Diary of a Rental Property

Diary of a Rental Property

J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes

I had a blast writing my Diary of a New Construction Project thread, and the feedback I got from that was great. So, I've decided to try another one...this time tracking and discussing the ongoing saga of a rental property that I'm in the process of buying, rehabbing and renting out.

A few details about this project and thread:

  • I'm not a professional landlord, and while I've had a couple rental properties in the past, they were all short-term and relatively turn-key (I didn't have to do much for the short time I owned them). This time, I'm looking to hold some properties longer-term, and the one I will be discussing in this thread will be my first longer-term property.
  • Because I expect this to be a longer-term hold, I expect this thread could continue for a quite a while. Obviously, I won't have stuff to post everyday (especially once the house is rehabbed and in service), but I'll try to follow-through for as long as possible, and hopefully until the end of the project, whenever that is.
  • I really have no idea what I'm doing when it comes to holding long-term rentals, so I'm guessing this thread will be more of a "what not to do" thread, as opposed to a "what to do" thread. That said, I'm open to all constructive critique, and hopefully advice, opinions and feedback I get in this thread will actually help me to be more successful.
  • I will, of course, post as much detail about the project as feasible, without risking giving away anything inappropriate about tenants, etc. I'll try to provide all documents, invoices, pictures, budgets, schedules and financials down-to-the-penny, so everyone will know just how well (or how badly) this project goes. Maybe we'll even get some insight into the "50% Rule" while tracking a real life project.
  • I have a partner on this project. It's a good friend of mine, and I'll likely be referring to him throughout the thread. Let's call him "Brian"...which makes sense, since that's his name.
  • This "diary" is going to start in the past, when I first found the house. I've been keeping notes in anticipation of starting this thread, and I imagine I'll be caught up to real-time in the next couple weeks. But, you'll notice that the dates on the first several posts will be in the past, and that's why.

Please feel free to ask any questions, provide any advice or give any opinions throughout the thread. I may not listen to all of them, but I always appreciate the feedback.

Now, on to the thread...

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Brandon TurnerPro Member
Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
12y

Looking forward to following along J! Now you are playing in my world! :)

See this reply in the discussion

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  • Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Roy N.:
    Originally posted by @Cal C.:
    Originally posted by @Roy N.:
    @J Scott
    It's looking fine. Have you had the Section 8 folks through to inspect yet?
    When the rental advert goes up, could you provide a link here? {I'm always curious to see how other word there advertisements.}

    Great point! I can't wait to see how Carol (J's wife) Writes this up, I'll definitely look to shamelessly copy!

    Cal.

    I was having the same intrigue, but was trying to be a little more discrete about it ;-)

    Lol! Yeah I figured that was the case but you gave me a perfect excuse for me to allude to a friend's excellent work.

  • Dallas, TX · Member since 2011 · 308 posts · 59 votes
    12y

    Great job! Do you mind sharing what colors you used for the trim/walls?

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Bryce Y.:
    Great job! Do you mind sharing what colors you used for the trim/walls?

    Sherwin Williams Realist Beige (SW 6078) for the walls and semi-gloss white for the trim...

    Same color combination we use in all our flips as well...

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    12y

    I see carpet in the basement - better to use vinyl plank there IMO because when (not if) the basement (and carpet) gets wet in that rental the vinyl plank will still be serviceable, but I wouldn't expect that with carpet.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    12y
    Originally posted by @J Scott:

    ... I've been putting off finishing this rehab because I'm not looking forward to dealing with the tenant-finding process.

    Yes, I know that sounds ridiculous -- I've basically given up a month of rental income because I don't want to do something that's relatively easy, but given my introverted nature, there are just some things I hate doing. And dealing with tenants is one of them. Some people would likely recommend hiring that part out (and I will hire a property manager eventually), but for now, I just need to overcome my discomfort and get this done.

    ...

    You sound like somebody who hasn't heard of this awesome website called BiggerPockets where lots of really smart folks help people out with things like learning to deal with tenants and rentals, among other things.

  • Specialist · San Antonio, TX · Member since 2012 · 462 posts · 294 votes
    12y

    J Scott,

    This is going to sound strange. Maybe it's the fact you are giving us the insider's peek of your "Diary of a Property Rental"... But I feel like a proud papa.

    LOL!

    I told you it would sound (read) strange.

    IMO, this should rent in less than two weeks... But truly doubt it will go past a week, easy.

    Great job in the rehab (as usual).

    Now suck it up mister and get you some tenants in there.

    I can't wait to see your success on this one.


    Big Henry

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    Curious what you paid per square foot to have the floors refinished. I had a guy that charged $1.50, but he has moved on to other things. I hired a guy in November to finish some at $1.75 and he did a great job, but he's now in jail. In February, I had some done and the new guy is at $2. They look great, but a little pricey. That's for natural finish. He's at $2.25 for stain.

  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    12y

    BEAUTIFUL rehab, J!

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y
    Originally posted by @Steve Babiak:
    I see carpet in the basement - better to use vinyl plank there IMO because when (not if) the basement (and carpet) gets wet in that rental the vinyl plank will still be serviceable, but I wouldn't expect that with carpet.

    I would have also recommended something other than carpet in the basement ... I prefer ceramic tile myself.

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    Not so much not knowing...just an issue of wanting to throw up every time I have to... :-)

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Henry M.:
    J Scott,

    This is going to sound strange. Maybe it's the fact you are giving us the insider's peek of your "Diary of a Property Rental"... But I feel like a proud papa.

    LOL!

    I told you it would sound (read) strange.

    IMO, this should rent in less than two weeks... But truly doubt it will go past a week, easy.

    Great job in the rehab (as usual).

    Now suck it up mister and get you some tenants in there.

    I can't wait to see your success on this one.


    Big Henry

    Thanks Henry!

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Rob K.:
    Curious what you paid per square foot to have the floors refinished. I had a guy that charged $1.50, but he has moved on to other things. I hired a guy in November to finish some at $1.75 and he did a great job, but he's now in jail. In February, I had some done and the new guy is at $2. They look great, but a little pricey. That's for natural finish. He's at $2.25 for stain.

    In Atlanta and Milwaukee, I generally pay $1.25/sf.

    For these, it was a little different -- the 400 square feet on the main level were sanded and two coats of polyurethane, but they were natural, so no stain was needed. The 400 square feet upstairs was just buffed with a single coat of poly. And then there were a dozen steps that were refinished with two coats of poly.

    Total price was $1200. Because of the mix of refinish vs buffed and because of lack of stain and because of the extra work on the steps, it's really tough to figure out what the per-square-foot price would be for full refinish with stain.

    In general, I've gotten a lot of $2/sf bids in this area for that work, so that would be my guess.

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    REHAB BUDGET OVERVIEW

    As I mentioned earlier in this thread, the goal for the budget on this rehab was $18,000. I was hoping it would come in cheaper, but given that this was my first rehab in Maryland, I used conservative estimates. Turns out my conservative estimates were spot on...while I'm disappointed that I didn't get it down for less, I'm happy that things weren't more expensive than my worst-case projections.

    Here's how the budget broke down (the two items in red are TBD, though I believe those are reasonable estimates)...click to enlarge:

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y
    Originally posted by @J Scott:

    Not so much not knowing...just an issue of wanting to throw up every time I have to... :-)

    I don't like rehab but I do it -- I much prefer dealing with tenants and rentals. So that shows you that everyone has their own skills and weaknesses. But once you conquer this, then you can add this to your strengths category as well and you will be an even stronger powerhouse.

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    Section 8 Listing

    I listed (sorry, I wrote the copy, not my wife) the house on GoSection8.com about 36 hours ago to see what kind of response I could get from purely Section 8 renters:

    GoSection8.com Listing

    So far, we've gotten 3 emails and 1 phone call, and I'll hopefully be showing the property to a couple people tomorrow. It's the beginning of the month, so it doesn't surprise me that we're not getting more traffic as of yet -- next week, if we haven't found a renter, we'll list it on CL and the MLS as well.

  • Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @J Scott:
    Section 8 Listing

    I listed (sorry, I wrote the copy, not my wife) the house on GoSection8.com about 36 hours ago to see what kind of response I could get from purely Section 8 renters:

    GoSection8.com Listing

    So far, we've gotten 3 emails and 1 phone call, and I'll hopefully be showing the property to a couple people tomorrow. It's the beginning of the month, so it doesn't surprise me that we're not getting more traffic as of yet -- next week, if we haven't found a renter, we'll list it on CL and the MLS as well.

    I think that is a good response rate given the time of the month! You'll probably have a few more calls tomorrow.

  • Memphis, TN · Member since 2013 · 969 posts · 524 votes
    12y

    Once it hits CL you will be overwhelmed with calls..LOL!!

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    APRIL 5, 2014: FIRST TWO SHOWINGS

    I've gotten 5 contacts so far, and we had two showings on the property today -- both Section 8. Both filled out applications and wanted the place...

    The second one we were able to disqualify after calling her two previous landlords -- they both said that it takes a lot of effort to get her to pay, though she eventually always does. I'm not looking for a tenant I have to fight with every month, so she's disqualified. Plus, she currently lives three buildings down from my unit right now, so there's something else fishy going on...she couldn't give me a good reason why she's leaving, and neither could the current landlord.

    A couple hours later, I got the following email from this woman:

    "I want to thank you for allowing me to see your property. Before you call the reference check..I do want to be honest with you. There have been times when my rent was late. I always paid my fees that where due but I'am in a better place in my life whereI can pay my rent on time. I ask that you consider my application and not hold my pass against me."

    Not sure if one of the landlords called her and she sent this trying to appease me, or if it really was the case, but either way, I'm not convinced.

    The first showing was someone I liked -- she's been in her current place for 8 years and showed me pictures (assuming the pictures were really her place, she obviously kept it in great shape). She did have a couple red flags:

    1. I asked her several times if she had notified her landlord that she was moving. Each time she said yes. Then, when I indicated I was going to call her landlord and asked once again if she had given notice, she said, "Well, I haven't, but I plan to tell him on Monday morning. Please don't call before then."

    2. She has a HUD voucher for a public housing under something less common than Section 8 (called "Metropolitan Baltimore Quadel" or "MBQ"). Not sure exactly what it is, but the voucher comes from HUD and looks the same as the Section 8 voucher. Unlike Section 8, which is county to county, MBQ seems to be for several counties, as well as Baltimore City. I'll need to investigate MBQ a little more to find out if there are any major differences between it and the standard Section 8 programs in the County.

    3. Her voucher said that she was qualified for a 2 bedroom unit. Mine is 3 bedroom, and while I'm sure she can use the voucher for my unit, it's not clear if MBQ will pay as much as I'm asking. She already pays some of her costs herself, so perhaps she'll just have to pay more, but if that's the case, I need to be extra diligent to ensure that she pays as promised. The fact that she's been in her current place for 8 years indicates that she probably does, but it's certainly no guarantee. After I find out more about MBQ, I'll call her landlord references.

    4. She's moving from the city to the county, but she works in the city. She indicated that she's moving to get into a bigger place and a nicer neighborhood, which makes sense...but I want to make sure that the extra commute isn't an issue for her (I'd like her to stay long-term).

    Anyway, that's the scoop. If anyone knows anything about MBQ, let me know!

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    12y
    Originally posted by @J Scott:

    ...

    3. Her voucher said that she was qualified for a 2 bedroom unit. Mine is 3 bedroom, and while I'm sure she can use the voucher for my unit, it's not clear if MBQ will pay as much as I'm asking. She already pays some of her costs herself, so perhaps she'll just have to pay more, but if that's the case, I need to be extra diligent to ensure that she pays as promised. The fact that she's been in her current place for 8 years indicates that she probably does, but it's certainly no guarantee. After I find out more about MBQ, I'll call her landlord references.

    ...

    This is where the HUD limit of 40% of the tenant's income kicks in - that is the most this applicant will be able to go to; and that is really only 10% of the income because the Housing Authority is already expecting 30% of the income to be contributed toward rent.

  • Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
    12y

    go with the first, MBq is more of a headache, she has a smaller voucher than you need (less money), and her landlord doesn't know she's leaving yet. Does she have her RTA in hand or MBq equivalent? Doubtful. aka, she's not going anywhere anyway....regardless of who you choose, welcome to your new nightmare

  • Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
    12y

    p.s if she's in the city and moving to the county, usually that involves "porting " your voucher , aka moving it, which is another process.

  • Rental Property Investor · Baltimore, MD · Member since 2013 · 281 posts · 257 votes
    12y
    Originally posted by @J Scott:

    The first showing was someone I liked -- she's been in her current place for 8 years and showed me pictures (assuming the pictures were really her place, she obviously kept it in great shape). She did have a couple red flags:

    1. I asked her several times if she had notified her landlord that she was moving. Each time she said yes. Then, when I indicated I was going to call her landlord and asked once again if she had given notice, she said, "Well, I haven't, but I plan to tell him on Monday morning. Please don't call before then."

    4. She's moving from the city to the county, but she works in the city. She indicated that she's moving to get into a bigger place and a nicer neighborhood, which makes sense...but I want to make sure that the extra commute isn't an issue for her (I'd like her to stay long-term).

    J,

    I think red flags 1 and 4 can be resolved with some casual conversation and probing questions.

    Flag 1) Sounds like a possible integrity issue. But perhaps she told you she gave her landlord notice for fear that you might think she was only kicking tires. In future conversations (perhaps after the credit check) I might probe for other indicators of dishonesty. Identify a few negative things in her history and then give her an opportunity to disclose without letting on that you know.

    Flag 2) What anchors will she have that will keep her in Reisterstown? I have one renter who commutes a long distance because she values living in a good school district. What reasons would this person have to stay in your rental once she becomes frustrated with the commute?

    And on the photos she provided you: Can you think of any excuse to visit her at her current residence to confirm it's the same house from the photos?

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y
    Originally posted by @J Scott:
    APRIL 5, 2014: FIRST TWO SHOWINGS
    3. Her voucher said that she was qualified for a 2 bedroom unit. Mine is 3 bedroom, and while I'm sure she can use the voucher for my unit, it's not clear if MBQ will pay as much as I'm asking. She already pays some of her costs herself, so perhaps she'll just have to pay more, but if that's the case, I need to be extra diligent to ensure that she pays as promised. The fact that she's been in her current place for 8 years indicates that she probably does, but it's certainly no guarantee. After I find out more about MBQ, I'll call her landlord references.

    Definitely find out more about the MBQ program and what the voucher will support. Some people will try to "cheat" or "go around" the system. I was once trying to rent a 3 bedroom unit and someone came by with a 2 bedroom voucher. They said I could claim the unit as a "2 bedroom" just by removing a door from one of the bedrooms. That sounded fishy so I called the Section 8 office and they said, no, no door removal was necessary -- the Section 8 office would only pay the maximum allowed for a 2 bedroom unit if I wished to rent a 3 bedroom, which meant I'd be losing rent every month if I chose to rent to this person.

    Taking calls and having showings is so much fun, I wish I could do it every month. Darn those long-term tenants! (I guess this means I just need to buy more properties.)

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    Thanks for the feedback and suggestions everyone!

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Account Closed:
    Does she have her RTA in hand or MBq equivalent?

    Seth (and others)...something I'm confused about:

    Both of the people who came yesterday had a blank RTA form in-hand, along with a copy of their voucher. Does having the blank RTA form mean anything? Or when you said, "Does she have her RTA in hand" did you mean a copy of her voucher?

    I've heard several people say to ensure they have their RTA, but if the RTA is just a blank form, what's to stop them from getting it anytime, whether they're qualified to move or not?

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