Stories – Page 2 – One Dollar Allowance

Rental Cost Changes

February 6, 2025February 1, 2025mrsonedollarallowanceLeave a comment

In November 2023, I posted about rental changes that had occurred over the previous year. I wanted to update that analysis a few months ago, but I didn’t have all the KY data. I recently shared that my rent increases aren’t covering my cost increases, and my portfolio’s cash projections are lower now than when we first purchased all the houses. Here’s more of a breakdown of those changes per house.

ESCROW

Escrow is an account that your mortgage company holds money to pay your insurance and taxes on your behalf. I have little faith in their management, as I’ve had to follow up on balances in the account and payments made incorrectly.

I created this table to show the differences between escrow payments over the two years. I kept the houses that don’t have an escrow because it can be compared to a future table in this post. There is no House5 in this table because we sold it several years ago (houses didn’t get renumbered because House5 still exists in terms of tax documentation).

INSURANCE

We had 3 insurance claims last year, and a big one the year before. It turns out, our portfolio is looked at as a whole, so 4 claims in a 12 month period doesn’t look good, especially when one of those was 6 digits and one was 5 digits. None of it was egregious, and they were each necessary. We were just a victim of poor timing (and for some reason, the 12 years prior to that with 0 claims of any kind mean absolutely nothing). While our own history is to blame in some aspects, insurance costs as a whole are increasing quickly over the few years. Here’s Google’s AI response:

And with that between payments made in 2023 and payments made in 2024, insurance is costing us almost $2,000 more for the year. I also just made my first 2025 payment, which increased that one house by $343. The total increase from 2022 and 2024 is over $3,000.

From the initiation of insurance on each house (so, when we first bought the house, which were mostly between 2015/2016) to today, we’re paying over 43% more in total for insurance.

TAXES

The table below shows the change between 2023 and 2024 for our tax payments. Last year, many jurisdictions that hadn’t captured the assessment changes since the pandemic made up for it last year, when we saw about a $3,500 increase for the year. This year, our increase was over $2,000. Fifty-five hundred over two years is nearly $230 per month, spread over 13 rental properties is $17 each. So for those that I didn’t increase rent last year, they’re not capturing that cost increase for our portfolio.

RENT INCREASES

So far this year, I’ve missed two opportunities to increase rent. I had planned on increasing one house by $25 to keep up with inflation costs, but it didn’t register that their notice had to be given by 1/1 (every one else is by the end of the month). The second is above market at this time, which was by design since they’re not easy to work with (tried to phase them out, but they accepted the rent increase). We last raised their rent in September 2022, so it’s been two years. But I couldn’t bring myself to do it. Next year we’ll increase them by $50 per month.

My plan is to increase the rent for 5 of our other houses. Four of these houses are planned to be $50 per month of an increase, and one is planned to be $75. Our management is generally to increase rent by $50 every two years if you’re a long term renter. There have been a few that we didn’t increase for a while, and the carrying costs have drastically increased, so we’re behind now.

SUMMARY

For our cost increases between taxes and insurance, we have over $4,000 that was paid out last year (and it’s really more than that in cases where the house has escrow, so our escrow was increased more drastically that the specific amount of change in bills).

We had 3 houses turnover from long term tenants, so we were able to increase the rent to market value. I prioritize keeping long term tenants, so I don’t always do rent increases. That means that sometimes the rent is stuck below market value, but I’d rather keep a good tenant than push them out with large annual rent increases.

By bringing those houses up to market rent, I’ve made up a good amount of our deficit. Now remember, these rent increases are catching up on multiple years of drastic increases. So even though it seems we’ve brought in more, we’re both making up for previous years that didn’t have such large rent increases and paying for more large scale improvements to these houses, in addition to larger contractor costs.

Additional Annual Income

January 9, 2025December 31, 2024mrsonedollarallowanceLeave a comment

Every year, I like to look back at ways we earned income outside of a W-2 or our rental properties. These things include interest earned, dividends paid, and bonuses received on credit cards.

CREDIT CARDS

We opened a new credit card to give ourselves a 0% interest loan when we purchased the hot tub. I’m a broken record on this, but I’ll keep pointing out the availability of this option. Yes, we made this purchase because we could pay for the item outright, but it would be nice to pay for the hot tub over time while letting our money earn more money in other accounts. A sign-on bonus for that credit card and the immediate high purchase led us to $489 earned for doing nothing expect spending money and opening that new card.

Outside of that credit card reward, we deposited almost $1,200 worth of rewards from other cards into our checking accounts. Then we have some cards that earn points instead of cash. These are kept in that credit card’s “bank” of points because they can be worth more if they’re used within the rewards portal (e.g., booking a hotel). Essentially, 100 points equates to a dollar, but it’s not always that because of the bonuses available. With that said: we earned 18,683 points between 3 cards and $73 on another card.

INTEREST & INVESTMENTS

We have two accounts that pay out dividends in December of each year. This year that totaled over $4k. Between two savings accounts, we earned $2,500 of interest payments.

Mr. ODA invests in Treasury bonds. Instead of withdrawing the money after each 4-6 week period, he rolls it over and the interest earned gets deposited into our account. That’s paid us $2k this year.

ODD JOBS & RANDOM INCOME

On top of the things I can project like interest earned and rewards, I also do a few odd jobs throughout the year. Between a part time substitute teacher position, doing surveys, and selling kids clothing and toys to second hand shops, I brought in another $1600. I use this concept as an ‘offset’ in my mind to cover gift giving throughout the year. Mr. ODA brought in nearly $1,000 doing mystery shopper activities for restaurants. Betting on games and doing fantasy football brought in another $700.

SUMMARY

So with minimal effort, we brought in about an additional $14,000 in the past year! That more than pays for our hot tub purchase. It more than pays for our Christmas gifts, and even birthday gifts paid for through the year.

When I consign, it takes several hours to prepare. But I do those items that way because I can earn more money with less stress. For consignment, I’m preparing my items, logging them, printing labels, and then dropping off. Once I drop off, all I do is watch my sales. If I try to sell these items on mom-to-mom type forums, then I have to manage each individual item, follow up on people who need to pay/pick up, and then set out my items and wait for them to actually follow through. It’s just a lot more mental energy even if it may be less physical hours of work.

Outside of the consignment effort and my very part-time job, everything else was fairly passive. We earned a lot of money just by buying other things. We earned a lot of money by just having a savings account with a decent yield. We earned a lot by Mr. ODA investing in Treasury bonds, which takes a few clicks every few months.

The first step should be to ensure your money that’s not in use is in a saving account and earning interest. After that, a credit card with rewards earned should be used. Teach yourself discipline to count your credit card swipes the same as swiping that debit card in your checking account. You’d be amazed at how much those small bits add up.

Year in Review

January 2, 2025January 1, 2025mrsonedollarallowanceLeave a comment

This was a good year. We took a lot of trips, made some good memories, and purchased some fun things. While day to day life has been hard with 3 little kids and managing some of my own interests, it really was a fun and rewarding year when I look at the big picture.

PERSONAL: MY YEAR

I went through a lot of growth in this year. I started the year with a girls trip, which was really healing in my mom-of-3 world. After that trip, I hunkered down on my diet and exercise. Over 10 months, I lost 22 pounds. Each kid added about 10 pounds to my body’s desired size (where I just plateau unless I put a lot of effort in). It’s not something that I regularly discussed with people or mentioned, but it is something that I’m pretty proud of and took effort. I ran a 5k in August, where I beat my time from the year before, and it didn’t feel like it took any effort to beat that, which was nice.

But then my oldest started kindergarten, which was a surprisingly hard adjustment in my schedule. He was completely ready for school, and him going wasn’t the hard part. I welcome new phases of life and mostly don’t dwell on the losses that those mean. However, the schedule of the year took me two or three months to get used to. He gets on the bus at 7, #2 gets dropped off at 9, she gets picked up at 12, baby takes a nap from 1:30-3:15, oldest gets off the bus at 2:45. It was just a lot of broken up time in my day, and it took so much out of me each day. I finally feel like I’m used to it and can be productive in those short periods in between.

We were told that our preschool will be changing ownership next school year, which threw a wrench in my plans. Sure, things will work out. But it doesn’t change that I had a plan that didn’t need to be thought about. I had a financial expectation that didn’t need to be budgeted for or considered any further. It was another thing that took mental energy from me. I had originally thought I’d not send the 3rd kid to a 2s year like the other two kids. I spent some days mourning that alone time I was giving up by keeping him home. But I toured a preschool, and that’s my wish list for next year. If we don’t get into that preschool, I’ll likely just keep him home with me and try for the 3s year there. It’s just a socializing desire. I don’t work and need child care, so it’s a privilege to send him if it works out.

On top of all the parenting jobs I have, my job managing our rental properties is another job that takes a ton of time and mental energy, but no one really sees the fruit of that labor. May was the only month this past year where everyone paid rent on time. While I’m pretty lenient on that, that’s still time that I’m taking to manage and keep up with. I have one tenant who hasn’t put the water bill in her name yet. Supposedly it’s a city issue, and she always pays when I send her a picture of the bill, but it’s still a time sucker that I have. Then add in that we have several maintenance requests that come up, and a few big projects that were needed.

Related to the rentals, I made 44 posts on this blog. I set a goal to post once per week, preferably on Thursdays, for the year. I fell short by 8 weeks, and I wasn’t consistent with the Thursday post each week. I did well when I had inspiration, and I always did the monthly updates, but I didn’t meet my goal. I’ll keep the same goal of once per week, preferably on Thursdays, for this year. While my reach isn’t far, I do hope that someone will find this little corner and gain a new perspective on their finances. Plus, I appreciate being able to go back to our monthly updates to see how things have changed. It’s hard to see it when you’re looking month-to-month, but to see a drastic jump in numbers from a year ago is nice.

PERSONAL: THE FAMILY

We made it to 12 states this year, and that’s pretty cool. The kids got to see a lot, and they’re really interested in different states and their stats. I appreciate that curiosity and the ability to learn while traveling. Only one trip was on a plane, which was to Colorado. We did a 2-week long trip to New York and Michigan, with a few stops in there. We went to Chicago for a wedding and explored the area, took the kids to Gatlinburg for Fall Break, went to Ohio to watch the eclipse in totality, and tagged along on Mr. ODA’s work trip to South Carolina.

Mr. ODA sold his 15 year old vehicle, and we purchased a Tesla. I didn’t have a great experience with one in Colorado, but I think that was more related to the circumstances than actual electric vehicle ownership. I had a great experience with the test drive, and we picked one up by the end of that week. We took advantage of their 0% interest and 3 months of free charging. We also referred a friend of ours, so we received $1000 in Tesla credits that we’ll use for charging after the free period.

We bought a hot tub. That was a purchase that was about a year in the making, so it wasn’t made lightly. There hasn’t been two days in a row where someone didn’t get in it, until we just left for a week (hoping that the water is in good shape when I get back!). Our deck was crushed by a tree in July 2023, and it wasn’t rebuilt until May 2024. Then we had to take the time to make the decisions on what we wanted, get it ordered, and wait for delivery. It was delivered in November, and it’s been a great purchase thus far. We haven’t done such a splurge before, and it’s nice to give ourselves something that we can enjoy.

The kids are doing their activities. We’ve been in a nice lull, but I recently saw our March calendar from this past year and was reminded of all those hours! Our oldest is doing t-ball for a second year. Our second is regularly doing gymnastics, but we’re also letting her do t-ball this spring. Our oldest is also doing an after school activity for checkers, but supposedly it’s in a fun way, so that’ll be interesting to see pan out. He was accepted into an advanced program for his 99th percentile state testing scores, which was a really exciting moment as parents. Our second will finish out her preschool year and go to kindergarten next year. And we hope to have another fun season over the next two months with everyone on skis!

RENTAL PROPERTIES

Besides the management of late rent payments, I had to put a lot of hours into these houses this year. We took a trip to Richmond, VA to work on quite a few of these houses. On top of that, there were several other activities that were needed, management of tenant turnover, and management of rental income, but I’ll save that for a future post so this doesn’t grow too long.

FINANCES

Our net worth increased by $745,000. We started the year with a goal of hitting $4 million net worth, and that was achieved in a short time. Month to month feels like we’re barely moving the needle, but it’s amazing to see that number over the course of a year.

We paid off one 0% interest credit card from our carpet replacement in our personal home, and then we opened a new 0% interest credit card to pay for the hot tub. That new card gets 2% cash back, so it’s being used more than we usually use a 0% interest card. Typically, we just pay for the major purchase and then pay it down over the 0% interest period. This time around, it’s being used for every day purchases so the monthly payment I’m making is more than I’d usually see.

I have a separate post that goes into our extra income that we brought in over the last year, which is related to earned credit card rewards and interest on savings accounts and bonds. That’s even cooler to see the total ($14k!) because that was actual cash that went into our account and was used.

In the last year, I only officially worked 11 days, which is crazy to think about. But I’ve been doing random other jobs to help others out. I’m on our homeowners association board of directors, and I’ve been helping a new school get their financials up and running. I’m ready to take a step back from the finance work because my commitment to the HOA feels more pressing, but we’ll see how the next couple of months progress. It’s just really hard to get things done when I’m rarely without a toddler who wants my attention (unless I get up at 4:30 or 5 am).

SUMMARY

This year has felt like it took a lot more hours from me for work and management of things. But I also feel like I have more energy now that I’m two years from having our last baby. We have lots of other things planned for this coming year, and I hope to take some even bigger trips to see more of the country now that we have a bit less baggage coming out of the baby years. We have no plans to make any big purchases at this time (although there are new windows needed on our house in the next couple of years), and I really hope this year is lots of fun with the family more than anything else.

EV vs Gas

November 21, 2024November 14, 2024mrsonedollarallowance1 Comment

I’m late to this comparison, but I didn’t have a reason to pay attention to electric vehicles (EVs) until our trip to Denver in July. As seems to be the case regularly there, the rental car company didn’t have any available inventory of gas vehicles, even though that’s what we booked. I’m actually starting to wonder if they have any gas vehicles because it’s suspicious that they thrust these EVs on customers so consistently. Here are some quick thoughts on an EV after experiencing it, but also the gas usage versus electricity usage math comparison we did while there.

EV EXPERIENCE: THE NEGATIVE

It started out stressful. Had we been given a tutorial or any guidance at all, it may have started out easier. However, we started the trip by having to wait in a 90 minute line to even get the car. Then we were greeted by a disgruntled employee who had no intention of helping us. Then when Mr. ODA tried to talk to a manager, she just kept saying “we don’t have any gas vehicles. I can’t do anything for you.” Well ma’am, you could maybe take 2.5 minutes and quell all our fears of the unknown, in a foreign place, while traveling with 3 kids that are 5 and younger.

The biggest issue was our timing. We arrived later in the day, needed to get the kids fed and their bedrooms set up, while also allocating enough time for them to just play and have fun since we’ve been traveling all day. The next morning, we planned to get out of the house and head to the mountains. That’s the problem. We don’t know our range. We don’t know where to fill up or how to fill up. We do know that charging it is not a 4-5 minute process like filling up a tank of gas. We do know that there aren’t super chargers everywhere. There was a lot of “I don’t know what I don’t know.”

Luckily, a friend of ours recently had a similar experience, and she shared some tidbits with us. For instance, there are multiple charger apps you need to download. Then once you download all of them and use the map to figure out where in town the closest one is to what you’re doing, you have to figure out what the data means. “6.6,” $ vs. $$$, “fast charging.” There were different filter options in different apps, but no legend on what these terms mean.

The first charge came while Mr. ODA dropped us off at McDonald’s, drove down the block to a “fast charger,” ran down to eat with us, then ran back to get the car and pick us up. This wasn’t ideal. This was really affecting our trip with this dark cloud hanging over us trying to figure out how to efficiently charge this thing. Plugging a car in while trying to entertain 3 kids for 45 minutes wasn’t how I expected our trip to go.

EV EXPERIENCE: FIGURING IT OUT

ChargePoint ended up being the easiest to use. They have a lot of stations around Denver, especially free ones. We looked for places to eat a meal where we could utilize a free charger and take advantage of the “down” time. It involved walking a block or two each time, but it gave us the peace of mind to get through the next phase.

One morning, we went to Red Rocks. There were a few free charging stations in the parking lot. We plugged in, spent two hours exploring the place, and received about 80 miles on our range, which was plenty for the next day of our trip. That night, we went to a concert at Ball Arena. Instead of parking where most of the other concert-goers parked, we went one block further and parked a well-lit, clean garage. We had to pay to park in the garage, but the charging station was free.

We also learned how to utilize the charging available within the car itself. EVs don’t “coast.” They have regenerative braking. You basically drive the car only using the accelerator, and don’t use the brake. You slightly hold down the accelerator to keep the car moving as you approached a stop, and it charges as that happens. There were different levels you could put the car at to take advantage of this charging process.

GAS VS ELECTRIC COSTS

We spent time figuring out the apps and the types of chargers. We avoided the chargers that had flat fees on top of the kwh charge cost. Almost all of the chargers had a “parking fee,” which meant that if you remained plugged in after the car was fully charged, they’d charge you by the minute for taking up that space. It makes a lot of sense since charging spots are limited, and you want to disincentivize people just walking away from their car for hours.

After we figured out the process of how to use the vehicle and the charging locations, we were able to do some math on the cost per mile. We specifically charged the vehicle either at free locations or in off-peak charging time (there is variable pricing on some chargers). We calculated that the cost per mile came about a few cents higher than if we were in a gas vehicle. However, that could be higher if you were charging during peak time or you needed to use the fast charging locations more often based on your vehicle distance/use. Gas prices in the Denver area were in the high $3.20s to low $3.30s, and we calculated a charge equivalent of $3.34.

There is the opportunity cost of your time. It only takes a few minutes to fill your car with gas. You’re not walking away from an EV charging location in less than 20, and it’ll likely be longer. If you have the ability to charge at your house, while the car is in the driveway, then it changes the equation. Since we were at a rental, that wasn’t an option available to us.

EV EXPERIENCE: END RESULT THOUGHTS

After the initial anger and fear of the unknown subsided, I’m not against EVs. If you can charge them at your own home, they’re great. They’ll get you around town just fine, and you’ll have the convenience of it charging while you’re home and comfortable. Your home charger won’t be a fast charger, but having it plugged in overnight for that 10-14 hour charge wouldn’t be an inconvenience.

I wouldn’t take them on long road trips. There would need to be careful planning of your charge range compared to where charging stations are. Unless it’s a truly a fast charger (15-20 minutes, and more expensive), you’ll need to plan to be somewhere for hours to get a charge. Then there’s the fear of availability when you arrive there, and whether you’ll get a spot because it’s not likely you can just travel down the road a few miles to find another station.

I wrote the initial draft of this in August. So it’s interesting to say – we bought an EV.

Fall Break: Smoky Mountains and Gatlinburg

October 4, 2024November 20, 2024mrsonedollarallowanceLeave a comment

We’re now on school schedules with our oldest starting kindergarten. We wouldn’t have typically taken an October trip without such prompting, but we decided to take advantage of the “down time.” We also became a Central KY cliche, and went down to Gatlinburg.

We aren’t the type who save up for years to go to Disney. We prefer exploring different trails and different towns around the country. We’ve dabbled a bit more in theme park type adventures as the kids are getting older. I had planned to visit Ober. Their ticket prices start at 5 year olds, so we’d only have to pay for 3 out of 5 us. Of all the bigger attraction places there, Ober seemed to give you the most for your money, and I thought it would be entertaining to see the kids attempt ice skating again.

But then with all the hikes we wanted to do, and the National Park Service opening up a main road in Great Smoky Mountains National Park, we decided to skip that. I really wanted time to explore the town itself, and it didn’t seem we’d have time to do Ober and the town. The kids enjoyed walking through the town because there were a ton of pumpkin-head-people, so it became a game to find the next one and get your picture taken.

I was surprised to see that the town’s main road was mostly restaurants and hotels. I thought we’d run into more activities along the way. By the time we found a mini golf place, I didn’t trust that the kids would have held their emotions together to make it enjoyable. We got some ice cream for a job well done and went back into the park for a short hike to a waterfall.

TRIP COST: $656

Our lodging was the east of Gatlinburg in a cabin community. It was $541 for two nights. I’m still at a phase where the kids need a decent bed time, and the baby is still in the high maintenance (needs to be pitch black) phase of sleep. When we book a place, I’m looking for a room that the kids can go to sleep in while Mr. ODA and I aren’t ready for bed, and then a place (closet or extra bathroom, ideally) where I can put the baby. This was a two bedroom, two bathroom cabin.

I brought all our meals with us. So we paid $10 to be in the park for 3 days, $45 for food (treats and travel day food stops), and filled up our gas tank twice while traveling ($60).

GREAT SMOKY MOUNTAINS NATIONAL PARK

In case anyone’s interested in a similar trip, here’s what we did.

We traveled from central KY, so our first stop before we got to Gatlinburg was the Foothills Parkway. Mr. ODA actually worked on the Foothills Parkway when we were first dating (14 years ago – yikes!). We ended up going the wrong direction to see the bridges he worked on, but we did find a nice little hike. We went up to Look Rock. It was a quiet trail that wasn’t too long, but it was a nice stretch of our legs. The fog was thick, so we couldn’t see much in the observation platform.

Then we drove to Cade’s Cove Loop in the park. I have zero pictures of this because it was not interesting whatsoever. It was prairies and zero animals except two turkeys. People praise it on all the travel blogs, and we couldn’t figure out the hype. We were hopeful when we reached a choke point that the backup of cars was because we’d see something up ahead, but nothing came to fruition. It was just a waste of over an hour to go 11 miles.

Next we traveled to the Sinks. It was a cool waterfall that you could park right next to, so no hiking necessary.

To finish up the day, we hiked the Laurel Falls Trail. It was really pretty, and I thought it was cool that you could walk right up to the waterfall based on how the water flowed. The trail was 1.2 miles one way, with an elevation gain of 420+ feet. The trail was well traveled. It claimed to be “asphalt.” At some point, it was probably all asphalt, but there have been a lot of washouts. Either all of the trail is missing in some places, or just half the trail in other places. I wouldn’t go into this trail thinking it’ll be easier because it’s paved. Look up a video of what the falls looked like during Hurricane Helene because it’s crazy to see just how much water was flowing only a few days prior to us seeing it. It took us about 90 minutes to do it with 2 little kids walking.

On day 2, we went to Cataract Falls because it was a short walk off the parking lot and we had a little extra time to kill. The kids liked this one too because they could play in the water and rocks at the base of the falls.

The hurricane had closed one of the main roads in the park, but it opened up the second day we were there. It was a nice surprise, so we were able to do Clingman’s Dome. This was a wide, paved trail in great condition. The leaves were starting to change colors, and it was pretty on the bottom half. Near the top of the hike, we were hardly able to see anything because the fog was rolling in and really thick. It was cool to see the clouds float right by you though. It’s 1 mile, round trip. It being relatively short and fully paved is misleading though because it’s basically a hill straight up for a half mile (332 foot elevation gain; their website says it’s about a 13% grade). There are multiple benches along the way for plenty of rests. We made it to the top in about 20 minutes. We then spent about 20 minutes at the top of the tower before heading down. It took us about 20 minutes to get down too. We stopped at a pull out with a NC/TN line marker and explored there for a little while too.

On Day 3, we did Grotto Falls. You take a one lane road to the parking lot, where there are about 10 parking spaces, and they were all full. Since it’s a one lane loop road, there was no waiting for something to open up. We kept driving and parked about 0.4 miles down the road in a pull out. The trail itself was 1.4 miles to the waterfall, so the kids hiked with us for a total of about 3.6 miles. They did awesome and didn’t complain once about the distance. We took our time on the trail and stopped for a while at the top to eat lunch and explore. From the time we left our car to getting back to it was about two hours, so not bad at all.

During our drive back, we drove the other end of the Foothills Parkway and saw all the bridges that Mr. ODA was part of building. No hiking around there, and the pullouts were nice, but didn’t take much time to explore the view.

Summer Trips

August 29, 2024mrsonedollarallowanceLeave a comment

In 2021, we looked to buy a lake house. We tried so hard to find something, and we almost settled on something that didn’t fully make us happy. It was March or April of that year, and we finally stepped back and said, “instead of buying a house here that we feel pressured to come to every weekend, what if we just went on vacation more.” Up until that point, we traveled a good bit, but it was typically with a purpose instead of just traveling for the sake of seeing somewhere new (e.g., one of us tagging along on work travel). We calculated that our mortgage payment on that second house would be $1200 per month. That was our budget for travel each month. I wrote a whole post about it.

Then I got pregnant and we bought a new primary residence in the summer of 2022. Almost all our ‘travel’ that summer was just us going to the new house to work on it before we moved in. Then the summer of 2023 was spent recovering from the newborn phase of that third kid that was unbelievably painful. I was just happy to be sleeping and in a routine again, and I wasn’t willing to leave home much and risk lack of sleep.

We made up for it this summer.

JUNE: MD, NY, OH, MI $1,251

Our first trip of the summer was two weeks long. I was so nervous to manage 3 kids (one of which is still a high maintenance sleeper) and a dog for that long, but I had hoped it would be fine if I prepared correctly. We hit four states.

Our son was on the Oriole’s for his baseball team this spring, so that became his favorite MLB team. It just so happened that they were playing at home on our drive from KY to NY (meaning, if we really wanted to, Baltimore could be on the way). As an added bonus, they were playing the Braves, which is Mr. ODA’s favorite team. So we made that work. We booked a hotel in Baltimore that was pet friendly and walking distance to the stadium, and then we bought the tickets. Actually, we bought two tickets for 5 of us to go. The Oriole’s stadium has a program where if you buy a ticket in the upper section, you can have up to two free tickets for kids up to 9 years old. It’s an incredible program. The detour cost us more in tolls than we’d typically spend on our route. It was worth it. Our son watched the whole game and was so happy with it.

Then we traveled to NY. There’s no lodging cost there because we stay at my dad’s house. We went to the local team’s baseball game one night, hung out at the beach one night, had two cookouts, and went to my cousin’s bridal shower. The bridal shower was the reason for the trip. The Michigan component then was booked as the other side of the family’s annual trip. It didn’t make sense for us to drive home from NY and then back up to MI, so we just buckled up for the two weeks gone. We didn’t eat at any restaurants while we were in NY, so our costs were a couple of grocery trips and our family cookouts.

The trip from NY to MI was 13.5 hours without any stops, so we didn’t want to push the kids that far. We typically do the KY to NY trip in one day. That takes 13-14 hours depending on traffic and our stops. It would take about 11.5-12 hours without kids. We usually do two quick stops and one longer meal out of the car when we drive straight through. But with it starting at 13+ hours, I didn’t want to risk it. Plus, I wanted to arrive in Michigan around check in time, which would have us leaving NY at about 2 am. I covet my kids’ sleep too much to risk that one!

Our stop on the way was Cuyahoga Falls, OH. Again, we needed to find something that was pet friendly without charging us $175 to have the dog there for 14 hours. We found a hotel that didn’t charge for a pet, and it appears that’s because they don’t really care about cleanliness. The room was disgusting. The mirrors looked like they’d never been cleaned, the counters had someone’s old rice on them, the door wasn’t fully attached to its hinges, and the sinks didn’t drain. At least the bedding was clean (I inspected closely). I was grateful to only be there for 14 hours.

We went hiking that morning and then headed to MI, dropping the dog off at a sitter on the way there. We use Rover to find a sitter, which is where the sitter takes the dog into their house. I appreciate this type of care/attention than a kennel; we’ve used this service for 11 years now.

Our MI trip was Mr. ODA’s family trip for the year. His parents treat us to the house, and the kids’ families cover the food. Usually our trip doesn’t involve many extra expenses, but this year we sought out a place with activities, so there was a lot of money spent. We went on a dune buggy ride, walked a windmill island, went to a little ‘dutch village’ theme park, picked cherries, and spent a lot of time at the beach. We usually eat all our meals at the AirBnB, but we did have two meals out and lots of ice cream this time around. Honestly, it was the best trip we’ve taken in a while. I appreciated the ‘vacation’ aspect of it, where we did things around the area and had fun with activities.

JULY: VA $570

This was actually a work trip. Last summer, we didn’t make it to Richmond to do property walk throughs because our baby was such a handful. We’ve had a lot of work done over the last year, and there were a few things noted by tenants that are just easier for us to handle in a few minutes than pay someone hundreds to handle.

We cleaned the siding on multiple houses, checked some gutters, replaced a few things, and painted a front door and front porch. It was a 3 night trip, and we put about 20 hours worth of work into it. It was hard to juggle the work that needed to be done, having 3 kids in tow, and a heat index of over 110 each day, but we got what we could get done. I wrote a post about the work we did earlier this summer. Our expenses were the hotel ($401), gas, and food. We actually had a surprisingly low food expense on this trip considering we stayed in a hotel (lack of kitchen and time).

While there, we were able to see a few of our old friends. However, we planned this trip fairly last minute and had to fit it around other activities already scheduled at home, so we didn’t get as much ‘play’ time as we’d prefer.

JULY: CO $3,350

Mr. ODA’s brother wanted to celebrate his 40th birthday by hiking 14-ers in Colorado. He invited a few people to join, and Mr. ODA spent the first half of this year getting in shape for that activity. Honestly, in January, this idea seemed so far away, so it was exciting when the moment arrived. Mr. ODA wanted to go out earlier than the trip’s original itinerary to acclimate to the change in elevation. That’s where I came in.

We booked a flight for all 5 of us to fly out there on the 18th (well, the baby was free). We spent the weekend around the Denver area, and then I flew home with the kids on the 22nd, while he stayed to hang out with his brother’s crew.

We had to buy flights, rent a car, book lodging, and buy groceries/meals. We did more-than-average entertainment for this trip with a concert and baseball game, so that increased our expenses.

On our first full day, we visited Mount Blue Sky, which is a drive up to the top of a 14er (a summit above 14,000 feet). It was a really unique and cool experience. On Saturday, we hiked at Red Rocks and went to a concert at Ball Arena. On Sunday, we went to a Rockies game and walked around Denver. It was a great trip, and the kids were troopers through all the fun.

AUGUST: NY $430

My cousin got married in NY. Typically, I’d take this opportunity to get my whole family to NY to see my side of the family. However, our oldest started school already, and I didn’t want him to miss any of that, especially on day 3. The whole family flying to NY is expensive, plus we’d have to figure out the babysitting need for while we’re at the wedding. While I have a few people I could call on, it’s more difficult when the intent is for the closest adults I know to be at the wedding.

We booked direct flights for Mr. ODA and me to fly out Friday afternoon and come back Sunday afternoon. We had the kids stay with grandparents for the two nights, and this way the grandparents didn’t have to manage any kid activities except getting our oldest off the bus. Our two flights cost $376.40, and it included a checked bag if we wanted it because of our American Airlines credit card rewards. Parking at the airport is $11 per day, so that was $33. Our original plan was to take the train from JFK to where my dad’s house is, but we pivoted because he offered to pick us up and take us out to dinner. Our meals were covered except for on the way out and the way back, and one coffee I purchased while there. It was a nice little trip where we had fun and could just focus on that versus managing the kids’ schedule, so I appreciated that.

Mr. ODA had two work trips this summer on top of all that we did as a family. Those net us income instead of expenses, so I won’t go into them. I mention it just to point out how busy and entertained we were. I’d say we’re looking forward to winding down, but now baseball and gymnastics start up on top of managing kids at two different schools. But I’m loving it and looking forward to what this next season brings.

Rental Property Work

July 18, 2024July 9, 2024mrsonedollarallowance2 Comments

We have several rental properties in Richmond, VA. However, we moved away from the area in September 2020, leaving the properties under a property manager’s oversight. My goal was to make it back to the houses annually to do walk throughs of properties. It’s surprising how many people don’t tell landlords about issues timely. Since most of our properties keep long term tenants in them, we don’t get eyes on the condition of the house regularly like we would if we were turning over the house between tenants.

Generally, I check to make sure their HVAC filters are changed out, that they don’t have any piles of garbage or old food (or the gigantic pile of laundry that was blocking one tenant’s second form of egress), that the yard is maintained, and simple things like that. I also take this as an opportunity to fix or improve things that I know need attention, but weren’t necessarily worth the up-charges of hiring the action out to a contractor.

We did a walk through of the Richmond houses in July 2022. At that time, nearly all our properties had long term tenants in them. A few small items came out of those walk throughs (e.g., change out filter, re-caulk the tub). While we hoped to get there last summer, it just wasn’t in the cards with our 3rd baby.

Based on the rest of our summer schedule (and soon to be constriction of school schedules), we were only able to get there for 2 full days. None of the work that I wanted to get done is a high priority; it’s mostly work that would improve the aesthetic of the house or help the longevity of an investment (like a new porch).

PROPERTY 7

This house recently turned over. The house was flipped when we purchased it 7 years ago, and we knew that everything that was done before we owned it would just be a bandaid. We had a couple of long term tenants in the house, and we even had quick turnovers because people needed a place to live, so we didn’t have time to do major renovations. It was time. We put a lot of effort into fixing up the place (e.g., all new paint, new flooring and fixing of subflooring). The front porch and front door were red, and it just made the house look dingy. I wanted to make it look better. See: not a priority, but something worth looking into eventually.

I arrived on the evening of the 4th to pressure wash the porch so it would dry by morning when I would paint it. I did not account for how bad the condition of the paint was. It appears someone just painted over peeling paint years ago. There were several layers of gray, purple, and red colored paint. The latest paint job had several places where that was the only layer of paint on the concrete. Very odd, but that meant that I had to scrape as much flaking paint away as I could. I spent over 10 hours on this. Not exactly what I had in mind. I scraped and scraped and scraped. I then put two coats on. I’m nervous how long it will hold up though. I did this during an extreme heat advisory so it likely didn’t cure correctly by drying in mere minutes.

I also did 3 coats of black over the red door. I don’t think it’s going to hold up against her animals, but at least it looks better from the street.

This house still needs the back deck pressure washed and painted. However, this is something I’ll do either with tenant turnover or if we sell it. It’s really worn down and places are missing paint because we removed the covered portion of it. The porch railing had also been painted at some point and is peeling, but I hadn’t budgeted time for that. I did a few touch up areas with black paint to cover where previous owners had painted it red.

PROPERTY 3

The tenant here reached out to me a couple of months ago to tell me that a salesman broke their doorbell. Fascinating. They claimed “well, it’s old.” My thought was “well, it’s meant to be outside, and the house next door was built the same time without any doorbell breakage now.” But instead of sending someone out to fix that, I put it on our to do list. It took Mr. ODA about 2 minutes worth of work, and the new doorbell cost $10.

While there, we cleaned out the gutters. That’s been a known issue throughout the life of this house because there are a lot of trees around the perimeter. We also cleaned the mildew growing on the house.

PROPERTY 2

This house is a mirror image of Property 3, but the trees in the backyard are much closer to the house. The back of this house had significant mold growth on the siding. We got all the siding cleaned up there too. Mr. ODA got on the roof to clean out the gutters. While up there, he also cut some trees off the roof.

The first picture is a ‘during’ picture because I didn’t get a ‘before.’ The part at the top that is dark is actually better than what was there, and it was over the entire back of the house. We soft washed with a mold and mildew cleaner and got it looking almost brand new.

PROPERTY 9

During the last turnover period of this house, we had the front porch jacked up (it was sinking), had the front stairs redone (they were sinking too), and had the back decking replaced. I had intended to stain the new wood for this house, but it being well over 90 degrees precluded that action. Instead, Mr. ODA got the siding on this house all cleaned up, and he cut/pulled several large weeds that were growing.

DRIVE BYS

We did drive by the other Richmond properties that we have. I didn’t have the time (or energy) to schedule walk throughs of everything. Once you do a walkthrough, you inevitably end up with a list of things to do to the house. I already had a lengthy list of things to do, so I didn’t want to manage that right now. Just by driving by, I did add to my to do list that one house needs its gutter replaced (how does a gutter, with no trees around, twist away from the house), and that their back deck really needs to be replaced (just the deck boards and railing; the substructure is fine).

I’ll need to make it back there to walk through the properties. If nothing else, it gets the tenants to clean things up once a year. One of our property managers offered a filter check quarterly, which was really used as a way to get into a house and make sure things were being kept clean and orderly. While a filter should be changed that often, I think that’s too much time being in someone’s place they call home. However, once per year is worth it to keep things moving in the right direction and to make sure there aren’t any maintenance issues that hadn’t been reported.

Risk Taking

June 29, 2024mrsonedollarallowanceLeave a comment

We’ve hit some pretty big milestones financially. Mr. ODA casually mentioned a certain number by a certain age, but our goals were more associated with quitting our full time jobs. I quit my job in May 2019. We’re in a situation for a couple of years where we’ve been ready for Mr. ODA to quit, but we keep pushing the date back because his job isn’t preventing us from doing the things we want to do.

How did we get to the point where we replaced my income and I could quit working without scaling back anything financially? We took risks. Some of them were big ones. Some of them weren’t so big, but they felt big at the time. Most risks worked in our favor, but some did not.

RETIREMENT ACCOUNT LOAN

Mr. ODA and I both worked for the Federal government. Their version of a ‘401k’ is the Thrift Savings Plan (TSP). There were two loan options that were available: a primary residence loan or a general purpose loan. You then repay the loan back to your account with interest (the interest is paid into your account as well). When we took our loans, the rate was just over 2%. According to tsp.gov, the rate is currently 4.75%. There’s a fee of $50 to take a primary residence loan and a fee of $100 to take a general purpose loan.

While you’re missing out on the compound interest of your account when you take the loan, the ability to buy our own house, create that equity, and be at the beginning of our careers made the decision easy for us. We made extra payments during the repayment period, and we were able to adjust the regular payments up and down based on our financial needs each month. We have no regrets in our decision.

ADJUSTABLE RATE MORTGAGE

An adjustable rate mortgage (ARM) sounds scary. A variable rate. Most people are used to locking in a 30-year mortgage. I’d venture to say that most people also think they know what an ARM entails, so they don’t even consider it. We considered it. We looked into it in great detail. We couldn’t see why more people didn’t use it. We actually were very hesitant over this decision the first time because an ARM’s reputation is very negative. However, we took our time to lay out the numbers and see what would work best for us.

The first time we used an ARM, we knew we had no intention of being in the DC area for more than 5 years. By using an ARM, we saved thousands worth of interest in our mortgage payments over the three years we owned it.

There are several “fail safe” parameters in an ARM. For one, you do lock in a rate for some period of time. We considered 5 year, 7 year, and 15 year options. Then after that period of time, your rate can only adjust within the contractual terms. For example, we have one rate that can adjust 2% in either direction at the 5 year mark, and then 1% for each of the following 4 years after that, with a cap of paying a maximum interest rate of 7% (this is an old loan, clearly). The rate adjustments aren’t a given, and they’re adjusted based on the prime rate at that time, not based on the whim of the bank or the maximum it could increase.

We also ran the numbers based on the interest rates. An ARM’s incentive was that the interest rate is lower than the 30-year conventional loan rate. I don’t have the details since this post is more of an overview, but the ARM saved us money we paid towards interest. Interest is a higher percentage of those earlier payments in an amortization schedule. We either sold the house or paid the loan off early, so the ARM adjustment never came into play, and we saved all that interest cost.

BUSINESS/COMMERCIAL LOAN

A series of events had us asking a local credit union about loan options. They offered us a commercial loan. This one has a big catch though: there’s a balloon payment. Our loan is amortized over 30 years, which is how our payments are calculated. However, the balance of the loan is due at the 5 year mark. That balance is going to be about $175k. We have no plans to pay that off by that time (we aren’t even making extra payments towards it). We will refinance it. The pro here was that our interest rate for a loan closed on in 2022 was 3.625% (when mortgage rates were in the 5% range). Hopefully by 2027, interest rates are lower than they are today; this is a gamble at the moment.

PARTNER

There’s a cap in the “Fannie/Freddie” world of the number of mortgages a person can hold. That cap is 10. There was a point where we had completely leveraged ourselves and ran out of room. We had a Realtor friend interested in more rental properties, and he agreed to front our down payments, which we’d pay back with interest, and have a 50% share in the houses.

We signed an agreement with him that outlined our payments to him for the down payment he covered (which we paid off in about 3 months), and it established our 50% shares in the two houses purchased via this method. We purchased the houses in April 2018 and February 2019, and put them in a limited liability corporation (LLC). Each month, I collect rent from the houses and pay out our partner’s share. These houses don’t ask for much (one has been rented since before we owned the house and one has a tenant that has been there a few years), but if they need something, I handle coordinating the maintenance request. We should have set up a schedule where I’m paid for my time since Mr. ODA and our partner really don’t do anything for these houses, but luckily the requests are few and far between. We split all costs 50/50.

RENTERS WITH COMPENSATING FACTORS

I have several examples of entering into lease agreements with tenants that don’t have a perfect record. In these instances, we typically request some sort of compensating factor (e.g., a cosigner, an additional security deposit). We give everyone the chance to tell us about their financial and rental history before we run a background check on them (telling us doesn’t cost anything, but a background check does).

We had a prospective tenant not disclose a bankruptcy on her record. I could have immediately disqualified her and her husband, but I gave them a chance. They lived in that house for a year. They only moved because his job after grad school took them out of the area, but they set us up with a new tenant at their departure, and she stayed there for several years. Then they moved back to the area, and they requested a house of ours. We had one available, so we happily had them move into it. There’s one success story from giving someone a second chance.

I also have a couple that doesn’t have a happy ending. We had purchased a house without vetting the area. I had fully vetted a house two blocks away, but I learned my lesson that the crime of an area doesn’t need more than one block to change its ways. This house was in a bad area. The house itself was adorable. It attracted wonderful people to come see it, but they’d check the crime history of the area and decline applying (understandably). Someone came forward with a 448 credit score. That’s pretty bad. She wrote a really nice letter though. She disclosed everything up front and said she just wanted a roof over her and her son’s heads. I believed it. We then spent months and months struggling to get her to pay her rent, even offering her a payment plan several times and changing her lease structure to allow her to pay twice per month (hopefully eliminating the constant late fees she was accruing). We eventually gave her 30 days notice to vacate the premises due to lack of payment. She didn’t even make it a year. Instead of listing the property for rent, we ended up selling it. That was a whole other debacle where we entered into a contract to close by September of that year, but we didn’t close until the following January due to the lack of financial qualifications on the buyer’s end.

PAID OFF LOANS/MORTGAGES

This doesn’t appear to be a big risk. What could go wrong with paying off your mortgages? Well, if we didn’t have a cash reserve, and there was an emergency, then we paid off these loans with the cash on hand, leaving nothing to cover that emergency. However, those dooms-day concerns rarely come to life, and we had continued cash flow that replenished our accounts.

The positive here is that we freed up cash flow. Instead of having mortgage payments to make every month, we now have the cash to go into savings or towards any higher-than-expected bills. Besides the house we sold, we’ve also paid off 6 mortgages. That means that we’ve paid less interest to the banks, and that’s more money in our pockets.

We haven’t paid off any other loans because they’re all below 5% interest (they’re actually all below 4% except for 1 with our partner, and we would need his buy in the pay that off, which he hasn’t wanted to do). After payments to mortgages, our property manager, our partner, and utility payments, we have over $8,000 in cash flow per month. I will note that this doesn’t include things that I need to save up for each year to be able to afford (e.g., taxes and insurance), and it doesn’t include maintenance needs that crop up. Cash flow is important for us because if Mr. ODA quits his job, that’s less income to offset our regular personal expenses.

FINANCIAL AWARENESS

On any given day, we’re weighing several financial decisions fluidly. There are the givens that we have to pay the bills that are out there. I have to pay all the mortgages and utility bills. I weigh the best time of the month to pay each bill, which means that I may not pay them as soon as the statement arrives, but may wait until closer to the statement due date (but never carrying a balance unless it’s 0% interest). Then there are the options such as paying additional payments towards a credit card with a 0% interest rate, additional principal payments to a mortgage, or additional investment plans. We’re not looking to apply for any loans, so the $9k balance on a 0% interest credit card doesn’t have any attention of mine except the $500 I pay each month. I have it marked on my calendar when that 0% introductory rate expires, and I’ll have to pay the balance in full.

Our money is handled by a full, big picture, approach. Each day, there’s a chance that we come to a fork in the road and make a different decision because the variables changed slightly. We don’t put our money into “buckets” or “envelopes.” In my experience, people who handle their money like this end up overspending.

We hit our goal to replace my income well before our son was born, but then I kept working until he was 9 months old. While I was still working, we could have easily said, “we hit our goal, but since you’re still working, let’s put all that money into a slush fund of some kind.” When people see any “extra” money, they then look for their next splurge. They feel they deserve something for saving money instead of putting that extra money to work for you and your future.

There are those “autopilot” moments in our finances, but when it comes to making a big change, we put pen to paper and check the details. We aren’t going to take $100,000 out of our investment accounts to pay off a 2.5% mortgage. But one day, we will have to consider what to do with our loan that has a balloon payment, which shows it’s not a hard and fast rule that we won’t pay off anymore loans early (because if interest rates are still at 7.5% in 2027, it may not be worth refinancing that balance).

LIVE SMART WITH INFORMED DECISIONS

Take the time to make informed decisions and research the data for yourself. Run models with the projection of money to see for yourself if it works in your situation. Don’t spend your days listening to other people’s opinions on actions. If we had listened to opinions, we wouldn’t have taken a TSP loan or taken out ARMs.

We’re at over $4 million net worth, have a solid cash flow (which is important because if our net worth of $4 million was tied up in a retirement account, that wouldn’t give us the ability to live comfortably now), and have plenty of money going into accounts for the future (for both us and the kids). Our spending is managed regularly with an ingrained thought process. Take the small, first step for yourself without other people’s opinions weighing you down.

If you want to live differently from everyone else, you have to take action and think for yourself.

House 4 Turnover

June 7, 2024June 3, 2024mrsonedollarallowanceLeave a comment

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

May 30, 2024May 25, 2024mrsonedollarallowanceLeave a comment

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.