extra “ounce of prevention” moving forward.

Want to be notified of new posts?

Join 175 other subscribers