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Category Archives: rental properties

Don’t Get Sick! Your Credit Can Suffer!

You can’t predict illness or accidents, but you can predict they will be costly.

Yesterday I wrote about how some of our tenants would really like to buy the houses they are living in. Sure, there are lots of people who, in the current economy, prefer to rent, but there are others who would rather put their money into property, because as you know, they aren’t making any more land!

Wanting to buy a home and actually being able to do so are two very different things. Unlike the people you see on House Hunters, who always seem to have money for million-dollar homes in their late twenties, a lot of people have barriers to coming up with the all-important down payment, or they have such bad credit that lenders will not let them buy other than with cash. Too often, both of these situations are caused by people having the misfortune of becoming injured or ill, which in this country means anyone not mega-rich or lucky enough to be able to afford good insurance will owe lots and lots of money.

Here are a couple of examples of people we are currently working with (details are vague to protect their privacy).

Small Business Owner Gets Hurt

One of our tenants was a small-business owner when they first leased one of our houses. Small business owners often have trouble buying a house, because they don’t have the proof of a steady income that’s needed. Then, our tenant became badly hurt in an accident while engaged in a sport they loved. Of course, this prevented them from being able to work for a while, and of course, large hospital and doctor bills piled up (it’s also really hard for small business owners to afford insurance; that’s why I have a job in Corporate America that will insure me and Lee).

This tenant had always intended to buy this home from us. But, who will lend them the money? No one, so far. So, they keep paying us for the house they’d like to own and renovate for themselves.

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Thinking about Rental Properties

When the sale on this one is finalized, we’ll have to decide whether its future is a rental or a sale.

Why am I thinking about rental properties? Well, many of us real estate investors own a portfolio of rental properties. It’s the thing to do, according to all those classes we take and books we read. Because we are good investors, all of us at Hermit Haus have rental properties, both as a group and separately. We have them to provide a steady source of income that we can rely on, or as they say in the biz, cash flow.

A good rental property owner knows to take into account insurance, property taxes, any mortgage on the property, and anticipated repairs into account while figuring out exactly how much cash is going to flow. That’s smart.

Lately though, some of our properties have had one issue after another. The hot water doesn’t work. The air conditioner has a problem. Is that mold or just mildew from the recent rain? We want to replace the floor. Our drainage is bad. As you can imagine, that eats into the old cash flow. It’s hard to guess how much maintenance a house is going to need per year. Houses are like that.

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Improvements at Travis

As you may know, the house where we used to have our Cameron office is now occupied by our friends Mike and Martha.

We are really lucky that Mike is quite the handyman, because he’s done some nice stuff, like repairing the deck and adding a pergola.

You hardly recognize this deck!

He’s been doing woodworking, which is also fun. We are so lucky to have an example of wood turning at our house.

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Swimming to Sunset

Gravel delivered that will aid the drainage system!

Rainy woes around town lately. One of our rental properties, Sunset Valley,  is sure not handling all of this rain very well! It has been a battle with the already saturated ground to keep the water from damaging anything. It’s also just a terrible thing to have water sit at the foundation of a house.

Pro tip! Move that water AWAY!!

Luckily, we found an expert in installing drains underground that will (hopefully) fix all of the issues.

What’s Going on with the Rain?

One of the trenches in the front with the drain pipe started, and Caution tape! This guy really knows his stuff and is all about safety!

What is really bad is that we usually do not have this kind of rain, so while it is very necessary right now, we may not realize the benefits again for a good while. I’ve heard people who have been here their whole life say that they don’t remember a time this wet in a very long time. I do not either. But we must protect the investment!

Finding a Guy

This awesome landscaper who just moved here from California had given our contractors from the Washington house his business card, and I called to see if he could help. Isn’t networking good?

To our joy he said he knew all about these types of things and has a lot of experience with them! So, he has been busy at work digging trenches and creating a large spillway (by hand) to put a drainage system in.

He has really worked incredibly hard and has made amazing progress (did I mention BY HAND) in only two days of work. He also found some issues with the gutter system and is going to address those as well. I’m sure glad he came along!

We can’t help what Mother Nature decides to do, and we can only seek out people who know how to work around it. Maybe it will stop raining long enough for him to finish soon!

Bac kyard. All of that water in the trench will soon have a better place to go! It usually just pools on the back porch area.

The back yard trench going under the fence to meet the other side.

The other side that meets the back yard drain with the spillway at the end. The spillway is a good two and a half or three feet deep. All of that water NOT causing an issue! Yay!

 

 

 

 

Here is the pipe that is going under a side walk.

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Commercial Update

The value of a commercial property is the income it produces. This one will produce income, just not very quickly.

Last month, I told you about a commercial opportunity in Cameron. Putting a commercial deal together takes a lot of time and effort…not to mention money. I’ve seen an “exploratory committee” spend as much as $20-thousand on due diligence before deciding to abandon a deal.

Luckily, I haven’t had to spend that much money, mainly because I wasn’t going to spend on things like asbestos studies, inspections, architects, and so on until I was certain this was a viable deal. While I haven’t spent a lot of money, I have spent a lot of time—more than 150 hours of my time and a good chunk of other people’s time.

Time is money. There’s even a formula called the “time value of money.” While that formula means something else entirely, my time has value! Would you like to know the result of this investment? Continue reading →

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