So I don’t want to oversell my experience with real estate investing. My wife and I (in future posts I am just going to say “I” to refer to both myself and my wife) have only been at it for little over 2 years.
We began with a duplex. During the first year, we rented out one of the units and lived in the other one. In addition we rented out our previous condo (which we have now sold).
We use a realtor that markets and reviews prospective tenants and have been very patient to find tenants who have solid credit scores and pass criminal background checks.
We purposefully bought a really nice home that was built in the 1920’s, and is located near a trendy Dallas neighborhood. Because of that we have been lucky to have lots of perspective tenants to choose from, and have gotten successively higher rents each time we have had a vacancy..
Knock on wood there have had fairly minimal vacancies, and have had a really good luck with renters paying on time.
- Have a strategy towards real estate. In a later post I will talk about ours. Yes it will change over time. But have one.
- I think our vetting process/use of areal estate agent has been so far a success. Its a bit costly, but I think we get protection of better tenants, better contracts and it gives us an impartial person to provide feedback.
- Even though we have had relatively minimal issues with vacancies, holy COW is it expensive. It takes a few days to turn a property between tenants and every empty day is really expensive. Dont underestimate the cost of lost revenue.
- It takes a shocking large amount of money to turn a property. Each time it seems like there are things you didnt think of that cost a lot more than expected.
- The first few years, dont plan to take any money out. Expect that you are buying a rental property that has some deferred maintenance. Even if the property looks to be in fairly good shape when you buy it. Off the top of my head we have fixed or replaced fences, light fixtures, circuit breakers, 2 refrigerators, a dish washer, a dryer, refinished floors, a garbage disposal, replaced a half dozen windows, bought a lawn mower, a trimmer, repainted both units and had the foundation repaired.
- We set up a separate checking, savings account and credit card to use exclusively for the house. I would highly recommend this. It makes it so much easier to keep track of expenses for taxes etc.
- Use Kwikset locks that you can reprogram. So much easier than changing out locks each time you have a new tenant.
Overall I think our purchase has been a success. We believe that there may have been as much as $80-100K of price appreciation and the cash flow seems solid. Over the next few years I think it will provide a nice income and we hope to buy our next property soon.
Any thought or hints for relatively new landlords?