<![CDATA[FI TRAVELGUY - My Ramblings]]>

<![CDATA[FI TRAVELGUY - My Ramblings]]>Fri, 01 Jan 2021 00:00:46 -0800Weebly<![CDATA[Why I Finally Hired A Property Manager | Real Estate]]>Mon, 04 May 2020 07:00:00 GMThttp://fiwiththetravelguy.com/my-ramblings/why-i-finally-hired-a-property-manager-real-estate

In every real estate investors journey there comes a time where you consider transitioning from self managing your units to hiring a property manager.

After 2.5 years I finally hit that point and here is why..

In the start of any business you'll need to bootstrap things. You'll want to save money whenever possible to reinvest back into the company. This gives you the best chance at long term success and growth. Side note - if you have real estate properties, or want to, it is important to treat it as a business.

Bootstrapping has always been natural for me so when I bought my first deal, a four unit house hack , that's what I did. I was the property manager, landscaper, and handy man. Of course this was in addition to my real job, contracting out to hospitals for additional money, traveling and simply living my life.

My plan was to systematically go through each unit and rehab it to force appreciation and minimize future expenses. Once everything was fixed up the "managing" part would be easy. What could they possibly have an issue with?! In 2 years I had replaced 3 floors, 3 AC units, painted 3 units, replace 3 counter tops, and 1 set of kitchen cabinets. Things were about to get easy!

My first deal.

Wrong! Having 4 units I felt someone was always moving out which meant I needed to rehab a unit, lease a unit, or call someone to repair something. Since I know how important it is to keep my tenants happy this was often my main concern. This took priority over my real job as a speech language pathologist which is how I keep the lights on around here. The moment of ease never seemed to come and I was tired of waiting for that magical day.

The longer I self managed the more it weighed on me. It was the little things like being on a date and having to take a 10 minute call about a plumbing issue or driving 20 minutes there and back to flick a breaker switch. It wasn't one thing, just an accumulation of small rocks in my shoe that annoyed me.

When I came back from a month long trip to Asia in late July of 2019 I thought I would hire a property manager. I was closing on deal 3 on August 1st (Yes, I did 90% of my closing procedures out of the country) which meant I'd have another renter and extra income to pay a property manager. I started researching companies but chickened out.

I was okay with the delayed gratification of hiring a property manager, I'm in the bootstrapping phase. Plus, I heard property managers charge 10% of total rent and want one month's rent for each lease they get signed. If they took 10% of rents I'd be paying them $5,000 a year PLUS the leasing fees of one months rent. That could end up being like $9,000 a year. That kind of money was for sure still worth my time!

So what happened? What made me change my mind?

The longer I self managed the heavier it felt to me. I had moved off the property so anytime I went down there it was a 20 minute drive each way. I didn't like dealing with the tenants, doing the yard work, showing a unit, or making phone calls during my work day to repair companies. I also had two tenants leave in the middle of a month to month lease, one in November 2019 and the other February 2020.

Of course they left the units in terrible condition and without paying rent.

I was fine with the tenants leaving but not with how they left it. I would have liked to take them to small claims court but didn't know the process or the first step. If want you information on what to do when a tenant breaks a lease I have some here or how to collect when their deposit doesn't cover the repairs.

When the second unit was left I needed to do a complete rehab. I choose the contractor that was half the cost but required I provide the materials. That was fine since I needed to spend money to get my Southwest Airlines Companion Pass but this meant I was leaving work to pick up and haul around toilets, tile, thinset, and more. If you want to see a before and after video it's here.

Before and after of the full rehab.

Things were slowly building up and then it happened. A tenant of mine locked herself out and I had to drive 20 minutes to unlock her door and drive back. As I was driving there it finally hit me that my hour of time was worth more to me.

I finally reached out to see what it would cost or if I liked any of the companies I researched last year. I was prepared to negotiate their 10% management fee to 7.5% since I had 4 units. But there was no need! They offered to manage it at $50 a door which is 5% of my total monthly rental income. The leasing fee, depending on the unit, was either going to be around 50% or 33% of the first months rental income. It was waaayyy cheaper than I thought. This was something I could get on board with, but, I'm a bootstrapper - I still debated whether to do it.

The more I thought about it when I was contracting in the hospitals I was lucky enough to be able to make $49 an hour. Someone put an hourly rate on my time and that was it. Hiring a property manager for $50 a door made the math simple. I knew I spent close to, or more than, 4 hours a month dealing with issues. IT WAS TIME!

Hidden reason for wanting to hire a property manager - The past two years were the first time I owed when it was tax time. I'm hoping this will increase my expenses which will reduce my taxable income. Not managing the property while hopefully paying less in taxes and still benefitting from appreciation, depreciation write offs, and loan pay down. That all sounds good to me! Obviously, consult a tax expert.

Summary

In the end I was glad I started out as a property manager. It allowed me to bootstrap the start of my real estate investing career which I needed. I also thought it was a great experience and when it came time to interview a property manager I knew what to ask or what I wanted out of a company.

I finally hit the point that my time was worth more to me than the cost per door. Self managing began to bleed into other parts of my life like my full time job, personal life, travel, or even fixing up my primary residence. I also had other things I wanted to focus more time on like this blog.

It was time to work on my business and not in it!

]]><![CDATA[6 Month Update!]]>Tue, 24 Sep 2019 07:00:00 GMThttp://fiwiththetravelguy.com/my-ramblings/6-month-updateIt has been 6 months since I first published the blog and quite a few things have changed!

Here is what has been accomplished..

My Country Count Is Now 22!
I went to 6 countries over that time but Mexico was a repeat. I went to Puerto Vallarta for the second time and then popped over to San Miguel for a wedding which was new. I went to Asia for a month over the summer and added China, Japan, Vietnam, Thailand, and Cambodia. I'm excited to post about those and go back and check out more of those pictures and videos.

My Monthly Passive Income Increased!
My Roth IRA really took off over the course of the past year and my monthly dividend has grown from a whopping $8.39 to a staggering $29.07. That isn't the only thing that jumped. I rented out another unit in my quadruplex for $775 a month. If you look at my numbers on the quadruplex I have my vacancy and repairs taken care. I am looking to potentially hire a property manager and if it costs me 10% of total rent, which is common, it would cost me about $400 a month. I want to plan for that as I will be hoping to transition at some point.

To be conservative we'll say the increase from the new renter is +$375. The total increase to my passive income is $404.07 bringing my monthly passive income to $1,106.00.

I Bought A New House!
It was a little foreshadowing to say I added a renter but I am onto deal #3 which will be a live in flip! The place needs A LOT of work.

I'm Debt Free!
.. well kind of. After working in the schools for 5 years I was able to get student loan forgiveness for $17,500 and made my final payment in August! I still have 3 mortgages but that doesn't feel as awful as my student loans did.

I Got A Health Savings Account!
After first hearing about the triple tax savings of the account I had to wait until the next open enrollment and it final started this fall!

I Have A New Budget!
With the start of every new school year I excitedly create a new budget and get to prioritize where I am putting my money!

I Got More Travel Miles!
Shortly after starting the blog I got the Chase ink preferred business card which came with 80,000 Chase ultimate rewards points. This isn't a bad deal since it took around 92,000 to get to China and back. I just opened a new Chase United airlines card which has a minimum spend of $2,000 in the first 3 months to earn 40,000 points. A one way flight to Europe can be as cheap as 30,000 points so this will come in handy. These are things I'm doing in the mean time as I gear up for the Southwest companion pass in 2020.

Ha Long Bay, Vietnam

As I look ahead to next 6 months I don't know if there will be this much change or growth but there is hope. I will begin the rehab on deal 3, be going for the Southwest companion pass, maybe try and partner on some real estate deals or look into hard money lending, hopefully max out my Roth IRA, and look more into note investing.

]]><![CDATA[Screw You Loans! | Student Loans]]>Fri, 16 Aug 2019 07:00:00 GMThttp://fiwiththetravelguy.com/my-ramblings/screw-you-loans

One of my two biggest money mistakes was being okay with taking out student loans. When I was in high school they offered a full ride to any in-state public university if you got exceeded on all three sections of the state exam. I not only didn't study I exceeded in one and got within a few points of exceeding in the other two and didn't retake it.

Well, 12 years after taking out my first student loan, add a car loan thrown in there, and I.AM.DONE! From the time I graduated with my master until I paid everything off it took me 5 years and a total of $78,480.90!

I know it was that much because I'm a crazy person and tracked all my payments throughout the process, I like to punish myself apparently. That number doesn't include the $17,500 I got in loan forgiveness or payments I made while in school. If you want to see if you qualify for something check out my post about it here.

When I began repaying I targeted my loans where I had a cosigner, which was my car with my mom and a private student loan which had my dad. I didn't want them associated with any of my debt. Once those were done I picked off all the smaller loans and snow balled into the bigger ones. I actually had to slow down the rate I was go at because I knew I would be applying for loan forgiveness and wanted as much as I could. When that write off came in it was a magical day! I never got an email, call, letter, nothing. I just logged in one day and it was taken off!

Once that came in and I saw it, I didn't want to wait any longer and just paid off the remainder. I spent that weekend celebrating and sharing a toast of 'Screw you loans!' at any chance I could!

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