It’s been 5-months since we bought our first investment property. I wanted to give you an update on what it’s been like in case you dream of buying one.
When we bought it on May 5th 2017, we had no experience as landlords. We’d never been real-estate investors, and didn’t come from families who bought investment properties regularly. So we had a lot of fear and anxiety going into the decision because we knew we’d make mistakes learning how to do it; and we didn’t want to make any big mistakes that would kill us financially.
But we had read a lot about it. We had friends that had done it that we could learn from. And we dreamed of trying it, and so we at least wanted to take the risk and try. Trying is the only way you can truly learn and grow in life.
I know there are readers out there who dream of buying their first investment property. So here’s an update on what I’ve learned being a real-estate investor and landlord in my first five months.
My First Thought On Being a Landlord for the First Time:
My first thought is that it’s been awesome. It hasn’t been nearly as scary as I thought it was going to be.
I enjoyed meeting people during the screening process when I showed the place after posting ads on Craigslist and Zillow. I enjoyed utilizing my emotional intelligence to try to pick the best renters out of the dozens of people who requested to see it during a showing.
I have loved the financial benefits of being a landlord too. Over the last few years, we saved aggressively so we were able to put down $53K as a 25% down-payment. This helped us keep our mortgage payment as low as possible on our investment property. I now profit $620 cash a month when rent is paid. I also pay off $200 of the mortgage per month. When the appreciation of the property is factored in, I probably profit $1,000 a month to my net worth. I love having this passive income stream coming in every month that I don’t have to “work” for.
One thing I was a little nervous about before buying it, is that I live next door to my rental property. We own a twin-home where we live in one-half and rent out the other side. So I was a little apprehensive about living next door to our renters. Here are a couple of pictures of my property so you can see what I invested in:
Before buying it, I didn’t know how having my neighbors become renters, and basically business partners, would change how I felt about my home.
Would having renters live next door make it awkward? Would I get frustrated with my neighbors? But now that I am doing it, I’ve learned it’s great. We screened the applicants hard, and we chose some great renters, who live quiet lives, and seem content in their home just like us. We occasionally make small talk in our shared driveway, and then go our own ways. I’m happy to be a landlord. They’re happy to be tenants and not tied down to a property. It’s worked out wonderfully for both of us. I get to keep a close eye on my investment property, and an added plus is that I get to choose who my neighbors will be. Also if I forget a tool during a general maintenance project, I don’t have to waste time driving across the city to get the tool I need. I simply walk next door to my house.
My Second Thought On Being a Landlord for the First Time:
My second thought on being a landlord for the first time, is that in some ways it’s been a lot of work. But luckily, it’s the type of “work” I enjoy, so it doesn’t feel like work to me.
I enjoy working on the property because it’s mine. I find this type of work “meaningful” because I get to build my dream. I enjoy mowing the lawn because it’s mine. I enjoy doing home renovations on it because I get to increase the value on a huge asset that I own. I enjoy watching utube videos on how to fix stuff on it, and then doing $1000 renovation projects on a budget for $150.
We bought the property in May of 2017, and I spent the entire month renovating it myself. I put in a new ceramic tile shower; painted the kitchen cabinets white; and put in all new stainless steel lighting, door handles, and hardware. I worked on it every evening, and every weekend for the first month I owned it. It was a ton of time-consuming, money-consuming work. But once it was done, and the house was updated, all the work was done on it for awhile.
Honestly, there really hasn’t been much work to do once we put all that work on it up front. For the last four months, the property has basically been on auto-pilot. It basically pumps a fresh $20 bill into my bank account every day for doing nothing. I love it. It’s been an awesome experience and makes me want to buy another big multi-family property like a twin-home, duplex, or tri-plex.
But there has been a few minor hiccups that came up, but nothing that I wasn’t prepared to handle.
I got a text from my renters one evening that the stove stopped working. I called the old owners of the property (who I am still friends with) and learned that the stove was 11 years old. It was simply time for a new one. So that night I went to home depot, bought a new one with free delivery, and the delivery team installed the new stove and took out the old one within a few days. I was even on vacation when they installed it.
Really, that problem was solved in about 3 hours, and I didn’t have to do any of the hard work. I just had to come up with the $500 to pay for the stove, which I suppose, is its own form of hard work. For this reason, I always keep an emergency fund of $15K cash to help me cruise through financial hardships in life.
When buying the new stove, I did decide to pay a little extra and upgrade to a stainless steel stove. My real-estate investment strategy has evolved to buying quality properties; in quality areas; that attract quality tenants. To accomplish this goal, I excitedly invest money and work to keep my properties in top shape at all times.
I read this article on biggerpockets.com recently about: “The Top 10 Rental Features that Attract the Cream of the Crop Tenants” that encouraged me to spend a little more on my properties to keep them in top shape.
I remembered tip #5 when the stove needed to be replaced. It read:
“Most inexperienced investors subscribe to the myth that their investment properties just need to be “good enough for a rental.” Therefore, they purchase starter homes with cheap finishes and rent them to mediocre tenants for mediocre results. Don’t do that; instead, purchase homes that have strategic upgrades that move the needle with excellent tenants: hardwood flooring, granite counters, stainless appliances, covered patios, etc.”
So here’s my new stainless steel stove in my rental property:
Ultimately, after 4.5 months of being a real estate investor for the first time, I have conquered my fear of the unknown and learned many things. But I think this below piece of knowledge is one of the biggest things I have learned:
As I have become a more experienced real-estate investor, I realize that being a good landlord is a lot like being a good sales person. You’re always maintaining your property so you can sell it to the best tenants who will cause you the least amount of headaches. I consider my property a premier piece of real estate, and so I treat it as such. I work on it so it doesn’t fall apart. I put in extra money to make it a nice place to live that will attract the cream of the crop tenants.
I am a great sales person in my day job. I have used the same skills I have learned in my sales job, to become a successful real estate investor for my first time.
And so far my investment to buy it has been working out great. My experience so far with real estate has been 10 out of 10 stars.
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