As some of you may know, my wife and I have over the last few years bought a house, lived in it a year, and then moved out and bought the next one. We now own three properties (see update below) , one duplex and two single family homes. One of the homes we live in, and the other two are rentals.
Often when reading blogs you hear only about the good, tenants paying on time, minor maintenance and boom…collect the cash. All passive income right?
This month we have a couple of good ones to share.
Part 1: Tiki Torches
A few weeks ago we get a call from our old next door neighbor. He tells us he woke up to a a crackling sound in the back yard. Low and behold our tenants had a party in the backyard complete with tiki torches.
Afterwards the party moved up the street to a local watering hole leaving the tiki torches lit. Well of course one of the torches fell over catching the wooden fence (wood floats don’t you know?…like a duck) on fire. Luckily our neighbor was able to put the fire out, and then put it out a second time when the embers lit back up. Without him being there, we might have been talking one or two houses that caught on fire and potential injury or loss of life.
Damage was a planter and a couple of sections of fence. Repairs to the fence ran $1,472 which will be passed on to our renters.
They aren’t dummies, combined this young couple makes something like $170K-$180K/year….well except they didn’t think about putting their tiki torches out before they went to the bars….so maybe we can call them dummies with regard to tiki torches.
Part 2: Tenants
About the same time as our tiki torch incident, I get a call from a realtor doing a tenant background check. But self….weren’t all of our tenants under contract for a year or more….and the ones that we were being ask about were under contract until May of 2017….and they signed a lease extension in October….self, why would I be getting a call from a realtor?
When I was growing up, never once in my wildest dreams would I have terminated a lease early, at least not one that I could pay. Its not that or tenants lost a job or anything, nope, something they liked better came up….squirrel….
Look, we decided not to keep our tenants in an adversarial rental situation, we settled on an extra months rent to terminate the lease. (probably should have held out for two) At least to their credit, up until then they had been low maintenance tenants, paid on time and did fully serve our their first lease. When they did end up moving out, the place was in good shape.
Don’t underestimate a renters ability to do odd things. Even when you think you have them under a long term lease.
OK.. Because we had tenants who were moving out, we thought it might be a good time to assess the market conditions of our duplex. Right now within a block of the duplex there were 10 or 12 houses that had been scrapped and replaced with high end condos. The market in the area is red hot.
So we put our duplex on the market. Low and behold, in the first week we had 3 offers, one in cash. We chose the cash offer and got just a couple of thousand dollars under list.
We actually had a really nice appreciation on the property since we bought it in 2013 (about +100K on a $280K purchase price). I doubt we can get that kind of run in the next few years and we thought it would be wise to sell and book some profits.
Update…last week we completed the sale of our duplex…and that will be reflected in our next monthly net worth update.
Oh…and the property game continues. we have a new house under contract.