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Rental Property

Costs of Owning Rental Property

Expenses to consider with rental properties

Most people seeking early retirement or financial independence have toyed with the idea of owning rental property. I’m a firm believer that rental income can be a great source of income, especially if you buy a property that cash flows from the beginning. One of our goals is to have rental income that can cover our basic expenses within a decade so that we can choose to retire if we want. So far, Jim and I own one residential property and one commercial one. We have a different strategy with each, and I’ll share some of the costs of owning a rental property. Think About More Than the Mortgage, Taxes, and Insurance Most people think that if rent covers the mortgage, taxes, and insurance, you’re in the clear. I think this is a good place to start, but also know that you will have vacancies plus rental maintenance and repair costs along the way. So far, our residential rental has done really well this year, averaging $319 in positive cash flow per month after all expenses. Considering that we bought this property for under $70,000, this makes me very happy. We just had our first set of tenants move out, ...

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The First Year of Owning a Rental Property

It’s been one year since our first residential rental property opened for business. I say that because it’s very important to treat investment property like a business.  After being landlords for a year, I though I would share my thoughts on the whole process of rental property ownership.  Property Management We chose to use a property management company, and up to this point, they have done a wonderful job. The particular company we use has an agreement in each lease to go in every quarter for seasonal updates to the property. While, this is true, it’s actually a great way to make sure the tenants aren’t running a meth lab in our house. We also get a report after each inspection with repairs that need to be done right away or in the future. Our tenants were late with the rent only one time. They paid about a week late, along with the $50 late fee.  I’m honestly very glad I haven’t had to go chasing anyone for late rent because I’d probably be a sucker for a sob story. For now, we will keep property management so that we don’t have to worry about things like this.  Unexpected Costs ...

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Should We Buy Another Rental Property?

One of the gems I have my eye on. Courtesy of Remax.com

About this time last year, we purchased our first residential rental property. We hit a few snags with getting it renovated and rented, but for the most part, I would call the effort a huge success. We had hoped to add another rental property this year, but with our other investment project bogged down, we decided to wait until next year after the everlasting house flip finally sells. Things never seem to happen on my timeline, though, as a house I have been watching for months recently had a large drop in the sale price. I really don’t know what to do, so I’m asking my readers if we should buy another rental property. Let me be honest, I am getting a bit ahead of myself. I don’t have financing secured. I have been churning credit cards, which is not a smart thing to do if you are applying for a mortgage. We originally though that we’d use money from the flip and our HELOC to purchase the next property, but that is not available right now.  We do have amazing credit scores, no debt except for mortgages, and a good cash reserve. If we can get a loan, here ...

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Hidden Benefits of Foreclosure Hunting

While I’m enjoying my vacation, I have a wonderful guest post for you today. If you would like to guest post here, please read the guidelines, and contact me.   Have you been living under a rock the past few years? No? Well then you must have heard that there was a bit of a real estate crash in the US. The area where we live in Florida was hit particularly hard. But we (the PoPs) were lucky. We weren’t leveraged, had jobs, and were young enough to afford some risk – so we went foreclosure hunting. While we eventually bought a $50K duplex, the road we took to get there was not straight by any means. There were many metaphoric missed turns and surprise roundabouts that we got stuck in along the way. But, boy was it interesting.  Interesting? What Do We Mean Interesting? In fact, of the more “interesting” stories we encountered along our journey went along with one of the first foreclosures that we started to get serious about. It was a single family home in an area that was predominantly rented by recently immigrated families. Built in the mid-1990′s, out of concrete block, with a two-car ...

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Rental Property Series: Let’s Drink to Having Tenants

It has been a little while since our last rental property update. In case you’re new to this site, we purchased our first rental property at the end of August this year. My husband and I became slaves for a month to get it renovated and ready for rental.  You can read about it here if you missed it. Our goal was to have it ready for rent by October 1. We decided to use a property management company because we are just too dang nice and might let in a criminal if they look sweet and have some money. We were hoping to get $750 per month in rent. With our mortgage, insurance, taxes and property management fees paid, we should net around $340 per month from this property. Sweet deal, right? Well, we did have the property ready by October 1. I assumed there would be a line of people waiting to rent the place. We worked so hard, and I got a pretty shower curtain and mirror for the bathroom.  Reality is that it takes a while to find the right renter. One thing I like about property management is that they have no emotional attachment whatsoever. Sob stories don’t ...

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