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Rental updates, feeling like my 2018 goal is in reach

December 8th, 2015 at 07:48 am

HI all

Been swamped and struggling with what to do with a personal relationship... have not figured it out yet.

Anyway. back to finances

new property manager still going well. some bumps in terms of communication but overall much better. We have a face to face meeting today to check progress after month 1 and I will talk about communication etc expectations. I feel confident we can smooth it out.

Meanwhile they are MUCH tougher with rent and faster to serve 5 day notices and get people on track which I like.

STILL smoothing out which is upsetting but necessary and hopefully this will be the last time.. We are doing 5 day notices on 2 tenants.. both the old property manager put in.. both fairly new. one is that tenant he put in after 4 months of searching or 'not searching'.. whatever. Anyway I feel good these people will put BETTER tenants in faster.. Hopefully that is the case and I really feel it is.. very happy w new 3 unit tenant

The Victorian I was going/am going to sell next year/this year.. I just got a good comparable on it. the house across the street just listed (not sold) for MORE than I was going to list mine at and mine is larger etc.. so hopefully I can get the price I want for mine but really I do not have a lot in the property so just want to move on.

Section 8 inspection over there went well. much smoother.. lower cost.. LOWER stress.. we have another one this month on this other house

We are also going to have to turnover 1 unit in the (2) 3 units. and will look to do so for the $50 upcharge we did last time.

They moved in someone within 3 DAYS (of old tenant move out) to fill that first 3 unit vacancy!!.. so almost no downtime. minimal cost to fix up. just great

Hoping that repeats itself.

I have now determined I can NOT refinance out of this loan for some time (my main house loan). so committed to sticking around at least for a few years.. house is a nice ranch.. large lot. updated.. great area. I have my big fence up so private.. sortof like a 'compound' and house has all I need..

I AM paying $450 more a month on that mortgage.. .. started this month

Goal is to get under $130k by 6/18

I also talked to the 3 unit seller (I have a seller held mortgage) and re amortized the loan to pay it off by March/April 2018. With the payment being due on the 15th and the automated system w the new property manager only sending checks the 14th and 28th. this requires me to keep $4k in the account as overage. I am doing that this month. After that. I should be able to pull cash from the account each month and still save on the side. Overall savings goal is $5800 a month towards my investments funds or to fund ROTH IRA and HSA. I will also contribute to the 401k

I AM getting renewed at work which is HUGE (but paperwork is not in yet so not counting chickens until hatched/signed)

So counting my blessings.. still struggling getting these homes/units under control but feel I am coming out on top and feel good I am with a company (property manager) that is professional, cares about the upkeep, is finding good tenants and cares.. ie wants to do well and HAS SYSTEMS in place to do so.. I can tell tenants already respect them more.

I feel my goal of $8k a month NET passive cash flow is in reach. I am still challenged by the $400k by 6/18 but definately in reach too and still need ideas to get the mortgage (main house) under $130k by 6/18

I feel am going to reach my goals.. maybe I can even go full time sooner. I am liking my job. I work at home. and do well. full time will pay $105-110k and comes w 3-4 weeks vacation. why not? or take something else. I want to travel, do stuff.. live while I am young.

I am excited to do 'year end math' and see how I did in all areas.. I know I was way over with vacancy and repairs for the homes but tracking (and new management and learning) is the first step to improvement. I have approximately $400 to go up in rents still that did not happen this year.. (below market rents not just renewals) so if these people move out and at least 2 of them are next year.. I can raise those. this will also mean rehabbing the last 2 homes (if I do not sell one first) . It feels good to have the homes up to a baseline (the ones I did do) and just in general things more under control. By the way. I am now looking for LONG TERM tenants and to keep good tenants. this year poorly handled turnover, legal costs etc, rehab due to new tnenants was my largest expense! Here is hoping that takes a dramatic turn for next year w the new management.

Onward!!

9 Responses to “Rental updates, feeling like my 2018 goal is in reach”

  1. Livingalmostlarge Says:

    Wow amazing job and gambles. I thought you were considering getting out of your lower rentals?

  2. Rachael777 Says:

    LAL. thanks for the comments. Do you mean 'lower rentals'.. meaning Section 8 or the 'lower rentals' meaning the 3 units (rents there are the lowest at $650). Let me know and I can respond (and get thoughts) Smile

  3. Livingalmostlarge Says:

    I meant moving from C rentals to B rentals? Hitting a higher sweet spot.

  4. Rachael777 Says:

    I do want to move to higher quality rentals but looks like 2 of my homes are actually B neighborhoods.. I am selling one Victorian C.. and the other 2 homes in this C area are on a single lot so that limits the buyer to an investor so may not sell them right now. I am going to try this new property manager with Section 8 on these two homes once they turn over. The other house is is probably C too (but really not the same. sortof rural just lower income area but lots of people own their homes and it is sortof a small subdivision/enclave where everyone has lived there for a long time and has family ties... hard to classify that area.. low crime) but just rented to a likely super long term non section 8 person (of course with family there). And i am looking to buy 1 home in a solid high B area for $62k. SO I will buy ALL new homes in B, high B and will get rid of this C Victorian next year and see how renting those other 2 homes go with Section 8. Owning the homes and having some cash flow gives me more options (and this job) but I CAN buy homes in HIGH B areas if I look and leap on them immediately for slightly higher than what this C Victorian will sell for. These homes are typically forecosed and owned by banks. The next 2 months will tell me alot with the new property manager. Also in this C area (own 3 homes there).. apparently people are starting to buy the homes to live in so may be going UP in terms of neighborhood but even so STILL want to sell the Victorian (too large, too hard to maintain and not getting any upcharge for the square footage). Still learning as I go. Smile

  5. Livingalmostlarge Says:

    You have been doing this a long time I thought? This is your second go around and you did it before but the divorce is what caused you to lose all your properties previously? After you earn your $8k/month passive income are you going to property manage yourself

  6. Rachael777 Says:

    I have had rentals since 1990 but never really took it seriously and depended on the income. that is my plan now... I had rentals in Joliet before but managed them myself and then got out because I did not like management. I then got 3 homes in Naperville (next door to where I lived before and 2 blocks away).. not to hard to manage a few homes within a few blocks of where you live. I got those for appreciation though because it is hard to have the rent cover the mortgage on a high end home.. so bought those in 2005.. husband had some legal issues. made him a pariah in town.. etc.. everyone moved out and was hard to rent.. used up a lot of money with legal issues, 'trying to save the homes' etc.. homes went upside down with months of non pays and the market...then met with a very straight shooter accountant who said it does not make sense to keep the homes even if the bank offered me a deal. said I should cut my losses and buy elsewhere.. so I 'let them go'.. I then decided to do rentals for the long term.. solid B properties and have someone manage them vs myself.(I figured at 42 it would be easier to create cash flow then save it. and people save cash to throw off income anyway. why not go right to the source0. My solid B properties turned into 3 B homes, 3 C homes and a B 3 unit. The only way to get in was cash or seller financing so your choices are more limited. I had no cash.. I chose to go big with seller financing. Finding a good manager has been a learning curve and getting the homes in ship shape took more time/money then expected. but I think the path was good. especially because it was all I could do at that moment to 'get in' the market. I have learned alot and sometimes learning is PRICELESS .. I survived and really am feeling like I am OVER THE HUMP and sliding down fast to freedom. I mean who would think I could do this that it would actually happen. Today I am expecting to receive approximately $7,3000 from this property management company. (after expenses). If I was not accelerating the 3 units so much (I pay out $5k+ on that) I would be having an unbelievable amount of cash. So not risk free yet... stil SCARY.. still sometimes have doubts. frustration.. still systemizing the rentals.. working with this manager but feeling like I have the right manager and can make this work . My stress already is THOUSANDS of times less than it was before. And again 'what if it is true? what if I can do this". I will have created a $6-7k monthly income source ..maybe more.. and with systemizing things. streamline...for a long time and with it set up as a business I get advantaged tax write offs.

    I do not plan to ever manage these JOliet properties myself. or really any other. it sortof make the income source active and I do not want that. I want a stress free life.. I may reconsider that if I were to find some super near where I live but to do that I want to do it right which means get a SUPER deal so the #s works and it profits from day 1. I likely need cash or credit for that. I am low on both as I pay these others off and getting a mortgage right now would be harder. there is always seller financing or some creative deal and that is a 'thought' but not for right now... stabilize one source , get some $ in the bank and then move on. Smile

  7. Rachael777 Says:

    I can not edit my prior note for some reason. so these homes are the first ones I really took seriously, that I had someone really manage, that I kept track of all costs and had a goal to make the numbers really work that I did any extensive rehab or turning over.. so much of what I did was new even though I was in rentals before..

  8. Livingalmostlarge Says:

    Wow. What made you decide to get into rentals in such a large way? Sometimes I go back and forth with your success of achieving so much rental income. But I am unsure how to get into rentals with a large cash flow probably because I've never lived anywhere that the cash flow made so much sense.

  9. Rachael777 Says:

    Thanks for the compliments. I feel sortof undeserving still as not quite 'there' and still lots of risk with this last loan and smoothing out but glad to help w any expertise I have picked up along the way. I guess the reason I got into rentals was because most of the worlds wealthy either got their wealth through real estate or their own business. Real estate also gives cash flow. It is so much easier to buy cash flow then to save up millions of dollars and takes LESS TIME. Most people are saving for cash flow. regular monthly income. Rentals are not hard. I chose a harder lot as mine were not A1, ship shape, managed well properties and you CAN purchase those.. they just cost more and may not give you the return you need. I had no cash and needed immediately return but now CAN work up to buying those. I just bought what I did to 'get in'. easier to move around once you are IN. Sortof like taking a lower level jobat a company for the purposes of getting in and moving up later. If you live somewhere where the rentals do not cash flow. .then you need to buy where they do.. another part of the state (easy) or find SUPER good deals where you are (harder. requires speed when such a deal is found). Hope you follow the ups and downs as I post further. really only 27 months left to pay off this last loan!!! buts lots of story still to tell.

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