My journey of becoming financial independence by 35 years old
First, I would like to thank everyone for your support. I have great commenters. You’ve not only been giving me the best advice, but you’ve also been also keeping me on my toes.
Second, I am thankful that my financial situation is coming together. All my units are filled at this point. The income from the rental business that is making my financial independence ahead of schedule. I won’t turn in my resignation or scaling back to part time until my ducks are in a row.
So here goes,
1. Tenant turn over – one of my unit, I have a very good hustler tennant. She is the one who find my unit to be the most affordable and she puts together her housemates. However, one of the guy doesn’t get along with everybody. He is now gone. New tenant move in, so keys to be made, locked to be changed, new contract to be signed. That’s sort of things you’ll have to deal with if the tenant break the contract.
2. Air conditioner was broken down. It was using the old R22 freon. After the coil leakage, three trips from the hvac guys later, I realized they’d just keep draining my money. So I replace the whole hvac unit. $4000 later, I haven’t gotten a phone call regarding air conditioner in that unit.
3. HVAC maintenance, the air filter is their responsibility but most of my tenants are pretty careless, so I have to do it myself. I have 7 units to care after it’s been keeping me busy.
4. Gutter issue – the building comes with small gutter, I need to replace it with commercial gutter with guard and drainage to go all the way out to the street.
5. Light bulb – one of my units, I have to advertise individual room. For that, I have to take care of common area. So, they call me for every little thing. I’m not complaining about the money though, I make the most out of this unit. This unit alone is $200 short of covering the mortgage for the entire building.
6. Flooding – yes, one of my unit is a half basement. It has a water system that drain the water out at the walk out area. One day, I was just happened to look down there and found puddle of water. So, I was working in the rain, poking holes trying to get the water to drain. Luckily the system works, just some blockage I need to unblock.
7. More flooding – yup! From the dishwasher! My tenant texted me in the morning, but I didn’t see it until 9:20pm. I went down to look at it. My first thought was “most likely was the drain pump.” But even with drain pump, the water should still drain. I searched online for parts – $86 for drain pump, $157 for motor. A new dish washer with 62db in noise (the cheapest) cost $280 with taxes not to mention hiring some guy to install it. I didn’t give up. Two hours later, I found a troubleshoot comment saying it’s the garbage disposal. The guy who installed it never knocked out the plug. Aha! I texted him, he said “it’s not related”. It told him, “if the house doesn’t have a dishwasher, then that plug keeps the water from leaking. If the house has a dishwasher, that plug needs to be knockout. It’s located deep inside so it’s an easy and common problem.” He agreed to come out. It was supposed to be free. Most guys don’t like to travel for free, so I got him to do some small things and pay $20 for his time.
8. Bee problem – more like yellow jacket. My gardener got rid of some of them for me.
9. Pests control – I have to pay the quarterly maintenance fee as I stil get report small mouse running around as the weather gets colder, creatures will seek refuge.
10. Other projects coming up – gutter cleaning, leaves sweeping, deck painting, floor replacing, then the turn over season will begin in March for May 30 turn over, and June, July, August.
How do I collect rent? How do I find joy landlording? I read somewhere people were using online rent collection service, which you have to pay a fee. More than likely that person is receiving kickback from the company for writing that post. Thanks, but no thanks.
1. I have my tenant pay me in cash, check, cashier check, or online direct deposits. It helps that theseare 20 something people are using online banking and hates mailing checks like I do. I showed them to do online transfer, free for me and free for them.
2. I make sure paying rent is theiR responsibility, so making rent on time is their priority by posting a big penalty $25 for late payment.
3. I am very responsive of their text. One time their light wasn’t working, I was on the phone with the power company at midnight to help them out, and even show up. Luckily I have a later shift the next day.
4. I make the maintenance trip the same trip as I go exercise. I get the aggression out on the tennis court. I’d still come home happy.
5. Tenants and I get along. One of my tenant is a health fanatic. She eats organic everything, I grow things on my garden. We share cable, so that cut down my expense. She sometimes rents movies, so I get points from Verizon or get gift cards, and watch free movies. She wants premium channel like showtime and HBO, splitting cable doesn’t seems so bad.
6. My family is miles away in the Midwest, I’m all alone in the east coast. It’s great to have good tenants and neighbor, I get to choose who will be my neighbor. It’s kind of cool.
7. The property will always have somebody there. Crime is not big around here, but hey, it’s the added security. I’m not turning it down.
8. The money is great, I’m not making as much profit if I list at market price, nonetheless, it helps me tremendously.
9. Personal development – look! I’m not going anywhere with my current job, one way to improve or maintain my problem solving skill like the flooding issue above, is to own my own business. I did it! Creating a million dollars rental property business post grad is quite rewarding.
Some other considerations – keep your rental property close, they can tell you you can hire people. Managing people is the toughest job. The money should always in your hand. You think people doesn’t hustle for themselves, and wouldn’t use your business to enrich themselves? Think again. Everyman is out for themselves, regardless ho trustworthy their appeal is.
It is tough when you have a game to go to and your tenant calling you because something is broken down. Plan your days, prepare for the unexpected, have a sizable emergency fund. Be humble. Be thankful, everything will eventually work out.
There is a proverb “No family with three consecutive generation in poverty. No wealth can be kept after three generations.” If you try hard, you will get there. The key is to diversify your income.
Are you thinking about rental property after my not so rosy report? What rental prorate story you have that you can share with us?