The First Vacancy

So August 13 marked the date that my first tenant moved out. Yes this was also Friday the 13th. Obviously not a good sign. So my parents came down and we did some updates, replacing three windows and fixing a couple of other things. I must say the place is looking good and hopefully the new windows will help save some energy costs as well. But you might ask...what is going to happen? How do you get a tenant? what if you never rent it out and go into bankruptcy because you can pay your bills? Trust me, all this went through my mind.

I am happy to write this now because we have a tenant for Septemeber 17th - one month vacancy. We used Craigslist which is free and gets you about 10 responses and showings per week. and the great thing is I didn't have to worry too much because we have another apartment which is still happily paying rent. So yes it is scary and stressful but I wouldn't trade it for anything because it has enabled us to live a life we want to be living and give us some options and back up plans.

How Income Producing Real Estate Works

Why do I think that the house I bought in Sept of 2009 is worth more now? Because I know real estate. Multi-family real estate is different than owner-occupied real estate. Here is how - I can force my property to appreciate. I bought Durham road for $282,000. The appraiser assumed I could rent out apartment A for 750, Apartment B for 900 and the cottage for 800. This equals $2,450/month or $29,400/year. The appraiser used a 10% rent ratio which when dividing the yearly income by 10% gives you a value of $294,000. Now I did some work and have about $300,000 in the property. I rent out apartment B for $1,150, Apt. A $875 and I am guessing the cottage, where I live would go for at least $1,150. This equals $2,135/month or $38,100/year. Using the appraisers 10% rent ratio and my property is magically worth $381,000. Now whether this would pan out or not is a different story but if you have a little bit of knowledge you can achieve extraordinary things.

Expand your horizons

I know everyone, especially in my family, thinks that Cailen and I are crazy for buying a house. Honestly some days I think we are too, but it has expanded our horizons tremendously. First off, we aren't living at home, or at the in-laws(love you R&J) but we also aren't spending a ton to live in our own house. This is awesome. Owning a house that, at least when we bought it was worth $280,000 has only costs us about $300/month and that includes utilities. Buying our first house also enabled me to get Cailen a kick-ass engagement ring - Thanks Obama! I will explain how taking a plunge and venturing into a CALCULATED risk has opened so many other doors.

That was a quick 9 months

So in my last post I told a scary story about owning an old multi-unit house. This story included lots of snow, leaks in the basement and mice running around. This is what you usually hear when talking to landlords - the horror stories. What you don't hear is that over the past nine months, I have collected rent checks from my two tenants on the first of every month. This has paid down my mortgage for the last nine months and if I have to deal with some leaks and shoveling (all of which I would probably deal with owning a house on my own) to have someone else pay my mortgage than I will take that EVERY time. So I am back to write a little bit because I am excited. I am dealling with my first vacancy - not a horrible thing, and I am putting an offer in on another investment property...stay tuned.