I just signed my tenants into another one-year lease, so I don’t have firsthand knowledge of what the rental market is like at this moment, but I’m reading that although rents have inched a bit higher in the past year, the vacancy rate is at a two year high (6.1% nationally). How would this happen? Although renting is looking more attractive to people, there are a lot of people who bought (primarily condos) speculatively, hoping to do a buy-and-hold strategy and make some easy money. Unfortunately, the housing market didn’t do what they predicted (went down, or at best flat instead of skyrocketing), and they’re left either selling at a loss, or renting. Adding more stock to the rental market, driving vacancies up (and preventing rents from increasing enough to keep up with rising inflation, property taxes, insurance costs, etc.)
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About a year ago, I was sprucing up my rental unit so that it would look more attractive to prospective renters (either it worked, or I really didn’t have to, because I found renters within a week).
One of the improvements I made was replacing the old outdated square pull-chain light fixtures.
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Last year, I spent $35 on what looked to be the best invention ever: the wall-mounted hose reel. It winds up the ridiculously long hose with a hand crank. genius. This frustration-saving device would prevent countless swearing fits throughout the summer. (And it did. It’s sooooooo much easier to use than winding up a hose by hand.)
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I always freak out when I find out that my tenants are leaving. Turnovers are a lot of work — painting, changing the locks, squeezing in improvements where I can, refunding security deposits, getting the new tenants moved in…. Oh, and the biggest task of all, actually finding and screening suitable new tenants. A couple of years ago, when the rental market was a lot worse (and I was brand new at this whole landlord gig), I think I had 50 showings before I had a signed lease. (Last year, thanks to a very directed ad, and an improving rental market, I found tenants on the first day, after about 5 showings).
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OK, so this is technically old news, (the article I’m quoting below is from 7/30/06), but I still find news about the movement of the housing market interesting. I’m happy that the current swing of the housing market is making the rental market more in my favor (even though I just signed my tenants into another year lease). Owning a duplex kind of puts me in a good place regardless of which way the housing market swings — if appreciation goes way up, and it’s a seller’s market, I’m in a good position to cash out and sell my duplex. If prices slow down, and so does appreciation, it becomes more attractive to rent than to buy, and my rental market goes up (lower vacancy rate = higher rents and more tenants to choose from).
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I really don’t like it when I have to assume the role of mean landlord / landlady. If I buy more properties, I’m sure I”ll get used to it. but I’m not entirely comfortable with it yet…
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I just read an article on CNET about would-be real estate mogul Casey Serin — at just 24, he bought 8 properties within a year, taking cash out at financing, planning to flip them all to turn a profit. But alas, due to the market slowdown, some hasty and risky decision, and perhaps just general bad luck, things did not go so well for him, at least in this round. He’s sold three properties and been foreclosed on in 6 properties (yep, six.)
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I just paid my property taxes this morning. I’ve chosen not to escrow my taxes and insurance with my mortgage payment, so that I can save the money up in a bank account through the year, and earn interest on it. (5% in an Emigrant account is nothing to sneeze at). So that means that twice a year I need to log into the county assessor’s website and send a payment via e-check (of course, if I planned ahead, I could also snail-mail it). They do keep going up, though. I’ve chosen not to raise the rent on my tenants if they signed another year lease, so the increased property tax bill just cuts into my profits. At least, though, the money that I pay in property taxes is deductible (on my 1040 for my personal half, on my schedule E for my rental unit).
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(Not likely.) While I was standing in line today to purchase exactly 47 two-cent stamps (due to the recent two-cent rate increase, which I was unaware of when I stocked up on stamps for the office two weeks ago), I considered the forever stamp. Jokingly, I declared to my friend, “I’m going to buy $5,000 worth of forever stamps, and sit on them for 20 years before reselling them on ebay and turning a huge profit! I’ll become a stamp tycoon!” (Well, as much as a tycoon as one can be on a $5,000 initial investment.)
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Yes, Virginia, there is such a thing as a 40-year mortgage. And some people are apparently using them (!) I was doing a bit of reading on bankrate.com today (doing some research, as I’m considering buying the duplex that went up for sale next door to me), and saw a banner ad from a mortgage company that had a list of mortgage rates. All of the usual fixed loans were represented — 30 Year Fixed, 15 Year Fixed, 10 Year Fixed. The ARMS were all there, despite the bad press they’ve gotten lately with all of the people who bought on ARMS that are now coming, causing the banks to foreclose on them. And then I saw it. The much-fabled 40 year fixed mortgage. Wow.
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There’s a townhome down the street from me that has been for sale for quite a while. The “for sale” sign has been out front, with a little mailbox full of flyers for almost an entire year. I pick up a flyer periodically, look at the price and say “How can this townhouse be worth $70,000 more than my duplex?”, and put it back in the mailbox. The curious thing is that they’ve only lowered the price by about $10,000 over the past year…
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There are quite a few brand new shiny condo developments in my neighborhood. All over town, actually. They’ve gone up in good neighborhoods and bad neighborhoods. They’ve gone up in residential neighborhoods and downtown areas. I’ve seen flyers for condos that cost easily three or four times as much as a an average single family house a block away. Condos condos condos.
The whole time I was watching them go up, and seeing that the prices were (on average) considerably more than a single family home in the same neighborhood, I couldn’t help but wonder who was actually going to live in them…
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Since the duplex next door went up for sale, I’ve been running a lot of ideas through my head. Could I buy it? Should I buy it?
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When I first bought my duplex, I didn’t really have a set of rules and regulations. I was too new at this game to have one, and I also had this misguided idea that I would be “cool landlord” who was informal, and let people “make the place their own.” That has only worked to varying degrees. People will unfortunately always have at least a little bit of animosity for the landlord; they’ll always think that you’re a big rich moneybag who’s too cheap to buy them new (fill in the blank). The landlord just says “no” and cashes their rent check every month.
Ah, but there is a reason for that “no.” Many reasons. Here’s a list of things that I’ve learned to say “no” to…
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My tenants are making themselves at home in the backyard. I’ve given them a fairly free reign over planting things in the yard (as long as there isn’t already something else growing there, and it won’t be a pain to mow around), and they’ve taken me up on it. They’ve planted some hostas around trees, and created a small flowerbed by the fenceline, with flowering annuals, and a clematis that should return year after year.
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Turns out there’s more to the story about the duplex next door — A few days after I saw the older gentlemen curiously trimming the tree branches of their daughter’s purportedly “trashed” duplex, I came home from work to see the the front yard meticulously mowed, and sporting a new addition — a for sale sign.
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The neighbors in the duplex next door seem to have disappeared. In an all-at-once, in the middle-of-the-night sort of way. Actually, the kind of way where THEY are gone, but the inordinately large amount of junk that they had in the yard was left behind. I suspect that they treated the inside of the duplex in much the same way.
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My Uncle, a real estate agent, recently inherited some money, and decided to use it to purchase my duplex’s big sister, “the fourplex.” Not sure exactly if they purchased it out-right, most likely they just used it for a 20% or larger down payment.
How is buying a fourplex, or four-flat different than buying a duplex?
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I showed a loss of several thousand dollars on my schedule E this year, from expenses related to my duplex – many of which would be nondeductible expenses that I would have as a homeowner…
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My duplex has a large yard, and thus attracts tenants who are fans of the great outdoors. I have a lot of space for flower gardens, hanging pots, and a large vegetable garden. I’ve planted a lot of perennials around the house, and in the front yard, but reserved ample space for my tenants to get their hands dirty. Why? While this may result in a lot of untended plants (which it has, in years past), allowing tenants to garden helps to foster a sense of “attachment” to the property. They feel like they’re a part of the place, rather than just staying there for a while and writing a check to me every month.
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