If you read my last post on owning rental properties it probably seemed like everything is always roses, which couldn’t be further from the truth. I’m still less than a year into owning my first property, and less than two months into owning my second one. That being said, I was contacted back-to-back days last week about multiple maintenance issues that needed to be done on both properties…lovely! At one point I’m explaining one condo having water damage and a leak, meanwhile my phone is buzzing in my hand because of multiple maintenance notifications on the other condo.
To be honest, I make a good amount of rental income on the condo near my house. It was barely over $100k, so I had a low down payment, and it was virtually maintenance free. I had to replace a doorbell and the dishwasher currently will not drain and is being looked at by a technician. Fortunately, I negotiated a one year home warranty with the seller when I bought his property. I basically wanted to be on the safe side since most of the appliances and utilities are original to the condo. They worked great at the time of purchase, but it never hurts to get a home warranty that covers the major appliances. They aren’t that expensive, it came at the sellers cost, and it seems it will already pay off for me. I am hoping the technician is unable to fix the dishwasher because then the warranty company is obligated to buy me a new one. This way it’s one less item to worry about after the warranty ends in March. Now, unfortunately, the doorbell is not covered under warranty and is actually costing me $138 to fix! Apparently they had to replace and rewire the whole thing… I never would’ve expected a doorbell to be so costly. In the end, this condo nets me about $550 per month in free cash flow, of which I take about $250 of that money and pay extra down on the principal. I am still happy with the investment, if I wasn’t then I would sell it. The condo has already appreciated in value by about $15,000 in the past 6 months (nearly 15%) based on several recent sales in that complex. However, you have to take the bad with the good, some years I will kill it, and others I will have to put some of my cash back into maintenance and repairs. If I didn’t realize this before then I certainly do now.
The stickier situation remains with my Florida condo. This is actually what inspired me to write my “not so rosy” tale of investment properties. So, we closed on this property about a month and a half ago, and our property management company is doing a very thorough and diligent job of prepping it for rentals for the coming snow bird season. One of the first items on their to-do list was deep cleaning the place because the previous owner left it in quite a bit of disarray when they moved out. Well, when they turned on the shower in the master bathroom, they received an unexpected surprise a few hours later. The unit below ours was having an extensive renovation done on their bathroom and they reported that a water leak had come through their ceiling…from our unit! Mind you this was the first time we had even run the water in our unit since we owned it. Long story short, we came to find out that the shower was leaking a month before we closed on the property and it was brought to the owners attention at that time. We also found out that he hired a plumbing company to come in and literally glue some stuff shut to temporarily assuage the leak. He knew full well it would only last for a few weeks until we closed and then it would become our problem. There was obvious water damage in the unit below, and the seller never disclosed any issues in the sellers disclosure. First and foremost, this level of dishonesty really pisses me off. Not only do we need an entire shower tear out and replacement, but we need a plumber to come in and fix the leaks, and then we need to reimburse the owners below for the amount of work the contractors now have to redo. Even if the previous owner had given us a heads up, or the contractor downstairs the heads up, we could have at least paid to have the leak fixed before they re-sealed their ceiling downstairs. His dishonesty is now causing thousands out of our pocket. We clearly have a legal ground to stand on if we want to collect these monies from the previous owner. The catch is that it will cost even more money out of my pocket to pursue this through legal channels, and there is never any guarantee of recouping and collecting on all the damages. I really hate stuff like this!
Again, my point in bringing all of these issues up is so you can see the downsides that go along with rental properties. I haven’t even had a “bad renter” story to tell you yet, this is just wear-and-tear issues and dishonest sellers, so I am sure I will have more stories to come in the future. I’m still happy with the returns I’m receiving on property #1, and VERY excited to see how the returns will work out for property #2. I still wouldn’t change anything I have done so far in the process, but it does open my eyes to the fact that this rental property biz isn’t going to be quite as smooth sailing as it had been the previous six months.