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My Income Property: Two Years Later

Two years ago, I received the keys to my first income property. It has also been exactly 2 years since my last update on it. This post will get you caught up to speed with what went on during those 2 years since my last post and also on Arizona Air BNB Company.

First off, I will tell you right now that purchasing an income property was the best business decision I have ever made, by far and all thanks to a Business Recovery and Insolvency Advice expert who helped me out of debt. This update will not touch on the appreciation or profits though, as I have that planned for a separate upcoming post. So, while you may (and should) feel some pity for me due to some of my recent depressing blog posts, this is one of the few things that have actually made me a significant amount of money. Then when buying a new property, it’s essential to complete a snagging survey as there are always lots of errors and defects which are found in the survey so will always save you a lot of money and hassle.

And I absolutely love everything about property investment too. I love the math and analyzing of numbers. I love looking at properties. I love the negotiation and purchasing process. I love improving properties. I just love real estate. And so it’s frustrating that I’m not making money anymore as there’s nothing I’d love more than to go out and purchase another income property. Instead of seeking investors for Votesy, I should have been seeking investors for a share of my property holding company instead (where I could actually give out real shares, too).

Market Explosion

While I won’t be talking about the appreciation in this post, I have no problem sharing the rent increase.

The market here has skyrocketed since I purchased my property, which in turn allowed me to increase my rents as well. When I acquired the property, it was bringing in $1,650 a month in rent. It is now bringing in $1,900 – a 15% increase over 2 years. If that trend continues (I expect it to slow down slightly, but probably still very high at 10%), in 4 years that would be $2,500 a month. If you need help managing the finances of your real estate business, or any other business for that matter, a business financial management firm could be your best bet. If you want need some help to handle your finances as well, you must want to check out,  the official blog from James Kawas.

In addition, I will be increasing the lower unit’s rent either at the end of this month, or else when the current lease expires in 6-months, by around $100-$150, so the rental income is nearly at $2,000+ already (which, by the way, if you plugged that number into the equation above, in 4 years the rent would be $2,900+).

Vacancy is also low at 0% (although I did have to deal with an eviction and 1 month of non-payment). The rental market here is crazy, and if my property manager put the unit up for availability, she’d get like 40 inquiries in 24 hours.

But the money is not in the rent. The cashflow essentially just covers all costs. This has always been a holding property. The real value is in the property itself through appreciation. But more on that in an upcoming post.

Crazy Lower Tenant

At times it seems like I’m throwing money away by using a property manager, but at other times such as from the story that follows, I am so grateful that I did.

The lower tenant that came with the purchase (we didn’t choose her, in other words), ended up being a tenant from hell:

Didn’t Take Care of the Unit

The carpet was in poor shape after she left, and a professional cleaning didn’t improve it much. Fortunately, the carpet is only a small portion of the unit and the rest is tile. There was also some minor damage to the drywall and paint. All in all, this was not dramatic though, to be honest.

Snuck a Pet In

She got a puppy without asking permission or notifying us (which was part of the reason the carpet was in bad shape).

Crazy Shenanigans

She was a druggie and according to the upstairs neighbours, people would go banging on her door in the middle of the night screaming at her and spit on her face.

Thief

She stole stuff from the shed, as well as the upper unit’s belongings such as some tools and a PS3 and would pawn it for money. When the upper units confronted her about it (to which she always denied), the next day the PS3 was magically replaced with an Xbox.

Late Payments and Eviction

Later on, she would start giving late payments, and we’d (and by we I mean my property manager) have to shake her down to make sure she paid. Eventually we had to evict her, and this process did not go well: she was being very dramatic and sending my property manager long e-mails saying how she’d be out on the street, etc. She even went so far as to threaten or insinuate suicide of we proceeded with the eviction.

Fortunately, I was only out 1 month’s rent and she was replaced with an awesome tenant (one that we picked!)

So yeah – I’m definitely happy I didn’t have to deal directly with any of that crap. Property manager all the way.

Lots of Improvements and Fixes

I’m the dream landlord 🙂 The first thing I did when I obtained the property was start going down the checklist of things from the inspector’s long report, and addressing them one by one. I ended up addressing about 85% of the things mentioned in the report, only ignoring the super minor stuff that wasn’t important.

I’m recently having issues with the plumbing system and need expert plumbing services, for this we hired a plumber in Cupertino, CA for professional plumbing services. I was looking for more info on the best plumbing and I had a lot of improvements done to the property, including: an emergency drain cleaning, getting a new hot water tank (the old one was broken so we had it replaced through services like water heater installation in Edmonds, WA), added plumbing through experts like this Anaheim plumbing company and the best pedestal sump pump I could find, bought a new stove (old one broke) upstairs, had broken lights fixed, and a bunch of minor things fixed by a handyman the property manager has on call. For the best plumbing services, read about Sarkinen Plumbing so you can call their attention if you need their great service. I also contacted the best plumbing company by visiting sharpplumbing.com. Don’t forget about the well pump maintenance as well. If you need well pump services, you may contact a specialist in well and pump service in Snohomish, WA. And if you need professional pipe relining services, you might want to consider hiring a professional in pipe relining services in Mill Creek, WA.

I was notified of a “water leak” from my property manager that the upstairs tenants had contacted her about. I was terrified until I saw the photo and learned the source of the “leak” – it was rainy season and the back door simply needed new weather stripping – whew 🙂

The dishwasher that was installed. They didn’t have one in black, and I wish they had filled or covered that gap to the left… oh well.

Broken Fence

One of the very few things I didn’t address from the inspection report – a couple of rotten fence post supports – ended up biting me in the ass, as one entire side of the backyard fence blew down on a windy day.

Hello, neighbour!

It required digging and new cement supports and posts to be put in place. Fortunately, the next door neighbour was an awesome lady and split the costs with me 50/50, and we got it done properly and quickly for either $1,000 or $1,200 (I can’t remember) total. We were able to re-use most of the wood which cut the costs. The fence is strong now and should not pose me any more problems for as long as I own the property (at least that side of the fence anyway ;)).

Summary

Overall, things have gone pretty well despite a fair bit happening during the first two years. I expect things to dramatically quieten down now though, since I’ve taken care of all the repairs and improvements to the place and now have new tenants in place.

While I have a property manager, I still have my hand in the property as I still have to make decisions at the end of the day.

Stay tuned for my upcoming post where I talk purely about the numbers and appreciation of my income investment. You won’t want to miss it.