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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.

Rental Property Work

mrsonedollarallowance2 Comments

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

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

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

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

PROPERTY 7

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

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

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

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

PROPERTY 3

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

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

PROPERTY 2

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

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

PROPERTY 9

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

DRIVE BYS

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

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

House 4 Turnover

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

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

TURNOVER

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

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

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

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

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

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

TENANT SCREENING

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

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

TENANTS THUS FAR

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

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

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

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

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

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

SUMMARY

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

Lack of Rental Payment

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

THE DETAILS

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

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

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

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

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

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

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

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

TENANT VACATES THE PROPERTY

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

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

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

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

TURNOVER

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

BACKGROUND & EXPECTATIONS

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

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

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

LESSON

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

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

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

April Financial Update

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I had this post mostly written by Wednesday, but we traveled earlier this week, and I haven’t kept track of the day very well. This is the first I’ve been able to update our net worth and get this done. Ironic, considering how I started this post when I expected it to be on time. And now..

This past month has been exhausting on me. I knew March was going to be busy. We had a bunch of sports schedules to manage, lots of kids birthday parties, hosting my dad for a long weekend that coincided with 3 family birthdays and the first anniversary of my mom’s passing, an assortment of Easter activities, a trip, and random other events. On top of managing these day-to-day things for our family, our deck replacement started, and we had to work on a massive turnover of a rental property. I’m in a perpetual state of tired these last few weeks.

DECK REPLACEMENT

On July 2nd of last year, a storm blew threw that destroyed our neighborhood. Honestly, we’re surprised by how little actual structure damage there was for our neighborhood because it looked like a war zone with the amount of trees down. A couple of houses had a tree fall on their roof, but only cause minimal damage that resulted in shingle replacement. We appeared to bear the brunt of the worst, which was a tree falling on our deck, crushing our furniture, moving all the supports, and cracking the concrete blow it. Another tree missed falling on one of our cars by centimeters, but that limb ended up cracking our driveway apron. We struggled communicating the extent of the damage with our insurance company, and they eventually realized what was needed and paid out on it five months after the incident. Our construction started on March 18th.

It hasn’t been an easy process. It’s emotionally draining on me because there were communication issues with our contractor that he wasn’t taking responsibility for. Then there were minor issues, but issues nonetheless. For instance, they installed waterproofing so the patio would be a dry area, but they cut through one of the barriers. Instead of realizing that was going to be an issue and fixing it themselves, I had to point it out. Then we went out there while it was raining to check it, only to see that there are 3 spots where water is just pouring through the seams. That just takes a lot out of me to have that conversation. They cracked off the top of our sewer cleanout, which not only made a mess in the yard, also caused a backup into our basement tub and toilet once it was glued back on because of a pressurizing issue (we think).

Then there are those hidden things that take energy, such as managing how to move money out of savings (while not exceeding the maximum of six transfers) and keeping track of all the bills, while ensuring the checking account has the right amount of money to cover the bills paid.

RENTAL PROPERTIES

Everyone paid rent on time! I had two technically pay on the 6th, but I sat waiting to see if it showed up before reaching out that morning. One of our tenants bought a house and vacated as of March 31st. They actually had left the house a little early, which was really helpful to us because the house needed a lot of work. The house had been flipped before we bought it. We knew everything was going to eventually need attention, but we hung on as long as possible. The neighborhood is really nice, so it was time to bring the state of the house up to a better standard. It had been “good enough” all these years, but there were definitely some items that should be replaced. This ended up being a huge overhaul, costing us over $10k. I’ll go into all the details in a future post.

NET WORTH

We’ve made a few substantial payments on the deck. We had been investing the money from the insurance company, while we waited for them to finish their estimates and then while waiting for the contractor to begin. Our taxable investment accounts have decreased a bit from that, and they’ll continue to decrease as this project finishes up in the next 2-3 weeks. The market is lower than it was a month ago, but our house values are starting their upward Spring trend, offsetting some of that loss. Overall, our net worth increased over the last month, but only by about $4,500 instead of the drastic increases we had been seeing month-to-month.

March Financial Update

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We’re just going to cut to the chase – $4 million net worth! I mentioned that this was a goal for this year. Unlike other years worth of large jumps because of purchasing houses, this was less in our control (granted, our market allocation decisions are what’s driving it…. and by “our,” I absolutely mean only Mr. ODA’s because I don’t do anything in that realm).

RENTALS

Well, we’ve had a quiet month. What’s going to be funny is, I’m going to list the things that we did. Quiet doesn’t mean silent or without effort, but we’ve had a rough go of it over the last year, so this was a welcomed break.

We had termites at a property. We pay $98 annually for their termite warranty program, since we found extensive termite damage and live termites when we bought the house. We’ve had to treat the house several times, so this $98 is a steal. However, I’m wondering why we keep needing to treat the house.

We paid $125 for a plumber to go out to a clogged sink. When we received the invoice, it was for 2 plumbers to go. Between the phone call that they were on their way and the tenant saying they were great, only 35 minutes had elapsed. The company charged us almost $300. Mr. ODA called to ask why they choose to send two plumbers to do a one-man job, while also charging us for it. The owner said it was for liability purposes, which Mr. ODA fought back on. They agreed to a reduced rate, but we were only charged $125, which was less than agreed upon.

We had our third tenant move in, after we unexpectedly had to turnover three houses in the middle of winter. We also were given notice by another tenant that she’s vacating by the end of March. We handled increases for two houses (one handled by a property manager to increase $50/month, and one handled by me to increase by $25/month).

We had one tenant pay on the morning of the 6th with no communication, so I did have our property manager let them know that’s not going to be ok. We also had a usual suspect pay late, with the late fee. However, their communication was frustrating. They said they’d pay on the 6th. At the end of the 6th, they said the money hadn’t cleared like they expected. No communication on the 7th. I asked for an updated on the morning of the 8th, and they said it would be that day. At 11 pm, I hadn’t received anything and reached out. I was then told that money was going into the ATM right then so that she could pay. Sometimes I wish I could do a deep dive into tenant finances so that I could help them out.

PERSONAL

Mr. ODA has a trip in July where a group of guys will hike in the Rockies. Our family is going out before that trip is scheduled to do our own exploring. We booked 4 round trip plane tickets, and Mr. ODA handled the lodging booking for the guys’ portion. That’s almost $3,000 worth of purchases, so our credit cards are higher than usual.

Speaking of the plane tickets. We purchased gift cards from Costco for Southwest. The gift cards are essentially $450 for $500 worth of purchasing power at Southwest. We bought two, therefore saving $100 on the tickets. For an extra few clicks on the computer, and the 15 minutes waiting time before the e-gift cards were delivered to my email, that’s $100 that can be used somewhere else.

We bought a new vanity for our bathroom. That was about $700 for the vanity, faucet, toilet flusher, and mirror. I sold the old vanity (in rough shape) for $30. And because I’m proud that I did most of it on my own, here’s a picture. I needed Mr. ODA’s help with the supply lines because I lost patience with how tightly they were screwed on and my lack of progress. I cut the baseboards down to size, except I somehow measured wrong on one quarter round cut (I was cutting while it was on the wall). Mr. ODA cut and installed the replacement piece for me.

We finished up the ski season. The kids did great. I was really proud of them for sticking with it. We used our season pass well (i.e., exceeding the cost had we bought individual tickets for each visit). I took two of the three kids to the aquarium, and we took the baby for a procedure at a local children’s hospital. We’ve started tee ball for our oldest. Our March is very full and busy, so we’re getting into the swing of things and keeping track of the schedule.

NET WORTH

Well, we far exceeded that $4 million goal. The market went up big, with our biggest changes being in our retirement account, IRAs, and cash. Our cash increase is offset by the lower amount in our Treasury account. Some of the short term bonds were transferred back into our savings account, and we’ve kept that money in savings since our deck replacement is slated to begin.

Lease Break Agreement

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Last March, it was time to make a decision on renewing the tenant’s lease on House9. There were several variables at play, and we ended up adding “lease break” terms to the renewal agreement. Here’s how and why we did such a thing.

LEASE BREAK CLAUSE

All of my leases are set up as a lump sum fee. This means that if the rent is $1,000 per month, then the lease is a legal binding agreement for $12,000 for the year. If you wanted to leave 6 months into the agreement, I could hold you accountable for the entire sum. In reality, this wouldn’t happen. I’d have to show a good faith effort to re-rent the property once the tenant vacated the property, and they’d only be responsible for the time it was vacant, at most.

The point here is that there is no section of my lease agreement template that allows the lease to be “broken,” and the tenant to leave “early.” In some instances, a tenant will request the flexibility to leave early, and we typically charge up to a month’s rent for that ability. We most often use this for tenants that expressed interest in buying a home. There are some other fee structures that we use depending on the circumstances, but this will focus on those instances where we know in advance that this is a possibility.

ORIGINAL LEASE AGREEMENT TERMS

The tenants had signed their original lease in June 2020. From the beginning, they were clearly money savvy. They had said from the beginning that they were looking for a place they could live until he finished his schooling, which was about 2 years away. They negotiated a two year lease for $1,280. In September 2021, so 6 months before their lease was set to expire, he reached out with an offer. His program was set to end in May 2023, but they didn’t want to commit to any longer than that since he could be placed anywhere upon graduation. He asked to go month-to-month after that.

We agreed to extend their lease until May 2023, but it would be $1,300 (instead of $1,280) between 7/1/2022 and 5/31/2023. We decided not to engage in the month-to-month conversation that far in advance, which he understood.

In March 2023, we started discussions on their status. They were about to have a baby, the market had cooled for buyers, interest rates were high, etc. They didn’t want to rush their buying process. Instead of paying the premium for a month-to-month lease, we decided on another year-long lease, but it would have a “lease break clause.”

NEW LEASE AGREEMENT TERMS

The new lease was executed for $1,350 per month, which was still a bargain for their property. However, we added lease break provisions, as seen below.

The thought process here was that we were protecting our financial interests based on the time of year. First, we required a month’s notice. Our original lease already states that we can have access to the property to show it to prospective tenants, so that wasn’t repeated here (although it is worth noting that this in our lease agreement, since renting while a unit is occupied is not always a given; we struggled with our property manager in KY getting access to our properties (that was a property manager issue)).

I don’t know if there are facts to back this up, but it seems (through my own years of renting, as well as all these years as a property manager) that most people are looking for a rental to be somewhere between May 1 and July 1 as the start. A quick search tells me that the common months are May to September. However, in the south, we start school in mid-August. If you’re not moved by August 1st, I’d venture to say you’re not preferring a September 1st start date.

If the tenant left in the summer months, then the fee was only 1/2 of a month’s rent. We had a good chance of being able to re-rent the property if it was during the summer and before everyone focusing on back-to-school in the end of August/September. If they requested a lease break between September and the end of March, then it was a full month’s rent. This was due to the fact that the turnover process was going to be longer than our typical turnaround, and it would put us at a disadvantage in re-renting the property down the road. We then put that there would be no fee if they left in the last two months of their agreement because 1) we’d likely be able to rent it quickly, and 2) as a way of showing that we’d meet in the middle since they were such great tenants.

EXECUTION OF THE LEASE BREAK AGREEMENT

The tenant had used our property manager as their Realtor for a new home purchase. She tipped me off that they’ve be giving their notice shortly, sometime at the beginning of November. I naively thought that meant they were newly under contract, but by the time their notice was given, they had already closed on their new home. They purposely waited to give their notice so that they had time to move their belongings without being rushed (which is fine; I don’t know why that reads negatively). On November 24th, they let us know that they’d be leaving by 12/31.

While the fee was due upon notice, per the lease agreement, it wasn’t something I was willing to fight. If you’re a good tenant and hold the lines of communication open, I’m happy to treat you as an equal. They paid the fee on 11/29, and then they paid their December rent on 12/4.

LESSONS LEARNED

Honestly, it worked just as planned. We weren’t able to rent the house for January. The lease break fee alleviated the pressure to settle for a tenant just to fill the house because we had the month’s income already accounted for. We’ve done something similar in the past, and this set-up has worked well for us. It gives a little grace to the tenants and real life needs, while still protecting our interests as business owners.

We put the same type of clause in another tenant’s lease. They executed the clause on February 23rd, letting me know they’ll be leaving by the end of March. If they broke their lease in March or April, there was no fee (their lease was set to expire April 30th, so it’s one month early).

Their are times where a tenant doesn’t know up front that they’re going to find a house they love or a job is going to move them. We handle each on a case-by-case basis. Generally, it’s either going to be a month’s worth of rent as the fee or it’s going to be a fee of $250 (the amount I pay to the property manager) and they pay rent until we find a new renter (which has never taken more than 6 weeks, and is typically a few days turn around for me).

February Financial Update

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RENTALS

The rentals were expensive this month with $4600 paid out. This doesn’t include work that’s currently under way, but not paid for yet.

I paid for a water heater replacement, which was $1,904. I had to pay insurance on a larger property ($793). I paid the balance of the window replacement at one property, which was $1,064. I also paid for a plumber to address a leaking toilet and a rotted faucet ($325). We had a new tenant move into a vacant property, so we had that cleaned before her arrival ($165).

I had to pay for a plumber’s service call ($95) for clogged drains, for them to refer me to a rooter company ($250). I emailed that tenant that preventive measures need to be taken because I’ve not had so many calls to one property. She assured me they have taken appropriate measures and it’s just old pipes. The only problem being that we have several other properties with old pipes that never call for clogs.

We’ve turned over two properties and are about to turnover another property in the dead of winter. It’s so frustrating to be in such a position. All of those stories will be elaborated on in future posts.
– On one property, we charged a lease break fee of one month’s rent to cover our losses (the fee was different based on the month in which they broke the lease). Luckily, that covered our entire month of January being vacant, but we found someone for 2/1.
– Another tenant asked to leave a property because he lost his job. That was handled a bit different because we didn’t know in advance that this tenant would want to leave mid-lease. We told them there’s a fee of $250 (which is what it costs us to pay the property manager to find a new tenant), and that they had to pay rent until we found a new tenant. We didn’t lose any rent on that property.
– Now, we have a newly vacant property because the tenant can no longer afford it. I’m not expecting to recover her unpaid rent at this point. We approved a tenant to start 2/28, leaving us with 27 days of lost rent. However, we sent a lease over for them to sign. They’re currently dragging their feet on signing because they want to pay with their tax return. I don’t love that idea. They’ve been easy to communicate with up until this point, just slow. I’m hoping this gamble works out.

PERSONAL FINANCES

I had to transfer money to Mr. ODA’s account to cover the purchase of our new back door and a new treadmill (although that was only $400). This is an interesting concept for us. Mr. ODA had an account before we met. His account was grandfathered in to new terms and conditions at this bank. He’s kept his checking account and credit card for the rewards (I have access to the account; my name just isn’t on it). Any online purchases go on that credit card. However, that account only receives $250 every other week from Mr. ODA’s pay check (occasionally it’ll receive rent via Zelle). So sometimes, we need to transfer money from our main checking account to cover that credit card payment. All our security deposit accounts are with that bank too. So I had to then transfer from a security deposit account into his checking account, and then have him send that money to our main account. It wasn’t our finest money management moment.

Not much else happened this past month. We’ve gone skiing with the kids some more, I went on a moms’ cruise (which was amazing), took a small trip to piggyback Mr. ODA’s work trip, and have done activities around town. We’re gearing up for a procedure at a local children’s hospital next week, which I’m expecting will wipe out our deductible. Luckily that’s only $3,000, but I’m sure we’ll hit it. We’ll actually be late hitting it this year; it’s usually done in January.

NET WORTH

One of this year’s goal is to hit $4 million net worth. I thought it was going to be a ways away, but the market has been up big recently. We’re only about $14k away from that goal now!

House 2 Turnover & Flooding

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This is long; I understand. It’s a detail account of our experience dealing with a catastrophic event and navigating the insurance process and tenants.

Over the winter, I received a call from one of my tenants letting me know that water was pouring out of the house next door (that’s also ours). The tenants had turned off the heat… when it was 6 degrees for 3 days straight. The water heater is in the attic and a pipe cracked during the freeze. When it started to thaw, the constant water running filled up the house. Our property manager went to the house and found two inches of water throughout the entire house, along with a collapsed ceiling in the master bathroom. Over the next two days, the ceiling in the adjacent laundry room and the master bedroom also collapsed. 

We took immediate action on the water remediation process. The clean up company had to put several fans throughout the house and crawl space after sucking out the standing water. The next step was to purge the damaged drywall, insulation, cabinetry, flooring, etc. However, the tenant was in our way.

TENANT ACTION

The tenant’s renters insurance was responsible for removing their belongings. They created quite the speed bump, and the tenant’s items weren’t removed for 5 weeks. FIVE! The insurance company [supposedly] was requiring the use of a specific moving and storage company, who had no availability. Eventually, the tenant had the insurance company agree to them removing their own belongings to begin moving forward. They finally got their belongings out a week or so after that process started.

When we started going through the process of remediation, the tenant asked to speak with us over their concerns regarding mold. We refused because we have a property manager, and the relationship is between her and the tenant. We asked them to write us an email expressing their concerns, and we’d respond to that. They didn’t write the email. We told the property manager to relay the message that we want the house restored back to the condition (or better) that we kept the house in, and we have no expertise in this area, which is why we hired a remediation company to handle it, and I’m to trust that they do their jobs correctly to dry out the house. After that message, they didn’t push any further on the subject.

There was a nuance in the lease that if there was a catastrophic event, the tenant could choose to be let go from the lease agreement with 14 days; after that timeframe, they’re still considered responsible for the lease. The tenant read this and wrote us an email to enact it about 6 weeks after the event. Technically, we could have held them to their responsibility. However, there wouldn’t have been anything good to come from that. The tenant went from being understanding to quickly being nasty and unreasonable; it was best to cut ties.

We had told them not to turn off any electric (they were worried that water and electric don’t mix, so they shouldn’t keep the electric on; we shared that we need the house kept a reasonable temperature, so that’s not the right answer). However, they did turn off the electric shortly after that conversation. They ended up not getting their security deposit back to cover the utilities incurred and lost rent for their lack of payment through their notice. We also charged them for leaving the refrigerator in poor condition and us needing to get extra cleaning for that (which didn’t work and we ended up needing to replace it, but that wasn’t within enough time for us to know before the security deposit notification was due).

REMEDIATION CONTRACTOR

We hired a company to come out and dry out the space right away. I don’t know the details of this process because I trusted the company to know what needed to happen. They sucked up the water and put big fans throughout the house and crawl space to dry everything out. Their process was at least a week long.

They submitted their bill and dry logs to the insurance company for about $22k. The insurance company rejected their process and everything they did, and they agreed to pay out about $16k. The contractor balked at it, but we said we didn’t know how to help, and he had to speak to the insurance agent himself. They went back and forth for weeks. The contractor submitted a new invoice for $25k (why more than what it was originally?!). The insurance company eventually agreed to their $22k figure.

I tried to pay him in July for work done in January (that’s how long it took!). My bill pay system flagged the check because of the amount, but never told me. They claim it was quickly released and delivered as expected and on time, but the company never received it. I had my bank place a stop payment on it. Then I went to the bank to get a cashier’s check and mailed that to the company. That was 3 weeks ago, so I’m assuming he got the check since I haven’t heard from him.

REBUILD CONTRACTOR

We received three quotes for cleaning out the damage and rebuilding those parts of the house. None of the quotes were close to what the insurance adjuster gave us as an estimate. One of the three companies that gave us a quote asked to speak to our insurance company. They went through all the line items, and the insurance adjuster agreed to the contractor’s price for the work, which was about a $6k difference. 

The initial contract with this company required 50% of the estimate up front. However, we didn’t feel comfortable handing over $25k. I spoke to the contractor, and he agreed to three payments. Their first payment was allowed via credit card, so we were able to capture $340 worth of credit card rewards on that $17,000 purchase. The second $17,000 was due upon flooring completion, and it had to be paid via check. The final amount was due upon substantial completion.

I spoke to the contractor about the vinyl floor in the bathrooms, and he actually said they’d be willing to lay the luxury vinyl plank for the rest of the house through the bathrooms also. While I’m sure it cost them less to handle such a change, it was nice that he didn’t charge us for a contract adjustment.

Once the contract was executed, we had to pick out all the replacement things. This sounded overwhelming, but it was pretty straight forward! I only had to tell him the paint color I wanted, and then pick out the cabinets and flooring. I went with a white cabinet for the lowers in the kitchen and the bathrooms. The upper cabinets in the kitchen are a brown, but I wanted to “upgrade” where I could instead of trying to match the existing. I figure eventually the upgrades will come if we ever want to sell, so I may as well do it nicely now and only have to change a few things down the road.

There were a few more selections during the process – little things like knobs and light fixtures. Again, I chose nice light fixtures, even if they didn’t match the brass that was already in the house.

There were some hiccups along the way. They painted the house the wrong color. I specifically discussed changing the color from the what was there since the whole house was being painted. The original house was built with brown carpet and yellow walls. We kept it the same color all along because we didn’t want to go through the effort of changing it (cutting in, two coats, etc.). This was our chance to change it to the color we’re using on our houses to make it more consistent. With a grayish floor, it worked better to have a light green than a yellow anyway. They also threw away our bathroom vanity counter tops, so they had to replace those at no charge to us because they were supposed to be salvaged.

All in all, everything went well with the contractors.

OTHER REPAIR WORK

Our previous tenant had burned the kitchen countertop. We decided to just keep the burnt counter and re-rent it for the time being (we didn’t have a good amount of time to add another contractor into the mess we were cleaning up at that time). Well, with the bottom cabinets needing to be replaced, here was an opportunity to replace the counter. I asked the rebuild contractor what he could charge. He was going to charge over $2k to replace the two bathroom counters and the kitchen counter.

He made the mistake of giving me the link to the countertop he would use for the bathrooms. It was $119. He charged $221.50. He also had a labor charge, plus a 10% charge for overhead, plus a 10% charge for profit. Once I saw all those details, I was put off. We said we’d just keep the bathroom counters and sinks – they were cultured marble, so they were fine, just more yellow than white. Then his guys ended up throwing away our counters by accident, and we ended up getting new bathroom countertops and sinks anyway for no charge to us.

We asked our handyman if he could do kitchen counters. He was able to get the new countertop installed and the sink set for under $500.

INSURANCE COMPANY

Our insurance company was actually really difficult to work with. They were willing to hand out money, but they weren’t there to communicate. Several voicemails and emails were left unanswered. Sometimes we’d get a random email that would say “I put a check in the mail,” but mostly, we just kept making phone calls that went nowhere.

Depreciation

As someone who worked in finance, the term depreciation makes no sense to me. The insurance company kept about $6k of our total amount they agreed to pay on the estimate. Once all the work was completed, we provided receipts of the work, and they paid out the rest of the estimate.

Because we had the rebuild contractor not do some of the activities from the original estimate (the washer and dryer were thrown away, so they weren’t hooked back up), or we had our handyman handle some of the items because they weren’t getting done (hooking up the dishwasher), the final estimate was lower than the original amount. Then I included the invoice from our handyman for the work that he accomplished. The total between these two invoices ended up being more than the original estimate from the rebuild contractor, which I expected was our loss, but the insurance company actually paid out on it.

Lost Rent

The insurance policy covered the lost rent for our vacancy. They took our lease agreement, determined the per diem amount, and then agreed to cover until the work was completed. There was a disagreement on when the work would be completed (they took a date off some paperwork that we had never seen, while we were told by the rebuild contractor that he’d be done by April 20th). Once we got that sorted, they sent us a check to cover all of March and most of April. We were able to get the house rented at the end of April, so it was only truly considered vacant for 3 days of the year, which I find impressive.

Utilities

The tenant turned off the electricity about a week after the incident (although we told him not to). Luckily, I have a program set up where the utilities aren’t actually ever turned off, but they’re reverted back to my name. We submitted receipts to the insurance company, who agreed to pay the excess amount of charges due to the house being open to the elements (missing ceiling and insulation). Their calculation was based on an average of bill total. Mr. ODA is a math wizard and didn’t accept that. He performed a calculation that equated to an average daily use of electricity, along with separating out the bills by days (because one of the bills was half a month of normal activity and half with the house open). The insurance agent said he wasn’t going to fight us over $50, so he just sent it to us. It was an interesting statement, considering all the calculations Mr. ODA did was in the original submission, and he decided to do his own math instead of accepting what Mr. ODA had said in the original email (granted, looking back, he may have never even read the email because that was the norm).

The water was turned off at the street when the initial report of an issue came in. Once everything was dried out and we had the pipe repaired (a $350 activity caused tens of thousands of dollars worth of damage .. gosh), we needed the water turned back on. That was a horrific process with the City of Richmond that ended with me screaming at a lady on the phone in some random street in my neighborhood during a walk. In order to speak to the City, you have to wait on hold for at least an hour; you can’t schedule water to be turned on via an online account. So after waiting 90 minutes for the first time to get it scheduled and being told no one needed to be home, they showed up, no one was home, and they left. There was no notice. No phone call. No voicemail. No email. No note on the door that they were there and tried to get in touch with us. Nothing. I was livid. So I called again. I waited over an hour. Then the woman who answered was very much not helpful. The conversation went quite poorly. I yelled, she wouldn’t give me a supervisor. Horrific. I finally got a new time scheduled for days out (and their window was 8 am to 5 pm – a lot of anger for that). They unlocked whatever it was that needed to be unlocked and our contractor handled it from there because it was done so poorly in the scheduling sense.

NEW TENANT

We actually struggled to find a new tenant. We were able to list it while the final clean up was happening. We had a lot of interest, but not a lot of people qualified. A neighbor had watched the rebuild happen, and she wanted the house. She didn’t qualify. And instead of accepting that information (and we’re pretty lenient), she started threatening us for not selecting her. Our initial choice fell through – and that’s why you should always be nice. She may have been a runner up, but she squandered all opportunities because of the way she handled herself and treated us. The new tenant was able to move in at the end of April. At the time that she moved in, she had two jobs. Unfortunately, she was laid off unexpectedly in June from one of the jobs, so she has struggled to pay rent in July and August. I’m understanding, but I didn’t appreciate that we had to ask where the rest of rent was and she didn’t send the late fee. Again, I’m lenient and understanding, if you’re nice. We had another tenant say that she needed another week to pay August rent because sickness kept her out of work, and I had no problem with that and waived the late fee. She told me up front; I didn’t need to go asking questions and wait all day for a response.

The new tenant did complain upon move in that the house wasn’t clean. We knew that may be an issue. The contractor’s cleaners didn’t do a great job, but the house was generally clean. The new tenant did mention that there was just a little too much dirt from the renovation to be acceptable, so we hired a cleaner to come in and get it done. Other than that, we haven’t had any maintenance requests or complaints from her.

For how big of an issue this was, I’m impressed by how easy it felt to come out the other side. We were lucky to have insurance cover lost rent and expenses, and they didn’t give us a hard time on nearly anything (we’re currently trying to manage a claim on our own how that is far from easy). We were able to re-rent the house for $150 more than it had been rented at. So while we had the house vacant and being worked on for 4 months, it really wasn’t too bad.