Small Money, Big Improvement!

IMG_1645[1]I try to make small improvements to my Indianapolis rental properties each time a tenant moves out. Kitchens and baths are the two most important rooms, in my opinion … for the other rooms, if you have fresh paint and decent floor coverings (I suggest carpet for the bedrooms, for sure, and I usually put it in the living areas as well), it’s all good!

But the kitchen and bath need to be fresh, clean, and updated where possible. The cabinets in this duplex were very old, metal ones that had been painted. I’ve had the house for over ten years, and it was just time to get rid of them. The drawers weren’t shutting well any more, and were rusting out in places.

IMG_1723[1]So I bit the bullet and had my handyman install these stock cabinets from Lowe’s, prefinished, and a stock counter top. The counter top is just formica, granite look-alike … so inexpensive, but durable and nice looking!

So, for under $1000, I have a new kitchen, which attracted a good-quality tenant who was excited about the update!

Of course, I won’t take the “good quality” assessment for granted … I’ll do apartment checks periodically, as we all should, to ensure our tenants are caring for the property and keeping it in good condition.

As I look to the new year, I hope to serve more people in need of reasonably-priced, clean housing. Establishing good relationships with tenants, taking care of the properties I manage … these are the keys to a successful 2015!

Happy New Year!

 

Success Story

Meet Jesus, Hilda and their family … when they first rented from me, their oldest daughter, Karina, was an infant.

photo 1They were wonderful tenants and fantastic people.  Kind, hard-working, excellent parents.  Jesus approached me in 2004 about purchasing the double in which they lived.  (His sister and her son lived in the other apartment in the duplex.)

I set it up as a land contract and charged him 50K for the home.  (I’d bought it for 20K, did 15K of repairs/updates before renting it out.)  I continued to carry the insurance and property taxes, but I passed these expenses on to Jesus, by adding those amounts into his monthly payment, and also charging him 9% interest.  He gave me 7K down, and paid on time every month.

Within seven+ years, he became the proud owner of that home.  Throughout those years, he also improved the property, inside and out.  Here are a couple of before and after pictures:

#22, Ch12photo 2I’ve been invited to their children’s confirmations, graduations, etc., and every time I stop by, Hilda is offering me some kind of delicious Mexican concoction she has whipped up that day.

Throughout my real estate investing journey, I’ve forged relationships that will last a lifetime.  This is just one of many examples.  Although there are plenty of scammers out there, this family and other tenants like them more than make up for the “rotten apples.”  They’ve enriched my real estate investing experience more than they can ever know.

Income is essential, of course, but these relationships are truly the icing on the cake!  🙂

Before You Buy …

When new investors consult with me about getting started in the rental business, the first question they usually ask is, “How do I know where to buy?”  After I ensure they have the finances for the purchase figured out, my answer is pretty straightforward:

1)  Make the property within a 30-minute drive from your home.  Gas is expensive, and if you buy a fixer-upper, you’re going to be spending enough money on the rehab without driving all over town to get there!

2)  Check the schools and amenities in the area.  Good schools and access to conveniences and the bus line attract renters and enable you to charge higher rent.

3)  Stop in at the local police station and get a crime run covering the past year.  Petty stuff like theft or disturbing the peace isn’t a huge deal, but if you see armed robbery, stabbings, drug crimes and worse, run!

4)  Drive your chosen neighborhood at various times of day … morning, noon, evening, weekends.  Notice who’s walking the street and “out and about.”  What do the residents’ vehicles look like?  How about the residents themselves?

5)  And lastly, TALK to people.  It’s incredible what you can learn this way.  Talk to neighbors, tell them you’re considering buying a home there (don’t tell them it’s going to be a rental … some may suspect you’re a slumlord).  Stop in at a local restaurant/bar and speak with a server or bartender who’s been there a while.  They’ll be a wealth of information … they may tell you more than you want to know.  LOL.  But that’s okay, you’re on a fact-finding mission.

If you do your “due diligence” prior to the purchase, you won’t suffer buyer’s remorse when the deal is closed.  It’s worth the time spent, trust me.

And, happy hunting!  🙂

Minimum Wage, Minimal Housing

In an interesting study reported in the Washington Post, the National Low Income Housing Coalition looked at fair market rents across the country and calculated how much a worker would have to make per hour to live in a decent one-bedroom apartment.  The study included rent plus utilities, and was based on a 40-hour work week, 52 weeks/year.

They came up with amounts — per county — a person would have to earn per hour to be able to afford a decent one-bedroom apartment in that county.  This is called the “housing wage.”

The minimum wage is currently $7.25/hr.  Not surprisingly, there is no single county in America that has a housing wage under the minimum wage.  (There are a few counties in Arkansas that come close, at around $7.98/hr.)  When you look at these numbers, you can understand why single parents often try to rent one-bedroom places, and give the children the bedroom while they sleep on the couch.  They work minimum wage jobs and just cannot afford a bigger space.

Here in metro Indianapolis, that “housing wage” is about $12/hr., which is fairly attractive.  I’d definitely take a pass on San Francisco, however … you’d have to earn about $30/hr. (i.e., $62,000/yr!) to afford a one-bedroom decent apartment there.

If you’d like to check out the entire article, here’s the link:

http://m.washingtonpost.com/blogs/wonkblog/wp/2014/04/22/what-youd-need-to-make-in-every-county-in-america-to-afford-a-decent-one-bedroom/?tid=pm_business_pop

Every county in American is included, so if you’re planning a move, you may want to read this before you pack your bags!

 

 

 

 

Baby, It’s COLD Outside!

As a landlord, I dread seeing this on my TV:

BrrrI try to keep abreast of the weather and contact my tenants with good advice on preventing their water pipes from freezing.  I include these tips in my monthly tenant letter, but reminders are valuable for all of us.  Here are some great tips I’ve gathered through the years:

1)  Run a thin stream of hot AND cold water from each faucet in the house.

2)  Open cabinet doors under all sinks.

3)  If possible, open access covers to expose pipes to bath tubs/showers, etc.  Sometimes these are just panels that are screwed on.  It helps to take the panel off and allow the warm air from the room to circulate around those pipes.  I even had one plumber tell me to put a small fan on low speed and direct it toward the opening.

By the way, in the event the pipes do burst, you must turn the water off immediately, of course.  I always make sure my tenants know where the shut-off is in the basement of the house, just in case the worst happens.  If not, the water co. has to be summoned to shut the water off at the pit outside.

When I saw this recent weather report, I sent a mass text to all of my tenants, reminding them to take care of their pipes.  I’ve been lucky so far this winter, but the end is not in sight!  Ugh …

Fingers and toes crossed …

 

 

Awesome!?

So, I’ve come across another time-saving product that cleans just about everything, and I took some video of it in action today.  It’s called “Awesome!”  Yes, that’s really the name.

I had a cleaning problem at a beautiful home — I’m taking over the property management there — and the previous tenant was a total slob.  The grout between the ceramic tiles on the kitchen floor had a variety of stains and dirt ground into it.  Nothing was getting it out, and someone told me to try Awesome.  I’d never heard of it.

Check this video … it was too long, so I had to post a smaller clip of it, but you’ll get the gist of it.  This stuff is amazing!

And, Awesome contains no bleach, ammonia, or acid.  Totally safe to use on most anything:  blood stains, wine, oil, grease, upholstery, cabinets, carpet, fiberglass, tile, vinyl, chrome, whitewall tires, road tar … I’m definitely adding this to my bag of tricks.

And at $1.47/bottle, what a bargain, right?  So, get on over to Walmart and buy yourself a container … it’s “Awesome!”