My very First Investment & NewHouseHackingProblems
Hello All! Thanks for the attention, so I bought my first property in December of last year. This year on a positive note I've been able to rent out the rooms consistently. Murphy apparently moved in too. lol the part where I am falling short is the amount of money its costing to repair the house...things I'm not sure i could have even prevented during the inspection. HVAC, Electrical box..flooring grout coming up from the new tile. This last one is where I'm lost on what to do about it...The front siding on my house is warping from the sun pretty bad? Has anyone had this problem? Installation errors aren't covered by Insurance from what I'm told. I can't figure out how to get ahold of the company that originally did the work. All these repairs are thousands of dollars so what I've collected in rent is pretty close to what I've spent on these repairs.
My question I guess is how is everyone doing repairs and maintenance, but ALSO saving money for their second (2nd) House Hack??
Do you still buy your next house if your first househack is draining or still costing you money?
@Joshua Hughes until you have a reserve built up you do not save anything for a down payment. I use 1 1/2 times my most expensive capex item. Might be a roof or flooring. If the roof will cost you $7500 then you put every penny into reserve fund until you have 10k saved. After that you can start saving for a down payment. If you spend any of the reserve fund you suspend the dp saving and build it back up to 10k. You have discovered that capex is not a linear occurrence. The inspection should have noted the age of the hvac and the size of the electrical box. I use a 20 year lifespan for hvac, but it doesn't follow my timeline exactly, lol. I've replaced them at 15 years and have some that are going on 30 years. The warping of the siding might be a simple fix. Ours was warping from being installed too close together. They came with a little trimmer and made the gaps a little wider.
@Joshua Hughes my wife and I set up a separate account for rents. So we pay the mortgage and expenses as if we don’t have any roommates. It forces us to save more and spend less for the house and then our capital comes from the separate account we have been pouring rents into.
@Joshua Hughes Unfortunately repairs in the first few years of owning a place are fairly normal. When you did your original deal, did you account for repairs and capital reserves? Moving forward, I would think padding your repairs and capital reserves would help you avoid obtaining another property draining all your capital. But also know that you can do all the calculations in the world and things still happen! You might just have to wait a bit until your reserves build up to buy the next one.
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Quote from @Eric Puffenberger:
@Joshua Hughes Unfortunately repairs in the first few years of owning a place are fairly normal. When you did your original deal, did you account for repairs and capital reserves? Moving forward, I would think padding your repairs and capital reserves would help you avoid obtaining another property draining all your capital. But also know that you can do all the calculations in the world and things still happen! You might just have to wait a bit until your reserves build up to buy the next one.
You might be in a J-curve. Remember you’re playing the long game.
When you bought the place, did you do a home inspection? Some of the systems should have been noted. Did you get a home warranty? Maybe they can cover some of the work.
Doing the work now will save you in the long run. However things like grout is just part of maintenance.
Regarding the siding, maybe it makes sense to remove it altogether and just have brick or stucco. The less maintenance the better. I know one investor who puts tile as baseboards in the bathrooms for this very reason.