Stories

House 4 Turnover

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We had a long term tenant in this house, who moved out last Spring. We luckily had someone lined up looking for a place to live. There were a few red flags from the beginning, but I went with him because he was a friend of an old tenant of ours. Rent was always paid on time, and everything went fine. Unfortunately, there was a public incident at work in the Fall and he was let go. He asked if he could be released from the lease so he could move back home.

I wasn’t interested in making anything more difficult for them. I didn’t ask for a lease break fee; I just asked that they continue to pay rent until we found someone who could take over the property. It was winter and holiday time, which is least favorable time of year to be finding a renter. They gave notice at the end of November and we listed to house right away. We did our due diligence to get someone in there as best we could, considering it was Christmas time and the middle of winter. The tenant paid January rent on the 1st, as required. Luckily, we were able to get someone moved in on January 5th. The tenant didn’t do anything wrong to the property, so I gave back his security deposit and the January rent they had paid.

TURNOVER

The original tenant had essentially vacated the property, so we were able to get in and do some work to it. The entire place was painted and had extensive maintenance needs met over last summer (after the long term tenant), so this was an easy task to get it ready for a new tenant.

We received a notice from the city that the yard needed to be cleaned up, so we had the tenant go over there and do the work. There was a tree limb that had fallen (and wasn’t reported), so we had someone go clean that up and the rest of the yard for $100.

Several years ago, we had replaced most of the windows in the house. There were 3 windows that were either fine or oddly shaped, so we didn’t replace them. That was a mistake. We ended up spending the same amount on 3 windows this year that we did several years ago for 6 windows.

The front porch of the house is seldom used. The driveway is in the back of the house and leads straight to the kitchen door. The entire front of the house is fenced in too (the house has a huge front yard and small back yard). Due to the age of the house, that it’s a rental, and that the front porch is rarely used, it wasn’t in great condition. It was finally time to replace it. We had our handyman rip out the stairs, banisters, and floorboards to replace it all; it cost us $1,640.

The kitchen faucet wasn’t working right, so we had our plumber replace it. He also tried to flush the water heater to extend the life, but it was broken enough to replace it. We needed a special size because it fits under the counter in the kitchen, so that was $1500.

Other than a clean from our cleaner, that was all that we needed to do.

TENANT SCREENING

We had 4 sets of people show interest in the property. One withdrew her interest form after checking the sex offender registry (understandable, but it is a city home, so that’s not surprising). I was interested in another guy who was retired and seemed handy, but as time wore on, there were several red flags. Another person tried to convince us that his day-trading of stocks qualified him to pay us rent each month, so he was disqualified for not meeting income requirements. Finally, a couple showed interest, and my property manager said they seemed like a decent option in person, so we went with them. At the time, I didn’t really comprehend that one of the tenants was only 20 years old. That comes into play when he shows his age and inability to handle a mature conversation about rent payments a couple of months later.

Due to the unexpected timing of turning over this house, we ended up with an 18 month lease. We didn’t want a 12 month lease, leaving us with another winter turnover. Even though their lease started January 5th, I counted the full month and ended the lease on June 30, 2025. I like a May 31 or June 30 lease ending the best because it seems to be when the most people are looking to move. Once you get to July 31st, most people (in the southern states, at least) are looking to have already been settled in the school district they wanted.

TENANTS THUS FAR

Well, since I had plenty of posts teed up, I’m only getting to post this now, months since they’ve moved in. That means I have a sample size of their tenancy to share, and it’s not good. They’ve had a lot of complaints, which is interesting to me since the previous tenants didn’t seem to have many issues with the house. It’s a 1943 house. It’s not perfect. It’s not spacious. But I assure you, the house is exactly what you see when you first tour it. It’s a cute, little, old house.

The tenants used Venmo to send the first sets of payments when moving in. For some reason, they decided to switch to Zelle; in doing so, they didn’t follow the instructions I gave them, and are sending them to an account I’d prefer them not to, but oh well. In March, rent arrived on the 6th. I was bothered by it, but I let it go. Then for May’s payment, we hadn’t received it by the 5th in the evening. Our property manager reached out to them to ask if they planned on paying that night. They said they had already paid on the 2nd. We explained that we hadn’t received it, and we still see no indication of it arriving electronically. He sent a screenshot of his bank’s information, which did confirm a payment on the 2nd. We said ok, thanks, and we’ll check in the morning.

He then went off the deep end. He attacked us, as if we just sit around pretending we don’t receive money so they’ll send more money. At no point did he stop, think, logically read our messages, and respond politely. He continued to berate us and the property manager over this, where we carefully explained that sometimes there’s an additional verification step required so that this 3-5 day hold doesn’t affect when rent is due. He kept saying he was completely verified and that it’s our bank not accepting the money. That’s not how banks work, but ok.

He eventually agreed to use Venmo. I went back to his January payments, liked them, and ‘friended’ him on the platform so that he’d have the right account in front of him. He did pay June’s rent on time and via Venmo.

In his berating of the house, he talked about how the house was awful. The house that they walked through and agreed to rent. The house that is very small and very old, but is clean and operational. The house is nothing special, but it’s a house with rent under $1000 in 2024 and decent access to the activities in the city.

They complained that the light in the oven was stuck on. They didn’t want to pay to run that electricity in a house that already had a high electric bill. It’s an 800 sf house; if you’re paying $350 per month for electricity, I’d say you’re doing something wrong. All systems in the house have been serviced and/or replaced recently. All the windows in the house are no more than 5 years old. We had our plumber lined up to handle this for us (he’s a good guy!), but they figured out what to do differently to get the light to turn off. What frustrated me the most about this complaint was that they acted like I purposely broke their oven 3 months after they moved in (and I live in a different state), and yet I’ve been very responsive to all their requests for maintenance.

SUMMARY

Overall, everything is fine. They have a lot of growing up to do. I hope at some point they learn that you catch more bees with honey. For now, they’re there until the end of April. We’ll see how the next several months go, but at this point, I’m interested in finding someone else. Based on their hatred of the house, I expect they’ll move out on their own accord regardless.

Property Assessments & Rent

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At the end of last year, I received each property’s revised assessments for 2024 tax purposes. To no surprise, every single property drastically increased. A harder pill to swallow is to see how much it increased just from two years ago.

Higher home sales are great – if you’re in the market to sell. If not, it’s just fueling the local jurisdiction’s ability to increase their tax income. Again, this increase is great for a resale opportunity, but it’s not great when we’re content in our “buy and hold” at the moment.

Where I live, we received our property assessments recently as well. There was an uproar from the citizens. The Property Valuation Administration explained the increases and how they work, noting that home values in our area have exactly doubled since 2014. While their valuation process only occurs every few years, and home prices are increasing about 10% each year, people are seeing 30-50% valuation increases when they receive their notice.

COMPARABLE SALES

When determining a property’s assessed value, whether it’s for tax purposes or a bank loan or such, nearby home sales are used as the basis. Home sales denote what buyers are willing to pay (and likely what an assessor determined as fair market value) for a home. To determine your home value, you would need to look at sales in your neighborhood or close geographic area, for homes (and lots) that are of similar size with a similar number of bedrooms and bathrooms. There are factors that you can use to compensate for a different number of bedrooms and bathrooms, but it’s easiest if you find homes with similar data points.

In today’s market, you’re also going to focus on home sales in very recent months. The amount that a person is willing to pay, and the amount that a bank is willing to loan, is increasing regularly. A home value in 2021 is different than today’s.

HOW DOES A PROPERTY ASSESSMENT AFFECT YOUR RENT?

I wrote a post that went into the details of how our expenses have changed over the last year on these rental houses. It’s noteworthy, as a renter, to be aware of the changes in property assessments because it’ll help you anticipate and understand the need for rent increases that will be coming.

I recently saw someone complain that a landlord was raising rent with no improvements. Rent increases aren’t tied to improving the house (well, they can be). Rent increases are keeping up with the costs that are increasing for the landlord.

I’m a broken record on this, but I’ll continue to work to educate. When you rent a house, you see the one cost. You don’t see that the landlord is holding the mortgage. That mortgage likely has escrow that pays for insurance and taxes, which both increase every year. Even if it’s not escrowed, the landlord is taking the time to manage the income/expenses of the house and paying out the taxes and insurance.

You also don’t see the maintenance costs. When you call me to have a plumber come out, that’s an expense. I used to pay $125 for a service call and minimal work. Now that’s $200-375. Your rent is covering that possible future expense. Could you imagine if you found out you needed a new water heater in the house; would you have $1500 to hand over in a day’s time? As a renter, your rent is set to cover those future expenses.

We typically reserve rent increases for every other year, and it’s usually $50 per month. There have been some cases where a tenant has negotiated less, and a few other cases where we increased the rate more than $50 per month because of the drastic expense increases we incurred. I learned that if I don’t increase $50 every two years, I end up behind on the increases that are coming in future years. I don’t want to increase rent by $100 /month on a good tenant, so I try to keep with this schedule. I always explain that this increase is due to carrying costs. I also always provide a written documentation and give the tenant the option to move out. I’ve never had a tenant move out because of a proposed increase.

SUMMARY

If you’re interested in knowing more about these numbers, review the post that I linked. You’ll see that my annual costs increased by over $4,500 on these properties. You’ll also see that in some cases, where I prefer to only increase rent every two years instead of annually for tenant satisfaction, I’m not keeping up with the cost increases I’m incurring. House3’s two year cost increases of that property’s insurance and taxes total over $125 per month; I increased their rent $50 per month. I have other properties that can float that loss I’m taking there, but having happy, polite, and courteous tenants who take care of the property like its their own is more important to me than drastic rent increases and risking someone less vigilant moving in.

So the next time a landlord increases your rent when your lease term expires, understand that it’s to cover the expenses they’re covering for you to live there. When the property sales in the area increase, know that the landlord’s taxes are increasing, which equates to a higher rent needed to cover it.

House 7 Turnover

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Our turnover this year has been higher than usual. However, it’s been for good reasons, and not just because someone is looking to rent from a different landlord, so I’ll take that win. In this case, the tenant was house hunting. We knew that a year ago, and we had set up our lease to allow them to break it. Since April was their last month in this current lease term, there was no “lease break fee” associated with their notice. They gave us notice at the end of February, which requires 30 days worth of payment. March rent was paid.

They had moved out of the house early though, which ended up being very helpful. The house needed a lot of work. There was a lot of deferred maintenance on this house. We bought the house as a flip. It looked fine on the surface, but we knew it wasn’t going to hold up. Our last couple of turnovers happened really quickly, so we didn’t put much effort into the turnover process. With the extra time, we knew we needed to address some issues.

PAINT: $2,750

First, we finally got the flat roof addition fixed on this house last summer. The flippers before us had added a laundry room to the back of the house. They used the existing covered deck infrastructure, and it was horrible. They didn’t tie it into the house correctly, so we endured several leaks into the laundry room. We struggled for years to get a roofer who would address it for us. We even hired a roofer, highlighted the flat roof issue, and missed that his contract didn’t do anything except replace the shingles on the main house roof. There was plenty of saga once we finally found someone to rebuild it, but it’s done. We hadn’t fixed the drywall from the leaks, so that needed to be done now (a.k.a. deferred maintenance).

We found a painter who repaired the drywall, repainted the ceiling, and painted the walls. He also painted most of the trim in the house to white (there was some damage on the baseboards that needed fixed) and all the walls Green Tint by Benjamin Moore.

Two tenants ago, we had given an offer that if she wanted to paint any of the rooms, we’d offer a rent concession. That was part of the deferred maintenance; most of the house was dingy white that took a beating over the years, but we never had the time between tenants already lined up to paint everything. She took us up on that offer. She even painted the bathroom vanity and medicine cabinet. It was a beautiful robins egg blue, but we didn’t have the paint to do a few touchups on the side of the vanity that were needed. Our painter added that to the work at no cost. He absolutely didn’t need to do that! But everything has a fresh coat of paint now, and I’m so happy at the facelift it gave.

FLOORING: $6,613

When we first bought this house, the bedrooms on the first floor had dingy carpet in it. The prospective tenant we had requested we replace the carpet. I can’t remember the series of events, but we determined it was better to refinish the hardwoods underneath the carpet than to continuously replace the carpets every 3-6 years. They’ve held up pretty well, but they are starting to show wear at 7 years in.

Regardless, we didn’t touch the carpet on the stairs or on the second floor of the house. It’s blue indoor/outdoor carpet. I truly can’t believe we’ve been able to house renters in this place with this carpet still in place. We’ve put it off because re-carpeting stairs is just so expensive relative to doing a whole room. One of the bedrooms on the second floor even has wood paneling, which just made it even more amazing that anybody wanted this house. It was not the most aesthetically pleasing place.

We replaced all the carpet. With the fresh carpet and fresh paint, it’s looking so much more inviting.

Then we move on to the kitchens and bathrooms. The first floor bathroom and kitchen floor were clearly just lipstick-on-a-pig situations by the flippers. The subfloor was clearly bowing and making all the cheap tile crack. The humidity issues in the bathroom (I’ll touch more on in a moment) weren’t helping matters in there.

Here you can see the kitchen (and its pink knobs!) with the tile floor. The tile had all cracked by this time.

The upstairs bathroom was original 1970s linoleum. Here’s a snip of it in its glory.

Trying to match/add the hardwood was not an option. We considered ‘luxury vinyl tile,’ but that was more expensive than I wanted to put in a rental property. I didn’t want to retile it because I just personally don’t find tile floors to be warm and cozy for a house. The only reasonable option left is ‘luxury vinyl plank.’

We requested a quote from Home Depot. Their quote was cheaper than the one we ended up going with, but we didn’t use them for good reason. We had a subfloor issue in another house. Home Depot was extremely difficult to work with. Not only were they doing questionable work, they also just threw their hands up at the subfloor issue. Luckily, we had a friend that was able to help us repair it (because we didn’t live there). We know for a fact that there’s subfloor issues here (we can see the bow in the floor at the sliding door), so we wanted to go with a contractor who could handle everything.

We picked a local company. They did both the carpet and the LVP. They were so easy to work with. I didn’t love that they wanted me to pay for the entire job up front, but it ended up being great. They had to come back to finish a few tasks, and they did it all perfectly. I’m really happy with the process and their product.

Another miscellaneous flooring issue was that the vent covers were rotting. The finish on them were peeling. This could be explained by humidity in the bathroom, but that doesn’t really explain the issues in the kitchen and living room also. Our handyman was able to pop those out and get new, clean looking ones in for us.

RANDOM WORK

We had to call on our handyman for random jobs. He had to tighten the front porch banister. It’s likely the original banister and has just corroded at the connections. He also had to tighten up the screen door (which, if it were to break would be removed; having to maintain non-essential pieces of a rental is no fun). Some light fixtures needed major TLC. We replaced the light fixtures in both second floor bedrooms, the sconce type light fixture in the half bath upstairs, and the main bathroom’s vanity light (it was all corroded and looked bad).

The upstairs half bathroom had a brown accordion door. The pieces were falling off and it just generally looked bad. The space is tight, and an accordion door style was definitely the best solution for the area, so we had a white one put in. It’s still less than ideal, but it looks much better.

The previous tenant didn’t clean up the yard as they were supposed to, so we had to hire out that work. We also asked him to clear the gutters, which was very necessary because it looked like trees were growing out of them with how many twigs were stuck. He charged me $250 to rake the leaves from the yard and flower beds, mow the yard, and trim the bushes. Then he added on $50 for the gutter clean out. We also did a final mowing before the new tenants moved in, and he charged me $60 for that.

I’m not exactly sure what the issue is, but for some reason we had water damage in the main bathroom. It wasn’t water damage in the sense of standing water. It was just too much moisture. The mirror was corroded; the tub faucet handles were corroded; the caulk was all moldy (and we knew it was fine a year ago); the walls had water streaks on it. I don’t know how it was fine for years and now it’s not, but I’m guessing the only answer is that last tenant just liked really hot showers and didn’t use the vent or window. The tub knobs were so corroded that they had to be sawed off and new valves and such installed. Luckily our plumber was able to handle it timely and it looks better now, but that was a minor inconvenience.

The back sliding door had always been questionable. No one ever pushed us on it though, so we didn’t know just how bad it was. I don’t know that the door ever fully locked. There was a block used to hold it shut for security measures (although I feel like everyone who has a sliding door uses something like that). I finally wanted it replaced. It was likely the original door (think nickel type finish), and it was overdue. We did this through Home Depot because I knew their prices were reasonable and it should be an in/out job. It was $1063.

NEW TENANT

Our property manager showed the property to several candidates. Only two provided their interest form timely. An interest form is a way to gather background documentation on the potential tenant without the tenant having to spend any money. It’s a way for the prospect to divulge any negative remarks on their credit or background check. It’s a good gesture that we allow them to fill this out before spending money on an application fee that will identify disqualifying information. We have found that some people don’t tell us anything, and then they’ve spend $43 for us to say they don’t qualify.

Both prospects submitted their interest forms on April 18. Unfortunately, both of them were interested in a mid-May lease start date. They both offered to do a 2 year lease as a compensating factor though, which was a nice gesture. I also appreciated that both of them were well spoken and up front with a lot of information.

We chose someone and ran her background check. Several “unlawful detainers” (a.k.a. evictions) came through, which hadn’t been disclosed. We told her that her credit score was slightly below 600 and the unlawful detainers would disqualify her. She then wrote back a very nice note explaining all the data that we found and asked us to reconsider. We agreed to rent to her and to take a higher security deposit as a compensating factor. She agreed to the 1.5 times a month’s rent as a security deposit.

Unfortunately, the house was vacant for a month and a half. Luckily, during that time we were able to get a lot of work done in the house. I hope that this tenant takes good care of the home and that we’re pleasantly surprised with her tenancy regardless of her history of late payments and court filings.

Grocery Shopping

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It doesn’t always work out this way, but we went to 3 different stores to accomplish grocery shopping, while building another order for pickup/delivery. We were shopping sales, which means we had a list and were in-and-out. There are a few times that an in-store sale will catch our eye, but otherwise, we’re in these stores on a mission.

Walmart is our default grocery store. There have been very few things that we have found to be different quality than name brand items. We keep an eye on sales and coupons at other stores, where we’ll pick up name brand items if they’re cheaper than the Walmart version. Walmart has a stigma that it can’t be good, but their items are usually comparable to the more expensive version.

Here are the places we shopped in one day, and what we bought there. We spent $208.05. About a third of these items are perishable (e.g., chicken and fruit) and expected to be consumed in this week, while others are being stockpiled based on the sales available this week (e.g., cereal). Two items were for the house (i.e., weed and feed, and a hose) and account for about $75 worth of this total.

  • Costco: $129.15 for sparkling water, a hose, rotisserie chicken, weed and feed for the grass, and yogurt pouches. We went there for the weed and feed, which is over $50. Costco’s sparkling water is a staple of mine, and grabbing a chicken is a regular occurrence. The hose was about $20 and spur of the moment to replace one of ours that always kinks. The yogurt pouches price caught my eye because they had a manufacturer’s rebate. On the spot, I pulled up Walmart’s price of it. Walmart was 7.78 for 10 pouches, and this price was about $9 for 20 pouches, so I picked up two of them.
  • Kroger: $58.04 for cereal, bacon, milk, yogurt. Kroger deals are more of a “buy X amount” to get the deal, so this is usually a higher charge to our credit card.
  • Meijer: $20.86 for bacon, strawberries, pears, apples, canned vegetables, and marinades.

On top of these sales, we also need a few staples that we typically purchase from Walmart, but that was only about $15 worth. We have plenty of food in the freezer (e.g., chicken, beef) that we can plan meals with for the week.

SHOPPER SYSTEMS

We pay for Walmart+, which is $99 per year and also comes with a Paramount+ subscription. Walmart does not inflate their in-app prices when you purchase that way. However, Instacart does. You’re paying an Instacart fee and inflated prices, while maybe also including a tip. Understand that there’s a tradeoff of your time to paying these inflated prices and fees. What are you doing with the time that someone else is shopping for you? Are you being productive to make the cost necessary? I’ve learned that having groceries delivered is a luxury I appreciate with 3 kids and all their activities/scheduling. I find it worth the $99 per year to have that luxury. But I’d also do fine with grocery pick up orders that are free if you spend $35.

GROCERY COSTS

I regularly listen to complaints that groceries are so expensive. However, I don’t see as many people putting a little bit of effort into finding better prices. If you’re shopping at Kroger, are you doing all of your grocery shopping there, or just the sales? Have you asked yourself why you’re shopping there? Is it a prestige thing because you don’t want to say you shop at Walmart?

For fruit, we buy based on prices. Right now, grapes are $2.69/pound. We look for the price to be $1.99 or less per pound to buy them. Strawberries were purchased at Meijer under their 4 for $5 pricing structure, which makes it $1.25 per pound. I regularly see strawberries at $4.29 per pound. We’re not going to be buy them at that price; there’s going to be another fruit available for less.

At Walmart, I’ve learned that I like their brand of paper towels if I buy them in a 6 pack for $10.22. If I buy the 2 pack, the paper towels are too linty. Walmart and Kroger sell different versions of Bounty to do a comparison, but a 12 pack of Bounty at Walmart is 22.18. A 6 pack of Mega rolls is $25.99, but it’s currently on sale for $23.99. Sometimes it’s not an easy comparison (especially in the paper towel or toilet paper world), but the point here is that I don’t buy name brand Bounty, and I’m happy with the quality (while acknowledging I did find another option I wasn’t happy with).

Make sure your shopping decisions are conscious decisions. We’re not buying strawberries once per week every week of the year because their price fluctuates. We’re buying based on pricing and sales. We’re asking ourselves, “is the price listed worth the item we’re purchasing?” A candy bar could be on sale for $3, down from $5, but I still wouldn’t want to pay more than $1-something. You don’t need to go to 4 different stores like we did this time, but do make conscious decisions. If you’re shopping at a store like Kroger or Shop Rite or whatever is in your location, know that you’re going to be paying more for your staples than if you were shopping at Walmart because a place like Kroger is banking on those sales each week to draw you in.

Hitting our Goals

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I mentioned at the beginning of the year that our general financial goal is $4 million net worth. I acknowledge that this is not a specific goal that most people can relate to. But I also pointed out that we weren’t always sitting with nearly that amount in our accounts, and that made me start thinking about where we were. This is long, but I didn’t think it worth splitting into multiple posts. I’ve gone into the topic in general, but this is our actual story and the steps we experienced.

This is just meant to show you that you can grow each year and slowly chip away at a goal. Everyone makes fun of the “don’t buy Starbucks everyday” philosophy. It’s not that saving that $7 per day is literally going to make you a millionaire in itself. It’s saying that if you’re willing to spend that $7 daily, that’s likely indicative of other spending in your day, and you should be more deliberate with your spending. I saw a meme on Instagram that said something similar about buying decor for your home, and if you’re willing to spend “just $25 on this lamp,” those little expenses add up over the year. I’m a broken record in saying make every purchase a deliberate, thought-out action; I went into how much effort (and years) I put in to purchasing a $4 tape dispenser on this post.

The background here is to first show you how I had no money, but I’ve been diligent on my spending and working towards goals. Mr. ODA was more of a saver and more prepared for the big life expenses in your early 20s. The part where we work towards buying a house is where we really buckled up and made life decisions that kept us on that track. Our money philosophies have gotten us to where we are today – every dollar has a purpose.

MY FINANCIAL HISTORY: COLLEGE, WHERE I STARTED MY INDEPENDENCE

I never liked relying on other people, so I was interested in making my own way as fast possible. My parents gave me an ultimatum during my sophomore year of college – either become a resident assistant for free room and board, or take out loans to help pay for it in the next two years. I didn’t want to take out loans, so I started looking for off campus housing. I didn’t mind living on campus. I have no idea why I was so dead-set against taking out loans and how that would have been ingrained in me at that time. But living off campus would allow me to pay month to month, instead of living on campus where I’d have to pay each semester’s housing costs up front.

On top of that, my dad offered me to buy out his car. He had let me drive the car to college that year, but around Christmas time, it started acting funny. It turned out that second gear in the transmission needed to be replaced. He said I could pay for the fix, and then it could be my car. I didn’t like the idea of being 3.5 hours away from my family and having a car that appeared unreliable. So I went car shopping, and I leased a Honda Civic. My car payment was about $300/month. I leased it instead of buying it because I didn’t need to put any money down.

I worked three jobs that summer after my sophomore year of college. It was so hard. I was working 40 hour weekends, and then I’d put hours in during the week. I remember getting burnt out and being overwhelmed because I had to miss my sister’s graduation party. I was working at a catering hall, which meant late hours on Friday and Saturday, and early hours on Sunday. I was also working at a bagel shop (big on Long Island), which was a 5:45 am call time, but at least I’d be done by 10 am. Then I was working as a cashier at K-Mart, which was Monday through Thursday in the afternoon or evening, and sometimes on Friday.

Even though I was working all those jobs, I still struggled with paying my bills once I got to college for my junior year. I paid too much for rent because I wanted to live on my own. None of my friends were interested in living off campus, and I was too afraid to live with someone I didn’t know. My parents ended up giving me $100/month for 6 months so I could pay to run my heat. I remember it being October, and I told my mom that I hadn’t turned my heat on yet. So she sent me the money each month to cover the heating bill instead of trying to live in layers and blankets because I didn’t want to pay for it.

When I moved back up to college, I was working at JCPenney while going to school. I did pretty well. My grades didn’t suffer, and I still felt like I had a life so I didn’t get burnt out with only work and school. I took on extra shifts and stopped going home for the smaller holidays (e.g., Thanksgiving) so that I could work.

MY FINANCIAL HISTORY: MY BIG GIRL JOB

My guidance counselor told me that financial firms would be expecting internships on my resume. This was 2007; financial firms were fat and happy, so they weren’t paying interns. I kept my eye on the job boards (which were literal bulletin boards) in the financial building. I found an internship with the Federal government that was paying $13/hour! I applied in August. I heard nothing for weeks, so I gave up hope. Suddenly, I received a call asking me to come in for an interview on Halloween! I had never interviewed before, so this was scary. Then the guy told me that they didn’t even know if they were going to hire a mid-career hire or go the internship route, and they had never had an intern before. That was the second time I gave up hope. A month later, I received the job offer, and I started working in December 2007.

From the start, I put money into the Thrift Savings Plan (TSP), which is the government’s 401k equivalent. My parents told me to take each raise I got and put it right into there also. If I was used to living on the lower amount, then keep the rest in savings. I followed that advice until I maxed out the contributions. I didn’t have trouble paying my bills, but I wasn’t saving as much as I should have for rainy days.

MY FINANCIAL HISTORY: MEETING MR. ODA

Mr. ODA showed up in my office in October 2009. Shortly after meeting him, we were hanging out, and next thing I knew, he was asking me my social security number. He was signing me up for a rewards credit card, since I had a credit card through my bank that was getting me no incentives. By the time I met him, I was living comfortably, but I wasn’t saving with a goal in mind. Whatever was left over became savings, and it didn’t matter to me what that number was. I was maxing out my TSP and paying my bills comfortably, and that seemed good enough for me.

OUR FINANCIAL HISTORY: IN A RELATIONSHIP

Mr. ODA came with a lot more money than that into the relationship. He had always been planning to save for two big purchases: an engagement ring and a house. To me, buying a house was somewhere down the road, but I didn’t have the confidence to move forward on that. I hope to instill that confidence in my children because that would have made a big difference.

Mr. ODA designed my engagement ring at a little mom and pop jewelry store in Harrisburg, PA (long story on where we’ve lived, for how long, and why). He proposed in November 2011. In December, I moved to DC, and Mr. ODA joined me shortly after. We lived in an apartment. We lived halfway between where he and I worked, but I admit we paid way more for rent than we prudently should have. Even though I grew up in the shadows of New York City, actually living in a big city was scary to me. We went on a house hunting trip, and I struggled with anything that didn’t look really nice/new. We were able to get a reduced rent rate, but at about $800 per month for each of us, it was significantly more than the $450 per month I was paying in Albany, NY.

The goal was to rent for a year while we scoped out the area to find a house to buy. We didn’t know anything about Northern Virginia, and we wanted to go to open houses to learn how far our money would go. Newsflash: not far.

OUR FINANCIAL HISTORY: A WEDDING

While we explored the area for a house, we were also planning a wedding. We paid for more than half of our wedding. My parents gave us a chunk of money towards it. If I had been married in Kentucky, it would have covered most of the wedding. However, I grew up on Long Island, and a wedding is a very different kind of event there. I probably wouldn’t have known any different had I not attended several weddings in South Carolina, where weddings were low key. After looking at venues in both Kentucky and New York, I ended up breaking down one day that I had always dreamed of a specific type of wedding, and Kentucky just wasn’t it.

I saved as much as I could in all the other areas since the venue was so expensive. The venue cost included all the catering, staff, and cake. I went cheap on invitations, my dress, favors. I just didn’t have the cash on hand to do a lot, and I wish I had done more. I also wish that I had been married on site at that venue instead of in my hometown church, but it is what it is. I also went cheaper on the photographer, and the day was terrible because of him. I recommend to everyone to get a good photographer and really check their portfolio (and if they do crazy things for photos, don’t trust that they’ll not do crazy things when you ask them not to).

We got married in August, after our November engagement. We had to lay out over $12k for that. The unexpected part of that was that we found a house to buy earlier that summer.

OUR FINANCIAL HISTORY: OUR FIRST HOUSE

Mr. ODA was a good saver. The problem was that he didn’t expect to pay for a wedding, and he didn’t expect to live in Northern Virginia. He was expecting to buy a house around $150k. We were struggling to find a house with walls and floors (literally) at $350k.

We lived a meager state for that year. Our goal was to spend less than $5 per day on food. That meant we weren’t spending money at restaurants. We were packing our lunches for work days. We were living off of macaroni and cheese. We weren’t taking trips. And yes, we were literally tracking our expenses on food each day.

THIS IS IMPORTANT: We were preapproved to buy a house up to $750,000. THAT IS STUPID. We didn’t want to pay PMI, so our purchasing power was based on our down payment being 20% (if you don’t come to the table for a conventional loan with 20% of the purchase price, the bank tacks on PMI). Between loans we could take from each TSP, cash on hand that we projected to have with our savings over the year, and possible liquidation of investments, we projected we could have about $70,000 on hand. That means we were shooting for $350,000 as the purchase price.

Our Realtor knew we were approved for double that, but we held our ground on our price range. We considered several properties. We put an offer in on a house at $380k. It was a bank owned foreclosure that they had flipped for resale. The flip was bare bones, but the house looked ok. We wouldn’t need to put immediate work into it. Our offer was declined. Then later that day, the bank called and asked if we still wanted it. We were instructed that the previous bidder attempted to counter the bank, and that’s why we were given the offer. We weren’t willing to lose it and accepted. We were under contract for a $380,000 house. That meant we needed at least $76,000 by closing.

Mr. ODA and I each took out TSP loans, we were gifted money from our parents, and we used our savings. Our final closing costs were just over $78k. We got our 20% down, so no PMI. We then spent the next 3-5 years paying ourselves back in our TSP. The loan payment amounts were adjustable, so we paid more when we could, but we had the flexibility to back off some of the payment totals if we needed to.

OUR FINANCIAL HISTORY: SELLING OUR FIRST HOUSE

We bought our first house in July 2012. We sold the house in September 2015. In that time, the house appreciated by $70k. On top of that, we had the 20% equity we had put down, and we had the equity for the principal payments we made over the previous 3 years. We were moving from the DC area down to the Richmond, VA area. We ended up purchasing a new construction home for about $360k. After putting 20% down on that purchase and paying off some debt (I had a car payment, and even though it was 0.9% interest, I wanted to manage less payments per month), we needed to decide on what to do with the rest of the money from the sale. Mr. ODA convinced my to put that towards rentals.

OUR FINANCIAL HISTORY: RENTAL PURCHASES

With that extra equity we had sitting in our account (which we had in an interest earning account), we purchased 3 rental properties (all with at least 20% down). The leap of faith we took into a landlord role, while figuring out things we didn’t know as we went is why we’re where we are now. We created a semi-passive income stream with these rental properties. Our savings continued to grow, which we used to purchase several more rental properties (again, with at least 20% down each time).

OUR FINANCIAL HISTORY: MRS. ODA ‘RETIRED’

By 2017, we had several rental properties, had paid off all our debts (e.g., car, TSP loans, IVF cost), and the net from the rentals was enough to replace my six-figure income. At that time, we had no kids, so there was no ‘real’ reason for me to not be working. As I continued to work, we kept it in mind that we’d be losing my regular income in the near future. I kept working, drawing down my leave balances, until our son was 8 months old (May 2019). I’ve worked a few random jobs here and there since then, but that was for something to do and not because we needed money.

MAKING GOALS

Mr. ODA had a goal of $1 million by 30. He exceeded it. At no point did we say “reach $4 million by 40” or anything like that. However, we’ve regularly tracked our net worth and made smart moves with the money we have. We don’t keep money in a liquid state for long. We make sure our money is working for us as much as possible. We take calculated risks that allow for interest earnings.

We also keep our ears open for extra income opportunities. We’ve been secret shoppers before, and I’ve taken on different short term work roles. That extra income isn’t meant to be frivolously spent; it’s income that we still utilize to move our family’s goals forward. We don’t buy the latest gadgets, but it’s not like we don’t have nice things. We spend will intention within our means; we don’t take out personal loans (e.g., furniture loans, layaway loans).

A goal that keeps moving due to preference is that Mr. ODA will stop working a full time job as well. The lack of insurance options is keeping that from becoming a reality, but if we really wanted to push it, he could quit tomorrow because we’re in a good financial spot. Nearly a year ago, we set up a separate bank account to have his pay check go into. It’s nice to know that we can live without his income, all the while having that bank account as a safety net.

Lack of Rental Payment

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I was going to include this in a financial update post, but it was too long and complicated to include there. I really want this to be a lesson for anyone reading this – mostly on the renter end, but perhaps for a budding landlord as well. We tried really hard to work with the tenant, but we can’t work with someone who doesn’t communicate up front and doesn’t keep her word constantly. When using statements like “I need to keep the water and electricity on for my kids,” understand that the roof over their head isn’t a given. I’m a private landlord and be lenient, but an apartment complex type situation isn’t going to allow you to not pay for months on end; they’re going to file for eviction on the first day 6.

THE DETAILS

After this house was flooded by a tenant, we got it fixed up and on the market. The options at the time were limited; plenty of people were interested, but they weren’t qualified. The area called for $2,200, but I wanted it to move quickly, so we listed at $1600. The previous tenant was paying $1200, so this felt like a huge jump. No one qualified for the property. We had two options that were close enough to our requirements.

We chose a single mom who worked two jobs herself to be able to afford this place. Honestly, kudos to her for her effort. She lost both those jobs (we knew about one, but not both) and ran into some other troubles. She has worked hard to get herself back on track. I commend all that. She’s wonderful like that. Her communication (or lack thereof) was infuriating.

At the beginning of October, she said she’s back on track now with a steady income (replacing both jobs), but with all the outstanding bills, she’s going to need time to catch up. I’m a very understanding person and work with my tenants as long as they work with me. Instead of telling me WHEN I should expect to see payments, she left it open ended with “sometime in October.” I gave her the benefit of doubt. Then two Fridays passed with $0 paid. I asked for an update through our property manager.

On the 16th, she sent over $300 (after we had to ask for payment), and wrote, “I will be sending another payment this upcoming Friday and typically Fridays going forward.” Typically. She reiterated that October would be paid before the end of the month, and then she’d need about two weeks to pay November’s after that. She did pay $500 that following Friday, and then missed the next Friday.

My property manager had to follow up with her 3 times before she actually received an answer. The tenant claimed she had been too busy to respond. Excuse me, but keeping a roof over your head should be a priority in your life (this will be a theme). I asked for a payment plan instead of this open-ended concept of payment. On November 1st, she finally responded that she was going to pay $400-700 every Friday, going forward, unless she needed to pay other bills. Again. “I’ll pay you when I pay you, unless I don’t pay you.” This isn’t appropriate.

She paid $700, as goods and services, on November 3rd. All fees are the tenant’s responsibility, so now she owed another $15. She ended up sending $50 over that same day. At this point, it’s November 3rd, and she’s still $60+ short on October’s rent and $0 towards November. As expected, Friday November 10th came and went with no communication and no payment. She ended up sending an email in the early morning hours of the 11th stating she’s waiting on a deposit to clear, so she’ll pay something on Monday. She did pay that Monday. However, she had said she’d pay every Friday, and the 17th came and went with no payment. Again.

On the morning of the November 18th, I sent the notice of default. It said she had 5 days to pay the entire balance or we’d file for eviction. She threw a little tantrum, claiming she wanted to end her lease. It doesn’t work like that. My property manager had a good idea and was able to articulate our frustration sternly, yet professionally. The property manager said that “forgetting” and “life” getting in the way were not acceptable responses, and it was time to be responsible for herself and her bills, perhaps by setting alarms or utilizing her calendar for reminders. The offer included our waiving of December and January late fees ($160 each) if the tenant continued to pay every Friday without us having to follow up. I thought the incentive was great. The tenant then paid $700 on the 24th and $600 on 12/1. At that point, she was caught up on October and November (sans late fees though), while paying into December’s rent owed.

She paid the first two Fridays in December, missed the 22nd, and paid on the 29th. At the end of December, she had a balance owed of just over $500, which included all late fees, so that was a decent position. Then things went downhill again. She paid nothing until January 17th, and it was only $100 that day. She claimed an issue with the amount she was able to send over, but stopped trying. When we asked why she mentioned $400 in $50 increments, but only sent over $100, she acted like we did something wrong. Over the next week, she ended up sending $300. At the end of January, she owed $1,863.40.

TENANT VACATES THE PROPERTY

In mid-January, seeing that communication was getting worse, and payments weren’t even being made, we asked her to leave. I was really trying to get through February so that we’d have a more favorable market time to list it. She said she didn’t want to leave. That’s a bold statement from someone who owes a lot. On January 25th, we sent her the 5 day notice until eviction document, which showed her balance due. We offered her the ability to leave the house by the end of the month with minimal damages, and we’d just keep her security deposit. Her initial response was that she wants to finish interviews she has scheduled, and she didn’t want to leave.

Within 24 hours, she decided she did want to leave. For the first time in all of this, she fully explained her situation. She gave good reason to have until February 4th to leave (instead of the end of January). We allowed it, but she’d be responsible for those days of rent in February.

As a final goodbye, she told us she would be able “to make another payment that first week of February.” As I suspected, she meant the week of February 5th, and not the 1st or 2nd. She didn’t pay. On February 9th, she “kindly” asked for an extension for the final payment, since she was expecting her tax refund in the next two weeks.

I don’t need to tell you at this point – two weeks came and went. She did end up paying over $500 on 2/29 though. That was more than I ever expected. I don’t know how she arrived at her number (she did email an explanation, but the numbers didn’t add up), but I’m accepting it.

TURNOVER

She actually left the house in great condition. She had sticking LED light strips in a bedroom that said they were easily removed. However, when she removed them, paint came with it. I had to have someone touch that up. She bought blinds, but didn’t hang them, for ones that were damaged (she had asked us to pay for them when she first moved in, so that was a nice gesture to uphold the integrity of the request), so I had to have someone do that. Then I paid someone to clean the house, which is normal. Overall, she was difficult to communicate with, but I do believe she meant well.

BACKGROUND & EXPECTATIONS

I have a track record of being very lenient and very understanding. I promise. I can provide lots of examples where I’ve let people know to take their time, prioritize back to school necessities, waive the late fee, etc. I can not work with you if you don’t talk to me. I don’t know what you need. I don’t know you as a person and whether you’re “good for it.” I need to know your expectations, needs, and plan. Talk to me without me hunting you down for information. I don’t know where I’ve said this before in this blog, but I’m positive you can find that or a very similar statement made throughout. Understand that in nearly all other scenarios, a landlord is not going to be patient for 4 full months to try to get you to pay rent owed.

She said phrases to me that were generally that she has kids so keeping the water and electricity current is her priority (isn’t keeping a roof over their heads equally important?), or that she asked for grace and patience (what have I been doing? I could have issued you the first step of the eviction process on October 6th, and I didn’t, even though you didn’t pay a penny towards rent until the 16th). It’s things like that get under my skin and make my efforts feel unappreciated, making not want to work with you going forward. Take the time to acknowledge how gracious I HAVE been, that I have bills to pay in addition to you having bills to pay, that I deserve to be given regular updates and information without having to follow up and beg for information.

My property manager says “she’s young” and “she’s learning.” There have been learning opportunities, but it’s also not my role to mentor a tenant on how to be an upstanding citizen and uphold your commitments. There were two other late rent moments this summer where my property manager said that if there’s any issues with rental payment, we need to know ASAP, without us having to make phone calls or send emails. My property manager reiterated this expectation on October 31st over the phone – don’t miss a Friday rent payment, assume we know you’re not paying anything, and leave it at that (I already played the “benefit of doubt” game through October when we received $0 for half the month).

LESSON

Communicate with the landlord. Don’t put the landlord in a position where they’re having to keep track of your financials and whether you’re paying timely. Pay regularly or communicate up front. All of my leases state that rent is due without demand. My having to regularly ask for an update or why you haven’t paid a single penny halfway through a month is not in any realm an acceptable way of doing business.

Renters need to understand that landlords have bills to pay. Those bills (that mortgage) are not as lenient as I’m trying to be with you. If I don’t pay my mortgage, there’s a late fee and it’s immediately reported on my credit. They also don’t accept partial payments. If I don’t pay for long enough, it becomes a foreclosure. As a tenant, you don’t know if I have funds to cover that payment. Assume I don’t. If I don’t pay my mortgage, the house is foreclosed, and you’re kicked out anyway. You’re getting by without any credit hits, as you’re now two to four months behind on rent. I’m floating mortgage payments on your behalf. Lucky for you, I’m on top of my credit and paying these bills even if you’re not paying me, but that isn’t an assumption you should make.

Your actions have consequences. You can mitigate those consequences by upholding your word and keeping in regular communication on what’s happening (again, up front, not after the deadline passes).

House 9 Turnover

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I recently posted “Lease Break Agreement,” where I went into the concepts we used to determine a lease break clause in our renewal with a tenant. The purpose of our fee structure was directly correlated to the time of year and probability of turning over the unit quickly. As I suspected, it took us an entire month to find a tenant. The lease break fee was one month’s rent, so we didn’t go without income during that time, but we also didn’t net a positive.

The tenant gave us notice on November 24th. Our property manager listed the property on November 26th at $1700. The higher price points are worrying me. While the market may claim that this is a fair rate, it doesn’t mean that we have a large pool of qualified candidates for this amount per month.

TURNOVER WORK

The house was painted before the current tenant moved in a few years prior. Unfortunately, some of the rooms were addressed, but not all of them. And the ware of time hit the walls all differently, so it looked like different colors of paint. I asked our property manager to get her painter over there and give all the walls a fresh coat. It looks great. That was $2,000.

I had a carpet cleaner come out and a cleaning company come out. The cleaners forgot about the refrigerator and had to come back. But otherwise everything looked great for less than $500 together.

The front porch was starting to sink. So while this wasn’t an activity done before someone moved in, we do have our handyman working on replacing the back deck, the trim around the back door, and the front porch (he jacked up the supports and is replacing the railing and stairs). I don’t even know what this final cost is yet, but it’s a lot.

APPLICANT #1

We had a lot of interest; hardly anyone qualified. After getting through some of the weeds, we did have a couple interested that appeared to be a good fit. They viewed the property twice over a week to be sure it was a good fit. The application was received on December 13, but it only listed one of the two adults who would be living there. We require all residents 18 years and older to complete a background check. We didn’t expect an issue with that since she works at a school, but it didn’t go well. Due to the holidays, their applications weren’t received until December 26th. She had several collections on her history. However, since he qualified on his own without her income, we agreed to overlook her lower credit score and collections history. I set up the lease with their names and sent them over.

We were excited because they wanted a January 1st rental, which meant we wouldn’t have any loss of income and would be able to put the lease break fee back into the house easily. They asked us if we would clean the carpets and clean the outside of the house. We agreed to the carpets and said that they outside of the house (mildew) would have to wait until warmer weather, but that we would address it.

Technically, all my tenants are supposed to clean the carpets and provide a receipt upon departure. However, I don’t hold this to anyone unless they were a real pain. A couple of hundred dollars out of my pocket and a happy ex-tenant is how I’d prefer to keep it (you’d be surprised at how many ex-tenant referrals we’ve had).

Suspiciously, they then withdrew their interest. I wish I knew why. I don’t know if their circumstances changed, if they were hiding information we hadn’t found on our own that caught up to them, or if something in the lease spooked them. If it was the lease, I wish they would have asked questions because we’re so easy going. I could have either explained why it’s there to protect them/us, or changed it.

So while we were a month ahead of schedule with being able to list the house, we now have a vacant house with no prospects. The goal is always to have the house ready to re-rent with little down time.

LISTING CHANGE

The market for the area called for $1600-1800 in rent. We originally listed it at $1700. It made me nervous. When the initial applicant backed out, I immediately adjusted the rent to $1650. We had plenty of interest at the $1700 amount, but it wasn’t worth weeding a few people out because they didn’t want to go that high. I decided to risk it with only a $50 decrease, since people would be able to see the decrease (and I try really hard to list it at the right price so I don’t have to do a price adjustment, but a December listing is hard to nail on the head). Again, we had a lot of interest, but few qualified.

APPLICANT #2

Two twenty-something men saw the property and asked to apply on January 11th. Neither of them had a job. Seriously. Neither had a single dime of true income, but wanted to commit to $1650/month in rent. Noteworthy was that they wanted us to consider that he had the potential to make $40k per year day trading stocks. We asked a few questions. They said they thought it better to find housing and then find a job. We suggested they try to find work and then live where they find a job (they had just moved ‘home’ from about an hour away).

APPLICANT #3

A woman showed interest who appeared to qualify on the surface. My broken record is to tell me things up front and be open with communication. I can’t help you if you don’t help me. Her information on paper looked fine. I’ve learned over the years to check the local jurisdiction court records myself, instead of relying on the background check. I’ve also tried to look things up before they submit their application; this way if there’s anything out there, they haven’t given us money for the application to not be used. During my search, I found several garnishment cases. Like a lot. An unreasonable amount of court records for a single person. We denied her interest form and did not pursue an application.

But on January 16, she asked for us to reconsider and explained the garnishment. There was one point deducted because the woman’s email asked if “he” as the landlord would reconsider her application (why can’t a friendly, reasonable woman be the landlord? 🙂 ). I didn’t appreciate that the garnishment wasn’t disclosed up front. However, she did explain what happened. It sounded like she was told that there was nothing due, made no payments, and then this debt showed up that she didn’t know she owed, but she’s been working a second job to pay it off. Honestly, the documentation didn’t clearly support the story, but my gut reaction was to believe her.

She also had three evictions recorded on top of this garnishment. The evictions appeared to be filed immediately upon unpaid rent by an apartment complex management company, and then the rent paid before the court date, thereby clearing the debt. I expect to have future issues with rent payments, but I suspect it won’t be anything more than I’m used to handling (e.g., where a tenant needs an extra week or so to make rent).

Our property manager appreciated the in-person interaction with this person, she was well written and well spoken when making her case to be accepted to apply, and overall it seemed worth giving her a chance. I’m also a sucker for giving borderline qualified individuals a chance. I think I’m 50/50 on it working out for me.

The lease was signed on January 18th. We agreed that she would pay the security deposit, first month’s rent, and last month’s rent. The last month’s rent was an additional way for us to hedge our bets with her unqualified application background. This is a “compensating factor.” Since she did not qualify according to our list of requirements, we’re taking an extra fee as insurance to our business interests in this property. We typically will work with someone on compensating factors so that they get a place to rent and we don’t lose out on too much in case our olive branch doesn’t work out.

She paid the security deposit with the lease agreement signature and paid first month’s rent on February 1st. We agreed to give her until February 17th for the last month’s rent. She was asking for a later move in date because she didn’t have all the money up front, but I didn’t want to cause extra stress on her moving plan/date over that.

FINAL THOUGHTS

I don’t even know how many people actually saw the property, since my property manager handled that. However, I know it was a good amount. I typically handle it where I set up an “open house” style visit window for people to come through (so many people claim they’ll show up to a scheduled appointment, and they don’t). I believe she tried to do this at the beginning, but it was taking so long to find a qualified applicant, that she ended up having to do one-on-one meetings.

She has them fill out an “initial interest” form after the showing. For the most part, I do that after the showings as well. However, it does help if you’re scheduling individual appointments to have people fill this out before hand. You want to know ahead of time if there’s even a chance of them qualifying. You don’t want to take time driving to/from an appointment and letting them looking around the house, only to find out they have a criminal background and/or less than favorable credit history.

THERE IS NO CHARGE FOR AN INTEREST FORM. If you are a tenant looking for a place to live, do not pay anyone anything until you’ve seen the property. There are a lot of scams out there where “landlords” are claiming they need an application before allowing you to see the property. They’re listing places “for rent,” that they have no vested interest in. People who recently sold their house, so pictures are available to use, are the ones finding out that people are driving by and looking around their house because someone claiming to be a landlord collected an “application fee,” with no intention of showing you the house or renting it to you.

So while this person didn’t expressly qualify based on our list of requirements to rent one of our properties, I felt like she deserved the chance. I feel bad when someone’s previous life choices immediately disqualify them, and I enjoy giving people a moment to voice their side of the story. Sometimes, their story is enough to solidify a denial from us. But sometimes, it appears worth giving them this opportunity to right their wrongs. I also feel good that I didn’t feel pressured into making a decision just to recoup vacant days on market, but that I made a logical decision. Now let’s see where we end up with this property in 18 months, and whether I still think it was a good decision!

2023 in Review: Rentals

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After several years of very minimal time having to be put into rentals once they were rented, 2023 made up for it. We had a lot of damage to properties, a lot of tenant payment issues, and just a general “can we not talk about rentals for ONE week please” moments. But even with that frustration, this is still the best.

All of these stories were elaborated on in posts throughout the year. This is meant as a summary of all our activities. You can search for the stories through keywords on the website, or just email me, and I’ll elaborate.

PROPERTY MANAGEMENT

In January, I took over management of our Kentucky properties. When we moved here in 2020, it was easier to maintain status quo. In Virginia, we had established contacts in the trades we’d need, and we felt comfortable there. In Kentucky, since we hadn’t lived there, nor did we have direct management of the properties (plus, the property manager did a lot of work in house), we just left it alone and kept paying the management fees. We bought a 4th property in Kentucky in 2022, and I kept it under my management. Through that process, I grew more comfortable with the area and any trades people I would need. Then over the course of 2022, the property management issues finally were painful enough that we cut ties.

We had cut ties with our first management company who was doing zero of the work they were supposed to do. In the process, we learned a few ways we wanted to see a future management company operate. We negotiated some of the fees that this company had. I didn’t foresee how frustrating that would be. For instance, they’d charge us 10% of the contracted price when hiring a company if they couldn’t do something in house. I said, “that’s what management is, and what I’m paying you for monthly.” They agreed to not add 10% to contractor payments. But I never saw the invoices, even when I asked for them, so it was hard for me to know whether I was being charged by them correctly. It turns out, I was always charged that extra 10%, and I needed to request the refund, every single time.

Problems really got bad when a single employee claimed we didn’t pay something we had and immediately charged us for it (over $1,000). We had to get the owner of the company involved. It was a mess. I finally said that’s enough, and even though I had a one month old baby, I took over management. Luckily, we had a clause in our contract that allowed us to cancel the contract (by either party) with 30 days notice.

I met with each of the 3 properties’ tenants they had under management, and I executed my own leases with them. First, their lease was a mess and disorganized (and had errors that were crossed out and initialed). Second, I like having my template in place so that I know what it says, and how it’s laid out. I recently learned that my VA property manager’s lease didn’t have some key information I would have preferred to see there, so I even started using my leases for the properties she manages.

INSURANCE CLAIMS

After having no insurance claims for all our homeownership years, we had three this year. One was on our personal house, and two were rental properties. I covered our own issues in a previous post; a wind storm caused a tree to fall on our deck, one (well, one and a half) on the fence, and a few limbs on the driveway.

We had a bad wind storm come through in March. The tree fell from the back of the property and hit the roof of a rental property. By some miracle, there was not a single puncture of a limb into the house. The roof sustained the fall and weight of the tree. We didn’t even need to fix the roof, just the fascia board and gutter. Insurance was super easy to work with. An adjuster came out, reviewed the damage, and issued a check.

We had another rental property with the water heater in the attic (instead of the crawl space or just anywhere better conditioned than the attic). A 2-week freeze came through in December 2022, and it froze the pipes. When it thawed, water just poured through the ceiling and into the house. There was 2 inches of water everywhere. The ceiling in the master bedroom, master bathroom, laundry room, and part of the kitchen caved in. The walls in the master bedroom and bathroom needed to be taken down to the studs and rebuilt. The bottom 2′ of all the walls in the house had to be torn out and put back together. All the flooring (that we had put in 5 months earlier) had to be replaced. And with all of that said, it actually wasn’t that bad of a process. Since insurance covered everything, it was just what it was. If I had to pay for each step, it would have been more painful (in time, contractor management, and cost). We were “out of commission” for about 3 months, but insurance even covered lost rent.

I sit here and type this while my back deck is still damaged. By the time we got through our claim with the insurance company, we were months out from the contractor getting to us. I’m hoping it’ll be replaced by May.

MAINTENANCE CALLS

I was surprised to realize that we only replaced two dishwashers and one refrigerator this year. Then I realized it’s probably because we’ve replaced almost all the other ones in the last few years – yikes.

We had a house cited by the City for unsightly conditions in the front yard. The tenant mowed and cleaned up some things right away, and we hired someone to come cut up a fallen tree limb that we didn’t know about.

We had another house cited by insurance for not having a handrail on the front stoop (even though we’ve owned this house for 6 years at that point, with the same insurance). We had our handyman install one for us. While he was there, he fixed the ceiling in a bedroom where there had been water damage.

We paid for a flat roof to be fixed, after several years of fighting it and it continuing to leak (it’s so hard to find a roofer to work on a flat roof). That was a debacle because he was delayed for weeks, didn’t communicate, and then took it upon himself to change the scope of work. I wasn’t happy with the new scope and forced him to uphold the contract and do it right.

One house was completely painted during the turnover. We also had the tile and cast iron tub in that house newly epoxied (and then learned that it didn’t even last a year and is flaking).

We also had a new one – wildlife traps. A tenant had a raccoon living in her attic. The management company “fixed” it, but didn’t actually. I hired a professional when I took over management. They didn’t catch anything over the course of a few days, so they were confident nothing was in the attic. They then repaired the hole.

And then the usual – several plumbing/HVAC issues that were resolved throughout the year. Those will always be there. We had a big one with a water main line leak due to trees infiltrating the pipes (and unfortunately, that wasn’t the first time we’ve done that type of work).

We spent $15k across the 13 properties (some had $0 spent) on maintenance calls.

INCREASE IN TAXES AND INSURANCE

In November, I had posted about how our taxes and insurance charges have increased over the previous year. Our escrow accounts increased by $312 in payments. Our taxes were over $3,400 more than the previous year’s payments, and our insurance policies increased by over $1,000. Both the tax assessments and the replacement value costs were increased by these entities to reflect the higher home prices over the last few years, and that caused a higher-than-expected increase in all these costs. Some tax jurisdictions took their time in catching up their assessments to the skyrocketing prices of 2020/2021, but some took advantage of it right away. We have two houses where the taxes over the last 4 years have hardly changed, but we have others where the costs increased significantly.

INCREASE IN RENTAL INCOME

Our total income in 2023 increased from 2022 by almost $12,000. Although, I’ll note that we had over $4,000 paid from a rent relief program in January 2023 that really counted some towards 2022 amounts owed.

Most of my rent increases went into effect in 2022, just based on how the years played out. I had two properties increase by $50/month each in May 2023.

When the tenant flooded the house, we were able to upgrade a few things in there. In that time, the market rent always increased. So we went from $1200/month to $1600/month in rent over that time. It ended up being a problem because the new tenant lost her job, but that becomes a problem in 2024, after we struggled with her paying rent from October 1 through February.

We also had tenant turnover in another property, where the rent went from $800/month to $925/month. The previous tenant had been there several years. We had decent numbers (e.g., covering of expenses) on the house, and she kept struggling to pay on time, so I didn’t have the heart to increase the rent on her. It was my way of giving her a break because she had done something really big/difficult in her life. When we put it on the market, it wasn’t an ideal time of year, so we went low at $925. This tenant asked to leave mid-lease. We ended up re-renting the house at $995.

We had another tenant buy a house and vacate their lease early, leaving us to re-rent it for January 1. We were able to get someone in by February. Luckily, their lease break fee for that time of year was a month’s worth of rent, so we technically weren’t out of any income for that month-long gap. We were able to re-rent the house at $1,650 (from 1,350); that’s not realized until 2024 income though. We also took a leap of faith on this new tenant, who didn’t completely meet our criteria, but she asked for a chance; hopefully when I’m making this post next year, I haven’t regretted the decision to rent to her.

SUMMARY

This year, we had one tenant egregiously not pay rent on time, another tenant continuously pay late by a few days (although for their track record, paying 33% of payments due late is actually low), and a few who needed a bit more time (and communicated in advance) so we didn’t charge them a late fee. We had two houses with insurance claims, two major expenses (main water line replacement and flat roof repairs), and about $9k worth of other maintenance expenses on the houses.

I took over management of 3 of the 4 properties in Kentucky that were under a property manager. We added a house to the Virginia property manager’s portfolio. We had to turn over two properties in the winter wasn’t ideal, but we made it work. Technically, it was 3 properties over the winter, but one gave notice in 2024. We increased the rent on two houses by $50/month each to cover large increases in taxes and insurance payments.

Overall, this was a time-consuming year. We spent more time managing these properties and dealing with issues than any previous year. I can’t say that there was a single month where we just collected rent without any calls or discussion with a property manager. Heck, I could handle the “is it ok if I pay rent on the 9th” type messages, but this year was more than that. Here’s to hoping that everything is moving smoothly in 2024.

2023 in Review: Personal Spending

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I’ve been working on the ‘year in review’ posts for 3 months. I really want to be consistent on tracking our spending and making sure I’m being intentional in our spending. Our main credit card had the nerve to tell me that it was exporting 461 line items for me to categorize and manipulate in Excel. We have 8 credit cards. So that wasn’t a fun realization.

Additionally, if I track it more than once every two years, I may be able to better categorize our spending. For example, a Walgreens purchase may be pictures that I printed, or it could be a prescription. My Amazon purchase may be clothes for the kids they needed, a gift for someone, something in the home improvement category, etc. The entertainment category can include exercise that we’ve paid for (e.g., 5K, ultimate frisbee, kids’ activities) or a trip we went on.

There’s also no direct way that I’m tracking where a credit card expense has been offset by someone paying us back. For instance, I put $980 on my credit card for a trip, but someone paid me $480 for it via Venmo. That offset is in my year’s total transactions, but not in a manner where I can capture it for this year-long-view of expenses. Additionally, we go out to eat at restaurants, but Mr. ODA gets paid for some of those as a secret shopper.

EXPENSES

This doesn’t identify the actual money spent in each category, but it shows how categories align with each other. To simplify this graph (and to allow all bars to even be seen), I combined several smaller categories into an overarching category. For example, the entertainment category includes anything from doing a brewery tour to traveling to another state. Home Improvement includes $10,000 worth of new carpeting, so it’s an outlier. This also doesn’t include expenses that were paid for out of our checking account(s); although nearly all of our expenses are paid via credit card to gain the rewards.

MEDICAL: We spent the first half of the year managing doctor appointments. They were mostly for the baby, and then halfway through the year, I started having serious vertigo issues. The baby was born a little early, had jaundice, diagnosed with reflux and put on medication, and then had trouble gaining weight. My 3rd baby then needed to have formula supplemented, after I nursed two kids and had extra milk to donate to NICU babies. That was an unexpected psychological and financial change. Once he started to become healthier, I hit a wall. After a week of wondering why I kept feeling lightheaded and dizzy, I woke up one morning not able to walk a straight line, and if I even attempted to, I’d throw up. I was diagnosed with an ear infection, which seemed to make sense, but the antibiotics didn’t stop the vertigo episodes. After several specialists, I was given the same thing that I always am: “your symptoms don’t fit neatly into any one category, and I don’t know what’s wrong with you.” Luckily, most of my symptoms have died down at this point. And thankfully, outside of random viruses and a bout of pink eye through 3/5 of us, the others were healthy.

SPORTS: We joined the Y and were really strong for the first 3 months. Once my mom died, I didn’t have it in me to go exercise, and then I got sick for most of the summer with that vertigo issue. Mr. ODA played softball, vintage baseball, and ultimate frisbee; I was able to play some ultimate frisbee and run a 5K. The kids did swim lessons at the Y (and was quite a terrible experience). Our oldest attempted soccer for the second time, and then cried through all practices and games. Our middle thrived in ‘acro’ for the second half of the year. I plan to finish our this semester with her in acro, but I think she’s going to love gymnastics after that.

TRAVEL: We traveled to NY for my mom’s funeral. I took 3 flights in a few days with the baby, all with points (which American Airlines was super easy to work with for last minute flights and using points). We went to the middle of nowhere Tennessee with Mr. ODA’s family, to NY two more times, a short family camping trip, to Indy for some kid-related fun, and a trip to Cincinnati to see Christmas lights and take the kids skiing for the first time. I bought myself new skis (I had been snowboarding for the last 13 years), which led to buying the kids ski equipment (although, it’s noteworthy that we bought them second hand and their skis and boots totaled $100 for two kids). That then led to buying mid-week season passes at our local ski resort. On top of our family trips, Mr. ODA took two work trips, a golf trip, and a mountain biking trip.

GAS: Typically, our gas usage can correlate to our travel because we usually drive somewhere instead of fly with 3 little kids and all the gear they come with. In June and November, we drove to NY, so those have bigger spikes in the graph below (June also included a trip about 4 hours away). In the beginning of the year, we were more interested in staying home because we had a new little baby, but we ventured out more towards the end of the summer.

RESTAURANTS: I was pleasantly surprised to see the amount spent each month in this category. I didn’t feel like we ate at restaurants all that much in the last year, but I was concerned with whether the numbers who support that. There’s an outlier in March because we spent a lot at one restaurant during the week of my mom’s funeral. On Long Island, food is a big deal; while every one else was paying for meals, I felt it was our turn. We don’t need to actually mention how much that meal was. May’s spike was simply the volume of times we went out to eat, and the majority of them being related to Mr. ODA’s secret shopper gig.

HOME: In July, we had a storm come through that wrecked our neighborhood. No one reported the damage to the National Weather Service, which makes me sad because I wanted to know if it was a tornado! We had several trees fall. One took out our deck, another took out our fence, and another cracked our driveway, but missed Mr. ODA’s car by centimeters. We fought insurance for 5 months, and now we’re in the queue to have it replaced some time late Spring.

CAR: We bought a car. That’s $6,000 worth of the “Home Bills” category. Since most of our bills actually can’t be paid by credit card, it’s surprising to have such a high category for that on the graph, but that’s why. They allowed us to do two $3,000 transactions on a credit card so we could get the points, and then we paid the balance by personal check.

GROCERIES: I’d like to watch this spending more in the future. A purchase at Walmart may include non-grocery items (e.g., shoes), but that is being lumped in with the groceries because I can’t possibly siphon out individual transaction expenses for an entire year in one sitting. So here’s a graph of our “grocery” spending per month, but noting such a caveat.

SUMMARY

While I know we’ve had some larger one-time expenses, I’m still not happy to see the amount spent in each category. I feel we’re diligent in our food spending, but I think we can reduce that amount.

I removed rental information, any rewards received, the $6,000 car purchase, and the $10,000 worth of carpet purchase to try to show that our spending is consistent month-to-month. Again, the baby kept us home in January and February, but we’re generally consistent in spending. I hope that I can review our expenses more often going forward so that I can more accurately categorize our spending.

2023 in Review: Net Worth

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A few years ago, I set out on this journey. I wanted to talk about money so that people would start talking about money. Talking about money is taboo. Someone will act funny talking about what they bought their house for, yet it’s public record that can be found in 2 seconds. People act like it’s “cool” to say they’re broke, as if it’s a badge of honor. I want people to talk about their spending and find ways to move forward so that money isn’t controlling their life.

In addition to that general goal, I’m also sharing lessons learned as we navigate owning rental properties. I hope that information helps both landlords (including potential ones) and tenants. I want tenants to understand the work that goes into owning the house and renting it to someone, and how the statement, “I can own a house for less than rent” doesn’t get you very far because you’re not the one maintaining the rental.

At the end of 2022, I was in the process of moving to a new home, renovating the new home, and was very pregnant with two toddlers nipping at my heels. My posts were just the monthly financial updates (and I didn’t even get to a December post because our baby was a sick little one). It was always in the back of my mind to make a post, but I didn’t have the bandwidth. It took until the last day of June for me to get my feet under me and start posting again. A few years ago, I tried to post twice per week. This year, my goal was once per week, with a schedule of Thursdays. I posted 31 times in 2023. I posted every week from June 30th until December 31st, except for Thanksgiving day.

MONEY

We used to make much bigger moves in our finances – buy a house, sell a house, pay off mortgages. This year, we did things differently. Mr. ODA discovered Treasury Direct. He invests in these short term savings bonds. They’re available from 4 weeks to 52 weeks, but we’ve only held them for 4 or 8 week periods. We had three different insurance claims over the last year or so, leaving high savings balances for a few months. Treasury Direct was a way to get our money to work for us, earning at a faster rate than a regular savings account.

Our net worth increased by almost $400k, which is impressive since there wasn’t a large swing with a new house purchase. In January, home values were still high. However, the higher interest rates over this year cooled the market some, leaving our values $64k lower than January.

The goal all along has been for both of us to quit working. I quit in 2019, but have been doing odd jobs here and there. Mr. ODA’s quit date continues to be pushed back for a variety of reasons, but it’s something we’ve been planning towards. One step towards that goal was that we opened a new checking account. Nearly all of his pay check goes into that account, and we don’t touch it. While I could manually track our money as if we don’t have his income, it was a big step to helping us visualize him not working and how our finances would play out. I’m happy to report that I haven’t felt the strain of not having his paycheck coming into the account.

We opened one new credit card this year. We open new credit cards when we have a large purchase coming up. It started with our IVF journey, and we’ve continued that concept. It’s a “free loan” for us. We could either pay the total sum immediately (typically over $10k) from savings, or we could get an interest free credit card, allow our money to earn interest in savings, and then pay the balance by the end of the interest-free introductory period. That’s the path we choose. We replaced the carpet in our new home – the living room and entire second floor except bathrooms – for over $10,000. That’s sitting on an interest-free credit card right now, and I make $500 payments each month, until I need to pay the full balance at the end of the introductory period.

INCOME

Since I quit working my full-time-Federal-career in 2019, I’ve done several odd jobs. I’ve wanted the small break from being in the house, the small opportunity to have conversations with other adults, and a small feeling of contributing to the household’s finances. 2023 was the first year that I didn’t contribute more significantly. I worked 1 day as a substitute teacher in a preschool; $47 was deposited into our checking account. Comical. Even though in the literal “job” sense, I didn’t contribute much, I did work.

Besides the fact that I had to care for a newborn baby and keep three kids and a dog alive for the whole year….. 😉

I manage our rental properties. This year required a lot of management. I’m managing the work that needs to be done at each property. I’m recording expenses per property. I’m tracking income each month to ensure that we’ve been paid rent from everyone (and one property made this a very frustratingly daunting task).

On top of that, I also have worked to declutter and organize our house. As our last baby grows, we don’t need all the baby accessories that take up space. By selling these, it’s providing the ability to buy things that the kids need now. I brought in nearly $1,000 through that process.

Mr. ODA signed up to be a secret shopper. He goes into restaurants, follows the instructions he’s given, and is essentially reimbursed for the meal. He “made” about $750 doing that. It’s important to note that we’re spending money to get that money though. If he spends $15 on a meal at an assigned restaurant, he may be getting only $15 back from the company. Sometimes they offer a premium if they can’t get people to select the “shop,” but it’s just a few dollars.

CREDIT CARD REWARDS & INTEREST EARNED

Every year I love to tout this category. This year, the interest earned section far outperformed any recent years. I typically make a post where I go into the details of how our credit cards are earned, so this is just an overview. For the sake of this conversation, this is based on rewards redeemed as cash. Citi makes it easy to see how much has been earned/redeemed, but Chase has a portal where things are different. Chase allows for your points to go further if you redeem through their travel portal. That makes it hard to manage “earned” versus “redeemed” for a total each year, because the amount earned is inevitably less than it’ll be redeemed for.

Between all our credit card redemptions for cash and interest earned on checking and savings account, we brought in $4,000.

GOALS

I want to track our expenses more often throughout the year. I want to be able to get a handle on trends we’re making with our expenses and whether there’s an opportunity to cut costs. When I do this review once per year, it’s not giving me a lot to work with.

Mr. ODA is discussing leaving his job this year. It’s something that’s been on the table for several years now, but there’s never been a real reason to leave his flexible job where he has a bunch of leave and benefits.

Mr. ODA is working towards a financial advisor certification though. It’s a big deal, and I’m excited about it. He loves to talk about money and help other people with their finances, so I’m hoping this is a springboard for him to doing more of what he enjoys.

I’d like to work more. The few temporary jobs I’ve had have been more time consuming over a short period of time, whereas this substitute teacher position right now is so sporadic that I’m only working 1 day per pay period. While I appreciate the availability I have, I’m looking for something with a little more consistency (granted, for the Fall semester, I would basically be available everyday of the week, so maybe that will help).

We’d like our deck and patio to be replaced, which will then lead to more home improvement expenses. We plan to build a privacy feature wall under the deck, so that we can add a hot tub on the patio. There’s also an old hookup for a tv, which means some sort of tv set up is planned for out there, which may be further expenses. We have two more bathrooms in this house that haven’t been touched yet, and I plan to do a few upgrades.

A lofty goal will be that we keep our tenants in place and don’t have any insurance claims this year. The last year has definitely been more taxing on us than previous years.

I think the big goal is that Mr. ODA wants to hit $4 million in net worth. Mr. ODA was 30 when we hit $1 million, 34 at $3 million, and hopefully 37 for $4 million (I don’t know when $2 million occurred because we weren’t updating regularly). Being that we’re at $3.98 million now, and that we grew by nearly $400k this year without any drastic moves (buying/selling a house), I think it can happen!

NET WORTH

This “net worth” graph isn’t the best since I didn’t update our net worth from February through June, but I kept those months in there so you can see the trajectory. I’m sad that life got in the way of my updating those data points. If I just post the first and last month, you can see there’s an increase. But that doesn’t show you that there are dips along the way, and everything is based on a single snapshot in time, even though balances are changing daily. I hope that I’m able to track each data point this year and in future years so I can see these trends.