tenant

House1 Turnover

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I wrote most of this post 5 months ago, but I’m going to finish it now for the longevity of what we’ve done with these rental houses. The house has been rented since September and was vacant for 43 days. She agreed to a shorter lease term, so it goes through June 30, 2026.

The tenants in this house moved in 3 years ago. They were good tenants. They hardly asked for things and were super understanding and gracious when we had the HVAC go out (granted it was their lack of filter changing). They brought a dog into the mix and tried to hide it (not well), and I eventually called them out on it to let them know they don’t need to keep finding a way to hide the dog every time I need to come over. They added a 3rd person on to their lease about a year ago. The only major issue I have is they smoked inside the house. I knew it constantly because (just like with the dog cover up) they weren’t great at hiding their evidence.

Earlier this year, I reached out that if they want to renew, I’d be raising their rent from $1200 to $1275. The girl who usually handled the bidding called me and explained they had intended to move to Georgia for a job, but they weren’t ready to move as fast as the end of the lease. I told them they could do month to month for a little, and we agreed to June 30th. I knew I had another lease ending July 31st, so I thought it would work out well that we could address the one house before the other became vacant. In theory. They ended up asking for another month, and we were busy with summer things at the end of June that I agreed, even though it meant two houses were vacating at the same time. I told them that I wouldn’t be able to extend any further though because it’ll be hard enough to rent end of August time frame, let alone into September or later.

On July 29th, they asked me what time they had to be out on the 31st. I said 5 pm. The next day, they asked me if they could have a couple more hours, but I let them know that I had already booked someone to meet them for their keys at 5 pm, and that’s all I could give without it costing them more. I was out of town for this vacancy and asked a friend to be my property manager to walk the property and gather the keys.

They ended up being out and basically cleaned up by 5 pm. I was impressed. The fridge was completely wiped down. The bathrooms were in rough shape, but overall, it was one of the cleanest vacancies we encountered.

THE TURNOVER

We had to have a friend go out to get their keys because we were out of town. I tried to get them to stay until the weekend to make it easier to move, and so that I could be the one to meet them (not that I said that), but they didn’t want to pay the per diem for that option. They ended up keeping their timeframe perfectly.

The turnover took longer than I had planned. I was working part time without a real ability to give up those hours because I had things that needed to get done, and it was summer, so we had 3 kids in the mix. Not to mention, we basically had back to back trips planned for the end of the summer. Overall, it was a learning experience.

We spent about $800 on supplies for the turnover, outside of the carpet, which was about $3,000. With the extra cleaning of the bathrooms and the time it took us to clean and paint the property, we kept their security deposit of $1,200. We could have gone after them for more because of the smoking (I have pictures from when I was doing work in the house of ashtrays with used cigarettes upstairs in the house), but it’s not worth the effort and cost.

FLOORING
Before they moved in, we had ripped out the carpet and installed luxury vinyl planks (LVP). Conceptually, the goal was to not need to work on the floor anymore. We had limped along with the carpet, especially in the living room, since we bought the house, and it just wasn’t worth it anymore. We did the install over two days back then. Now that they were out, there were several gouges in the floor and the floor was separating in some spots. Mr. ODA handled fixing the separation, and he replaced a few boards that were damaged and noticeable.

The kitchen floor was so dirty and it’s the first thing you notice when you walk in. I spent many hours on my hands and knees cleaning out the grout to make it look less dingy. I didn’t get it perfect, but it was fixed. It’s one of those things that no one will ever know just how much time I put in for it to not be perfect, but it would have been so much worse had I not done anything.

BATHROOMS
The bathrooms were a wreck. I’m so lost when I walk into homes and the bathrooms are dirty. Do you want to sit on that toilet or clean yourself in a shower that is dirty? It seems counter productive to me. Mr. ODA had to take over with Bar Keepers in one of the bathrooms to remove the staining and soap scum build up, but we did pretty dang good.

I wish I had a ‘before’ picture easily available to show, because this picture does not do justice to how much time went into this tub.

CARPET
We bought this house 9.5 years ago. The carpet was questionable when we bought it. We would have it professionally cleaned between tenants, and it would look amazing compared to what we saw at first, but the stains would always come back because they were deep in the pads. Before these tenants, we ripped out the carpet in the living room area and laid LVP because the living room was especially bad. Well that still left carpet in the 3rd floor bedrooms, hallway, 2 stairwells, and the whole basement. With the smoking by the tenants and knowing we had far surpassed the useful life, we went ahead and planned to replace the carpet.

There were delays in getting the appointment scheduled and making it all work. The lady who did the measure appointment said installations were 3-4 weeks out. That was disheartening because we had already lost over a week by having back to back trips at the beginning of August. We went into Home Depot to find something else. I ended up settling on something because it said 5 day install. Well, 5 days came and went. I was so frustrated that I had settled on this worse-off carpet just because I wanted to meet a timeline, and now the timeline meant nothing. Then suddenly, we got a call and they said “can we come install the carpet today? We’ll load it now and be there within the hour.” That they did. They installed it in 7 hours and that was behind us.

PAINTING
This took forever. Two big stairwells really take a lot out of your time. Every surface needed to be painted just to work on covering the smoke smell. While we didn’t spend a lot on the turnover (outside of carpet), this house just took so many hours from us. We painted every wall. I painted some of the trim that had not been previously painted, but it was in rough shape. We also had to repair several walls because they had sticky things to hold shelves up and they didn’t remove it.

  • MISCELLANEOUS THINGS DONE
    • Replaced the dryer door handle (that had actually broken off before they moved in, and I thought this was an insurmountable task to fix/replace… well, it was a $6 plastic piece off Amazon that popped right in. Welp.)
    • Replaced window screens that were worn away and in disrepair.
    • Cleaned out all the air filter areas for the HVAC.
    • Replaced all the rusted and broken floor vent covers.
    • Installed a doorbell because they installed a Ring, took it with them, and didn’t put the old one back in.
    • Replaced the cabinet knobs (it appeared someone had spray painted over the original 90s brass with something to mimic a stainless steal look, and they were all worn and chipped).
    • Wiped down the cabinets and walls to get them to be less sticky. Wiped down all the doors, light switches, and outlets because they were so gross.
    • Replaced the broken light in a stairwell that they broke on their move in (and reported).
    • Repaired some ceiling areas that were damaged due to a roof leak before the HOA replaced the roof.
    • Replaced a shower curtain rod that they took with them instead of leaving behind.
    • Painted the front door. It looked like someone had taken steel wool to it to clean it.

LISTING TIMELINE

We got the property to “good enough” stage so we could get it listed. There was still things to get done, but we didn’t want to wait until it was perfect and lose interest as we got further into the school year under way.

We listed the property at the end of August for $1,400. I thought we were golden. The location of this property is excellent, and it’s on a bus route that takes you downtown and to the outskirts of the city for shopping. There were two other listings for $1,500. It didn’t move. I didn’t even get productive bites.

I dropped the price to $1,350 two weeks later. I did show it a few times. I was happy that when I made appointments, people actually showed up, but they didn’t qualify. Mr. ODA hosted an open house and had one person come through. That one person was our person though. I removed the listing two days after the open house and we have it rented at $1,350.

I offered her $1,325 for an 18 month lease or $1,350 for a lease through June 30th so I could get back on a Spring schedule. She agreed to the shorter timeframe. She was looking for a quick move because her landlord was selling her place. Our house seems too big for her needs, so I wouldn’t be surprised if she leaves at the end of June and we need to find a new tenant.

SUMMARY

We knew a September listing was going to be tough, but I didn’t expect it to be that tough. When we had a property managing on this place, they always took 5-6 weeks to get it rented and it drove me crazy. At least 3 weeks from start to finish isn’t terrible, but I’m definitely used to it moving faster. It’s also nice that had my tenants stayed, we’d be getting $1,275, and now we’re getting $1,350. Thus far, this lady hasn’t asked for much. We struggled with the utilities getting into her name. For some reason, the utility companies credited my accounts and billed it directly to her, so I didn’t even need to work on capturing that money from her, which was nice.

November Financial Update

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Another month, and another delayed post while I juggle life. These numbers are mostly based on last Wednesday’s market close. I had big intentions of writing this on Thursday last week.

RENTALS

Our rental that we purchased a month ago is still vacant. It’s a commercial loan, so the first payment was just made on it yesterday. It always hurts to pay those bills without income. I’ve spent some time cleaning it. It looked fine if you just did a quick glance. But the details were terrible. I wiped down all the walls in the house and all the outlets and switch plates, which were extremely necessary. I wiped the baseboards with their first clean using the mop, but I’ll need to go back and do a wipe with something that gets directly on it. We were excited that the house didn’t need painted, but the closets are a bit of a mess. If I decide to make the time, I’ll throw some fresh paint on some parts. The bathrooms were pretty bad, and they’re about 70% done being cleaned. Maintenance wise, we just needed to replace a missing cabinet door pull, clean out the air return vent, and do a few random small fixes with caulk and screws. I’ve shown in several times. I even had a lease drawn up for one person, but it fell through.

We’ve had issues with our two new tenants getting their utilities in their name. We had one in Virginia who claimed she tried to get the water bill in her name and it just wasn’t happening. She always paid the day I sent the bill to her, so I just let it go. This past month was terrible. It took her over a month to get it paid, and I threatened to turn it off so that it would force her to get it in her name and keep me (and my property manager) out of it. One in Lexington was annoying that she didn’t get it done, and she’s not very communicative. Then the other in Winchester had to go in person to get the water in her name, so that wasn’t surprising that it took a while.

PERSONAL

Our 3rd kid got off the waitlist for preschool! Our beloved preschool closed down last year. Everyone flocked to this other preschool. I followed the “rules” and did things “ethically,” but we got waitlisted. Long story. I wasn’t pushing for him to be in preschool in the 2s year (he’ll be 3 next week, but our age cut off here is August 1st). I figured I’d push really hard in the next couple of months to make sure he got a spot for next year. This place I want him to go to has a lot more spots for 3 year olds than 2 year olds, so I had high expectations we’d get a spot next year. Well, we got the email a couple of weeks ago that there was room available for him! It’s a longer day than we’re used to, but he’s so excited to go to school. He asks to go to the playground daily, so that’s going to be nice that he’ll have TWO playground times twice a week. I can’t wait to hear all his stories.

My work schedule has me in the office for half a day on Monday, Tuesday, and Thursday. We’re going to look into adjusting that in January to account for the days he’s in school so that I can actually enjoy some kid free (guilt free…no strict schedules and babysitter availability) time since 2018.

We paid off the 0% interest card that was sitting at $14,000. It didn’t bother me to have that balance sitting there because it was for a good reason, but it sure does feel good to have that off our plate. Our spending has been relatively low the last few months. This month will see a small spike because I have’t preemptively bought any Christmas gifts, so that will likely be a large purchase amount later this week. We’re also in the market for camping gear since we took the kids camping this past weekend and noted a few gaps in our equipment.

SUMMARY

We’re up $1.5 million from 2 years ago, which is a cool number to see. Considering we paid off large credit card balances, I’m surprised our net worth only went up about $5k since last month. I updated the value of the houses in the past few weeks, so that’s where the hit is. Home values are expected to go down in the Fall, so I like to capture that adjustment from the higher values that appear in the Spring. Our cash value obviously went down since it went towards credit card payments and a down payment on a house (except it only decreased by $11k).

House15 Purchase

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We last purchased a rental property in 2022, after most of our purchasing was done in the the 2019 era. We were busy with 3 kids, and I recently felt like I was coming out of the fog. Mr. ODA and I went to a wealth building seminar in the Spring; my intention was to have that seminar reinvigorate our desire to build our portfolio. It worked well for Mr. ODA, but once options started to show up, I started to panic.

We first went to an open house. It was a bit further away that I’d prefer to maintain a house, and there were a few red flags. For one, it frustrates me that landlords can fill out a seller disclosure claiming they know nothing about the house. I can tell you if I had any roof issues or major system issues in any of my houses, even though I haven’t physically lived there. Mr. ODA wanted to pursue it, but I couldn’t bring myself to get on board.

We were then sitting with his parents one night, telling the story of this open house, and his mom said that she saw a townhouse posted on Facebook that she thought we’d be interested in. It was owned by the son of an old friend of her’s. We asked our real estate agent if she’d show it to us, but she was out of town. So then his mom texted her friend to see if they were there and we could go look. They weren’t there, but they gave us the contractor box code (which is surprising in itself that there wasn’t a sentribox on the door). We went over and the house looked to be in good order, so we put an offer in. We like to surprise our agent with these types of things where all she needs to do is get the contract ratified.

UNDER CONTRACT

The house had been listed for some time when we came across it. It was was listed at $182,500. We offered $182,000 with $2,000 worth of seller subsidy on September 2, 2025. They agreed that day. We ended up needing to redo the contract because the wife wasn’t on the deed of the house, but she had signed the contract, but that wasn’t a big deal.

We had the inspection scheduled for September 10th. There was hardly any issues in the report, and we picked a few of the bigger things to ask for them to fix. They agreed to our list. They gave our agent a receipt showing they had paid someone to fix the items on our list. We did our final walk through the afternoon before closing and were disappointed to find that two of the bigger items (leaks) were not addressed properly and the house was dirty (including things left in the fridge and freezer). Our agent reported that to their agent, and they addressed everything that evening. We swung by the next morning before closing to see it all cleaned up and the leaks addressed.

The appraisal was ordered by our lender and came back at $188,000. That was a pleasant surprise to see we had immediate equity in it.

COMMERCIAL LOAN

We chose to go a commercial loan route. Interest rates aren’t falling as quickly as we expected to see. We have a commercial loan on one of our other properties in town, and I was still surprised to see how easy this process is. The loan qualifications are mostly based on the cash flow of the property. I filled out an application, submitted a ledger of our other property cash flows, and sent in 3 years worth of tax returns.

We were quoted at 6.74% interest. The loan terms are a bit different. Our last commercial loan was amortized over 25 years, but there’s a balloon at 5 years. This time around, it’s amortized over 25 years, but the balloon is at 15 years. A commercial loan also means that the taxes and insurance are not escrowed, and I’m responsible for paying them on my own.

The loan is an Adjustable Rate Mortgage (ARM) too. There was no different to us in the 3 year or 5 year ARM, so for the first time, we picked a 3 year ARM. In the past, it was related to securing our low rate. This time around, we’re expecting rates to drop in the near future, so we locked in our rate for only 3 years. It only changes on 3 year increments (some of the others will change every year after the initial lock period). It also has a clause that indicates the rate has a floor of 4%. I also don’t see a maximum adjustment that can happen (we have other ARMs that state an adjustment can’t be more than 2% at the change date).

We were expected to put 25% down. That would be $45,500 based on the $182,000 purchase price, and would leave 136,500 worth of a loan. They ran some numbers and determined that we could only qualify for a loan of $132,000 based on a rent of $1,400. They only us the cash flow to determine the eligible amount and not the rest of our portfolio. Let’s break that down to the fact that a loan of $136,500 equates to a monthly loan payment of 942.23, and a loan of $132,000 equates to a monthly payment of 911.17. So at a rent rate of $1,400, we could cover the monthly payment of $911.17, but we could not cover a monthly payment $31.06 higher. We pushed back for a second, but in the end it didn’t matter and we accepted the loan of $132,000.

PROS

When I look at this place, it feels like a place someone will rent. It’s clean, feels like home, and has a good layout. It has a closet available for a washer and dryer, which is a plus. Both bedrooms are upstairs and each has its own bathroom, and there’s a powder room on the main floor. It’s more secluded than other units in the complex, giving the occupant more grass area to hang out in the front and back.

CONS

We do have some concerns. The townhouse is at the back of the neighborhood. The entire rest of the community has parking right outside their front door. This group of 4 townhomes is separated from the parking lot, so you have to walk a bit further. The trade off there is that it’s secluded, you have a front “yard” (instead of pavement), and you’re more secluded from your neighbors.

I didn’t want another townhouse in our portfolio. With a townhouse, your value is strongly dictated by what your neighbors have done (or not done) to the property. As much as we don’t plan to resell these properties in a short time frame, I do have the thought that I want to be able to sell it when the time comes.

Also with a townhouse, you’re also at the whim of a community manager that is likely not putting utmost effort in. We asked about the HOA at closing and the previous owner said the cost used to be $35 per month. When it was that cheap, they weren’t paying their bills, so the lawn wasn’t mowed and the trash wasn’t removed. They increased the price to $95 two or three years ago, and that has made a difference in the community’s upkeep.

The HOA is due monthly, which is an inconvenience and a surprising process on their part. I plan to pay it monthly until I have confidence in their ability to process my payment and apply it to my account timely. After some time, I may pay in advance. I just went to process the first payment and planned to pay 3 months worth, but then realized that will create a harder tracking mechanism on me right now.

CLOSING

We had our closing on October 16th. It was super quick and easy. I listed the house for rent that evening.

SUMMARY

At this point, we have the house listed for rent at $1375. We had determined the range for rent during our purchase evaluation. Unfortunately, I hadn’t looked at the current market by the time we went to list, and there’s quite a bit out there. I’ve shown it to 2 people and have another showing today. One of the people from the weekend said they were seeing other places on Wednesday, so I’ll hold out on any changes to the rent price until this weekend.

October Financial Update

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We had two tenants move out at the end of July. We also had back to back trips scheduled for the end of July and beginning of August, with the kids starting school on the 13th. We also had the cruise planned for the end of September into October, so that was a decent push to get the rentals rented before we left. We put countless hours into those two houses and it definitely took its toll.

RENTALS

As of October 1st all our rentals are rented! That’s a good feeling after two months of vacancy. This is the month of taxes. We have several houses that are paid off, which means they aren’t escrowed, and I’m responsible for paying the taxes and insurance on them. The 4 houses we have in KY are owed this month, and it’s about $7k worth. We’ll owe 2 houses in VA that come to about $3k next month.

I have a couple of houses that are struggling to pay rent on time. Usually it happens for a couple of months and they get back on track, but that’s not happening quickly. I’m trying to remain optimistic, but there isn’t a track record of it getting easier if they have taken this long needing to catch up.

We closed on a new property near our house. It’s a townhouse that we hope to get rented later this month. We’ll see what it looks like once it’s empty, but it didn’t appear we’ll need to do anything to it to get it rented (which is how we buy our rentals). There will be separate posts going into the details of each rental turnover and the purchase of House15 using a commercial loan.

PERSONAL

This is the last month for the 0% interest credit card. When we have a major purchase on the horizon (it was house-wide carpet this time last year), we open a 0% interest credit card. We started this concept about 8 years ago. We look for a credit card that has 0% interest for at least 12 months and that gives us a bonus of some sort. We make more than the minimum payment each month and then pay it off before the deadline. A default payment can cause you to lose your 0%, so it’s important you’re making your payments. But we don’t pay a lot towards it because the money is doing more for us in our savings account (or the investments) than it would by paying down a 0% interest balance. This time around was a bit different. The carpet only cost us $10k, but the balance is over $14k. This credit card had the same incentive as our typically used card (2% cash back), so Mr. ODA used it a majority of the time. For a while, my goal was just to pay what gets our balance lower than the original balance from the carpet. But then we had some big rental purchases that we put on the card, and it just wasn’t worth paying $5k+ to the card. We will make a transfer from our big savings account to make that payment at the end of the month.

Mr. ODA’s last pay check arrived on October 11. He took the “deferred resignation program” as of April 30. The sunset date was September 30, so that covered the payout that we just received, including his balance of annual leave.

Outside of rentals, our spending has been minimal. With the cruise, we didn’t spend much since that was a week of almost everything paid for in advance. The dog had his annual check up, so he was the bulk of our costs. We have our routine costs we see, but happy to see lower balances after all the rental work costs.

SUMMARY

I don’t even want to admit what is about to leave our account this month. I guess the positive is that it’s under $100k..? We have to pay the taxes on the houses that aren’t escrowed, pay off that credit card, and buy a house. At least the house purchase goes right towards equity. Since I didn’t get all the account numbers yesterday morning like I planned, here’s an update that captures our new purchase.

August Financial Update

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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

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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 Options

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There are options that give the tenant flexibility, while protecting your financial interests in a rental property. I talk about this in some fashion about once per year, but I like to give the reminder.

In January, I ran all my usual numbers to determine if any properties needed a rent increase. The last few years have really hit our margins – insurance has drastically increased, taxes have increased significantly, and the regular trades costs have increased over time as well. During this process, I determined that 5 houses needed some sort of increase in their rent. One was the responsibility of my property manager, and the other four I wrote up the notifications, put them in the mail, and then emailed them also.

I’ve had two tenants respond back that they intend to move in the next year, and they wanted month to month. We don’t agree to month to month options. Well, I should point out that for significant financial compensation, we would consider month to month. However, the expectation is that having a long term tenant renew their lease is less work month over month. If they’re on month to month, I’m constantly watching and waiting for their 30 day notice. Additionally, there’s a concern that their 30 day notice comes in October or November, leaving me with a mid-winter lease that I’m trying to get filled.

Instead, I provide a few options that protect me. I’ve done the “buy out” or “penalty” option multiple times in the past, and that has served me well. I haven’t needed a short term lease option, but since there are certain circumstances with these houses, I put that offer out there.

In both cases, the tenant said she wants to be able to leave sometime in July/August. This is manageable to me because I can likely rent it under a fairly quick turnaround.

  1. Short-term lease
    While I would typically require an increase in rent to cover a short term lease, I was already in conversation about rent increases, so I let it be. I offered a July 31st or August 15th move out. In both cases, I know the house is going to require work. I’d like to have the last two weeks of August available to me for construction activities, instead of going into September and trying for an October 1 lease start date.
  2. “Buy out” options (e.g., penalty payments)
    In this case, I have the tenant sign a year lease. However, the lease comes with “lease break clauses.” The penalty for breaking the lease ranges based on the time of year. In all cases, I require 30 days notice and full payment of rent through the date given as notice. If the tenant wants to leave before 8/15, then there’s no penalty.

    If they want to leave between 8/15 and 9/30, then they have to pay the equivalent of one-month’s rent.

    If they want to leave between 10/1 and 1/31, there’s a two month penalty. This is because finding a renter during this period is difficult. There aren’t as many people looking during the winter because most leases are spring to spring, so the turnover is fairly cyclical, and because most people are distracted with starting school and all the holidays happening during that time rather than looking to rent (or even buy) a house.

    If they want to leave between 2/1 and 3/31, there’s a one-month penalty. Again, this is to cover the longer time it will take me to find someone to take over the lease period, and it provides me with a year-long lease (which most people are looking for) that ends at another inconvenient time for turnover in the next year.

    If they want to leave between 4/1 and 5/31 (which is the end of their lease term), then there’s again no penalty just as there wasn’t for the first few months of the lease term. I’ll be able to get work done on the house and list it for rent, expecting a decent pool of people interested in a rental.
  3. Lease transfer option
    As a final option, which was offered to us when we lived in an apartment building, a tenant can agree to a year-long lease with no extra terms. They then have the knowledge that if they want to “break” the lease agreement at any time in the next year, they are responsible for paying rent until a new tenant is found. They can move out, but they’re on the hook for paying rent until a new tenant has sign a lease.

    This is risk on their end. In some cases, I may be able to get someone in just a week or two. However, if it’s the winter, it could mean that they’re paying a month or two months worth of rent while they’re also living and paying rent somewhere else.

    The only time that I’ve used this option, the tenant provided notice on December 1st, which as I’ve pointed out is not a great time to be searching for a new tenant. Since he was already not living in the house (he had moved back in with his parents), he agreed to empty the house of his furniture so that we could still show it during that time. He paid rent on January 1st per our agreement, and luckily we found someone to take over the lease as of January 7th or 8th, so I refunded him the prorated amount of rent.

The “lease take over” concept was done by a management company in a fancy apartment building outside Washington D.C. It never hurts to ask for options if you’re the tenant. Just understand that managing the rental is work that the landlord has to do, and their “profit” is how they’re paying themselves for that. Especially in today’s environment, that margin is quite small. So when they tell you they don’t want to have a lease fall through in the Fall or Winter, understand how this is their investment and their income, so they need to protect themselves, even if it’s not necessarily what works for you or is your preference. And as for landlords, treat your tenants nicely and be as flexible as you can; it always pays off for me.

Rental Cost Changes

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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.

October Financial Update

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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.

5% Rent Cap

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The President issued a statement calling on Congress to cap rent increases at 5%, specifically for corporate landlords. The statement appears to define corporate landlords as those owning over 50 units in their portfolio. This was not an executive action that is implemented. And while my numbers are different than the numbers of a “corporate landlord,” I do think it’s worth hearing a landlord’s side. I feel that there’s a lot of spite against landlords without a lot of knowledge about their actual financials.

I admit that there is a possibility that some of these companies with large complexes could be raking in on the fees or “utilities” that are in the unit, without actually providing a properly maintained building, but that’s not the case for everyone that’s labeled as a landlord. No one seems to step back and see that this is a business model for landlords, and while everything else around us is increasing in costs, rent needs to as well.

No one predicted such a significant rise in product costs or housing costs in such a short period of time, but here we are. And landlords aren’t in the business to graciously eat the costs of homeownership for renters.

LANDLORD COST INCREASES

The Presidential statement released refers to a press release that starts with, “Today’s U.S. Labor Department Consumer Price Index (CPI) report revealed costs remained largely unchanged in May, with overall inflation cooling faster than economists expected as the Fed considers finally reducing interest rates below a 23-year high.” Is there a comparison to costs that landlords had to take on because the costs of everything increased faster than expected back in 2020-2022? Increases have been seen on small things like a maintenance call for a technician, but also big things like property taxes and insurance.

That same article goes on to state, “Since 2019, the cost of rent has risen 31.4%, with wages only increasing 23%, as tenants on average need to earn nearly $80,000 to not spend 30% or more of their income on rent.” In 2019, on one of my properties, the taxable assessment was $95,000, which equated to about $1,200 per year in taxes. In 2024, the taxable assessment was $242,000, which equates to about $3,000 per year in taxes. That’s a 61% increase in just my taxes over that same period of time where they’re complaining that the cost of rent increased by 31.4%. If rent had been set based on the 1% rule in 2019, rent would have been $950 per month. Had I increased 5% each year from 2019, it would be $1,212 in 2024. If I set rent based on the 1% rule now, it would be $2,420. However, the rent on the property is $1,750. So while it’s more than 5% each year since 2019 (the baseline the government is using), it’s set at an amount where I capture my expenses for owning the house, while also turning a small profit.

It’s taboo for a landlord to turn a profit, but that’s why we’re here. It’s an income stream that we’re establishing for profit. I don’t get to pay myself an hourly rate for managing the property. So this “profit” can actually be looked at like a salary. Every time I need to show the property to a prospective tenant, the lease signing, the walk through, every call or text you make, every trade that I need to schedule and coordinate with the tenant on, any fixes or improvements that I do myself. All of these minutes in a day add up, and I’m not directly paid for any of them.

On the particular house that I’m using for the example, we are assuming $300 per month in profit, which comes to $3,600 per year. Would you work as a manager of a company (e.g., hiring trades to fix things, performing maintenance, making sure all bills are paid timely, general management of having liabilities), for only $3,600 per year?

I wrote a post last Fall about the changes in my rental fixed costs from a year prior. I plan on doing the same this fall when more tax information comes due. The house I’m referring to has been at $1,750 for the past two years. However, between 2022 and 2023, my taxes and insurance have increased by $255 per year. That’s a cost that I’ve “eaten” from my “profits.” I could have said that equates to $22 per month increase, and I could have projected a similar increase for the year coming. I could change their monthly rent to be $1,790-$1,800 to keep my profits on a similar path. However, I didn’t, because they’re good tenants that haven’t had many maintenance calls.

However, if I don’t increase every year, then I could find myself in a sudden deficit like I did during the pandemic because costs increased faster than projected. A 5% cap could actually incentivize annual increases because I wouldn’t want to be caught behind and not able to catch up down the road.

LEASE TERMS

The Federal Housing Finance Agency announced protections for renters in multifamily properties that are financed with loans backed by Fannie Mae and Freddie Mac. The protections include: (a) requiring 30 day notice before rent increases; (b) requiring 30 day notice on lease expirations; and (c) providing a 5 day grace period before imposing late fees on rentals. I know for a fact that every single lease I’ve executed personally already has all of these requirements in it, at a minimum. In many cases, there’s a clause for 60 day notice of a potential rate increase, with negotiations being completed before 30 days from lease expiration.

Some states already have this codified. Other jurisdictions have landlord/tenant agreements that give the tenants rights (and awareness of rights) that can be lobbied against if the landlord is noncompliant.

There’s a clause that I’ve seen that requires expired leases to auto-renew on a month-to-month basis instead of for another year. I would argue that a requirement to renew a lease month-to-month instead of annually actually hurts a tenant. A landlord then only needs to give 30 days notice of a rent increase, and they could technically increase it month after month.

SUMMARY

If the ‘cap’ were to apply to me, then I’d be more inclined to increase rent every year. As a general rule, I increase rent for long term renters by $50 every two years. When we turnover a property, we will evaluate market rent in the area and set the monthly rent at what we see (which could be more than $50). In some cases, the evaluation ends up being too high, and we set the rent at something we think more people can afford. For example, there were comparable houses renting at $2,200 near a house we had listed. We’d rather get the property rented than shoot for top dollar, so we listed it at $1,600. While lower than “market value” probably called for, it was $400 higher than what we had it previously rented at, which covered cost increases that weren’t previously covered.

In the post that I previously linked, I highlight that our standard for increases barely offsets our increase in expenses. While we manage each house individually on setting the rates (asking ourselves: do we think the tenant can absorb the increase, do we have to increase to cover actual costs now), our monthly income among all houses was increased by $475. If you add up the cost increases for taxes, insurance, and property management (increased rent means increased fees because fees are based on the rent price), our costs went up $415 (and that’s before any service calls). On a whole, we’ve offset the ‘fixed cost’ increases. We’re taking ‘losses’ on houses where our routine for increases is slower. Therefore, having 13 properties affords us the ability to be more lenient with tenants and to keep good tenants in the house instead of forcing them out with hgher rent increases.

I support having protections in place for tenants. I’m sure there are landlords out there that aren’t interested in playing ‘by the book’ and just being decent human beings like I intend to. However, landlords are people too, and they’re running a business. Creating boundaries without fully understanding both sides of the situation and focusing on data points that only support your theory is unfair. I’ve joined the Landlord/Tenant Advisory Committee in my city. I hope to bring more awareness to the landlord side of things and bridge the gap between landlords and tenants when it comes to responsibilities.