insurance

August Financial Update

mrsonedollarallowanceLeave a comment

This month was unbelievably painful financially. And yet, I appreciate that we’ve set ourselves up that we can handle these things without stress, even though the balances on credit cards made me feel like I was drowning. At one point, we had over $30k on credit cards. I’m still juggling life as a mom, financial consultant, part time worker, and volunteer on the HOA board. Oh, and managing two vacant rental turnovers, throw in 2 trips away from home, and school starting.

RENTALS

We had one house pay late, with little notice and communication (if you’ve been here, you know this is a pet peeve of mine). They paid the late fee at least. I had another house pay partial on the 3rd and then true up on the 6th. Again, no communication, and she beat me to asking what the deal is. I also had a tenant who already pays twice per month be late on both of this month’s payments, so that also brought in late fees.

In a story for another time, we have two vacant rentals. 11 of 13 houses renewed. Two houses each actually moved out of state, and unfortunately, my kind heart scheduled both of them to end their leases on July 31st. We’ve been spending all our time at these two houses. The one had smokers in it (against the lease) and we’re struggling with that. We’ve replaced the carpet and painted all the walls (except 2 closets and a powder bathroom) and it still smells funky when you walk in. Then there’s just the routine type turnover things like scrubbing and wiping dirty hand marks off the door frames. All of these things will be detailed in separate posts. The other vacant one was quite the story, so that’ll be multiple posts. Our attention isn’t as heavily on that one because we’re going to likely sell it instead of re-rent it.

We replaced a roof ($5500), replaced an HVAC ($8300, but split with a partner), evicted bats ($1480), and made decisions on flooring replacement in another house with extensive termite damage. Seriously. Financially painful. Coming this next month, we will also be paying for termite repairs at another house where we tore out carpet and laid LVP.

HEALTH COSTS

I tend to focus heavily on this topic in this blog. It’s surprising because it’s not really the niche of making money, but insurance and doctor bill processing seem to be wrong more than they’re right. Therefore, it falls more into “protect your money” than anything else.

This is a longer story for another post yet again, but the gist is that the insurance company took 6 months to process a claim. They sent me the bill in June. I called 3 weeks after the bill arrived to find out they had sent my balance to collections because their system flagged it as a January overdue balance…even though this was my first invoice on the matter. Love it.

The end result here is that we needed to add $1600 to the credit card.

PERSONAL

I don’t know that there’s much personal life happening with all those other things we’re managing. We took 2 trips. One didn’t cost us much because the grandparents take care of a lot of the cost, another one cost us more than usual because I put a lot of effort into food that we usually don’t do when we travel there. Overall, the trips were fairly inexpensive financially, but they took a toll on me due to the time commitment and what we had to give up by doing these trips.

Otherwise, we’ve just been wrapping up summer and starting school. We’re about to get back into baseball season with lots of practices.

NET WORTH

The market had a big jump last week and my update of financials occurred Thursday morning. Unfortunately, life put a blog post on the back burner while we were turning over a rental, so I’m only getting around to posting this now. The market is in a fairly similar spot as of yesterday’s close, and I’m thinking we’d even be over $5 million if I were to fully update our financial status right now. We’ll just hope for the best for next month.

In October, we’ll pay off our $15k credit card that we’re carrying, so that will be a big swing in our credit card balance two months from now. We need new windows at our house (the seal keeping in the gas between the panes is going on quite a few windows (or went years ago), and it creates this streaky dirty look to them), but I think I’ll appreciate not carrying this large credit card balance month to month while we utilize the $0 interest for a while.

July Financial Update

mrsonedollarallowanceLeave a comment

Well, we started the month with way too many things hitting the credit card: 2 insurance policy renewals, a new insurance policy, air conditioning fix at a rental, and bathroom replacement at a rental. That eventually led to a $1500 charge for bat removal at another rental.

PERSONAL

My big news this month was handling my HOA’s annual meeting. We’ve been working so hard for the last year, and I tried really hard this year to increase communication between the Board and community. I think I did a good job because there wasn’t any contentious point of this meeting and there were very little questions. I received nice feedback on how I presented the budget and that I did a good job throughout the year. It was a welcomed win since there was a lot of heat in the previous couple of years.

The family’s big news is getting passports for a trip this Fall. The parents already have theirs, but we got the kids their pictures and submitted their application. So our credit card balance is higher than normal because we paid for flights and the cruise itself.

It took us until the last week of June to meet our deductible on our health insurance. It’s only $3,300, so that’s quite the impressive feat. I’d point out that my March surgery took until then to get processed correctly, but at least we eventually got there. I have very little faith that it’s all processed correctly though, so it’s on my to do list to verify that we’re not overpaying into that deductible, which they don’t make easy because they don’t show me prescription fills clearly.

We went on a trip for a long weekend to visit Mr. ODA’s aunt in WV. They have a vacation house there, so we didn’t pay for lodging. Unexpectedly, they provided all our meals. I bought them a gift card and some beer. So between that gift, gas, and the meals on either end of the trip, we spent about $200 for a trip, and it was one of the best vacations I’ve been on.

Two of the kids spent this past week at camps. One was 3 hours per day at a dance studio, and the other was 9.5 hours of all outdoor time for the week. He had a blast, and I’m kind of jealous that he got to play all those games and have a great week.

RENTALS

This month, I received an email from Rent App that a tenant was paying their rent. She didn’t give me a heads up, so I wanted to verify things with her. She said this app pays me in full, but it takes the first half of the payment from her account at the beginning of the month and then the second half of the payment in the middle of the month. They’ve lived with me for for 8 years, so I’m surprised she sought out this option instead of talking to me about a payment plan. The program was extremely sketchy and I didn’t feel good about a single step of it. I gave up the registration process at the point that it required untethered access to my phone, but I wish I would have followed my gut at the first personal information step, as if it wasn’t bad enough I had to give my bank account details for the transfer to happen. The payment eventually came through on the 10th, but I didn’t feel good about it.

Another tenant paid late with the late payment. And another tenant paid late with little to no communication and several follow up conversations. I can’t stand when I have to hunt down money. I’m willing to work with everyone who reaches out. She paid the first one with a (1/3), so clearly she knew the plan. And yet, on the 6th, I had to ask where the rest of the rent was. She said it would be done that day. A partial payment was made on the 7th. Then another partial payment on the 8th to finish it out.

We hired someone to clean out the gutters at two houses. Both houses are inundated with trees over the roof, so it’s something we need to stay on top of because they back up every 6 months. We could add gutter guards, but just didn’t see the point since we could do it. Now we don’t live there. He is also going to cut trees 10′ back from the roof on one of those houses.

And then the bats. One house had a bat show up last Monday. My property manager didn’t think much of it, so we didn’t do anything (I wasn’t even told about it at that point). Another bat showed up on Saturday. The tenant went for rabies shots and got boosters for her dogs. She then took a bat to get tested, which came back negative. She said she wasn’t comfortable staying there, so she stayed with a friend. We had traps set so bats could get out of the attic, but they couldn’t get back in. The pest people will go back next week to check on things.

We have two houses that will be vacant at the end of this month. We were supposed to have one at the end of June and one at the end of July, but the June one asked for an extension. I let them have it, but I’m not thrilled about my timing now. We won’t be able to truly get to work in there until mid-August, and it’s going to require a lot of work (not hard work, just time consuming). Then for the other one vacating at the end of the month, we don’t intend on renting it again. We’re going to let it sit over the winter and sell it in the spring.

NET WORTH

The way that I update our net worth each month involves overwriting the numbers from last year. So I can easily see that we’ve gained over half a million net worth since July 2024’s update. What’s nice about that is that it’s all appreciation, paying down mortgages, and the stock market with continued savings. We didn’t make any large financial moves that would have adjusted our net worth in one large move like buying a house. I had a conversation with someone about our net worth and goals recently. It would be nice to cross the $5 million threshold, but we’re not actively managing our funds in a way that will cause drastic swings outside of market movement. We crossed $4 million in March 2024.

We’re over $200k from last month’s update. Our credit cards are much higher than last month because of trip purchases and rental work that was unexpected, but needed. Here’s to the last month of summer.

Rental Cost Changes

mrsonedollarallowanceLeave 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.

Rental Profit Calculations

mrsonedollarallowanceLeave a comment

When we consider purchasing a house to be used as a long term rental unit, we perform a “cash on cash” analysis. I’ve discussed this in the past, and I regularly share this with other people for their use. The gist of this calculation is to determine whether we would get a return on the cash put into the house.

The calculation considers the cost of taxes, insurance, homeowners association fees, vacancy expectation, maintenance expectation, costs to get the place rented, property management, etc. This is compared to the projected rental income. The upfront costs are compared to the annual cash flow projection. That ratio is hopefully in the 8%-10% range to be considered a reasonable cash flow to look further into the purchase.

Since we’re not really looking to purchase properties these days, I use this spreadsheet to consider changes in a tenant’s rent when it’s time for renewal. I kept all the original cash flow amounts to see how things change over the years. As I sat down to determine what changes, if any, are needed in the rents I charge, it was disheartening to see how our portfolio has dwindled in profitability over the years.

A few years back, housing prices skyrocketed, which drastically increased our taxes owed. Unfortunately, I hadn’t increased everyone’s rent consistently. I kept many people level or did small increases every two years, but that means I’m now “behind the 8 ball” in trying to make up for those drastic increases that happened in 2021-2022. In addition to tax increases, we’ve also seen huge insurance premium increases that weren’t projected in our portfolio.

Our total “cash on cash” started at 11.42%. It’s now projected to be 7.58% – if the increases I project actually go into effect over the next few months.

We historically increased long term tenant’s rent by $50 every two years. Some of these tenants have been with us for over 5 years, and the $100-200 changes in their rent have not covered the increases we’ve seen. I hadn’t worried too much about it because the losses on those houses were offset by houses where we saw greater margins. Now, everything has leveled out, so those losses are felt harder.

The table above shows the change from our original “cash on cash” to our current status. In some instances, we’ve been able to increase our margins. But there are 8 instances our margins decreased, with some being drastic. Even though some are drastic decreases, there are only 5 properties that fall below the 8% goal we have.

For Property2, the projection shows that rent would need to be at $2,500 for us to hit our cash flow goal. The rent is currently at $1,600. The neighborhood doesn’t call for $2,500. I also don’t want to be in a position where I’m floating someone’s rent at that price. From the time we bought the house to now, our taxes and insurance have increased by $1575. That number only continues to grow. Our insurance started at $390 and is now at $765. Our taxes started at $1,500 and are now at $2,700.

On top of the obvious ones like that, our maintenance costs have also increased. As one example, our HVAC technician first was charging $125 per site visit. He now charges $325 just to show up. I’ve found someone who charges $200, so I’ve been going with that guy, but just knowing that there’s been such a change in pricing structure needs to be factored into our costs.

These are really big affects on our houses that a tenant and the average public opinion don’t seem to grasp. I don’t get paid hourly or per transaction I perform to manage these properties, so that decrease of 3.8% in our cash-on-cash analysis is actually a net loss in my “income.” In many cases, we catch up when there’s tenant turnover, but watching the rent compared to our expenses are things that I need to be more on top of year-to-year.

November Financial Update

mrsonedollarallowanceLeave a comment

We bought a hot tub! It’s something that we’ve been talking about for almost a year, went looking at in May, and then finally ordered it last month. It was delivered and set up this week.

RENTALS

We replaced the roof on one of the houses. I go into that a little more in the ‘insurance’ section, but that was a $6,300 payment that was made.

INSURANCE

The fact that I have a separate category to cover my insurance efforts is just frustrating.

Last month, I complained that we were threatened with our liability policy being dropped because we didn’t provide the necessary documentation … that. we. were. never. asked. for. So I dropped everything and got the documentation as fast as I could, while being praised for my organization and response time as usual. Then a few weeks later, I was told that our policy has expired because they couldn’t get to our documentation review fast enough. Awesome. I love the one way street. We were finally informed that everything was reviewed and our policy was reinstated with no lapse in coverage. I paid that policy.

During that process, we were informed that one of our policy providers does not qualify to be covered under our liability policy because their company rating fell below A. Ironically, we had already pulled all but this one policy from this company. We requested a quote from another agent, but she said they couldn’t write a policy on the account at this time. It’s frustrating to me that once you file claims on your insurance (which it’s there for), you’re blacklisted. There were no claims for 8 years of rental properties and 12 years of homeownership, but that doesn’t matter. Since 3/4 of our claims in the last year are all in the same location … all those houses were hit by the same wind storms to cause damage. I certainly didn’t request trees to fall on two houses. Add in that the damage to our house was severe, making our policy pay out high for the last year, so getting new insurance policies where necessary (and on houses with no claims) has been difficult. There’s nothing to say we can’t keep this policy on this house even though the rating declined (which I would have never even known about), so we’re not stressing about it.

One of the wind damaged houses with a claim caused that company to drop us. That’s fine. I have been working on this replacement since September 23rd and finally got everything squared away on October 31st. One of the frustrations on that was that I’d ask multiple questions, and this guy would either not respond to an email or respond to half of it. One of my complaints was that my original request was for $500k of liability coverage (which is higher than offered on most policies I’ve had written, but is the minimum required for our liability policy), but he wrote it at $1 million. I asked for it to be lowered no less than 4 times. He finally responded when I got stern and called out the lack of action; he said that since it’s only about $25-30, they just go ahead and do it. I finally said (again) that I have liability policies that give me extra coverage, so I don’t want my individual ones to give extra coverage “just because,” and that it’s up to me to decide whether that $30 is worth it. He finally reduced it. The new policies are $510 more than the policy we were covered with that got dropped.

Oh – the original policy that we got dropped from included two houses. It wasn’t clear whether the company was dropping both houses, but I went ahead and switched both. I was hoping that the new policies would be written like all my other houses – individually. Unfortunately, it’s under one company and they handle things the same way, so both houses are tied together under one policy number again. I have multiple houses covered by Travelers, and they’re each on their own policy. I don’t understand why these houses get lumped together.

Another house of ours was given “high risk” insurance because of our roof condition. Our partner didn’t tell us about the transfer of insurance or the reason why. I discovered it when I received weird paperwork for our liability policy (which, ironically, now that I think of it, my liability coverage didn’t call out as odd, but they weren’t happy about that company getting downgraded…hmm). I discovered this on September 6th. I started getting quotes for roofers immediately, but that process took forever. I finally got the roof replaced on October 18th, and then I requested her to find us new insurance on October 31st. We have a new policy being issued effective November 15th, which will cancel the higher insurance. The total savings equates to about $450, but it’s still over $300 more expensive than the original one that we walked away from.

TAXES

Central KY taxes were due this past month. I paid 4 houses worth of taxes. 3 were cashed immediately. I pay via online bill pay, where they send the check on my behalf, instead of online because there are fees associated with that. Well, now one of them is floating out there without my knowing what to do next. There’s a 2% discount if you pay before 11/2, and that check didn’t get cashed by that deadline. So now I have to make phone calls to track down why the check I sent via bill pay didn’t arrive, even though another one arrived just fine. I also have a city that I have to pay a small amount of taxes to, and I’m waiting for those two checks to cash as well.

NET WORTH

Our net worth is almost $100k over last month’s. Not reflected in the credit card yet is the payment for the hot tub that just happened this week. By next month’s update, I’ll have to pay off the 0% interest credit card, so the total credit card number probably won’t change drastically.

October Financial Update

mrsonedollarallowanceLeave a comment

I feel like I have a lot of balls in the air right now, but looking at our finances, they don’t say that there have been a lot of charges. However, this post sure says that I’ve been juggling a good amount of things over this last month, and most of the issues are related to insurance in some way (and I despise insurance!).

Last month, I mentioned that we had two large charges hit our credit card. One that I purposely held off until the new credit card cycle (an insurance charge) so that the previous month’s credit card was lower than average (psychological play for myself). Then we had the electrical work completed on our deck rebuild, and that was another significant balance that needed to be paid. After that, we just had a a few medium-sized, if you will, charges that hit. I paid an extra payment to keep the balance closer to the $3000-3500 range. Well, it didn’t work. Another two service calls to rental properties and the dog’s annual vet appointment, and we were back up to $6k. We have the cash to pay it off every month; it’s just not something I want to see!

When we have a large purchase, we open a new credit card. The new credit card gives us some sort of bonus, and we get 0% interest for 12-15 months, typically. Last Fall, we replaced the carpet on the first and second floor of the house for over $10k. I paid $500 per month up until last month’s payment. The balance wasn’t a round number, so I went ahead and paid that little bit while also upping the payment to $1000. That balance is at $7,000 now and will need to be paid by December 13th. The new credit card will be used to purchase a hot tub and pay for the electric work associated with that (as well as an electrical panel upgrade).

INSURANCE CLAIM

Since our deck work is now complete, we submitted a request for additional funds. The concrete replacement was controversial in the claims process. They eventually agreed to pay for it, but they held back a significant amount of depreciation on it. We submitted the final work order showing the concrete costs and that the job was complete, and they sent us a check for about $6,550. Additionally, the electrical work was projected to cost about $1,700, but it actually was about $3,500. Luckily, we submitted the invoice and, with no questions asked, they cut us a check for the difference.

Just for the record, the job was never fully completed. Mr. ODA pulled up deck boards and retrofitted the waterproofing. We never paid out the final payment. The City’s inspector came out and started asking a bunch of questions, and the foreman finally acknowledged that they hadn’t completed the waterproofing. We didn’t tell them we fixed it, but we have no intention of being in touch with them again. Outside of the waterproofing and concrete subcontractor issues, the contractor was great at the work he does – but they should stick to simple deck construction.

PERSONAL CHARGES

We actually had a low number of transactions over this past month. We took a trip, which I covered in my last post. Mr. ODA negotiated a refund of some of the cabin charge since we booked it with a hot tub and discovered at 8 pm that there was no water in the hot tub. They refunded 10%! We had our typical charges that occur monthly, and I paid several health insurance bills for various reasons.

RENTALS

Luckily, everyone has paid their rent this month. We have $750 outstanding, but it’s not technically due until the 19th with how I’ve structured their lease. One person did pay half her rent late (on the 15th), but I didn’t charge a late fee since she actually paid when she said she would this month (always a gamble). We had a few smaller maintenance issues come up in the last month, as well as a range replacement at a property that will be installed this Saturday.

  • INSURANCE

Due to a claim on one of our properties, that insurance found a reason to drop us. They notified us that we have a couple of months to find new insurance. I’ve been working on that for the last 3 weeks. It hasn’t been easy. They want pictures and then want all different angles, as if it’s my home and I can just take these pictures on a whim. Then for some reason, the agent I found through a local real estate group is great about answering questions on one property, but won’t answer questions on the other. It’s pretty frustrating. As of 10 minutes ago, I at least got the policy executed on the one he hadn’t been responding on. I started this process on September 23rd and got this run-of-the-mill policy executed today – ugh. So that’s over $900 going on the credit card today.

We have a roof replacement occurring on a property in VA tomorrow. I found out that our partner switched insurance companies without us knowing. That seems fine, except that I discovered our policy went from $600 to $1400. It turns out, he switched because that original insurance company was requiring a roof replacement. Conceptually, that’s annoying because they find some action for us every year with no warning or previous mention of something being on a watch list. However, it turns out that the roof was bad enough that no one would insure us. Again, I’m finding all this out after the fact. Our agent found someone to cover us for short term, and we’re paying a hefty premium on that. As soon as I found out, I requested quotes from roofers. I signed a contract 3 weeks ago, and that’s finally under way with materials dropped off this morning. As soon as the roof is done, I plan on sending documentation to our agent to get us switched to a “regular” insurance company and hopefully reduce that premium substantially.

We had issues with our Commercial Liability Umbrella Policy issuance this year. It was all due to the company’s poor communication. They asked for a new document to be completed, which I did in less than a day. Then I heard nothing from them until a cancellation notice for not providing supporting documentation. I had to scramble to gather all the documents, only for them to not even review my information timely and cancel the policy. They reissued with no lapse in coverage, but goodness that’s so frustrating that they can do whatever they want with no repercussions. In that process, we learned that one of our houses isn’t included in the CLUP because that insurance company’s rating fell below a reasonable threshold. So now I’m shopping for insurance for that house.

I had to pay one property’s insurance of $270 (it’s a townhouse with HOA insurance also). I also had to contact one of my escrow accounts to find out why they didn’t pay on time, which is so much fun (and I still don’t have that resolved).

  • TAXES

It’s that time of year again where I have to pay out on KY taxes. Relatively, they’re low amounts, but they add up to a decent amount when you have 4 to pay at once. I’ve issued payment on these, but they haven’t cashed the checks yet (it would be nice if businesses would allow electronic payments without exorbitant fees!).

NET WORTH

We’re over $800k over this time last year. It’s crazy to see that number because I don’t feel comfortable with our finances. I can’t put my finger on it, but I just don’t like how often I need to transfer money out of a savings account to cover obligations in the checking account. It’s just a psychological thing for me. I can’t figure out why I can’t get past it, when I know for sure that we have 18 safety nets out there if we were in a bind.

Last year’s update mentioned that our finances took a big hit between September and October, but this year, we’ve recovered a good bit and increased over $115k from last month. It appears last year I paid off a large credit card balance this month, whereas the large credit card balance pay-off will be December this year. I’ll also have additional charges when the hot tub gets delivered in a few weeks, which will increase our debt.

August Financial Update

mrsonedollarallowanceLeave a comment

Many of our activities over this last month were already paid for or minimal cost. We went to Colorado, and we’ve been doing back to school type activities. Mr. ODA was in Colorado longer than the rest of us (I flew home on my own with 3 kids!), and he went on a work trip for a week, so my goal has been activities outside of the house as much as possible in this final stretch before school starts. We’ve had quite a few activities on rental properties too.

RENTAL PROPERTIES

Historically, if the 1st through 5th of the month falls on a Friday, that’s the day that I receive rent. Meaning, if the 3rd is a Friday, then I get rent that day. This month, the 2nd was on Friday. I received very little rent. Going into the 5th, I was still waiting on 60% of rent payments; I was already told by 3 tenants (making up 23% of that amount I’m waiting on), that rent will be late this month. Luckily, 2 of those 3 tenants had paid partial rent already. That left 4 houses going into the 5th that hadn’t paid and I hadn’t heard from. That’s more than normal and was a bit worrisome. By the time of this post, I’m missing nearly $2,000 worth of rent, which is over 10%.

We’ve had several small actions that needed attention from our handyman, so I paid out on that. We had an AC go out before a hot weekend, so we had our technician go out and fix that (I haven’t seen that bill, but it’s expected to be around $1,000). Mr. ODA went out to a local house to properly fix their kitchen cabinets that were apparently never installed correctly (before we owned the house) to install them into the studs.

I was called for a garbage disposal that wasn’t working, and I attempted the fix on my own. I was nervous going into it, but I successfully fixed it in about two minutes. That felt good. I also went out to check on a roof replacement at a local house, and Mr. ODA replaced their deck. This tenant doesn’t communicate well whatsoever with us. She said “the deck is in bad shape.” That was it. Didn’t send a picture, didn’t give any details. I went out to check on it, and the deck stairs were hardly sturdy and none of the pickets were installed anymore around the decking part (it’s more of a landing than a deck when you think of size). It’s infuriating that people could not communicate such a dire issue. Most of my tenants do a great job, but this is why annual inspections are necessary.

PERSONAL ACTIVITIES

It has been a crazy month! I have thrived with the busy scheduled and a sense of accomplishment.

I was elected to our Homeowner’s Association board of directors this past month. I’ve spent a significant amount of my time going through that information and trying to get things organized and back on a schedule. I had my first meeting on the Landlord/Tenant Advisory Committee. And I joined on with a start-up school to be their financial consultant.

We signed our oldest kid up for Fall Ball and our second for gymnastics. She did acro last year, but I said all year that she would thrive better in actual gymnastics where they do more activities than dance. Our oldest started kindergarten, which is really exciting. That also required a lot of attention between back-to-school activities and paperwork to be filled out. I ran a 5k with zero training (I had run 1.4 miles the week leading up to the race), but my friend and I beat last year’s time by 5 minutes!

We worked on our own deck. A tree fell on it last July. We had to get our insurance company to understand our issue and fully cover the repairs that were necessary (it took them forever to get an engineer involved instead of all different adjusters). We finally got started in March on the replacement. After weeks and weeks and weeks of our contractor working on it, he finally ghosted us because he couldn’t get the waterproofing to be waterproof. So this past weekend, we tore up our deck boards and repairs the waterproofing issue. It’s supposed to rain this weekend, so hopefully we’ll see that our fix worked finally. Once we prove to ourselves that no water is getting down there, we can have the electricity finished. We also built a little wall to hide the storage being kept under the stairs under the deck, which was cool.

NET WORTH

Obviously, our investment accounts diminished slightly since last month, as the stock market has been a constant discussion point recently. Last August, my updated said: Our overall net worth went down slightly from last month because of market fluctuation. So this seems to be a typical cycle! Last year it was offset by a large insurance check we received, while this year our cash balance is much lower from last month to this month.

I have about $9k to still pay out on a roof replacement (insurance is covering most of it), about $1k to pay to a plumber, and a couple of other odd jobs that are waiting on invoicing. Our net worth isn’t 100% accurate this month because I don’t have access to a few accounts (well, I have the log in and password, but it requires either text or email verification to get logged in, and Mr. ODA holds those and isn’t available – annoying!). I also have a $1500+ insurance payment to make, but I’m purposely holding off until this credit card statement cycle ends so that I can feel like one month isn’t a crazy high balance.

To update our net worth, I have spreadsheets set up that I overwrite from last year. Last year’s August update had our net worth at $3.78 million. So even though this month is over $27k less than last month, we’re still up over $500k from a year ago without any drastic changes in investment portfolio.

June Financial Update

mrsonedollarallowanceLeave a comment

Welcome to summer, where we’re traveling and I’m not posting on time. This time it was because I had to figure out a few things with bills and health before I had the time to get to the update. I can schedule content in advance, but not this post where I need the most up to date numbers when talking about our net worth.

We’ve been busy with baseball and activities around the house, so our spending was lower than it had been. However, this time of year is typically where we see a lot of our rental property expenses come through. We purchased many houses around this time, which puts their insurance payments due now. Then the City of Richmond’s tax payments are due in June and December also. The City of Richmond doesn’t post our escrow payments timely, and it drives me crazy. Every 6 months, I get notification that I have unpaid taxes and it’s the due date. I have then go through every escrow and prove to myself that they were in fact paid out over 3 weeks ago, and then I have to go back and check that Richmond posts them eventually. I stopped sending checks into them for the accounts that aren’t escrowed because it took too long to monitor, so I pay the $0.95 fee to pay via their ACH option online.

Mr. ODA had been in a relationship with a financial advisor, which was $35 per month. Over the last 3 months, Mr. ODA has been working to become his ‘apprentice.’ He passed his Series 65 exam and will begin working on this guy’s team. Not that $35 is a huge amount, but that’s one less ‘subscription’ that we’re paying monthly.

Speaking of subscriptions, we did something that I’d venture to guess other people wouldn’t put the effort into. One of our credit cards (that we rarely use) had a promotion for a $15 statement credit if we had at least $100 worth of subscription and/or utility payments go through. Most of our utilities can’t be paid with a credit card without paying a fee. The fee for our internet service was low enough that we went ahead and switched that one over for one month. Then I went into our Y membership and switched the credit card on file for that payment. With a few button clicks in May and then later this month to switch everything back, we made $15. It doesn’t seem huge, but it’s the compound of that thought process and awareness that makes a difference in your finances.

The ‘bigger’ expenses of the month were one kid’s school registration fee ($175), purchased baseball tickets (the Oriole’s don’t charge for 2 kids per paying adult!), got an oil change ($65 ugh), paid two homeowners insurance policies that aren’t escrowed ($1,371), paid for pet sitting for a coming trip ($155), paid car insurances ($567), and built a few steps in a new walkway ($275). Our deck isn’t complete because the waterproofing isn’t waterproofed. We haven’t paid out the last $3,500 on that, but we also haven’t heard from our contractor in several weeks.

We initiated a homeowners insurance claim for one of our properties. The tenant wasn’t complaining about the house/roof, but we knew the roof and soffit were in rough shape. I was hesitant to contact a roofer because I wanted the job done right. I expected the house is really old, and there would be decking problems to fix. I dragged my feet on finding someone, but I did click with someone finally. He went out and actually suggested we go for a claim to cover the replacement. We’re in the process of that now. An adjuster has been out to see the damage, and now we wait for the estimate. In the meantime, another property had water spots on the ceiling show up. I had the roofer go out there to check it out, but he didn’t see anything glaring. That roof also needs replaced, but I’m going to get at least one more quote on that job since it’s not through insurance.

All the good things (assets) went up and all the bad things (liabilities) went down! Our net worth increased by $60k over the last month.

2023 in Review: Rentals

mrsonedollarallowanceLeave a comment

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.

December Financial Update

mrsonedollarallowanceLeave a comment

I’m not even sure where to start for this month. It has been a whirlwind. There were a lot of tax payments last month, and this month I was still paying those among several other things.

PURCHASES

I purposely paid my credit card statement a little earlier than the due date so that it wouldn’t be that high for this update, but then I put a bunch of charges on it over the last two days. To catch you up – we’ve been holding money in our savings account for as long as possible. When we were getting 0.2% interest on it, it didn’t matter when I paid the card, so I typically paid it shortly after the statement closed. Now that we’re getting 4.22%, it’s worth keeping the money in there to earn interest, and then paying the credit card closer to the due date.

Our regular-use credit card is currently holding: $300 towards my dad’s iPhone (I should really share that mess of a story in purchasing that) (also, that doesn’t clearly account for my sisters having paid $200 towards that because that’s just “cash” in our checking account balance), $500+ of the kids preschool tuition, renewing our zoo membership for $139 (honestly, 5 of us enjoying the zoo for the year for that price is wonderful), over $200 for signing our son up for tee ball, two car insurance payments, and a rental insurance payment. I don’t typically go through the charges like that, but it’s just been a bunch of just-big-enough charges to grab my attention on our credit card balance. We drove to-and-from NY, so our gas station payments are higher than average too. As a reminder, the credit card balance you see also includes $10k worth of new carpet that we’re paying slowly on a 0% interest credit card.

RENTAL PROPERTY EXPENSES

I paid two of our Richmond houses’ taxes. The taxes are due on January 14th, but if I pay them this year, then it reduces what’s viewed as our ‘profit.’ I make sure to pay any known January bills in December of each year. Those two houses are so tiny, so their tax payments being so much larger than they once were kind of hurt (I’ve discussed the increases in property assessments, thereby increasing taxes). It was about $2,000 paid out (on top of all the things I paid over the last two months).

I also had to pay two supplemental taxes for Lexington. Government entities not meeting deadlines is a pet peeve of mine (I used to work for the Federal government). Last year, I completely missed that paperwork I received was a supplement bill for education, and then I received a penalty.I thought it was their typical assessment notice since it was outside of tax payment time. Luckily it was a few dollars, but I was so lost. This year, I paid close attention when I received an extra tax-related document. This supplemental bill was for trash services. Again, a few dollars. But think of all the extra paperwork, staff hours, postage, payment processing cost to collect an extra $20 from every house.

RENTAL PROPERTY INCOME

We had two tenants give us notice that they’re moving out. While extremely unfortunate timing on the year, I’m also human and understanding of their need. One tenant had a traumatic work event that led to him being laid off, and another family bought a house. We’ll find a way to get the houses re-rented as soon as possible, even though our vacancy time may be longer than it would have been if we were looking for a May 1st or June 1st renter. We have someone interested in both houses at this time, so that’s encouraging.

We had 4 tenants not pay in full. They all reached out to me to let me know in advance, and they paid what they could by the 5th (I always appreciate that – it holds them accountable, and it allows me to not foot all of the bills that I have to pay on the houses). As of the end of the 5th, we were short over $3,000 worth of rent ($1300 of that was for the house that has been late since October 1st and is finally working towards paying their debts).

As of today, we’re short $2,400. The tenant who’s playing catch up only has a balance of $960 left, which is great (that’s been a long road). Another tenant typically pays $750 on the 5th and 19th. So they’re not late on $750, but they are late on the $375 they didn’t pay in the first half of the month (this is a special scenario that we put in place for them because they couldn’t pay all at the beginning of the month, so we increased their rent as a concession to being able to pay twice per month without creating more late fees for them… but they’re still late).

NET WORTH

The market significantly increased over the last month. We also had $28k come in as part of our insurance claim; our cash increased by $35k though, so there’s an additional savings in there. And even though we had large expenses on our credit cards, it’s still slightly down from last month.

BONUS STORY

Mr. ODA and I wait for Black Friday deals to purchase our iPhones. We typically purchase every 3 years. I usually bite for a new phone so that the camera is better, but I’m suspicious that Apple is sending updates to alter the clarity of photos on older phones. How can I take these BEAUTIFUL pictures for the first few months of having a phone, and then all my pictures are grainy suddenly? ANYWAY.

Walmart had a deal that you purchase the iPhone 14 on a payment plan, and they give you a $350 Walmart gift card. These are the deals we typically seek. Apple is still getting their full price for the phone, but Walmart is offering a deal to bring our net to $0. When you want to purchase the phone from Walmart, it asks you to log into your carrier’s account. For this phone, it’s Verizon. We spend hours trying to figure out who the primary account holder is and what that log in it. Verizon does it where you can create your own log in and see you phone’s data at any time, but to see the entire plan’s data, you have to be the account holder (makes sense, but complicates this particular instance). The primary account holder is my mom’s phone number. Who died in March. We finally get assistance with that and log into the account through Walmart. It brings up all the lines on the account, we select my dad’s number, and then it gets to step 2. It says they can’t verify the address on the account and we need to go to Walmart mobile desk in a store. I call Verizon. Can’t help. I call Walmart. They keep telling me to put the item in my cart, which isn’t how you purchase a phone. So no help.

I finally bite the bullet, and on the Saturday after Thanksgiving, march myself to the nearest Long Island Walmart. They can’t help because they need the phone in the store. I swear if I were at my Walmart in Kentucky, they would have helped me. It was actually at the point where I was going to risk waiting until Tuesday so that I could have my phone desk people help me. The Walmart employee actually wasn’t flippant or trying to blow me off; I believe he genuinely thought he couldn’t help me. What needed to happen was that he called their help desk people, and then he was the mediator to figuring out the address. I figure this because a Walmart customer service person transferred me to such a person, who said he’s not allowed to talk to me and has to have a Walmart employee talking to him on my behalf.

I gave up. Sunday comes. I hope that some “overnight” processing of information has magically cured the process. It didn’t. I call Verizon again. Some angel of a lady answered the phone and actually helped me more than I could have imagined. I told her that I wanted the Walmart deal because all the Verizon deals require me to change my plan to unlimited data. I let her know that I’ve already spoken to several people, and they keep trying to convince me that I get a “free” iPhone while my plan increases $30 per month in perpetuity (versus $23 per month for 36 months for the phone). She offered me a deal that equates to $5/month for the phone for 36 months. So I put 100x more hours into this than I should have, but it ended up working out in our favor!