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Wednesday, November 6, 2013

Escape from the Cube: Financial Independence - Being a Rental Lord

It's middle of month 4 of the Landlord Challenge, and so far so good.

PROs:

1.  I've  cleared about $300 or around $100 a month!   Doesn't sound like much except that $300 is on top of the renters paying for all of my maintenance costs savings ($200 per month), all of the manager's fees, property taxes, all of my mortgage interest, the mortgage itself and building my equity - about $150 per month.

2.  I'm only making $28 a month on a savings account of $28,000.   I've got $50,000 in equity in this town home, so I'm thinking making  $100-$250 a month is good return.

3.  My utilities at my new place are only $50 a month for electricity and $21 for water/sewer/trash.  I'm living in a luxury condo in the middle of the city, within walking distance of coffee shops and grocery stores, for about the same cost as living in my suburban town home with the long work commute.

CONs
1.  Rent is coming in as expected, although it is a little later than I would have hoped. The management company's bookkeeper quit and they are in process of training the new one.  By the time the management company processes the checks, it is around the 15th - not the 1st - and I'm usually so nervous about it, I go pick up the check myself.   I am looking forward to the day when that check just shows up in my mail box, as I expected.

2.  The air conditioner went out on the Friday before Labor Day.  The temperature in my part of the country averages around 98-100 degrees on that weekend!   The maintenance guy I had lined up for such an emergency was a complete waste - thank goodness for the management company.  They took over and had it fixed before 5 p.m. that day.

3.  Renters, being college kids, forgot that they had to pay for water as well as electricity.  Their water was shut off and a panicked phone call to the manager occurred on a Friday afternoon.   All was straightened out and again, I'm in debt to my rental manager.

Like I said, so far, so good.  Next month could be a completely different story!    But for those hoping to take this risk as well -- the moral so far is "hire a good manager, and stay on top of the rental checks..."