The Horrors of Being a Landlord

Posted August 15th, 2012 in Real Estate by Jeremy Waller

For 2 1/2 years I worked for a property management company. Going into it, I thought it was a great job. You see, I love real estate as an investment. I had this plan to climb the property ladder and build a portfolio of rental properties.

When the opportunity came up to work for a property management company I thought it would be a great way to my hands dirty learning the ins and outs of managing rental property without the risk of actually owning the property.

I ran the whole show – everything from advertising to tenant screening to rent collection to evictions. It was good way to learn. I had my hands in every part of the process. The downside is, I had to deal with the headaches that came with every part of the proces.

One of the biggest headaches was dealing with evictions and property damage. Those two usually went hand in hand. It’s rare that a tenant that pays their bills damages your property.

I don’t know if they caused damage because they didn’t care or if they were vindictive because we were trying to collect rent.

The worst case was a house we managed in a not-so-nice part of town. The investor bought it for a whole $27,000 and I think he may have overpaid for it…The house was a dump.

There was a tenant in the property when he purchased it, but they only made one rent payment to us. After that it was a 3 month process of chasing them down and finally evicting them.

When I got into the house…holy cow…

It was disgusting.

I think it would have been better if they burned the house down before they left.

I took a step in the door and the carpet started crawling. Roaches literally covered the entire floor. There was a half-eaten, moldy birthday cake on the kitchen table. Animals had been kept in the house and apparently were never let outside.

It took an exterminator 7 trips to get rid of all of the roaches. All of the carpet had to be replaced. There were several places in the sub-floor that had to be replaced because of the urine. The entire house had to be sealed and painted to cover the smell.

At the end of the day, the investor spent nearly $10,000 rehabing the house – more than 1/3 of his initial investment.

That scared me away from real estate for a long time. It seemed like there wasn’t a good way for an investor to protect themselves.

I’ve come to learn that’s completely wrong. There are a number of ways to protect yourself. A situation like that should never have happened.

First, do your due diligence before buying an occupied property. If he would have personally inspected the property, he would have noticed that the interior needed a significant amount of work.

Second, don’t buy a property on the wrong side of town unless you’re willing to be a slum lord. I don’t know about you, but I don’t like fearing for my safety when I visit the property.

Third, consider landlord’s insurance. It’s an insurance policy that covers both accidental and malicious damage caused by tenants.

Having insurance allows you to even out your cash flow. You have a small payment each month, but you won’t have the risk of a large expense due to damage that could kill your profit for the entire year or longer.

Real estate can be a huge risk and a huge headache if not done right; however, if you do your due diligence and offset risk using insurance, it can be a great investment.

How Much Should I Spend On a House

Posted December 14th, 2011 in Real Estate by Jeremy Waller

Calculate A Mortgage Payment

Buying your first home can be overwhelming. You’re signing you name to a document that commits you to paying hundreds of thousands of dollars over the next 15-30 years.

That’s not a decision you should take lightly. Continue Reading »

The Advantages and Disadvantages of Renting a Home vs Buying

Posted November 21st, 2011 in Real Estate by Jeremy Waller

The decision of where you are going to live isn’t one many people take lightly. It’s usually both a big financial and emotional commitment. Since it is such a huge decision, most people want to make sure they make the right choice.

Before you even going though the process of finding a house, you have to make a bigger decision. Should you rent or should you buy? On the surface it seems that the right decision should always be to buy. I mean, when you’re renting a house – you’re just throwing money away. Right? If that’s what you’ve always thought then you may be surprised to find that there are cases in which renting is a better choice by far. So what are the advantages and disadvantage of renting a home vs buying? Continue Reading »

When Should I Refinance My Mortgage? When Does It Make Sense to Refinance?

Posted October 17th, 2011 in Real Estate by Jeremy Waller

When is the right time to refinance?

Interest rates are at an all time low. Low enough that even people with a great interest rate are thinking about refinancing their mortgage. The timing can be tricky though. When does it make sense to refinance you mortgage?

That’s a question I struggled with last year. Interest rates were falling through the floor and I had to make the decision on if it was worth it to refinance my home.

There’s several important things to consider. This is what I looked at when I was making the decision for myself. Continue Reading »

Find The Fastest Way To Pay Off Your Mortgage With This Calculator

Posted September 13th, 2011 in Debt, Real Estate by Jeremy Waller

A lot of people would love to know how to pay off their mortgage faster. The problem is, they don’t know where to start. I tried to show the effect of making extra payments in my post how how to pay off your mortgage in 5 to 7 years.

I know the problem with that is that it can be intimidating to hear that you need to come up with $1,000 extra per month. This would be extremely difficult for most people.

Then there’s the question of what kind of an impact it would have if you make one big extra payment – maybe applying a bonus you were given. Continue Reading »

Is it Better To Pay Off Your Mortgage Early Or Invest?

Posted September 11th, 2011 in Debt, Investing, Real Estate by Jeremy Waller

Should you pay off your mortgage or invest?

Not long ago I talked about how to pay off your mortgage early. For many people that is exactly what they would like to do. Pay off their mortgage and be debt free. The idea of not having a mortgage payment each month may excite you. But is it really better to pay off your mortgage early or invest?

A lot of people I’ve talked to don’t care if investing is better or not. The emotional benefit of being totally debt free is more important than anything. If you’re in that boat, then that’s fine. Being totally debt free is a great goal to have.

But I hope you’ll stick with me and see if it is better to pay off your mortgage early or invest the extra money in something else. Continue Reading »

How To Pay Off Your 30 Year Fixed Rate Mortgage in 5 to 7 Years

Posted August 30th, 2011 in Real Estate by Jeremy Waller

Paying off your mortgage in 5 years seems like crazy talk. Most people never even pay off their house in 30 years due to refinancing or buying a new house.

Even for people on 15 year mortgages, paying off your home in 5 years seems unachievable. Recently, we refinanced to get a lower interest rate and moved our mortgage to a 15 year note.

I got curious the other day and stared running some numbers. I was wondering what kind of an impact making extra mortgage payments would make. During the process I found some interesting things. Continue Reading »