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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  • Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    12y

    @J Scott You seem to be well informed so my apology if you have already heard this:

    MBQ does not work the exact same way as Sec8 Voucher.(Housing Authority) They are somewhat similar in many ways but the devil is the the details.So here is the biggest difference that comes to mind right now.

    Each agency does yearly inspection, and they re-inspect when you tell them you did the repair(with in 30 days of course)

    However MBQ only pays you rent from the day you PASS the re-inspection. (my former college professor has MBQ tenant and they sent her the letter to fix a few small things(during normal yearly inspection) and it toke her about 18 days to fix things and notify MBQ and they "skipped" her rent for 18days!

    Where as the Housing Authority pays you continuously rent as long you fix the items, and notify them with in the 30 days window.

  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    12y
    Originally posted by @Val Csontos:
    However MBQ only pays you rent from the day you PASS the re-inspection. (my former college professor has MBQ tenant and they sent her the letter to fix a few small things(during normal yearly inspection) and it toke her about 18 days to fix things and notify MBQ and they "skipped" her rent for 18days!

    Where as the Housing Authority pays you continuously rent as long you fix the items, and notify them with in the 30 days window.

    Val,

    Does MBQ simply withhold the rent until the repairs have been affected (and inspected) or do they abstain from paying rent until repairs are affected?

    The first is a major inconvenience, the second would be unreasonable.

    If they are doing the latter, there must be a contract with the landlord whereby the landlord agrees to forgo rent when repairs are warranted ... I cannot see any business person agreeing to such terms.

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

    Casino has opened two years ago with about 2-3000 jobs.

    Having done a grad school thesis on the economic impact of casinos on local economies, I'm going to say that this is probably the worst thing that could have happened to Anne Arundel county in recent history. Just wait 5 years, and you may see what I mean...

  • Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    12y

    @J Scott

    I would not disagree with you about your comment on the Casino! As a matter of fact would love to hear your view on that one of these days! Only mentioned Casino among many, many Job Opportunities we are getting here!

  • Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    12y

    @Roy N. MBQ never paid my college professor friend the 18 days of rent! She got so upset that the following year she did not renew the lease!

    As far as the contract with them, currently i do not have MBQ tenants so i would not know what is language in the agreements. I just wanted share this story here so Investors in our area can look out for it.

  • Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
    12y
    Originally posted by @J Scott:
    Originally posted by @Val Csontos:
    Casino has opened two years ago with about 2-3000 jobs.

    Having done a grad school thesis on the economic impact of casinos on local economies, I'm going to say that this is probably the worst thing that could have happened to Anne Arundel county in recent history. Just wait 5 years, and you may see what I mean...

    This I would like to hear about at some point in time.

    (and what was the thesis grade ( ha ha)? )

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Christina R.:
    Originally posted by @J Scott:
    Originally posted by @Val Csontos:
    Casino has opened two years ago with about 2-3000 jobs.

    Having done a grad school thesis on the economic impact of casinos on local economies, I'm going to say that this is probably the worst thing that could have happened to Anne Arundel county in recent history. Just wait 5 years, and you may see what I mean...

    This I would like to hear about at some point in time.

    (and what was the thesis grade ( ha ha)? )

    I don't remember exactly, but if it was anything like my typical grades, it was probably a solid C... :-)

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    12y
    Originally posted by @J Scott:
    Originally posted by @Christina R.:
    Originally posted by @J Scott:
    Originally posted by @Val Csontos:
    Casino has opened two years ago with about 2-3000 jobs.

    Having done a grad school thesis on the economic impact of casinos on local economies, I'm going to say that this is probably the worst thing that could have happened to Anne Arundel county in recent history. Just wait 5 years, and you may see what I mean...

    This I would like to hear about at some point in time.

    (and what was the thesis grade ( ha ha)? )

    I don't remember exactly, but if it was anything like my typical grades, it was probably a solid C... :-)

    I saw this happen in Detroit when the three casinos opened. Everyone said it was "going to be great" and "create thousands of jobs". It didn't even take the five years for it to have a major negative impact. It got a lot harder to collect rent. There were other impacts too - gambling addictions, ruined marriages, crime, etc. I'm a big fan of gambling, but some people have a hard time handling their fun.....

  • Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    12y

    @Rob K.

    Wow people are funny and interesting and even negative when it comes to jumping on the band wagon! Rob, Did you read my original post or just saw the word "casino" in the paragraph? :)

    In The original context of my writing I was describing J Scott the economic and the demographics of the two surrounding counties around here. And i was attempting to explain that, out here in the two counties we have experienced some amazing demographics and economic indicators. The housing bubble did not effect my property holdings and most of our property values are back to 2007-8 rates and are start climbing again 2-3%.

    In the past ten years Private industry and Goverment have been opening up new, and move here existing jobs like never seen before. The US Cyber Command is about to open several thousand of jobs here next to NSA on Ft Meade. When DoD started closing bases in the South US in the mid 2000s some of the Jobs that could not be closed, they had moved here that gave us about 7000 white collar DOD jobs. This is still ongoing and because of it, we have a population growth of about 1.1% each year for the last 15 years and the US Census expect this to continue for the next 20-25years (they do not make prediction beyond that) . Large players have also built over 5000 units of Luxury Apartments and close to 10,000 SFR are being built for about 3-4 years now, and close to hundred restaurants, several Hilton/ Mariats etc... The Luxury Apartments charge rent for a 3br around $18-2000/mo (fortunately they do not compete with my properties . The nearby mall was built 10 years ago for 100,000 daily car traffic, plus buses comes here from Baltimore and even Washington. This is where they put the Casino. As you can see the casino is NOT the major player here rather one of MANY! Just a fun fact: They sell $300-800K houses walking distance to the casino. Don't get me wrong I would never buy that close to the Mall/Casino.

    I was asking J Scott, since He now live close by here, why not invest here, for a very nice pay off down the road vs closer to Baltimore where Appreciations does not really come to play. He said his plans were calling for immediate cash flow and that was more possible closer to the city.

    Good Luck and Happy Investing! :)

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

    April 21, 2014: Plan B

    I haven't posted in this thread for a week or two, as there have been some unknowns we've been trying to figure out. I purposefully stopped interviewing potential tenants, as we've decided that this rental property may be a solution to another problem we've been having.

    You see, we're getting ready to tear-down and rebuild our personal residence, and we're going to need a place to live for 6-12 months. While this rental is a good distance from the build (30 minutes, no traffic), paying our company the $1450/month in rent is a much cheaper option than paying someone else $2000/month in rent (market rent is much higher near our house).

    So, unless a better solution presents itself in the next week, we'll be moving our family into this property for the next 5-7 months.

    We plan to treat ourselves like any other tenants -- paying the full rent to the company, etc. -- so I'll still have good numbers to apply to the analysis of the property down the road. Though I'm not charging us a pet fee for my dog and it's unlikely I'll keep any of our security deposit on the way out... ;-)

    The other bright side to this is that the place will be rented as of May 1 (by us) and we'll be able to schedule the next tenants to move in ASAP after we move out (i.e., shouldn't have any issues with showings or make-ready repairs).

    I'll write more if/when this is official...

  • Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
    12y

    Are you going to charge yourself late fees?:)

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Cal C.:
    Are you going to charge yourself late fees?:)

    Neah. I'm sure I'll threaten to evict myself if I don't pay on time, but I'll also know that I'm just bluffing... :-)

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

    With that 6 month or so timeline, you will be having a vacancy at the wrong time of the year, when it is harder to find (good) tenants from my experience. Maybe you didn't consider that as a factor ...

    I could be mistaken about that area in MD, but I guess it will be similar to PA in that when it comes to filling vacancies, better tenants are easier to find between April and September.

  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Steve Babiak:
    With that 6 month or so timeline, you will be having a vacancy at the wrong time of the year, when it is harder to find (good) tenants from my experience. Maybe you didn't consider that as a factor ...

    I could be mistaken about that area in MD, but I guess it will be similar to PA in that when it comes to filling vacancies, better tenants are easier to find between April and September.

    That's certainly a consideration in our decision. And the major reason we haven't made a final decision on this yet. If we can find another option that is similar financially (i.e., another rental at a similar price where we'd be just as comfortable), we'd prefer that.

  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    12y
    Originally posted by @Steve Babiak:
    With that 6 month or so timeline, you will be having a vacancy at the wrong time of the year, when it is harder to find (good) tenants from my experience. Maybe you didn't consider that as a factor ...

    I could be mistaken about that area in MD, but I guess it will be similar to PA in that when it comes to filling vacancies, better tenants are easier to find between April and September.

    Steve,

    If J encounters delays similar to his last build, he will be looking for tenants in February/March 2015 ;-)

  • Investor / Developer / GC · Manassas, VA · Member since 2013 · 229 posts · 39 votes
    12y

    @J Scott

    don't mean to sidetrack this great post but how does the comment by @Brian Lara fit in this thread? I notice all of the posts by this person all drive traffic to their affiliate.

    BTW, paying your company to rent the home is so, much more enjoyable then paying someone else.

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

    Steve,

    If J encounters delays similar to his last build, he will be looking for tenants in February/March 2015 ;-)

    Hey now!!! :-)

    Actually, our last build only took about 14 weeks...it was the 7 months that it took us to get permits that really slowed things down.

    That said, you make a very good point -- we've already been working on engineering/permits on this one since last September...there's no guarantee that we'll be ready to move into the new house in October like we plan. If things get sidetracked, having the flexibility to stay as long as we want will be nice...

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

    don't mean to sidetrack this great post but how does the comment by @Brian Lara fit in this thread? I notice all of the posts by this person all drive traffic to their affiliate.

    BTW, paying your company to rent the home is so, much more enjoyable then paying someone else.

    Yup, that's spam...I'm waiting for another mod to pull that down (I don't have permission to remove individual posts)...

  • Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    12y

    @J Scott I think is a Great Idea to use your rental for temp housing!
    @Steve Babiak

    @Steve Babiak if J Scott still considers Gov. Voucher,( Sec8) or Quadel applicants as potential tenants, he should have no problem finding a good tenant, even "out of the season" .

    If I was him, i would start advertise the unit a month or two in advance, with pictures online, and lined up some quality families, (visit how they live, make sure paperwork ready etc) and the same day Him and his family had moved i would show the place finish the paperwork/gov inspection etc to have the family move in in few short weeks.( I think the shortest we ever had was: we got rent check in 11 days, but it could take over 30, it just depends on the positions of the stars) :)

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

    @J Scott What did you end up doing with this property? I thought you were moving in, but you mentioned another property in a different thread. Did you rent this to someone else? Sell it?

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

    Wow, I completely forgot about this thread...sorry!!!

    Good timing, though...

    We had discussed moving into this property for 6 months, but then decided that it was too far away from our build (good decision!), so we got a nearby apartment instead.  That was right around May 1.

    For the next two months, we were so busy with our build that we decided to put off deciding what to do with this property.  We discussed selling it (again, I hate rentals but my wife loves them) and we discussed getting a property manager.  Ultimately, around July 1, we decided to just suck it up, put it back on the market and start driving up there (about 45 minutes away) for showings. 

    A couple weeks ago, we found a Section 8 (MBQ, actually) tenant that appears to be good.  We did a reference check with her current landlord (Baltimore City Housing for the past 7 years) and all checked out there.  Did a background check and no problem.  Did a reference check with her employer, and everything she said was verifiable. 

    So, we decided to move forward.  I submitted her RTA and associated paperwork to Section 8 (MBQ) about 10 days ago, and am just waiting for them to schedule the inspection.  Assuming we pass, I imagine she'll be moving in in a few weeks.

    She accepted the listed rent of $1450...we'll see if Section 8/MBQ is good with it as well...

  • Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    12y

    @J Scott I was off for a while, out of the country on vacation, but i see you are moving a head with this property. How are things with the new Tenant? Did housing of MBQ certify/inspect your unit? I hope this one will be a pleasant experience for you. Otherwise your wife will have a hard time convince you to do another "buy and hold" :)

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

    Wow, forgot to update again...

    After submitting the RTA package to MBQ, the tenant and I were notified that MBQ recently changed their maps, and the area where my unit is located is no longer available to new MBQ tenants (apparently, it's too nice of an area :).  So, MBQ told us that she wouldn't be allowed to move forward.

    The next day, very coincidentally, that tenant got notification from Section 8 that she was approved for Section 8 housing.  Turns out that my unit is perfectly acceptable for her once she gets her voucher.  Only issue is that she won't be getting her voucher until next month.

    At this point, we're relisting the property and we'll either find another good tenant in the next few weeks or we'll move forward with the other tenant once she gets her Section 8 voucher.

    We'll see which happens first...  :-)

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y

    You closed at the end of January and it's September and it's not rented yet?

    J, you may want to consider that if you're that busy, that you allow someone else to be your PM (even if you really want to do it yourself) ... time is money!  :)

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

    You closed at the end of January and it's September and it's not rented yet?

    J, you may want to consider that if you're that busy, that you allow someone else to be your PM (even if you really want to do it yourself) ... time is money!  :)

    Yeah, but then I'd have to interview PMs, which would take even more time than interviewing tenants!  :-)

    At this point, I've likely lost about $3500 in cash flow, which really sucks.  But, my wife assures me that keeping it as a rental is still the right choice...  :-)

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