Good afternoon BP,
I recently got my first property rented. I needed to rent fast so I lowered the price from 2200 to 1850. The Management company gets ten percent 185. The Mortgage is 1500.
I bought the property no money down for 244k. I should see about 125 dollars in cash flow. This is my first property. I think it may have been a mistake lowering the rent. But a wanted to make sure that I wasn't stuck with two Mortgages.
Does this sound like any of your first timer stories? please tell me what you think my best path forward would be? I think she has more potential.
Is it feasible to raise the rent on the next lease? Could I have made more cash by managing the property myself since it is brand new, built 2014, 5 beds/ 2.5 bath Norfolk, Va?
Thanks in advance BP.
I previously posted this in the wrong room, I think.
I think getting a property manager was a good choice. You may "save" money by doing it yourself, but in my opinion, it's more trouble than it's worth. Does your mortgage of $1500 include taxes and insurance? If yes, it looks like you're breaking even (put money aside for vacancies, maintenance and unforeseen repairs) or coming out ahead.
You can always explore raising the rent after the lease is up.
@Troy Kerr first of all, congrats on your first rental!
$2200 to $1850 seems like a pretty big jump, I'm curious how you arrived at that number. you want to make sure you are looking at other properties in that area/neighborhood and comparing the rents. Lowering your rent to fill a property faster is not a bad strategy, but you don't want to cut yourself too short. In my experience, an inflated rent will attract desperate tenants... and you probably don't want that.
You can definitely raise the rent when the lease is up. Although, if you are going up by a couple hundred dollars it would be wise to give your current tenants enough notice as their income may not support such a big hike; you may have to fill it with new tenants.
As for the property management question, I am not a big fan; especially on such a new property. I remotely manage two properties (1 built in 2005, the other in 2007) and I field about 4 phone calls a year... Simple things like the garbage disposal clogged or the HOA needs them to pull weeds. I'm not saying you will have the same luck, but if you have a few minutes to check your email and make a phone call then you are capable of doing a property managers job. $185 a month to do nothing for 10 months out of the year seems like a waste of money if you only have one property to manage. Of course, filling the property if your tenant moves out is more complex, but if you have your paperwork and policies squared away, it is just as simple.
There is some great information on this site about managing your own properties; you should check it out and get comfortable with what is involved and save yourself some money.
Hit me up if you have questions, I will be heading to the Virginia beach area when I retire from the Air Force.
yes. This price does include rent. I definable see where your going with your thinking. I got some reach to do. Thank you so much.