My First Rental Property Freak Out

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My First Rental Property Freak Out

Justin JohnsonPro Member
Fort Smith, AR · Member since 2018 · 122 posts · 70 votes

Is it normal to start freaking out after you purchase your first rental property?  I know I am seriously freaking out.  I hope that it's just the jitters from all of the new things going on.  This is the first property I've ever bought, let alone a rental property.  My first experience was...interesting to say the least.  The seller seemed a little shady and didn't bother to tell either agent that the tenant was moving out...the same day that we were closing.  I am house hacking this one, living in the one side that I thought was going to be vacant.  The other side was cleaned decently and is in pretty decent shape, but the SMELL is so bad in there.  Everything has been chaotic and I'm really trying to calm myself, but I just have this huge anxiety.  I worked and saved and cut my finances to the bone saving off 40% of my income each paycheck, then poof, it was gone into the down payment.  Has anyone else felt this way when they started or is it just me?

Any stories, advice, or words of encouragement would be greatly appreciated right now while I'm trying to hold it together.

Thanks!

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Joe P.
Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
6y

Justin -- relax. It's normal. You didn't buy a 100k car which loses 20% of its value driving it off the lot. You bought a property that likely has the same value it did yesterday. If you sold it tomorrow, all you'd lose is your closing costs front/back, a super expensive lesson but ultimately most of your money is still there.

Now, the purchase is done, but I assume you ran your numbers on this? Why not share it with us and we can provide feedback on your evaluation and what to expect.

What's the smell on the other unit? Is it smoke, dead rat, urine? There's companies that fix everything. 

What's your estimate on rehabbing one or both units? Do you have that cash set aside and ready to go? If so, just start executing. Fix whatever is broken, replace what's needed, do it quickly, validate the work, and work on getting your income rolling.

This is an operations and execution business. You just executed the sale. Not start operating the business. What goal needs to be met with this tenant moved out? Providing a clean, safe, and ready rental to your next tenant. Make a checklist, start delegating items to yourself, a GC, or a PM, and focus on one, two, or three of the biggest items until your checklist is down to zero.

Breathe.

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  • Joe P.
    Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
    6y

    Justin -- relax. It's normal. You didn't buy a 100k car which loses 20% of its value driving it off the lot. You bought a property that likely has the same value it did yesterday. If you sold it tomorrow, all you'd lose is your closing costs front/back, a super expensive lesson but ultimately most of your money is still there.

    Now, the purchase is done, but I assume you ran your numbers on this? Why not share it with us and we can provide feedback on your evaluation and what to expect.

    What's the smell on the other unit? Is it smoke, dead rat, urine? There's companies that fix everything. 

    What's your estimate on rehabbing one or both units? Do you have that cash set aside and ready to go? If so, just start executing. Fix whatever is broken, replace what's needed, do it quickly, validate the work, and work on getting your income rolling.

    This is an operations and execution business. You just executed the sale. Not start operating the business. What goal needs to be met with this tenant moved out? Providing a clean, safe, and ready rental to your next tenant. Make a checklist, start delegating items to yourself, a GC, or a PM, and focus on one, two, or three of the biggest items until your checklist is down to zero.

    Breathe.

    51Reply
  • Timothy Durante
    Real Estate Consultant · Philadelphia · Member since 2020 · 10 posts · 20 votes
    6y

    @Justin Johnson I would have to agree with @Joe P. on his above comments. He brought up some good points on what your next point of actions should be. So maybe there was a hiccup in the current lease with the tenant, lesson learned for your next purchase. The first purchase is always the most difficult with the most lessons learned. 

    Start thinking about your next step and begin problem solving. Take a deep breathe, dedicate some time to come up with a plan that has reasonable solutions to the problems encountered (bad smell, necessary rehabs, new tenant) and execute. 

    On the other hand, feelings aside you should be proud of yourself for the investment your making. Reflect on the strides you made to better support yourself. Your on the path to generating yourself a secondary source of income! 

    At the moment times may seem tough, however your only growing yourself to become a more seasoned investor with the challenges faced. This is a time of growth take advantage of it. 

    9Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    Yes, it is normal. I bought my first property at 24. I spent the first hour after I got the keys sitting on the staircase starring at the coat closet because I had no idea what to do first. Take a deep breath, remember you have BP to help guide you, and celebrate! You just took an exciting step. 

    14Reply
  • Justin JohnsonPro Member
    OP
    Fort Smith, AR · Member since 2018 · 122 posts · 70 votes
    6y

    @Joe P. thank you!  I was just feeling overwhelmed with all of the goings on.  I had to move from my old place, clean it up, clean the new place, move in, organize it, clean the new place, get everything in place...I was just feeling like it was too much to do and take in.  Here is my final analysis done on the property. 

    I plan to hold onto this property for at least 1-2, unless I can find a way to get the total monthly cash flow bumped up considerably.  It is not under management and the lawn care is based on the lawn care company visiting twice a month and that will only be for about 2 more months until the grass has slowed way down as fall and winter approach.

    2Reply
  • Justin JohnsonPro Member
    OP
    Fort Smith, AR · Member since 2018 · 122 posts · 70 votes
    6y

    @Timothy Durante I did just that, that is why it has taken me a while to get back to responding.  I sat down and made a list of things that needed to get done and started doing them.  I forgot what I had saved the extra money aside for and was thinking that I had to do *everything* on my own.  I went out right after posting my little freak out and hired a lawn care team of people whom I knew their work was good, hired a cleaning service to deep clean the property, and focused on getting fully moved in.  I have moved in and already completed several of the repairs that needed to be done.  The unit is needing a new paint job inside and then it will be ready to be rented out!  I know the cashflow on the property is not the greatest that it could be, but once it is rented out, it will still save me a lot of money that I can take towards another deal.

    Thank you, I was not feeling too proud of myself, I was sitting there staring at things thinking "what have I done?" but I am feeling quite a bit better today and hopeful that I can have it rented out by the end of the month!

    @Nicole Heasley Beitenman omg, I know that staring feeling.  I walked into the empty apartment, took a deep breath, immediate regret and for the first time in *years*, I didn't know what to do or where to start.  

    I am excited and still a little scared.  I'm still not sure why I'm scared, must be newbie jitters.  I didn't let fear stop me from going this route, I'm sure not about to let fear stop me from continuing this course!

    9Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Take a shot of whiskey.  Then get some Fabreeze and hit the smelly apartment.  

    You will be fine.  

    15Reply
  • Timothy Durante
    Real Estate Consultant · Philadelphia · Member since 2020 · 10 posts · 20 votes
    6y

    @Justin Johnson Looks like you're doing quite well since your last post. A man of action! Glad to see you took the action upon yourself the results will follow. Keep up the good work, the BP community is here to be by your side as you make this transition.

    Best of luck!

    8Reply
  • Michael Beninati
    Investor · Charlotte , NC · Member since 2013 · 19 posts · 11 votes
    6y

    @Justin Johnson I settled in pretty quickly to the fact that this money was still mine, just not as liquid. Pretty quickly after my first house hack 10 years ago I became numb to the growing receipts at lowes and home depot because I knew it was necessary, and that was cash was all coming back to me in the end.

    5Reply
  • Justin JohnsonPro Member
    OP
    Fort Smith, AR · Member since 2018 · 122 posts · 70 votes
    6y

    @Michael Beninati I needed to hear that.  I started kind of getting knots in my stomach because of the many trips to Home Depot.  It felt like I was just hemorrhaging funds.  Also, not wanting to "mess up" with how my banking/spending was structured.  I am still trying to learn the bookkeeping/accounting side of it so that my CPA won't scream at me come tax time! lol

    2Reply
  • Michael Beninati
    Investor · Charlotte , NC · Member since 2013 · 19 posts · 11 votes
    6y

    @Justin Johnson i put lots of stuff on credit too, but thats the cost of doing business.

    2Reply
  • Erica J.
    Rental Property Investor · Houston, TX · Member since 2019 · 11 posts · 8 votes
    6y

    Glad I’m not alone with this! LoL. I was at closing asking “I should be excited right?” . 

    6Reply
  • NaDean Bowles
    Investor · Jacksonville, FL · Member since 2020 · 124 posts · 68 votes
    6y

    @Justin Johnson

    My first property was an apartment. I had to step off to the side of the building on the way in and hold up the wall for a minute because I was hyperventilating on the way into closing.

    Loved that apartment building.

    OdoBan and Kilz everything that smells after you clean it. You’ll be fine. Hang in there.

    2Reply
  • Justin JohnsonPro Member
    OP
    Fort Smith, AR · Member since 2018 · 122 posts · 70 votes
    6y

    @NaDean Bowles thank you! my first deal was almost 4 properties bundled together for a total of 10 units...I'm glad that deal fell through honestly. I think this being my first deal is the best so I can start very small and figure things is.

    Just got back from Home Depot getting painting supplies and other things to finish the repairs. going to try to knock it all out by tomorrow and put the place up for rent!

    1Reply
  • Natalie Cloutier
    Rental Property Investor · Ottawa, ON · Member since 2019 · 68 posts · 225 votes
    6y

    @Justin Johnson yes it’s normal! My husband and I started by building our first home from the ground up at 19 years old and my husband was throwing up the entire first week when the shovel was going in the ground lol then we house hacked it with a basement apartment and I still get nervous to this day when we take on a new tenant in our own home. Just take a deep breath, remember to always keep your eye on the ball, stay focused, treat it like a business and keep educating yourself. You will come out a winner. It just means you’re going outside your comfort zone. Good luck!

    1Reply
  • NaDean Bowles
    Investor · Jacksonville, FL · Member since 2020 · 124 posts · 68 votes
    6y

    @Justin Johnson

    Almost ready to rent? Look at you go, great job!

    0Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    6y

    @Justin Johnson,

    Congrats on your first house hack!   If it wasn't scary and uncomfortable, everyone would do it!

    1) You haven't lost a penny, you've put it in the house,  where it's likely going to grow comfortably, and remember-- you can always do an equity line if you need to pull it out.    I do remember the feeling of like "oh crap, where'd my money go?!" but don't worry, it's safely locked down.

    2) Smell-- figure out the cause, is it a horrible smoker,  bad carpet, or mold?  What is causing the smell?   After you figure  it out, oil based killz does AMAZING things!  If it's been vacant, getting fresh air and letting the house breath will do a lot!

    3)   I have a little saying.. you have 5 minutes to freak out, yell, scream, cuss, whatever, then get over it, deal with it, fix it.. move on.. you can't stress yourself out, bad stuff will happen-- guarantee.  Fix it fast, move on.  Show must go on.

    3Reply
  • Randall K Compton
    Flipper/Rehabber · Member since 2020 · 16 posts · 4 votes
    6y

    @Darius Ogloza

    This thread is hilarious haha.

    Get this, first week, first property we ever bought, one of the units flooded on like the second day I think.

    On a bigger picture note, as long as you manage property it’s always going to be something.. so if you want to win (you don’t want to become maxed out owning 2 doors) you’re going to have to LEARN to be calm and take the next step. Welcome to school.

    2Reply
  • Suzette T.
    Rental Property Investor · Acadiana / South Louisiana · Member since 2019 · 115 posts · 49 votes
    6y

    CONGRATULATIONS!!!!!! 

    Stay the course. 

    You've got this.

    Trust the process.

    0Reply
  • Matt J.
    Rental Property Investor · Hugo, MN · Member since 2014 · 283 posts · 257 votes
    6y

    @Justin Johnson I think it’s normal to feel jitters like that. You did something outside your comfort zone that’s pushing you to grow. You bought a house hack, so you have a lot more margin for error than someone who bought a traditional rental for their first one.

    You probably dodged a bullet by not inheriting a tenant that caused a unit to smell that bad. Remind yourself that once you get this thing rented, someone else is helping you pat down the mortgage, keep your living expenses low, you get to reap the rewards of appreciation and the tax benefits too.

    Hang in there and stay positive!

    2Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    Everyone goes through something similar when they first purchase a property. You took a risk that most people are not willing to because the fear overwhelms them. Take a deep breath and stick to the plan you laid out and this will just seem like a blip. 

    0Reply
  • Colin Merrill
    Investor · Milwaukee, WI · Member since 2016 · 22 posts · 22 votes
    6y

    Congrats!  The big thing that you said you noticed about the other apartment was the smell.  Where we buy rental properties usually that is caused by cat or dog urine.  Is that the smell?  If so the cleaning crew probably won't get rid of the smell.  Kilz (Shellac based) everything in rooms and closets where you can smell it from floors to baseboards and a couple feet up the walls.   Good luck!  If you have any willing friends now is the time to buy a pack of beer and some pizza and call them!

    0Reply
  • Ron Todd
    Rental Property Investor · OK · Member since 2019 · 126 posts · 114 votes
    6y

    Everytime I buy a property, I feel the same way at first. Then you solve the problems, get the tenants placed and start making money! Then of course, stuff goes wrong and you solve those problems and press ahead. It's all part of the game! You got this!

    0Reply
  • Alex Keathley
    Rental Property Investor · Saint Louis, MO · Member since 2020 · 44 posts · 39 votes
    6y

    @Joe P.

    Couldn’t have said it better myself. Taking out your emotions and focusing on the tasks at hand are imperative to success in this industry. Patience and persistence are key!! Thank you for sharing Joe! 👍🏻👍🏻

    2Reply
  • Abigail Pusey
    New to Real Estate · Hilton Head Island, SC · Member since 2018 · 13 posts · 4 votes
    6y

    @Justin Johnson, I haven’t even bought a property yet and I totally get the nerves. My girlfriend works for a real estate lawyer so she’s seen the ins and outs of thousands of real estate transactions. From stories I’ve heard, it’s not rare that the seller will keep the tenant in there until closing date - they’re probably maximizing what they can get for rent. However, you should’ve been made aware of this. That definitely would’ve been nice and actually might should have even been in the contract considering any possible issue with getting the tenant out. Consider that for next time and ask your seller when their current tenants will leave and ask your agent to add a clause that saves your behind should any problems arise. Like being able to back out of the deal, holding no liability, and/or receiving payment for each day that the tenant remains in the property.

    On the other hand... the property is yours. Congrats! Excited for you and wishing you the best of luck. As for the smell, remove floor coverings such as carpets, remaining drapery, wash walls, and paint. Definitely repaint. Not sure what kind of smell you’re talking but I’m assuming it’s probably from poor hygiene/care of the unit overtime. Things just get dirty and smelly. If there’s any beadboard/paneling on walls, think about removing that too.

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    @Justin Johnson  Congrats on your first purchase.  As both sides are empty, pick the one that needs the most work and move into that one.  Focus on getting the other unit ready for rent, and post it at market value.  Look into the Home Depot credit card-I think they do 6 months no interest-make sure you pay it off after 5 months.

    You mentioned holding the property for 1-2 years.  Unless the market goes up or you do some smart renos to increase the value, I'd think twice about that.  Look at how much it costs to sell a home.  Selling it after a year may mean you lose money.

    0Reply
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