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A Glimpse Into My Busy DIY Landlord Week

by retirebyforty on February 21, 2014 · 58 comments

in real estate, rental property

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Last time, I mentioned that I was turning a rental condo and I was having writer’s block. So I might as well write about this process to get it out of my head. It should be interesting for those of you who are aspiring to own rental properties. Actually, I’m not even sure if “turning” is the right term. I’m just cleaning and fixing up the unit to get it ready to lease again.

Here is a little background to get you up to speed. This condo is owned 50/50 by me and my brother. We purchased it so we’d have a place nearby for our parents. Meanwhile, we are renting it out and the cash flow is about even. The last tenant left last weekend and I’m getting the unit back into move in shape.

Move out

The tenant scheduled the move out on the worst snow day of the year. There was a sheet of ice over everything and the whole town was shut down for 4 days. They had to reschedule to this past weekend. I met with them Sunday and went over the unit. There are a few minor issues, but no big problems.

Fix up

DIY landlord fix unit

DIY fun at the rental

The tenants cleaned up what they could, but the place still needs quite a bit of work.

  • Cleaning – The carpets are dirty and needs steam cleaning. The stove and counters are not cleaned well. The inside of the cabinets weren’t cleaned. The stove backsplash has stains and bits of food stuck to it. The windows weren’t wiped. The bathtub was not scrubbed. I’m hiring a professional cleaning crew to go over the whole place. The cleaning cost will come out of the security deposit. Now that I’m a landlord, I think tenants should really hire a cleaning crew. You never have time to clean up the place properly when you’re busy moving.
  • Toilet runs – Every landlord’s favorite appliance, the toilet. The toilet tank kept filling every few minutes. I took a quick look and saw it needed a new flapper. They really should have informed me of this problem so it could be fixed earlier.
  • A socket (GFCI) in the kitchen isn’t working – This was an easy fix. I just hit the test button then reset to turn it back on again. They must have tripped it somehow.
  • Light bulbs – Some light bulbs went out and they never replaced them. This will be charged to the tenants via the security deposit.
  • Cabinet faded – The cabinets are birch veneer which faded and cracked over the last few years. I got a bottle of Howard Restore-A-Finish and it helped immensely.
  • Broken closet knob – Got a new one from Home Depot.
  • Dirty HVAC filter – Need a replacement.
  • Nail holes – I patched these and I’ll touch up the paint on Saturday.
  • Check smoke alarms – I need to check the smoke alarms to make sure they are functioning properly.
  • Home Depot trips – I already took 3 trips to Home Depot. One of the bulbs didn’t fit. The new closet knob didn’t have any threads. The new toilet flapper didn’t fit right with this toilet so I had to get a different one. These things never get done in one trip. I probably have to go pick up a new can of paint too. I’m 99% sure the old paints are all dried up.

So that’s what I’ve been doing this past week. Doesn’t that sound like fun?

New Tenants

Luckily, we also have a prospective new tenant. The new guy doesn’t have a car so I’ll lease out the parking space separately. He also wants to move in as soon as possible and I’m scrambling to get everything done. The cleaning crew will come by on Friday. I’ll do the last touch up on Saturday and he should be able to move in on Sunday if all goes according to plan. Here are the things that I’ve been doing for the new tenants this week.

  • Draw up new lease. I just based it on the previous lease.
  • Run background and credit check. I used an online tenant screening service. They’ll do background and credit check for me.
  • Rental application. Sent him the rental application and collected a copy of his paystubs.
  • Draw up parking spot lease.
  • Negotiated discount for no parking space.
  • Meet another prospective parking space tenant.

DIY Landlord

If all goes well, I’ll finish the last touch up on the unit and meet with the new tenant on Saturday to sign the lease. I’ll give him the tour of the building and turn the keys over so he can move in on Sunday. Whew, this will be a record if it goes off without a hitch. One week turnaround time is great, but it’s a little stressful. I really hope this new guy is a trouble free tenant. He is an engineer so I’m hopeful.

Next…

I’m also meeting the tenant from our rental home on Friday. Their 3 years lease is running out at the end of April. I’ll see if they are interested in buying the place. If not, then the rent will go up substantially (maybe 10%.) They have been paying the same rent for a few years and the rental rate has increased significantly. If they move out, then I’ll most likely sell the rental home. We are contemplating a little bit larger home and would need some cash for that.

So that’s how I’m spending this week in addition to blogging and being a stay at home dad. Luckily, the 4-plex is managed by a company or else I’m sure something would come up. These things tend to come in bunches. See, retired life really isn’t that idle. :)

Do you have aspirations to be a landlord? Mrs. RB40 doesn’t like it at all and she wants to get out of it. 

photo credit: flickr eszter

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{ 58 comments… read them below or add one }

Pretired Nick February 21, 2014 at 12:32 am

Thanks for bringing back the bad memories! All sounds very familiar. It’s probably a good idea to change out the smoke detector batteries at every turn as well.
I’m not sure splitting the parking spot from the unit is wise. If you get out of sync there, from an eviction, for example, your main unit would be harder to rent.
I’m glad you posted this so I don’t get tempted to buy another rental!

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retirebyforty February 21, 2014 at 6:55 am

I just changed the smoke detector batteries. The parking spot can be cancel with 14 days notice so I don’t think it’s a big deal. It’s not the right time to sell this condo yet, but the other places are definitely on the chopping block.

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Dividend Growth Investor February 22, 2014 at 12:29 pm

I almost bought a rental property last year. However, i was inspired by your experiences with your rentals, as well as some experiences of my brother in-law who was renting his house, I decided to stick with dividend paying REITs like Realty Income and American Realty Capital Properties. Why further complicate my already time-starved life?

And no, I don’t receive calls about fixing toilets ;-) The only thing I receive are monthly dividends deposited to my account. It is not too bad to receive a growing stream of passive dividend income every month for decades to come, because of an investment decision i made in the early 2010s ;-)

Dividend Growth Investor

PS My brother in law’s tennants had left the windows open and had the A/C on 60 degrees when they abandoned his property in a 80-90 degree weather. The A/C was broken, so were the windows, and there was dog… excrement all over the floor. Plus cigarette butt’s all over the carpet, ashes, and the smoke alarm had been taken down. At least there had been no fire, so my brother in law was lucky

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retirebyforty February 24, 2014 at 9:14 am

Oh man. Thanks for sharing your BIL’s experience. More reasons to get out now while it’s a seller’s market.

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Rodger Frego February 21, 2014 at 1:52 am

In Texas and most States the landlord is responsible for replacing the door knob locks on the front and back doors in between tenants. The toilet flapper is a wear and tear item. Unless you paid the water bill the tenant us the who lost out. The should have called you to replace the flapper.

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retirebyforty February 21, 2014 at 6:56 am

The only thing I’m charging them are the cleaning and light bulbs. All the other stuff will come out of the general operating fund.

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Steve February 21, 2014 at 3:12 pm

I’m surprised you’re charging them for the bulbs – are they especially expensive bulbs or something? And yet, I’m surprised you’re not charging for the holes in the walls.

I’ve never owned a rental but this “multiple trips to home depot” reminds me of the months after we moved into our house. Changing over a rental is a little like moving yourself, minus the actual moving.

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retirebyforty February 21, 2014 at 4:55 pm

Maybe I’ll charge for labor for the hole in the walls. I’ll do a little research.

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jim February 21, 2014 at 1:46 pm

Rodger, why do you believe its a requirement in most states to change locks? I have not seen that as a legal requirement in most states.

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Maverick February 21, 2014 at 2:47 am

Yeah, I keep looking into single family home rentals and can’t make the numbers work considering the additional hands-on work involved. While I would consider your turnover work to be minor, I still consider being a landlord, an “on-call” profession. How could I enjoy travels away from the area? I’d have to find a single family home that is well below market value. And then I ponder, why should I get involved with a rental and the potential legal liabilities when I now have a substantial ‘stash to protect? So I come back to thinking that your wife’s view may be correct.

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retirebyforty February 21, 2014 at 6:58 am

You’d have to find a really good tenant who is generally self sufficient or get a management company. I think we’ll reduce the number of our holding soon. It’s the right time to sell. Perhaps I’ll get back into it during the next crash…

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Clarisse @ Make Money Your Way February 21, 2014 at 4:46 am

My in-laws have a house for rent and they are living in abroad right now. Usually I visited their place twice a month. I’m the one who checked the appliances, if there’s something to be fixed.

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retirebyforty February 21, 2014 at 6:59 am

Twice a month is pretty often actually. I only have to go over to this condo every few months. The exterior are maintain by the HOA so that helps.

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Justin @ Root of Good February 21, 2014 at 6:22 am

Hey Joe, my Vanguard REIT index fund called last night at 2:00 am and reported it a leaking pipe. Oh wait, REIT funds don’t call me ever! ;)

Hope you’re in a good mood and can take a little humor. And like Nick, I always appreciate updates like this to keep me out of the residential rental game. I know the numbers are awesome (cash flowing properties here in Raleigh NC is very easy) but the headaches would take a toll.

It sounds like you escaped relatively unscathed though. No missing appliances, no major repairs required. Just a thin layer of dirt and a few minor items that the security deposit will cover.

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retirebyforty February 21, 2014 at 6:59 am

Yeah yeah yeah. That’s probably our next move. It’s not too bad at all. I’m sure the rental house will be much more involving.

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EL @ Moneywatch101 February 22, 2014 at 7:50 am

I get what your saying about REIT’s, but dollar for dollar do you really feel that a REit will pay you as much as owning a duplex? I have owned Reits and still do, but that still does not change my mind to one day own a 2-3K cash flow a month duplex to help increase income.

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The Stoic February 21, 2014 at 6:56 am

Your multiple trips to Home Depot remind me of my early rehab days this past summer with several trips to Lowes or Home Depot! Part of this was inexperience and part of it was things just not fitting right or needing additional items that weren’t anticipated.

Renting is still something I contemplate from time to time. I think you have to have a mindset that it is at least a side business and not really passive income. If you’re ok with this and adjust accordingly I think it can be profitable, however my landlord experience is very limited…

What is Mrs. RB40’s aversion to rentals??

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Mrs. RB40 February 21, 2014 at 7:23 am

It’s not so much an aversion as it’s just a pain that I’d rather not have. When Joe gets stressed, I in turn get stressed, even though he is the primary contact for the rentals. I have more experience with how the HOA and building management works, so whenever there’s an issue, Joe asks me and then I have to get on the phone to get answers. I have too many other things I’d rather focus on.

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retirebyforty February 21, 2014 at 9:14 am

It would be easier if I don’t have a 3 years old tagging along everywhere. :)

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The Stoic February 21, 2014 at 1:30 pm

Three years old?! And you haven’t put him to work yet? ;-)

Thanks for the response Mrs. RB40. It’s nice to hear your perspective.

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Will Murphey February 21, 2014 at 7:33 am

Wow, this since sounds like a landlords dream turnover. Not too many issue at all. I have a lease that is turning over in March so I am preparing mentally for the worst. I’ve had rentals where all I had to do was sweep and the worst of all; had to gut the house. I am reading up on owner financing as an exit strategy and will approach the tenant soon to see if they are interested. Fun stuff.

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retirebyforty February 21, 2014 at 9:16 am

The previous tenants were pretty good as far as renters go. The place is pretty small so there aren’t a lot that could go wrong. Gutting the house would scare me off from being a landlord forever…

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EP February 21, 2014 at 7:40 am

Check that the toilet isnt leaking below those toilet bolts. They look rusted out. We just had this happen in our place and a tiny leak caused a lot of damage over time. You can get the bolts at home depot in the same isle as the flapper.
:)

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JP February 21, 2014 at 7:53 am

I have an engineer in our place in FL; it’s been smooth this far (ending year 2 soon) and it seems they will stay another year. There were a few repairs that if I was around I would have done myself. The HUGE bonus has been that since we left town, the home has appreciated 30%. And increments have occurred in most of the country, I expect your 3 year old 4-plex will provide you a similar profit at sale.

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retirebyforty February 21, 2014 at 9:17 am

30% is great. That’s nice. The 4 plex appreciated about 25-35% over the last few years according to Zillow. We’ll see when we sell.

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Kurt @ Money Counselor February 21, 2014 at 8:04 am

Yes, being a landlord takes a lot of time and effort, unless one resolves to be a slumlord (which I know you are not!). I recently inherited an old farm house, and I’m trying to decide between two options: Demolish the 150-year old house and convert the 2+ acres it’s occupying to crop land (corn & soybeans, very good central Illinois land), or rent the house for probably $750 per month. I could rent the crop land for maybe $600 per year. Yes, a lot less than the house rent, but expenses are almost nil, so the numbers are not as lopsided as one might think at first glance.

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retirebyforty February 21, 2014 at 9:18 am

That’s interesting. Maybe just sell it and the money. :)

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UrbanSaltlLake February 21, 2014 at 8:25 am

I’d still do rental properties over working a full time job (which I do both at the moment) any day. It can be stressful at times when you get a call or text, but they are far far in between. I do spend a day or two in between tenants to clean the place, but that’s easy and the cash flow has been really nice.

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retirebyforty February 21, 2014 at 9:18 am

I like being a landlord much more than working for someone else too. :)

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David Stott February 21, 2014 at 8:33 am

Joe, what online service do you use to screen your prospective tenants?

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retirebyforty February 21, 2014 at 9:19 am

I use e-renter.com. The new tenant has good job and just graduated a year ago so not much record.

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Wilson February 21, 2014 at 8:36 am

I also had to do a turn at the end of last Nov that went fairly similar. I knew it was coming so I had time to get it rented out and arrange a painter to help me, but I only had 3 1/2 days to get it done. I like to do a deep clean and repaint different rooms every few years to keep the place looking fresh and maximize the rental amount. Fortunately the leaving tenants hired a maid to clean, although the place is so large that she couldn’t get all the pet hair so I had to come behind and charge a little extra. My area keeps improving so I was able to raise the rent 12% and probably could have gotten more but the new tenants came recommended so I never had to place an ad, run a credit check, etc.

I have to remind myself every time I have a new tenant that they’re assuredly at a lower level of home maintenance knowledge and walk them through the most basic things. For as great as the last tenants were, they never realized there was a HVAC filter upstairs they had to wash monthly (how I don’t know when they did the one downstairs), which lead to the condensor blowing out during 90+ degree weather when his parents were staying there last year, then to me calling a back-up AC repairman when the trusty one’s phones were down and I couldn’t get in touch, and he was hopped up on meth and did a crappy job and dropped a vial of crystal (knowledge gleaned from Google images, not first-hand ) in the backyard we later found playing with junior, and had to be redone the following week by my usual guy, and I had no recourse against Mr. Meth b/c guess what? He already had been arrested in that subsequent week and sent to a far-away parish on a parole violation!

But issues like that are rare and I’ve been lucky to not be bothered but only intermittently during the 3 years each of my tenants have averaged since 2007. Compared to my neighbor who has several units in his house and finished it with cheap fixtures, etc., I find that spending some more money on the front end and being responsive when the tenants have a legit problem leads to more rental income and a more responsible tenant, which means less overall troubles and more income.

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retirebyforty February 21, 2014 at 9:23 am

Thanks for sharing. 12% increase is great. I have been slowly increasing rent too. The rental house needs a lot of work when the tenant leave. I’ll need to repaint interior and exterior. We’d probably just sell it and put the money toward a home at this point.
Our condo tenants have been pretty good too. I only get a call every few months. Usually the garbage disposal or microwave.

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Financial Samurai February 21, 2014 at 9:06 am

Sounds like a good idea to sell the rental house yeah? That would leave you with the four plex and your main house?

As we get older, the desire for simplicity is greater. With your increase in online income and the price appreciation id sell it.

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retirebyforty February 21, 2014 at 9:24 am

We are thinking about moving so we might just sell everything and roll it into a home. The timing is right to sell the rental home and 4 plex. The condo probably need to wait another year or two. A new MAX line is coming in nearby and should increase the price a bit.

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Done by Forty February 21, 2014 at 9:15 am

Glad that the transition wasn’t too hard with the tenant, Joe! That’s always got to be a relief when you step back into your property after a while.

Do you think DIYing the landlord tasks is worthwhile for the savings, or, presuming the property cashflows enough to justify it…would you like to outsource it to a property manager?

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Daizy February 21, 2014 at 9:46 am

So far it sounds like an easy turn-over. I hope your new tenant works out. I seem to have a problem every 2 years with my rental. Last year it was an eviction and then someone stole the A/C condenser unit. It cost me thousands even with insurance. I will be very glad to sell the house but I am waiting for the price to go back to what I paid for it.

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retirebyforty February 21, 2014 at 4:31 pm

Oh man. I have been really lucky so far with my tenants. More the reason to get out now before I run into a nightmare.

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SavvyFinancialLatina February 21, 2014 at 9:47 am

It’s interesting reading about pf bloggers’ experience with being a landlord. Some love it and others don’t. We’re considering buying a second property to rent out, but I’m not sure…Sometimes I want to just invest in stocks, and other times I want to save up enough money for our first rental property. Except I know we won’t be able to handle updating both our house and the rental property, which makes me want to wait a bit.

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retirebyforty February 21, 2014 at 4:32 pm

You can invest in REIT for now and cash it out if you decide to invest in rentals. :)

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davidmichael February 21, 2014 at 10:05 am

I know that rentals can be a PITA. However, all of my teacher colleagues are multimillionaires just because they bought one extra house at a time and held on until and sometimes, through retirement. They literally begged me to buy a rental home but I only wanted to travel. So…an investment in property vs. life experiences. Not going to say which is better but I lived my dreams at a very early age (40 on).

Now however, at ages 75+, I am the one on a budget and our travels are mainly in the USA since we have travelled worldwide for 30 years. They on the other hand, have mounds of money and spend it mostly on cruises, adventure travel or other forms of entertainment.

For those who want to sell their rentals early because they are stressed out, I say, slow down and think about it again. When couples have children, it’s a stressful time of life. No way around it unless you hire a nanny to take care of the kids. Rentals just add more stress. But what the heck…when the kids leave sell the real estate and live your dreams without money worries. My advice…hang in there. You are probably going to be retired for 30-50 years. Lots of time to live out your dreams. Not so much fun to worry about passive income. Real estate is one of the very best ways to gain long term passive income!

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JP February 21, 2014 at 1:01 pm

I agree. Sometimes landlords remind me of business owners. During a stressful stretch, you hear them say “Sometimes I think about just selling the business and working 9-5 for someone else; steady paycheck and no worries!!”. Yeah, right!! 1) No; you would not do it. 2) Have you heard of layoffs??

I wish my rental wasn’t 3000 miles away; if I found a local one I would jump on it. But most markets are overpriced again. here in the pacific NW is impossible to find something with positive cash flow. FL was a gold mine; I get about 30% more than what the mortgage payment would be for my place.

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retirebyforty February 21, 2014 at 4:39 pm

I heard FL is good too, but I don’t think I can handle 3000 miles away. I think our 4 plex will be positive this year, but it took 3 years to get here. Now the price is up and I’m thinking about selling it to take profit. :)

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retirebyforty February 21, 2014 at 4:36 pm

Thanks for your advice. The housing price seems to be pretty high right now. It just feel like a good time to sell. Wouldn’t it be better to pick up rentals in the next down cycle? It seems like the bargains are all in the past, but who knows what the housing price will look like 10 years from now.
Anyway, I think it’s great that you traveled when you were young. The world changed so much over the last few decades. You friends wouldn’t see the same thing you saw.

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Max February 21, 2014 at 1:09 pm

Careful raising rent, I’m sure you’ve probably looked into this, but at least where I live you can’t raise the rent retroactively like that and there are limits set by the rent adjustment board on how much you can increase it each year, it doesn’t matter if you hadn’t increased it for several years or if the lease is up if they’ve been living there you can only increase it by a certain percentage say 3%.

Might be different in Portland but worth checking out as law suits can be a hassle if the tenant gets upset and you’re not in compliance. If you get a new tenant then you can charge whatever the market rate is, but otherwise unless you have a section 8 tenant you can’t increase it up to market rate (there are limits) and can only increase rents once per year.

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retirebyforty February 21, 2014 at 4:40 pm

OK, I’ll check on it. Thanks for the advice. I just talked to the tenant and I think we’ll probably end up not renewing the lease. They can’t afford more rent and they aren’t ready to buy.

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jim February 21, 2014 at 1:37 pm

Thats actually not a very bad list of items to fix for that rental. Pretty typical really.

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retirebyforty February 21, 2014 at 4:54 pm

Yeah, it’s not bad at all. It’s just busy work.

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Mom @ Three is Plenty February 21, 2014 at 1:40 pm

I’m with MrsRB40 – no rentals, no matter how lucrative they seem. They’re just one other thing to worry about and deal with. I was an “accidental” landlord, and that experience has soured me on any real estate other than REITs!

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Dividend Mantra February 21, 2014 at 3:53 pm

Joe,

I feel your pain here.

I have absolutely no desire to be a landlord. If I’m leaving a little money on the table then so be it. I’d rather have a few REITs in the portfolio and be done with it. :)

Hopefully, all this hard work pans out for you in the end and the extra returns work themselves out!

Best regards.

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retirebyforty February 21, 2014 at 4:55 pm

REITs are getting more and more attractive everyday. :)

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Maverick February 22, 2014 at 2:20 am

FYI, Vanguard’s REIT fund returns; 7.91% YTD, 2.94% 1 yr, 22.47% 5 yr, 8.57% 10 yr, 10.91% since inception (11/12/2001)

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Tushar @ Everything Finance February 21, 2014 at 7:23 pm

Wow, this sounds like a lot of work. Whenever I am doing a project, it’s nice to get it done and step back and admire the work, though. Being a landlord is more difficult than it sounds.

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Chuck@Tortoise Banker February 22, 2014 at 1:03 am

Dude, plumbing kills me every time.

It’s like a puzzle that can’t be solved… like the pieces never fit or something…

:)

I prefer maxing IRAs and 401ks.

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papadad February 23, 2014 at 7:31 pm

We were land lords for about 14 years, had a total of 6 or 7 doors to rent and in that time, the rental market where we were heavily invested went to hell with renters not paying rent, needing to evict renters, paying a lot to maintain the property with frequent renter turnover, and being many miles away, wasting money on maintenance that I could have done myself if closer to the units. In the end, I decided that piece of mind was worth more than the few hundred thousand dollars in equity that the rentals could/would MAYBE eventually be worth. In the end, we sold for a substantial paper loss…the sale price of the units was far less than what we initially paid. However, the mortgages were all partially paid down by someone else. In the end, after taxes and property tax and insurance, etc, I figure we about broke even after 14 years….. not exactly a good return on investment and I know i can do better elsewhere. I am very handy and like to use tools, fix stuff etc…but being far away, I could not leverage that personal advantage into the rental business and so for me it was the right call to walk away. Short sighted…possibly…but i;ve had many restful nights of sleep since then — and I am still chasing a renter, 3 years later, who owes me $6K in back rent after finally being evicted….

I know many people who retired very wealthy from rental real estate. Sadly, I think I am unlucky in real estate investing and likely will not be one of those. Perhaps we try again down the road, but I’m with other posters that a better real estate investment for me is in RIET’s and specifically I am looking at demographics and profitability and I believe older / senior citizen / assisted living type of RIET investments are where to play going foward.

What do you think of my investment hypothesis? Did you sell your real estate investment at a loss just to have piece of mind ?

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papadad February 23, 2014 at 7:34 pm

REIT not RIET… typo

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retirebyforty February 24, 2014 at 9:15 am

I’m sorry to hear about your experience. Being a landlord isn’t for everyone. I don’t think I’m cut out to be one either. It’s probably best for me to get out now while I can and take a little profit. Thanks for sharing.

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Ryan @ Impersonal Finance February 25, 2014 at 11:14 am

It doesn’t sound like too bad of a list. Of course, easy for me to say as I’m not the one doing it, right? My wife and I are actually going to look at rental properties in town this April, as that is the first time we could fit it into our schedules. I know I can handle a little bit of maintenance and repairs, but anything major I would have to contract out. And I feel you on having to make multiple trip to home depot in the same day. I was pretty much on a first name basis with half the people there when I was renovating our home.

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