[Lack of] Rent Payments

We have one house that seems to always have a story. Well, we have two that are consistently late, but the one just says, “it’ll be late,” while this other one has a crazy story. While trying to gather my information on how we’ve worked with her so much, I thought I’d share some of these stories. Perhaps if you’re a tenant, you can see the landlord’s perspective on how this just doesn’t add up and there’s eventually an end to the rope. So just for fun, it’s story time.

This person has a history of fraud. She also had domestic abuse and restraining orders against her that caused us to lose one of the tenants at the beginning of 2020. There are the typical excuses like car maintenance issues, and then there are interesting ones.


March 2020

We started the pandemic off with a “furlough” letter. Knowing the history we have with this tenant, I didn’t take it at face value. I struggled to find a contact for the company that the letter was from, and then I eventually found a way to get in touch with a local office (as in… where she works and not the one in Florida where this letter seemed to come from). I asked for an employment verification for the tenant’s name and whether she was furloughed. The woman on the other end did a laugh/sigh thing and said, “She’s not furloughed. We’ve been over this several times. Her hours were reduced, but she is still employed and expected to show up to work.” I let her know that I received a letter from the company stating a furlough, which she said she was unaware of.


January 2021

Virginia has a Rent Relief Program for tenants that were affected by the virus and lost income. The program is for unpaid, past due rent. I pretended to be a tenant and went through the application process; it very clearly only let me input unpaid rent that’s past due (i.e., I couldn’t claim that I wouldn’t be able to pay a future rent owed). I even went through the trainings available on the system. I was very thorough. The tenant paid January rent, and then I received notification that the tenant applied for assistance. I can’t remember how I knew it was for this tenant (because in the future, I’ll get emails from the system that I can’t tie to any tenant), but I knew. I called the hotline and asked what month was being claimed as unpaid and was told January. I sent the tenant an email letting her know that she was not eligible and that I had done my due diligence acknowledging the information. I had actually also called because I didn’t appreciate that the documentation on file required my social security number to be on paperwork that the tenant had access to. For some reason, this didn’t bother any other landlords, but it’s not something I want this person having! When I told her she was ineligible for the assistance, she said it was because she expected February’s rent to be late, which she then paid without the assistance.


August 2021

She paid August’s rent on August 31. Why? She was in a car accident. When? On April 24, 2021. How is this related to August rent? I don’t know.

This doesn’t exactly explain why she doesn’t have income or what happened to her job. She said in passing that she would start a new job on August 30th, but we don’t know what happened to her last job or how long she had been unemployed.



It’s now October 6, and she hasn’t paid September or October rent yet. Why? Because she went to Costa Rica on September 1 (or 3rd?) and tested positive for COVID, so she had to quarantine. She shared several pieces of correspondence related to the car accident, which told us that she received over $5,000 in the insurance settlement. Questions that I have, which have not been asked and/or gone unanswered:
1) If you don’t have any money to pay rent until a car accident settlement check arrives, how are you affording to go on a trip?
2) If you received the settlement check in time to pay August rent on 8/31, why didn’t you pay rent with the rest of that check on 9/1?
3) Why didn’t you pay rent before you left town?
4) If you were unemployed for a while, and were starting a job on August 30, how and why did you leave the country (during a pandemic)?
5) Through communication with her girlfriend, we learned that she went to Costa Rica on 9/1, but she tested positive on 9/3. How did you get into the country and not get tested for 2 days?
6) I received an email on 9/6 stating she couldn’t get the payment to go through. What were you doing between 9/1 and 9/5 that I’m receiving this email on 9/6?
7) I responded to that email and gave other electronic options for payment. I received no answer or acknowledgement. Why couldn’t you respond to this email or attempt to pay rent again?
8) Assuming internet issues, I let it go for two days before sending a follow up email. No response to that email. Why?
9) At this point, I got stern. I very rarely get stern with people.

10) I received a response from someone stating they were her girlfriend and monitoring her email. If you’re monitoring her email, did you not find it urgent to address the lack of rent payment emails you’ve been seeing?
11) This person says she’s working with the family to get rent paid timely. I receive no rent nor do I receive an update.
12) Even though I had said I’d give until the 13th for an update, I ended up being responsible for my household while my husband traveled and didn’t get to the follow up until the 15th. I sent an email asking for an update. No response.
13) I don’t handle the text communication, so I waited until Mr. ODA was unoccupied with his work tasks, and asked him to text her on Friday. She responds! She says she’s been back for several days. Really? Why didn’t you get in touch with us? Why didn’t you let us know your status?
14) She says she can’t pay rent until Wednesday (the 22nd) because she had to pay for the extra costs for staying in Costa Rica for longer than anticipated. What if you had paid rent before you left? How would you have been able to pay for that hotel stay and getting out of the country? Why is it on me to float this financially?
15) Mr. ODA texted and asked about payment on the 22nd, we got no response, and I sent a notice of default. She suddenly was able to share that the person she was going to get the money from didn’t have it, and she couldn’t pay rent. Then she responded to my email and said she wanted a payment plan (Virginia requires me to offer a payment plan once every 12 month cycle).
16) I put together a payment plan to start payment on 10/1. She responded that she wouldn’t be paid until 10/8 because of the start date after she returned to the country. So she can’t pay anything towards TWO MONTHS worth of rent until it’s late for both months.

PAYMENT PLAN

I front-loaded the payments in the plan. First, I need to pay my mortgage, which I’ve now paid twice without offset from a tenant living in my house. Second, I’m not offering a payment plan for the next six months worth of rent, so come November 1st, she needs to pay rent in full. She can’t have evenly spaced payments while also paying full rent in future months. I put the due dates as every other Friday, starting 10/8, as she claimed she had no money until then.

I stated several times that the money is due on the date that we have agreed upon, and there is no five-day grace period like there is in the lease. Too many people think rent is due on the 5th because there’s a grace period. It’s due on the 1st, but there’s a grace period to allow for payment without penalty. October 1st was a Friday, and I still received rent on the 4th and 5th. Since this is overdue rent, I wasn’t going to play the follow up game that I’ve already had to play far too much in the last two months, so it was due that day, and that’s it.

During this process, she applied for assistance from the State for COVID relief. I also included the following:
Any monies received from the State’s program will eliminate the last payments first. If and when I receive money from the State, I will let you know, and I will update the schedule accordingly. Do not assume any payments received; adhere to this schedule until told otherwise. If you can pay more than the amount throughout this timeframe, please do. Any and all payments received will work to eliminate the latest payments due first. 

Since I didn’t find any requirements on the how the payment plan was to be set up, I didn’t extend it very long. The final payment is scheduled for 12/17, so that’s just 6 payments. As I mentioned, I front-loaded the payments, so the first two are $550. Then they taper to $350. The payments to be made also include the two months worth of late fees.

If she doesn’t adhere to the payment plan that she had to agree to, then I can seek possession from the court for default on the lease. Hopefully we’ll have some money here by the end of the week!


There’s really no point to this except to share in our experiences. The excuses are creative and entertaining. We’re lucky that we have the ability to float one house under the payments of all the other houses, but it doesn’t make it any less frustrating to be two months behind on income.

A Second Home & Summer of Travel

Why did we do so much traveling and activities this spring and summer? Most people probably assume all our travel was making up for a year of not traveling during the pandemic, but we came at it from a different perspective.

We’ve had a long term goal of a beach/lake/mountain home. After another failed search to make this dream come true this past Spring, we decided to redirect that money to trips this summer. I’ll run through the background, the financial decision, and how we spent our travel “budget.”

BACKGROUND

We first looked into a vacation rental in Snowshoe, WV – six years ago. Snowshoe is a ski resort, and one of the better available ones to those of us south of the Mason Dixon. It also has a draw during the summer with hiking and mountain biking, albeit not as constant of a stream of people needing a rental. The draw for us was that it was halfway between our home in VA and Mr. ODA’s family in KY.

We went as far as meeting a Realtor and looking at properties. If the house was off Snowshoe proper, it was a good distance from the ski lifts and not in great condition. If the house (condo) was on Snowshoe proper, it came with a lot of rules and regulations and costs. Everything near the ski lifts had to be under Snowshoe’s management, which included their cleaning costs, and their booking process. This meant that someone couldn’t necessarily go onto the website to book our unit. Someone would go on their website and book “a 2 bed and 1 bath unit” and the system would cycle through the bookings. With the high condo costs and the uncertain bookings for those units, as well as the distant location of the units that weren’t subject to the condo process and cost (plus finding a management and cleaning company for that), we stopped the search.

Since then, it’s been on the wish list, but we weren’t sure what direction we wanted to go. 

When we moved to KY, we decided to look into a lake house. We want it to be close enough that we could just pick up and go (e.g., trying to keep it under 2 hours), we want it to be on a lake that allows motor sports (so this rules out anything that’s “no wake” or prohibits motors of any kind), and we want it to be lake front (we learned this during our recent search, and hadn’t fully realized how much we wanted this until we saw a house that wasn’t on the lake directly). 

We looked at parcels of land and kept an eye on a few houses listed in the March/April timeframe of this year. Our initial thought was that we would purchase land and hold it until we were ready to have a house built. The parcels of land we looked at didn’t meet the criteria we wanted (good size, on the water, ability to build a dock). I started to feel like we were pressuring ourselves to make a decision for something that we didn’t actually need. 

We took a break and just kept an eye on Zillow. We went to see a new construction house on Herrington Lake, but it wasn’t actually on the lake. It was next to the community pool, across the street from the community’s dock, had 3 bedrooms and 2 bathrooms with a loft, and it was brand new. It even had a two car garage, which wasn’t something on our wish list. However, the price tag was high; it had been listed for many months, and we didn’t feel the comps supported such a cost for it not being literally on the lake. We spent a lot of time mulling it over, but decided to not even put an offer in. Lucky for the seller, they did get a full price offer shortly after that. 

I decided that we should wait at that point. I figured we may have better luck waiting until the end of the summer (perhaps people will think they’ll spend their last summer on the lake and then unload it?), and that we shouldn’t force this decision to not get exactly what we want for something that isn’t a necessity. 

THE FINANCIAL DECISION

If we purchased a $250,000 second home, and I assume an interest rate at 4.5% (even with excellent credit, the rates you see advertised are for primary residences), we’re looking at a mortgage payment of $1,200. On top of that, we’ll have escrow costs, HOA costs, the possibility of management fees, and then even PMI costs. That was another big factor; we’ve been throwing any ‘extra’ money towards paying off two rental property mortgages, so we don’t have $50,000 liquid to cover a 20% down payment. Without having the 20% down payment, it wasn’t even guaranteed that we’d be able to get a loan for a vacation house.

Knowing $250,000 was even more than we expected to spend, I conservatively assumed $1,200 in monthly house costs. Instead of spending $1,200 each month to go to the same destination over and over again, why don’t we just mentally allocate $1,200 each month to travel and go to all different places? And so, months of a crazy amount of travel began.


HOW DID WE SPEND OUR ENTERTAINMENT ALLOCATION?

MAY: $618

We started with a last minute trip to Atlanta to see the Braves. We spent 4 nights in Atlanta, went to two baseball games, met up with family for lunch, visited Stone Mountain, and explored the city parks. We stayed in a 2-bedroom hotel room because it was cheaper than any AirBnB options, and I was highly focused on giving the kids separate sleeping spaces. The hotel experience was less than favorable (dirty, AC broken, limited breakfast, roaches … and a good name hotel!), and after some conversations with the hotel, we ended up not paying for it. They had credited us one night without us asking after the AC continued to not work after their “fix.” Mr. ODA then had a casual conversation with the manager about the stay as he was checking out, and the manager credited a second night. I thought we paid for the rest of the nights, but it never showed up on the credit card. Our total trip cost was $460.

Later in May, we went camping in the Daniel Boone National Forest with some family. We booked a “cabin” (I used that term loosely; it was walls, a roof, and platforms for sleeping bags, but it had electricity and AC!) for two nights. We went swimming, rode bikes, and hung out under a canopy while it poured on us for most of the main day we were there. Our dog got to come on this trip, so we didn’t have any pet fees. We brought groceries to cover our meals since there’s nothing close by. Since we’d be buying groceries anyway and gas is negligible since it’s an hour away, I’ll just focus on lodging, which cost us $158.

JUNE: $200

Almost a year ago, we planned a trip with the extended family to Hocking Hills. This shouldn’t really count against our “monthly allowance” mentality since it was going to happen regardless, but I’m including it anyway since we didn’t do any other June trip. Mr. ODA’s parents covered the cost of lodging, and the rest of us covered the cost of food and our canoe rentals. We went hiking, got rained on, and played games at our rental. On the last full day, we rented canoes and went down the Hocking River, which was a great experience. We went with 6 kids, 3 of which were under 3 years old. So if you’re a beginner or looking for something to do with little ones, this was a fun time for $52 per canoe! This trip cost us about $200.

JULY: $690

Before we left Virginia, we discussed doing walk throughs of our properties and being more present with them. There were some properties that we hadn’t seen since we bought it because they don’t have maintenance requests or we call someone else for the work. Well, it was a whirlwind to move, and we didn’t do that last summer. After the debacle with the flooring replacement at one of the houses, we knew we needed to get back there to tie up loose ends. We have a wedding to attend in the area in September, but decided this couldn’t wait until then. The first weekend we could go ended up being the 4th of July. Being in Richmond, VA, there isn’t a large AirBnB market for a normal sized family. All of the options that were available were meant for multiple families in a large house, and we just aren’t interested in paying $700 per night for ourselves. We went with a hotel halfway between Richmond and our old neighborhood, and because we stayed for 5 nights, it was considered “long term,” and it only cost us $525, which included $75 for the dog being with us. Since our entertainment was either working on rental houses or visiting with our old friends, we just had food and gas costs. The total trip cost was $690 (and most of that was tax deductible!).

AUGUST $1069

We learned that St. Louis is only about 4.5 hours away from us, so we looked to see the Braves’ schedule. They were scheduled for mid-week games for the first week of August, so we marked it down. Unfortunately, things were busy, and I didn’t make the plans in advance. I struggled to find pet care for our dog, and I ended up booking an AirBnB the morning before we left. We searched and searched, and this one randomly popped up that morning, and it worked out well. Lodging cost us $585. Our entertainment (tickets and parking) cost us $135. Food and gas cost us $213. Total trip cost was $933.

My plan to visit my family in NY in July didn’t come to fruition because we had to manage 4 days worth of our builder being here to fix things in the house, and then I had a doctors appointment pop up that had to be a specific time. Instead of driving there and back (12+ hours each way), we booked some flights. We’re able to go from Cincinnati to JFK directly (such a blessing with 2 kids under 3!). The flight was 2 hours, plus an hour on each side for driving (although, it took us an hour and a half to get to my parents’ house when we landed at JFK because a 3:20 arrival, plus what felt like a 2 mile walk from the gate to passenger pickup, put us at getting on the Belt Parkway at 4 pm – that’s not good for that area!), and getting to the airport an hour early. We left out of LGA, but it was still a direct flight, and we arrived 25 minutes early! We had hardly any wait at TSA for either leg, no issues with boarding or the flight, and we got our gate checked bags easily. I’ll take 5-6 hours of travel over 12+ hours. The flights were booked through our Chase Travel Portal, costing us the equivalent of $833 in points. The parking is $9 per day, the gas to get there is negligible, and we actually didn’t spend anything on food (I very much owe my parents for that!). Our entertainment goal was to go swimming in my parents’ pool the whole time, and that’s just what we did! The trip cost us $36 in parking and $100 for our dog’s boarding.


On top of these long trips, we also did a lot more activities that were just for one day. We went to 2 Reds games, the Cincinnati Zoo several times, a UK baseball game, Bernheim Forest, and random family/friend activities. It turns out we didn’t spend the $1200 per month we had mentally allocated, but we kept ourselves really busy and had a great time making memories! 

Now it’s time to enter a new phase of life: preschool and sports! I’m pretty excited!

House 10: Creating a Partner

This house was purchased in 2018, and it was actually purchased by our Realtor and friend, under the plan that we would formalize the partnership after closing. Mr. ODA had been searching for another investment property, but we had 10 mortgages already (9 investment properties and our personal home), which is a Fannie Mae cap (see the Selling Guide, section B2-2-03). One of our loans was a commercial loan, and we had hoped that it didn’t count against the 10 mortgage limit, but it did. Fannie says that the cap is the number of properties being financed, regardless of type, when looking to originate a new loan. Our Realtor had one rental property on his own and had mentioned how he wanted to purchase more properties to create an income stream through that option.

Mr. ODA and our partner went to see the house without me in March 2018. After the initial visit to see the house, they requested the information for the tenant that was living there. We received their applications, current lease, move in check list, and rent roll. They had started living there October 1, 2015, and while they had been late, they had always eventually paid rent with the late fee. During some of our initial searches, we had someone tell us that rent on the 6th was more profitable because they’re pay with a late fee. While we don’t encourage late payments (and we’re actually really lenient with late fees in general), this eased our tension when we saw late payments.

The house is a 4 bedroom, 2 bath, with a fully finished basement. The condition of the house was probably slightly lower than what I would have accepted based on the pictures, but I hadn’t seen the house in person. I actually had only seen one room of this house before our walkthroughs this past July. Our partner and Mr. ODA said that the pictures didn’t do the house justice, and it was worth purchasing.

After our partner purchased the house in April 2018, we established a Limited Liability Corporation (LLC). My last post goes through the details of why we established an LLC for joint ownership, but we don’t use LLCs for our personally owned properties at this point.

LOAN TERMS

We requested three different options for the mortgage numbers: A) 20 year fixed with 20% down was 5.125%; B) 20 year fixed with 25% down was 4.75%; or C) 30 year fixed with 25% down was 4.875%.

All of the options included ‘points’ without us being told upfront or requesting it. We questioned the reason for the quotes having these points and were given a half-hearted response that sounded sketchy. We ended up with a 30 year fixed, no points, and a rate of 4.875%. There wasn’t an incentive to go with a shorter loan (and therefore a higher payment each month) at a higher rate just to put 20% down. We went for the 30 year instead of the 20 year to increase our cash flow opportunity since we have a partner on the house and are only getting 50% of the income and taxable expenses.

PARTNERSHIP

Our partnership actually started with a loan for the down payment of this house. Mr. ODA and our partner agreed to allow us to pay him back over time for our 50% of the closing costs. We didn’t have the amount needed liquid, but we knew we could make up the amount owed over a short period of time instead of liquidating money from our investment accounts. We were able to pay most of what was needed for his closing, but we “took” a loan from him for $8,000. I used a loan agreement template that I found online and manipulated it for our purposes.

We established the loan terms to be the same as the mortgage he was entering into (4.875%). Most personal loans are for five years, so we chose that timeframe, even though we knew we’d pay it off much earlier than that. We could have just agreed to the terms and not documented it based on our relationship, but I’ve always felt better having things overly documented. I was basically an auditor in my career, and I’ve seen how “gentlemen’s agreements” over rental-related things haven’t worked out. I formalized the process through this contract and had all of us sign it. While the contract was mostly for our partner’s benefit (to make sure we paid him and he received interest), this was the only documentation we had that once he closed on the house, he then had to give us 50% share of the property ownership.

I established a simple amortization schedule through Excel’s templates. We established the loan terms as 5 years (60 months) at 4.875% (same as the mortgage being executed). When I made extra payments to him, I logged them in the spreadsheet. We only made two payments to him, but he made $44 for not having to do anything except accept our money. 🙂

We had to establish an LLC to be able to claim the tax benefits on this house for our 50% share. The attorney required us to have the tenants acknowledge the transfer of ownership to the LLC since we hadn’t executed a new lease in our names. The attorney then took care of the establishment of the LLC with the State and transferring the deed of this house to the LLC.

RENT COLLECTION

We’ve had the same tenants since we purchased the house. We inherited the tenants, who had moved in 2.5 years before we purchased it, and had rent established at $1300.

As a reminder, we purchased the house in April 2018. They paid that July’s rent late, and despite reminders about the late fee, they didn’t pay it. And so began this constant story with them. The main frustration was that they wouldn’t tell us to expect rent to be late, so we kept having to follow up with them. After two months in a row of it being late at the beginning of 2019, Mr. ODA actually explicitly said: In the future, it’s better to communicate issues with rent payment up front to see if there’s an opportunity for us to work with you. We had been lenient and informally requesting the status of rent, but this was their warning that we’d be sending notices of default going forward.

In January 2021, we hit a wall with rent payment. I sent the notice of default on the 6th of the month like usual. However, because of the pandemic, I had to adjust my verbiage to highlight all the rent relief options available and remove the late fee requirement. My understanding is that a late fee can still be collected in Virginia, but I can’t proceed with eviction just because they don’t pay the late fee portion (which isn’t something we’ve ever held any tenant to regardless). While the rent payment is typically due within 5 days from notice, Virginia now required me to give them 14 days to request a payment plan or pay rent owed. We then had to text and email them several times and never got a response. I finally sent an email with the following at the beginning:

We are very flexible landlords and willing to work with all our tenants. However, we are unable to work with anyone who does not preemptively share possible rent payment delays nor respond to requests for information. Please respond to this email by noon Sunday January 24, 2021 or pay the rent owed by that deadline to prevent proceedings for eviction filing with the court. 

Virginia was very lenient with rent payment throughout the pandemic, but they were also fair. The lack of response from a tenant or the tenant not working with the landlord didn’t protect them from eviction. I finally got a response that the rent would be paid that week.

Since then, we’ve been told that rent will be late. We’re simply sent an email that says “you’ll receive rent on 2/12. Sorry for the inconvenience.” It’s as if they feel they have the upper hand and control. We hadn’t received any late fees until I finally sent an email in response to their “you’ll receive rent when we get to it” email for August’s rent that there’s a late fee due.

In 3 years, they’ve been late 14 times. When I put it in that perspective, it doesn’t seem that bad. In the moment, it seems like it’s a constant battle with this house. That’s probably because a majority of our houses pay rent without making it a painful process!

RENT INCREASE

We hadn’t raised rent in the 3 years we owned the house, and they had been paying $1300 since they moved in on October 1, 2015. That’s a great deal for them! Depending on our ownership costs, we would typically look at raising rent every 2 years, and likely around $50. We’ve raised the rent on only 2 tenant-occupied houses we have (meaning, raised the rent on people who continued living there, versus raising it between tenants); both were rented under market value when we inherited the house, and both have received a $50 increase every two years. We typically raise the rent during vacancy times, which has worked out pretty well for most of our other properties.

For a 4 bedroom and 2 bath house, $1300 is low. We mulled over our options. The house is currently on an October 1st renewal, which is a poor time to be looking for new tenants. I wanted to get the house on a spring lease moving forward. My original proposal to our partner and Mr. ODA was to offer them a 6 month lease (ending 3/31/22) at $1400. Our partner said we should include our expectation that we’ll be raising the rent to $1500 for a year long renewal as of 4/1/22. I struggled for weeks on the verbiage for this double proposal. Eventually, Mr. ODA said we should just risk it. We should lay out an 18 month lease at $1450 to split the difference, and if they don’t want it, they can leave or attempt to negotiate.

We offered them just that, and they accepted. Of course, true to form, they were a week late in meeting the deadline to sign the selection that they want to continue living there at the increased amount. Now the rent will be $1450 as of October 1, 2021, and their lease will run through March 31, 2023.

MAINTENANCE

We started with a clogged drain right off the bat. We had our partner go over there and try to unclog it with store-bought items, but it didn’t work. We ended up hiring a plumber for $300 to work on it. We’ve had several plumbing issues in this house, including a clogged sink that backed up and flooded the kitchen and basement. We ended up needing to have the line jet blasted and a camera put through it for $550! This plumber’s quote for the ‘fix’ was $6k. Mr. ODA sent the video footage to another plumber, and that guy said he didn’t see that anything was needed, so we didn’t proceed with the ‘fix.’ The jet blasting appears to have worked, and we haven’t had any damage reported. The other plumbing issues included fixing leaks in the basement bathroom and replacing that toilet.

The inspection didn’t identify active leaking on the roof, but our insurance company was hounding us over the condition of it. We ended up sending our roofer out there to do the items that came up on the inspection report. This was $350.

We then had several more issues with the roof that cost us $125 before we just decided to replace it. The replacement was quoted at $5,500 and surprisingly that’s what we paid. We expected to have additional costs for plywood replacement due to all the damage we had seen.

Interestingly, while not communicating about rent nor paying rent, they felt the need to tell us the washing machine wasn’t working. We ended up replacing the washing machine for them. We try to not supply any non-required appliances because then it’s on us to fix them or replace them, but since the tenants already lived there when we bought the house, we inherited that the washer and dryer are our responsibility. More interestingly, as I was writing this post and going through my receipts, it dawned on me that the washing machine that was in the house when I did my walkthrough last month isn’t the one that we just sent them in February.


While collecting rent has been frustrating with this house, and we’ve had a lot of plumbing and roof expenses, the house is still profitable and worth our investment. The house is in an area of Richmond that’s being revitalized, yet at the same time it’s in its own pocket of the city that’s also protected from big changes and is mostly original owners. Appreciation has really taken off, so even though our maintenance issues have eaten big chunks out of our cash flow, this house will be well worth it when we eventually sell it and move on to a new investment.

Visit St. Louis

While I plan on sharing all about our summer of travel at the end of the month, we thought this last trip deserved a post with more detail than what that post will entail. We went to St. Louis from 8/1 to 8/5. It’s 4.5-5 hours from Central Kentucky and a really easy drive on I-64.

When we mentioned to people that we were going there, it was usually a negative reaction. I was starting to get concerned about how safe it would be, but the moms in one of my Facebook groups always raved about their trips out there. I was concerned enough that I didn’t book our lodging until the day before we left.

LODGING

We went back and forth on whether our dog would take the trip with us, which affects our lodging options. Our usual sitter (through Rover.com… and if you’ve never used it, let me know because I could save you $20) wasn’t available for our trip dates, so it left us in limbo on what we wanted to do. Taking the dog with us hinders our ability to be out all day, but the more we thought about the logistics, it seemed none of our plans were for a full-day activity at once. I searched through Rover to see if there was anyone available for about $25-30 per night either near our home, or in Louisville, or in St. Louis. I came up with nothing. I contacted 3 different people in St. Louis who had availability on their calendar, but then they said they were busy.

Knowing that we’d have the dog with us, I went back and forth with whether to go for a hotel or AirBnB. At a hotel, I felt more confident that we’d have a clean and comfortable experience, plus we’d have the amenities of a pool and breakfast provided. St. Louis reinstated their mask mandate as of 7/26, so that may have limited the breakfast options to bagged food rather than something substantial. The pet-friendly hotel that I was looking at was about $700 for our stay to include the dog. I started looking at AirBnB and VRBO options. The pro to that type of option is that I can have separate bedrooms so that: 1) I can black out the windows with multiple layers of curtains for my children, and 2) we can still hang out in the house once the kids go to sleep.

If you’re looking at AirBnB in the area, stay away from any of the listings by “The Stay.” While one of their properties may have good reviews, nearly all of their properties have very bad reviews. I’ve never experienced as many listings with negative reviews as I did when searching this area. I’m used to deciding between someone with a 4.8 star or a 5.0 star review. “The Stay” had many negative reviews, and then there were even others in the area that had 3.0 star reviews. “The Stay” had all the same issues – the property wasn’t the same as the one pictured (that they circumvent by saying in their listing that pictures are of similar units), they provided the bare minimum on towels and linens, their doors were questionable if they closed and locked, and some units were even dirty.

I searched several times. The morning before we left, I found one that I hadn’t seen before. It was a 2 bedroom and pet friendly; she had a rating of 4.85, but the reviews were all glowing. I decided to go for it and messaged the host, who accepted our reservation request within the hour! Even better, it was only $585, where I was earmarking about $700 for lodging.

ACTIVITIES

St. Louis has a lot to offer. Many activities/attractions seem to have adopted a model where entry is free, but you pay for parking. There are many parks to explore, including the massive Forest Park, which is larger than Central Park in acreage. The parks have lots to offer – from sports to the arts, and they’re free. When we were in Atlanta, we explored parks, but the parking was always a beast, entry cost a bit, and the park was dirty and overused. Conversely, St. Louis’ parks are used, but not overused; parking is free, and there’s plenty of it; and they’re clean.

We visited the Gateway Arch, which is a staple. We made reservations online and paid their fee to ride to the top, which was $35 (2 adults, both kids were free). Their website includes a link to a nearby parking garage that is $9 for 5 hours of parking. The garage was about 3 blocks away from the entry to the Arch. Note that if you click the link, it auto populates for one hour; you need to manually change it to a 5 hour reservation. If you don’t make it a 5 hour reservation, then you’re charged for going over that 1 hour. We learned through experience. The parking garage was so nice about it though, and they refunded us for our screw up on the reservation when we had to pay for going over time.

There’s a museum that’s free under the arch; you still need to go through security, but you don’t need a reservation or have to pay the entry fee to see it. Once you get through the museum, you get in line for the ride to the top of the arch (either the north side or south side, based on your reservation). Strollers are permitted everywhere except here. We simply left our stroller at the bottom, and it was there when we returned. They give you some history about the arch and show you a video about the 60s and building the arch before you get in line for the elevator. Then you get in a little “pod” that takes you to the top. It’s little. It’s confined. It only has 5 seats. It’s “scary,” but only a 4 minute ride to the top. You spend a few minutes looking around, and then you head back down when the next group arrives. You’re assigned a “pod” number, so they make sure you leave with the group that you arrived with.

The Science Museum (pictured above with our itty bitty daughter waving to the dinosaur) is free! The parking is $12, which we paid. There were spots outside the museum on the street that were free, but we didn’t feel the need to seek a spot out. It was a last minute decision to go here. They closed at 5:30, and we wanted to get in as soon as possible since we were already arriving about 1:30. They had a lot to do there. Our almost-3-year-old had a great time exploring. They had dinosaurs, puzzles, arcade games, infrastructure exhibits, space exhibits, and a fire show to see. Everything was hands-on, and we had a great time. We really didn’t expect to spend nearly 4 hours there, but we did!

The Zoo is free! And it’s incredible! Parking in their lots (one on the south side and one on the north side) is $15. But we parked on the street in Forest Park and walked 0.4 miles to the entrance for free. Honestly, we planned on paying the $15, but we don’t like sitting in long lines to get somewhere. When we saw the line, we checked the map, saw it was about a 10 minute walk, and we just parked the car right there. It worked out perfectly. The zoo was well maintained and very shaded. We were impressed by the aesthetics of the exhibits for all the animals (e.g., grass, blending of tree protection instead of wire cages). We spent about 4 hours there, moving at a fairly slow pace. We contemplated purchasing the “Adventure Pass,” but decided against it. There are several activities within the zoo that you can pay for individually, or you can buy the Adventure Pass. For example, it’s about $8 per person to ride the train. That’s something that our son would really enjoy, but that seems steep. So we thought about the adventure pass, which is about $15 per person and includes the train, carousel, sea lion show, stingray exhibit, 4D theater, and a dinosaur exhibit. Our son would have loved all of those things, but as we wandered the zoo, we noticed all the lines were really long. Our two kids would not have enjoyed standing in long lines in the heat, so we decided to see how far we got without the activities. Since that brought up to nap time for our daughter, we decided to just go back to the AirBnB at that point.

We did a brewery tour at Anheuser-Busch. Tickets were $33 total for the adults. The tour was 75 minutes long with a lot of walking (and a lot of time spent outside). At the end, they gave us a bottle of beer to take home that was fresh off the production line (yet ironically we haven’t drank it yet), and then they gave us a beer from the tap to enjoy in the biergarten. Their food options were expensive though. We looked into an appetizer to enjoy with our beers since it was about lunch time, but chose to pass. The kids ran around the picnic table while Mr. ODA and I chatted and enjoyed our beers.

While on the tour, they mentioned Grant’s Farm. Their website hadn’t been very clear on what the experience entailed, so I had written in off. We decided to risk it. It was free admission, but you had to pay $15 for parking. We arrived and were still lost on what to do! We went to see the Clydesdales in their barn, and then we walked across the parking lot to a bridge. When we got to the other side, we were in a queue and still really lost – haha. We ended up getting on a tram that took us on a 20 minute ride through their property. We got to see a lot of animals like a safari tour (e.g., water buffalo, bison, several types of deer, yak), and then they dropped us off at the end. It was a zoo of sorts with a bunch of animals to look at, and some that you could feed for a fee (milk bottle for goats… which was only $2 and I would have done if it didn’t involve standing in a really long line with two kids in the heat; and pellets for llamas, cows, and goats in another section). They offered other things, like parakeet feedings ($7) and camel rides ($10). At the end, you enter a little german-looking village that had food for sale and some horses to see. Most interestingly, it had two free beers per adult. So again, we enjoyed our beers while the kids ran around the table and ate some pretzels!

The reason we picked this timeframe was because the Braves were in town playing the Cardinals. We bought tickets on StubHub for $23.80. We paid the $9 for the Arch parking garage for a 5 hour window; the garage is one block from the stadium. I still can’t believe it worked because game day parking was actually $25 or $30 for the garages on that block. We got to the garage at 5:30 for a 7:15 game, so we got a great parking spot that was easy to leave from (no long queues after the game lets out!). We explored the Ballpark Village before the game. There were lots of restaurants, but we had already eaten, so we just played with the giant games (Connect4, Jenga) in the center of the Village. We walked the whole stadium, as we like to do when visiting a new one. While it was nice, it wasn’t anything special. We really like how the Braves have a section for their history that you can visit, and we were surprised that this was a newer park and didn’t have such a section. The Braves won, so we ended on a great note.

FOOD

I’ve mentioned before that we don’t spend a lot of time or money on food when we travel. We’re not “foodies,” looking for the eclectic options of a region. We usually rotate between fast food options while we’re racing between activities. However, we purposely spent more time on this trip to spread everything out, so we ended up having an evening free. We went to the “Delmar Loop” to try a place that had good reviews: Blueberry Hill. We were disappointed. We tried fried raviolis, which claims to be a St. Louis “must have,” but other than that, it was just regular bar food (that was overpriced). The “Delmar Loop” was cool to walk down after dinner, but the drive to get there was sketchy.

SAFETY

There are areas of the city that are run down with boarded up buildings, just like with any city. While we drove through a couple of these areas, it wasn’t our destination. Even driving through it didn’t feel overwhelmingly unsafe (as it did in certain areas of Detroit). Our destinations were always in safe-feeling areas that were clean and well-lit. Whether we were downtown or in the suburbs (where our AirBnB was), we weren’t concerned.

As for the pandemic concept, the mask mandate was put into effect again right before we arrived. We had to wear masks for all indoor activities, regardless of vaccination status. Some places also required masks during entry (like at the zoo) or in crowded areas.

A FUN MIDWEST TOWN WITH A BUNCH TO OFFER

The whole trip was amazing. There was obviously a great selection for a family with young kids, but many more things to do if your traveling party is just adults. Bars, the Arts, Local Food, Museums, etc. There are even more things available to do (Botanical Gardens was one on our list if we had the time). The people we interacted with were all very pleasant, and the price was right. It’s worth putting on a travel list if you haven’t been!

Property Walk-throughs

Early on in our investing in real estate, we were told to make regular walk throughs of the properties. We were taught to use changing the HVAC filters as the guise to get into the property and look around once a quarter, even if changing the filters was put in the Lease Agreement as the tenant’s responsibility. Realistically, we have mostly great tenants that will tell us what goes wrong in the house and take good care of it. But this isn’t always the case. Plus, once we added two kids to our lives and I no longer worked (i.e., no longer have a set schedule for being out of the house), the rental properties moved to the back burner unless a tenant brought something up specifically.

After our experience with House 9 – both the hoarder and the guys who just turned off the gas to the stove instead of telling us about a gas leak (yea….), we decided it was important to get into these houses at least once a year. In many instances, either one of us or our handyman is in the house at least once a year for a repair, so it’s not a big deal. But there a couple of houses we hadn’t seen in a while. Add in the pandemic, and we really haven’t been in houses all that much.

We moved out of Virginia, where we have 9 properties, last Fall. That means getting into these properties is more of an effort that needs to be properly planned and orchestrated now. We already planned to be in Virginia for a wedding in September. However, the issues that stemmed from the flooring replacement in House 3 made it imperative that we get there as soon as possible.

I emailed all the tenants to let them know that I planned to walk through the property for a quick inspection. I asked if they had any definitive times of day or times of the week that they would prefer I not arrive (e.g., works night shift, child’s nap time). I let them know that they didn’t need to be present for the walk through, that I would send them a document outlining anything I noted, and that I would try to avoid their times of being unavailable, but didn’t guarantee it.

Of the 9 properties, 3 are with a property manager. We took two off the list after they responded positively about how they replace the filters, had several conflicts around the holiday weekend, and we have been in these houses for repairs in the last 6-9 months. One is a house that we had been in regularly and knew she was treating it like we’d treat our home, and the other had our handyman in it recently, who said, “they seem to be by-the-book people.”

While there, we took pictures of the front and back of each house to give to our insurance company. We have a commercial liability umbrella policy, and the underwriters like to update the file every 3 years (details in a future post!). So instead of posting pictures of all the “dirty laundry” (literally and figuratively) I encountered, here’s a picture for this post that’s of our nice, pretty house with great tenants. (Note – Mr. ODA tucked in that piece of vinyl on the back right just after I took this picture!)

HOW DID IT GO?

Well, I started in a house that I’ve only seen one room of since we bought it (this is owned with a partner – he and Mr. ODA have handled most issues to date). I was overwhelmed. There were 5 full/queen size beds in the house, where the lease holds a husband/wife and adult daughter. There was stuff everywhere. We just replaced the HVAC in the house, but they had all the windows open, fans on, and the HVAC running. I knew that there was water damage from a plumbing issue, but I didn’t realize that it had affected the kitchen and the basement (thought it was just a part of the basement). It was a hard way to start. I should have started with an easy one that I knew would be in great condition. 🙂

From there, it went pretty well though. Most people obviously cleaned and changed the filter because I was coming. This is a good thing and a bad thing. If I don’t show up for a year, is the house cluttered and a mess? Then there was a house that I went in, where he didn’t bother picking a single thing up for my arrival. Dirty socks, things strewn about. It wasn’t to the point of hoarding, and I didn’t find any food laying around to attract pests, but it wasn’t how I would manage a household.

I ended two days of seeing 7 houses with a lengthy to-do list. Plumber, HVAC technician, roofer, electrician, pest control, and then a random assortment of things that I don’t know who to call for (e.g., replacing bedroom doors, closing in literally 2 sections of chain link fence that are missing). I also made note of things that will require our attention during a turnover, but that don’t necessarily require attention right now (e.g., removing old caulk around the tub and re-caulking it).

TENANT FOLLOW UP

I sent an email to each tenant. I thanked them for their time, outlined the items that I noted needed attention (e.g., vacuum HVAC filter cover, vacuum dust build up on bathroom, unblock exits), documented anything we did while we were there (e.g., gutter clean out, caulking), and sent a list of reminders that are the lease items we see most frequently broken (e.g., only adults that have passed the background check and are on the lease may reside there; any fines incurred by lack of yard maintenance will be passed onto the tenant who is responsible for yard maintenance per the lease; change air filters no less than every 3 months; all surfaces are to be cleaned and remain clear of food particles as to not attract pests).

Contractors are scheduled a couple of weeks out, so nothing is moving very quickly, but at least we’ll get into these houses for some preventative maintenance.


Lesson learned that when life gets in the way and active management of rental properties becomes a little too passive, the to-do list grows pretty long. There was nothing critical that we weren’t aware of, and we could handle these things during turnover, but I’ll try to get ahead of some of it in the near term, especially where we have long term tenants.

Hear more from Mrs. ODA

Back in May, I was a guest on Maggie Germano’s Podcast, “The Money Circle.” I shared some of our background and how we started investing in real estate. We brushed on topics like establishing an LLC, tax advantages, and how you don’t need to start big to just get started. It was a brand new experience for me, but I’m passionate about our real estate experiences, and I loved being able to share. I hope you’ll check it out!

The Duds – Walking Away From Contracts

I just shared the details of the home inspection contingency in the real estate purchase agreements in my last post. I was laying the foundation to share what we’ve encountered to invoke the termination clause of the home inspection contingency.


COMMERCIAL PORTFOLIO

There was a time where we were trying to grow fast. We wanted to work smarter not harder, so we investigated commercial portfolios instead of buying one single family house at a time. We worked with our Realtor’s office’s commercial team to find an off-market deal of several houses. The owner of all these single family houses had lumped several houses in his portfolio by geographic area of Richmond, VA. He had provided us with 13 ‘sub-portfolios’ to review, but he was willing to sell individual houses.

We went through the entire portfolio to decide which houses we were interested in. We were able to eliminate several from the start because his rent to purchase price ratio were far from the 1% Rule we aim for (the monthly rent amount (e.g., $1000) is 1% of the purchase price (e.g, $100,000). We identified 10 houses we wanted to see and met up with the owner’s property manager to get into each house. Afterwards, we went through the list of houses, the comps we could find for purchase price, and discussed the condition of each house as we saw it. We ended up making an offer on 5 houses.

We received the ratified contracts on May 9th of that year, and we immediately contacted our home inspector to come through the houses with us. We met with the property manager, our home inspector, and our Realtor to inspect the 5 houses in one day. We negotiated with our home inspector that he didn’t need to write a report for each of the houses; I would take notes as we went through everything, and he wouldn’t charge us full price for the inspections.

We knew the houses weren’t in great shape, but we weren’t prepared for all the details we found in the home inspections. During our time at the houses, the tenants were quick to complain about the maintenance on the properties, saying things would take a long time to get fixed or they wouldn’t ever be addressed. The inspection found strong evidence of mold, patch jobs in structural beams in the crawl space, appliances not in full working order, windows screwed shut, and several other minor things.

We attempted to negotiate by the seller providing $10,000 per house in seller-paid closing costs. We didn’t ask for anything to be fixed because we saw the work that had been done in these houses, and we wanted it done right. The seller denied our request for funds to address the home inspection issues, and we walked away from all of the contracts.


FIRE DAMAGE

This was a hard one for me to walk away from. The house itself was in a high-crime neighborhood of Richmond. However, only THREE! parcels away, houses were being torn down, rebuilt, and sold for significantly higher than purchased. I saw the potential of the area’s revitalization. But we were not in the business of flipping houses nor doing major repairs. Not only were we not interested in that because we wanted to be able to create the cash flow as fast as possible, we also want to be able to hold these properties as rentals instead of flipping them so we maintained a continuous income stream.

There were several concerns when we walked through the property. The kitchen was a mess, there were signs of water damage in multiple places, the floor felt soft upstairs, the upstairs deck didn’t seem stable, the house needed a lot of TLC with the overgrowth, and then best of all – clear fire damage to the structure of the home when we went in the basement.

This isn’t a picture from when we were looking at the house, but this is the condition 3 years later, which shows just how ‘great’ of a house it was. 🙂 This is the backyard.

We were under contract for $72,500 in May 2017. The house recently sold for $296,000. Although it seems we missed the opportunity that I felt was there, I found pictures of a failed flip attempt in 2019/2020 that uncovered even more damage behind the walls than we even knew (although we suspected), and none of the houses around it have sold for nearly $300k. Therefore, we don’t believe that was a reasonably-expected sale price had we taken this beast on. And what’s not known in those numbers is just how expensive the flip was to that owner, both in headaches and wallet!


A KENTUCKY MESS

Mr. ODA went to see a house in Winchester, KY without me (it was easy because he was working near there, and it wasn’t worth me packing up our baby to go walk through a house that we may not even want). He and our Realtor walked the house and decided it was worth putting an offer in. The house had two units set up inside it, which was a goal of ours (duplex = one building the maintain with two income streams). The cash flow on it was great, so he probably turned a blind eye to too many negative issues during that first visit.

The inspection was $500. I was there for the event, but didn’t walk the house with the inspector. He ran through everything with me after he was done, but the tenants were present, and I didn’t want to bring my baby into their smoke-infested house (first red flag because we don’t allow smoking in any of our properties).

The first thing the inspector said was that the roof needed replaced. He pointed out that several tree limbs were in contact with the roof, and the roof had considerable algae growth on it. Basically, everything on the outside of the house needed repaired or replaced: siding, decks, roof, gutters, removal of vines on the house, negative slope of ground towards the house. The doors and windows were old and broken, so none had the proper seal to prevent water infiltration, in addition to not being able to maintain temperature.

On the inside, there were several code violations with how the kitchens were built (e.g., venting for range), and several large cracks in the walls, some of which were patched poorly and never repainted. There were five or six electrical issues that needed to be addressed immediately because they were a fire hazard. There were signs of water damage in the ceilings, as well as in the bathrooms where the peel and stick tiles were ‘floating’ and warped.

As if that wasn’t enough, the straw that broke the camels back for me was the head room given for the upstairs unit entrance. The required head space by code is apparently 6’6”, and we only had 5’6”. This seemed to be a big problem because an average man is 5’9”, and the average height of women at 5’4” doesn’t exactly give much wiggle room.

I was worried about all the work that needed to be put into this house. The tenants weren’t taking good care of the house, so it wasn’t worth putting a lot of money into it, just for them to destroy it. They had been there for a while, so it wasn’t like they were going to leave voluntarily any time soon. The neighborhood wasn’t in great condition, so a fully renovated house wasn’t called for when it came to resale or the type of client looking for a rental there.

It was a difficult balance, but the house had way too much deferred maintenance, way too many things poorly fixed/maintained when there was an attempt, several unfinished projects, and too many code violations to move forward. Mr. ODA really wanted to buy a house in this area before the summer was up, and he was pushing for the cash flow side of it since it had two separate units bringing in income. But that cash flow is non-existent if you’re having to put it back into the house.


These are the three main stories that have stuck with me. We learned a lot about houses through the process, and we feel we made the right decision on each of them to walk away. Through these experiences, we solidified our decision-making to focus only on houses that have been properly maintained and require little work to get rented. Having a unit already rented with long-term tenants isn’t always the “diamond in the rough” that you think it is.

The inspection is buying you information. Once you find out that information, the money is a sunk cost, and you should use it to now choose if the house is still worth owning or not. While inspections aren’t exactly cheap and aren’t tax deductible if we don’t buy the property (if you have a legal strategy, drop it in the comments please!), that information gained is important. That $500 “lost” is better off because you’re not buying a money pit that will cost a lot more in the long run. Remember, this is a business, and it’s best to keep your emotions out of it. Don’t pinch pennies and end up costing yourself big dollars later on.

Most times you’ll do an inspection, find some things to fix or negotiate down on the purchase price, and even find yourself in a situation where the inspection “pays for itself.” Other times, it doesn’t work like that. Life lessons can cost money, and inspections can help point out duds so that those lessons don’t end up costing a lot more.

Happy investing!

New Flooring

I had this post teed up to share at the beginning of the month. I thought the story line was going to be that I went on vacation while all new flooring was installed in a home 500 miles away with little effort by me. It’s no longer a positive story. This post is to share that there’s struggles, but they’re only a few weeks of the year. It’s not a cumbersome year-long process to have rental properties.

This house has the same tenants in it from the time we purchased it in 2016. They’re a family of 5 with a dog, so it’s not surprising that the carpet reached its useful life. I don’t know when the carpet was installed, but I assume it was right before these tenants moved in, which was a few months before we purchased the house. The carpet was matted down in the high traffic areas, and it was starting to separate at the seams. The vinyl between the kitchen and laundry room was also peeling back. While I wouldn’t typically look to do such a large project while tenants are still living there, we made the exception to keep them happy and wanting to stay even longer. We decided to replace all the flooring in the house, except for the bathrooms.

My first lesson learned: keep these major projects to vacant houses. While there are exceptions, such as these long term tenants, the tenant just doesn’t understand the work that’s going to go into it. We had a bad experience that dragged this out for multiple weeks, but even with that, the tenant had a lot of complaints about having to move their closet things and move their furniture. I kept reiterating that it’s short-term ‘pain’ for long-term gain, but he kept wanting to tell me how much work it was. It was hard to not retort that he asked for this and we could have said no.

PURCHASE PROCESS

The experience to purchase the carpet was less than satisfactory. We’ve had several positive experiences, so I wasn’t going to name the company over this one incident, but it just keeps getting worse, so here it is: Home Depot. Eight phone calls before installation, and that doesn’t count the mess I’ve managed for the last two weeks. Typically, I would just go into the store to make the purchase. However, our closest store is now a half hour away, and they have an 800 number, so I thought it would be fine. I should have just driven down to the store after the measurement was done.

I was trying to compare replacing all the flooring with vinyl plank against putting sheet vinyl and carpet back in. In a previous house, we spent slightly more by tearing up the old carpet and refinishing the floors under it. We saw it as a long-term investment. Instead of replacing carpet every 5 years, we just needed to mop the floors, and they’d last longer. For this house, since I knew vinyl installation was expensive (relative to carpet), I thought maybe it would be better for us to spend more to get hard surface flooring installed throughout the house instead of replacing in-kind. The house was built in 2007, so I didn’t have the prospect of beautiful hardwood flooring already being under the carpet.

Home Depot’s process to compare the two was painful at best, so I gave up on the comparison between carpet/vinyl and hardwood/vinyl plank.

They run a promotion that carpet is free installation if you spend $600. Apparently, that’s only for non-in-stock carpets. So I asked, “which aren’t in stock?” Their response? “I don’t know; we just need to try SKUs to find out.” Quite an inefficient process. Our carpet and installation came to $1.24/sf, so I quickly priced out of the SKUs that were less than that without installation in our trial and error process of finding carpeting.

The sheet vinyl always comes with a high installation price tag, so I was ready for that. I wasn’t ready to be told that several of the first ones I tried weren’t eligible for installation. I was left with one option, but luckily it’s a pretty gray-wood-look.

I finally approved the carpet and sheet vinyl options after 3 phone calls and the measurement appointment.

The receipt I received after I paid said that there were some items to pick up. Well, if I’m paying double the cost of the material for it to be installed, I don’t intend to go pick up product. That took 4 phone calls to get squared away. And honestly, it wasn’t even any of the calls I made that solved it; someone from the store called me to ask if I wanted to move forward with my quote (that I had already accepted and paid for in full), and she got it all figured out so that it was right. Or so I thought.

INSTALLATION DAY

The installer showed up to the house without the material. He missed the note that he had to stop and pick up the items because, for some reason, that’s not the norm. I truly am confused that I pay for the installation of a product, and it’s my responsibility to gather all the materials (lifting, carrying, organizing, storing) until the installation day. I hadn’t encountered this before. In the last house that we put vinyl in, we purposely saved $75 by borrowing a friend’s truck and bringing the vinyl there. That was an active decision to change their norm of delivery, so this was surprising.

The installer removed the vinyl in the kitchen, and then went to the local Home Depot and gathered the materials. He was gone from the house for 2.5 hours to do this, with the store 10 minutes away. When he returned to the house, he got the carpet completed (which honestly was impressive) in the rest of the house, and then around 7 pm told the tenant he couldn’t do the vinyl because of damaged subfloor in the laundry room. I’m frustrated because 1) he could have done the kitchen part and returned for the laundry room part, since there once was a seam, and I don’t think they would have tried to cut and mold around a doorframe to keep it all one piece; and 2) he could have told me this when he removed the vinyl before noon, so I didn’t lose a business day trying to get the subfloor taken care of.

I didn’t even know the whole story. I had to call the installation company (i.e., not Home Depot) to ask why I hadn’t been told the next steps. The customer service representative didn’t know what I was talking about. She had to call the installer to find out the story. The installer claimed that there was a “huge” “pool” of water on the floor and water was just continuing to pour into the house at the door jamb. I found this hard to believe. These tenants call us over every single weather crack in the drywall; there’s no way they had water coming into the house and didn’t tell us about it. Regardless of my frustration, the result was the same: I had to find someone to fix the damaged subfloor.

Our handymen options that we’ve used were unavailable for weeks, so we asked a friend of ours if he wanted to make some money and take care of it. He did a great job! He cut out the rotted wood and laid new plywood and luan. We would have preferred the installers handle this. It’s surprising because for a roof replacement, we sign off that they will repair any damaged plywood during their installation and bill us for each piece laid. Why can’t the flooring be the same set up? It became especially frustrating when we heard that the next installer was cutting wood on site.

INSTALLATION DAY: ROUND 2

Now we needed to reschedule the installation. I called as soon as our friend finished the job, and they said they had an installer who could be there the next day (a Friday)! I should have known it wasn’t a good thing that they could fit me in last minute. The arrival window, for this man coming from Maryland to Richmond, VA, was 10-1. At 12:30, he told me he was almost at Home Depot to get the materials. Well, the materials were at the house, which I told him. So then somehow, he took his sweet time, and at 1:30, he called to ask me where the address was. I told him the address and that no one else had an issue finding this house. He told me he had arrived at about 1:45.

At 4:00, my tenant called me to tell me that he helped the installer move all the appliances into the living room and that he hadn’t been in the house yet because he was outside cutting wood in the rain. Wait. I just had to repair my subfloor because of water damage, but you’re out there cutting wood in the rain to put into my house while it’s wet? I was also irritated that all the appliances were moved before the job was ready to be started. I called the installation company, and I was livid. I was already frustrated with the communication and process to date, and this was just icing on the cake.

As I was complaining to them about the situation, I received a text from my tenant saying that the installer said he was quitting for the day because of the rain and MAY be back tomorrow. He left, leaving the appliances in their living room, with no certainty that the job would be completed the next day. So my tenants were left without an operable kitchen (violation on me at that point) and with a cluttered living room, with no certainty it would be put back together the next day. Plus, this was originally a two day job. One day was already taken with ripping up the vinyl and replacing the carpet, meaning only a few hours should be needed to lay the vinyl. To be told this is going to be a two day job just for this installation is wrong.

The installation company tried to tell me to be patient because the installer is coming from Maryland. It’s not on me to account for this man’s 2-3 hour commute. I can’t work in DC, but live outside of DC (like many do), and say to my employer, “I live 3 hours away, so I can’t start before 11.” No. That man should leave his house at 6 to account for that difference, or you shouldn’t assign this man a job that’s too far away. Don’t inconvenience your customer, making a 3 hour job into a two day job, because your installer lives outside the region.

The company made the installer go back to the house to fix it that night. Instead, he just picked up the wet wood and tools, and left the appliances for my tenant to return to the kitchen.

INSTALLATION DAY: ROUND 3

I was adamant that installer #2 was to not return to the house. The next available date was a week later, and I said I’d rather it done right than fast. The new installer came and finished the job in under 3 hours.

RESOLUTION

The flooring is in. The communication and process was horrific. While managing the installation company, I also had to manage the tenant’s expectations and hear out his complaints. It took more effort than I anticipated, but it’s now over, and I shouldn’t have to deal with flooring in this house for another 5+ years.

This was self-inflicted. I chose to replace the flooring while a tenant was still in there because the flooring was degrading and they’ve been good tenants for over 5 years. In the future, I’d prefer to hold off until there’s tenant turnover, or I will more clearly communicate how the process works and how much effort it will take to manage while living there.

BONUS: TAXES

Quick teaching moment. The entire cost of full flooring replacement cannot be captured in this year’s taxes. The IRS expects the cost of flooring to be depreciated over its useful life, which is 5 years.

We’ll say the entire cost of the purchase was $4,000. I divide $4,000 by 60 months, which is 66.67 per month over the 5 years of depreciation.

Since I made this purchase in May 2021, I will only capture May through December for this year’s cost. The monthly cost of $66.67 is multiplied by 8 months (inclusive of May), which is a repair/maintenance cost of $533.33 for 2021 taxes.

For the years 2022, 2023, 2024, and 2025, I will capture 12 months worth of the depreciation monthly cost, or (66.67*12) $800.04. For 2026, I have 4 months left of the total cost that haven’t been claimed on my taxes, or the balance of the total cost that I incurred in May 2021, $266.68. However, if I claim this total, it will over-claim the total cost by $0.17, so this final amount should be adjusted to 266.51.

When filing your own taxes, the software typically calculates the depreciated amount for you. We enter the total cost, that we’re do a 5-year straight-line depreciation, and the amount already claimed on previous year taxes. The system will auto-calculate the amount to be claimed for the year. It’s important to keep track of these expenses year after year, to ensure you’re not claiming more than you spent.

June Financial Update

We’re continuing our spring/summer of travel and activity, which is why there are fewer posts and lots more spending.

The stock market has increased, which has been the main factor in our net worth change. We paid $2,000 towards the mortgage we’re paying down, leaving a balance of $3,300. This mortgage will be paid off once all our rent is collected for July; it was pushed back a little bit because of the flooring replacement that occurred in one of our rentals, which is why our credit card balance is much lower than last month. We’re also still waiting for half of one property’s rent, which is the norm these days.

  • Utilities: $250. This includes internet, cell phones, water, sewer, trash, electric, and investment property sewer charges that are billed to the owner and not the tenant.
  • Groceries: $518
  • Gas: $268
  • Restaurants: $165. Our credit card reimburses for many of these expenses; we received credits totaling $120.13 in the last month.
  • Entertainment/Medical: $1,093
  • Investment: $1,100
  • Insurance Costs (personal and rentals): $845

VIGILANCE ON CREDIT CARD REWARDS

Mr. ODA discovered that our PNC credit card rewards balance was decreasing, despite earning new rewards this cycle. He investigated further and noticed that we had been losing rewards for a few months now. PNC has a policy that they don’t issue their rewards until you hit $100 worth of rewards. Once we hit $100, PNC sends us a check in the mail. Since they send a check, we still receive paper statements, even though we regularly check our financial accounts online. Over the past few months, both of us checked the balance to see “ok, we’re nearing $100,” but didn’t put any more effort into knowing the details of the balance. Mr. ODA happened to notice that the statement didn’t make sense.

$89+3 somehow equals $82. There isn’t a single section on our statement or via our online account that identifies the loss of rewards Mr. ODA called PNC to ask for more details and learned that our rewards expire after 2 years, despite their policy of not issuing a check until you hit $100. They basically said, it doesn’t matter that your account is over 10 years old, or that credit has been used less in the last year due to the pandemic, or that they don’t clearly identify the expiration of rewards and just identify a lower balance. As a comparison, and I keep going back to Chase, but Chase changed up their reward categories to allow the consumer to earn more rewards during the pandemic (e.g., in addition to giving rewards in the travel category, since consumers weren’t traveling, they added grocery and home improvement stores as major reward categories).

The PNC customer service representative reinstated 60 days worth of lost rewards and issued a statement credit. We don’t want a statement credit because we no longer want to use this credit card, earning rewards that we’ll never be able to capture. If we use this credit card to use up the statement credit, that’s rewards that could be earned on a different credit card. Now Mr. ODA is fighting for the credit to be applied to our checking account or to have a check sent to us (which is the preference on our profile) and fighting for the reinstatement of the rest of the rewards lost.

Without PNC, we’re down to 4 credit cards in our regular rotation. We have 3 cards that we use for categories (gas, grocery, restaurants, travel, home improvement stores), and then we have the Citi Double Cash card that is for “everyday purchases.”

Medical Bills

Here’s something different. Medical insurance isn’t something I’m going to pretend I understand fully, but I know enough to protect my money. So here’s two quick stories about how due diligence saved us hundreds.

First, an overview.

When you see a provider (e.g., doctor), they bill your insurance on your behalf. The claim that’s submitted is reviewed by the insurance’s benefits administrator, and any coverage is paid out. Your insurance will likely have a “disallowed” amount (what your insurance deems is too expensive to be billed for the given service), a benefits paid amount (what insurance pays on your behalf), and then a member responsibility amount (what you owe). Once the claim is processed, these are outlined in an explanation of benefits, or an EOB. If and when you receive a bill from the provider, verify against your EOB to ensure that it aligns with your insurance benefits.

Here’s an example of an EOB. By using a provider that is in-network (in a negotiated agreement plan with my insurance company), the doctor and the insurance have agreed costs for services provided. My insurance’s “allowances” are negotiated with each provider who participates in the network. Allowances may be based on a standard reduction or on a negotiated fee schedule. For these allowances, the provider has agreed to accept the negotiated reduction and you are not responsible for this discounted amount. In these instances, the benefit paid plus your coinsurance equals payment in full. So here, for the services that I received, the insurance company is saying, “I see you billed for $115, but we agreed that this service only costs $65.34, so that’s what we’re allowing.” You, as a covered member, are not charged for the ‘disallow’ amount of $49.66.

In our case, we have a high deductible plan, which means we have to spend a certain amount of money on covered services before the insurance pays out benefits. Ours is $3,000. This means that for the first $3,000 worth of doctors visits to in-network providers, we’re paying the total allowed amount (e.g., our son had to go to the ER, and we paid $609 for the visit, which is the fully allowed amount). There are plans out there where you don’t have a deductible, but you have a copay (e.g., I had a plan where I paid a flat $20 for each doctor’s office visit and $125 for each hospital visit, but I was also paying a higher premium for that coverage type). In a future post, I will share how we compared our plan options and chose a high deductible plan.

After we meet the deductible, most of our services are covered at 95% (i.e., we’re responsible for paying 5% of the allowed charges). In the example above, we had to pay 5% of the $65.34, or $3.27.

There are tons of nuances to insurance though, but hopefully this broad overview helps understand how to read the EOB. I have more stories of where my interpretation of the coverage in my brochure doesn’t seem to match the benefits administered, but those are for another time. For now, here’s how we protected hundreds of dollars by staying on top of our coverage.

MR. ODA’S STORY

Speaking of nuances, here’s one of those. Preventative care is covered at 100% (e.g., maternity screenings and annual physical exams). Mr. ODA needed a physical to qualify for his agency’s wellness program (they’re given 3 hours per week to exercise). When he went to get the physical, it got coded as a sports physical because the doctor had to sign off on a paper that said he was healthy enough to participate in the wellness program. A routine annual physical is fully covered by insurance, regardless of deductible. Apparently, a sports physical is not the same concept and regular coverage requirements apply.

Mr. ODA had to call back to explain that the exam was routine with a signature on paper, and not any more in depth to be considered a sports physical. The doctors office offered a reduction in the amount owed, twice, but eventually realized they were spending more in postage and phone calls than the bill was worth while Mr. ODA fought the coding, and they wrote it off.

MRS. ODA’S STORY

I saw a doctor in December 2019 when having pregnancy complications. In February 2020, I received a bill, which I promptly, and erroneously, paid. A few days ago, I received a check for the amount I paid a year and a half ago. So it wasn’t a quick resolution, but I wasn’t going to let $300 go.

The bill said:
Charges to Date: $451.00
Payments/Discounts to Date: $157.85
Remaining Patient Balance: $293.15

I had seen multiple doctors in a short period of time, so I was just in auto mode to pay all the medical bills that I had. After I paid it, I realized that on the back of the bill there were more details about that “payments/discounts” line item. There were three columns: Insurance Payments, Patient Payments, and Adjustments to Date. The total $157.85 was in the Adjustments to Date column, and the insurance column said $0. I checked into my insurance claims online and didn’t see this date of service. Well, I’m insured, so this should have been submitted to my insurance for review first. I called the hospital to indicate that there was an error made, and I shouldn’t have paid this in full, even with an “uninsured discount” they graciously offered me.

I called the hospital to ask why this wasn’t submitted to my insurance and discovered that my name was spelled wrong, my insurance was entered wrong, and this claim wasn’t tied to all my other hospital-related claims I had processed. Supposedly, they updated my information and resubmitted. I still didn’t see it on my online claim history after the 30-45 day window they told me, so I called again in April 2020. I was told they would resubmit. Two months later, I was managing a newborn and we were just deciding to move, so this fell off my radar. Then all of our things were in storage for two months. By the time I got this paperwork back out, it was March 2021.

I explained my story to the hospital again and asked for it to be properly submitted. I was again told they would submit the claim, but this time they’d submit by paper handling. Again, nothing showed up in my insurance. I called in April 2021 and was again told that they would try submitting again. This time I escalated to a supervisor. I said that this was unacceptable, and I didn’t want to keep being told they would try again, delaying my reimbursement by another 30-45 days each time I called. The supervisor said she would ensure the paper claim was sent out and call me back in a week. I never got the call. On May 18, I called again, immediately asking for a supervisor. This supervisor said that my account showed a refund was approved, but he needed to issue it (why couldn’t that just have been done?!).

Well, on June 1, I received a check in the mail for $293.15. That’s the amount I paid back in February 2020 for a December 2019 date of service. I could have written this off in my mind a year ago and not made these five or six phone calls, taking about 90 minutes of my time in total. I could have said to myself, “I called. There’s nothing more I can do.” But we wouldn’t be in the position we’re in now with our finances if I kept saying “oh well, that’s all I can do.”

The moral of the story is that you should be an informed consumer. If you know how to determine your benefits and calculate your coverage, you can make sure the proper payments are made to the provider, and that you aren’t overcharged.