The Real Estate Roller Coaster

Yesterday was a weird day for me. I felt all the emotional ups and downs that you hear about in real estate in one day! I thought it might help other newbies if I shared an example of the crazy roller coaster experiences that can happen in real estate investing. It seems to be the norm... so I guess we all just have to hold on tight and try not to puke.

The High:  A Great Sale

My day started at 6am, as it always does. Before I jump in the shower, I usually scan my email to see if anything important came in overnight. Sure enough, in my inbox were not one, but TWO full-price offers on a property I had just listed for sale the day prior. After living in it for a few years, and then renting it out for the last two years to test my interest in being landlord, I decided it was time to sell it and put my equity into properties that would offer better cash flow. I did a walk through with my agent just before my tenants moved out to determine how much work to put in to make it a competitive listing in the neighborhood. We decided to focus on the basics - new paint, new flooring, and cleaning up the landscaping - plus a few small repairs and finishing touches. On top of getting to dip my toe in the water as a rental property owner, these renovations felt like an opportunity to do a "mini flip" and get a feel for that process as well. Great learning experiences, right? It gets better. 

With over 2,500 sqft of living space to update, the renovations cost a total of $18,700. Add that to my $12,000 down payment nearly five years ago, and a couple months of holding costs, and I'm into this property for $33,800 of my own cash. We listed at $259,900, and got TWO full-price offers within 24 hours! It's officially under contract, and after commissions, closing costs, paying off my mortgage, etc. I should get about $65,500 back in my account. So simply looking at this sale, and not accounting for the cash flow I made while renting it, I stand to make a profit of $31,700, which translates to an ROI of 94%!

We still have to get through the inspection period and actually close, and I know roadblocks could pop up along the way. Luckily, the property is in good shape and there isn't much inventory on the market right now, so I'm optimistic that all parties involved are eager to make this work. As a newer investor, this feels like a win!

The Low:  A Nightmare Tenant

After riding the high from getting my "mini flip" under contract so quickly, my afternoon took an unfortunate turn. I got a call from the property manager of the 4-family rental property I purchased in June. We inherited three tenants, made some updates to the vacant fourth unit, and have been showing that to potential tenants for the past month.

I was hoping the property manager was calling with good news about an applicant for the vacant unit. No such luck. Instead, he had some very bad news about one of our existing tenants. We have reason to believe he's a convicted felon. Talk about a low! I could feel my stomach flipping as my property manager explained what he knew, and what else he needed to find out, and that he'd be working with a detective to get the rest of the details.

I won't go into any of details now, because we JUST found this out and the tenant is obviously still in the property. Suffice it to say that on top of not filling my vacant unit as quickly as I'd hoped, it looks like I'll have another vacancy very soon. Wish me luck, folks.

The Love of the Ride

At the end of the day, I was more optimistic than I was nervous. I know what you're thinking... I probably have an uphill battle ahead to stabilize my 4-family. I agree! And I see writing a detailed blog post about the stabilization process in my future. But the good news is I'm learning every day, improving, and still confidently moving toward my dream of financial freedom.

Yes, it will be tough. Yes, I'll get some bumps along the way. But I'll also experience some exhilarating wins. And if I am smart, conservative, and willing to learn from my mistakes, I'll make it. Roller coasters aren't for everyone... but I've always loved them. ;)

Can you relate? Share your craziest, roller coaster day in real estate with me in the comments!