I had a dude email me this week. Says he found my blog and asked if I do much with investment property. Then it dawned on me that I have never blogged about it.
The biggest client I have worked with on investment property is……..me! Want to hear my story?
I use to live in Gainesway. I bought that house for about 80% of it’s potential. I fixed it all up, doing most of the work myself. We decided to move. I really hated to sell the place since the market had tanked (this was 2007) and I had done so many long term improvements. I didn’t like the idea of giving somebody else the benefit of all I had done.
I was having lunch with my kids one day at their school and a mother I knew suggested I rent it. To be honest, it scared the heck out of me……..but I also liked the idea.
So, we bought our next house in Andover Hills and I “Finished” all the work I needed to do on the old house. I got it looking good and put it on the market. Having lived there, it was really hard to think about somebody else living there. I finally found somebody that looked good and we signed a lease. They have been there for 6 years.
I really didn’t have any plan to keep going, but I did. I found another small ranch house in Century Hills that had a remodeled kitchen and bath, plus a 4 year old heat pump. The house was just dirty. It needed paint and carpet. So, I bought it, did paint, carpet, new lighting and a new range. It rented quickly.
Then we decided to move again. After keeping my old house the last time, my default was to keep the Andover one after we moved out. This one rented quickly too. There aren’t many 2500 square feet houses for rent. While they cost a fortune for the turnover, they are easy to rent and I’ll have a huge asset for retirement.
I got this wild idea that I needed one that was more about cash flow than creating an asset for the future. I bought a shotgun house on the edge of downtown for $18k. There were lots of positive things about this street. I could see it turning around in time. All was well until the tenant had a home invasion. I think she was selling drugs. She came with the house. I would have never picked her. I sold it 4 months after buying it. It just wasn’t the property for me. Every investor has a different model, and this was not a good fit for me. Some people like the super low end rentals, some like multi-family properties. Everybody has their own niche.
I then got word of a property in Ashbrooke from a prospective tenant who looked at my little ranch. His family was selling it. It was pretty rough. I got that one for a pretty low price and spent 6 leisurely months fixing it up. It got an all new kitchen, hardwood, a lot of work in the bathrooms, new roof, windows, hot water heater and HVAC. For all practical purposes, it was effectively a brand new house. Other than maybe carpet and paint, I shouldn’t have to spend a lot on it for the next 15 years.
Because this gets addictive, I just bought two more small ranches. I think I might be done for a while though!
Here is how I roll:
1. If a house won’t cash flow on a 15 year loan, I don’t consider it. Neither should you.
2. I only pay wholesale (unless it is my primary residence). I like to be able to make all the improvements needed to keep it in good shape for the next 10-15 years and still get some free equity.
3. I like to make my houses a step above what other houses look like. People always want the best house they can find. By doing this, I have always been able to pick the best tenant.
4. I try to make long term decisions. I’ll do hardwood if I can because you can refinish it forever. I do wood cabinets rather than melamine film because I can paint them or repair any minor damage. Most landlords just go cheap and have to keep spending the same money over and over again.
5. I like single family homes. You can sell a house for retail whereas you can only sell something like a duplex to an investor, and they don’t pay anything over wholesale.
6. I only rent to the best applicant. I would rather have a house sit vacant than stick a bad applicant in it. It’s that whole long term verses short term thinking.
7. I always remember my tenants are people too. It is my house but their home. They get a good house and deserve a prompt response when anything needs fixed. Not only is that just the right thing to do, it is good business. Happy tenants stay longer. Long term tenants save you money. Everybody wins.
I’ve enjoyed getting to this point. I am always happy to help anybody wanting to do the same!!
One thought on “Want rental property? Here’s the LEXpert’s story”
Your blogs are very good and smart marketing. I can see why you are successful as a realtor just from reading them. Good job.
Tim Fisher Founder/President RTF Consultants http://www.RTFconsult.com (859) 806-5001
Articulate. Stimulate. Your business. Your life.
*sent from my iPhone, so my apologies for any potentially misspelled words