The Good and Bad of Rental Properties

In general our rental properties have been pretty great.  Our owner occupied duplex has always had great tenants in the 6 years we have owned it and our other duplex has been wonderfully cash flow positive since we purchased it in January of 2016.  During the majority of the year our properties are pretty hands off other than yard maintenance and the occasional repair.  But come late April and May every year the number of hours we have to put in to managing our rentals increases dramatically.  As we live in a college town all leases start on June 1st so all three properties have the potential for turnover at the same time.  Although this is time consuming it is also when we are most likely to increase rent so that is always a good thing.  If we have good tenants we sometimes keep the rent the same to make sure they stay but if there is a changeover we always increase it at least slightly.

The tenants in our duplex unfortunately decided to move out to Oregon.  We were going to keep the rent the same for them at $1390 per month as they were super chill, were great neighbors, and always paid on time.  Alas they were moving so we started our search for new tenants.  (Past tenants for this unit either buy a home or move out of state. No one has ever left to find a new rental).  This apartment is always easy to rent as it is in really good shape, has an in unit washer/dryer, dishwasher, and a locked garage.  We prefer to rent to people we know so we both shared the details on our Facebook page with the new rent amount set at $1,425, a $35 per month increase.  Thankfully we had many friends who shared the link so we had a half dozen groups come through our two open houses.  Out of those who looked at it we had three groups apply, and all were very different.  The first was two young guys who were just finishing up their senior year.  They were very polite, asked all of the right questions (how much were utilities, etc) and even took off their bike shoes before walking into our unit as they didn’t want to damage our floors.  The second group to apply was a couple in their 20’s who both worked in local restaurants.  They were looking for an apartment to stay in for a few years (always a good thing).  The third guy was single and just moving to the area.  I didn’t actually get to meet him but he seems qualified enough.

One of the few good things about renting a unit in an owner occupied duplex is that you can be a little selective about who you choose, as you will after all be sharing walls.  Of course we still can’t discriminate but we can choose who we think will be the best fit for us.  We are up early every day, even by 8 on the weekends, and are usually in bed by 10:00 so we prefer to have someone whom I don’t have to worry about waking if I want to vacuum at 9 on a Saturday.   As the couple both worked in restaurants we figured their schedules would be skewed from ours.  They would always be coming home after we were already in bed and likely sleeping later in the morning.  Not that this is a deal breaker but it is something to consider.  They also had a dog and we were really hoping to rent to someone who didn’t have a pet.

The two graduating seniors were at the top of our list.  Both are very active bikers (they showed up on single speeds) and one of the two seniors had a mutual friend with us who is a very active biker in the community.  Because of this we were able to get a referral from him, without having to call some random referral on an application.  We guessed that as these two were active bikers their schedules might more closely match ours.  Plus our first impression of them was really good.  They actually sat at our kitchen island and completed applications while Mr. SFF was showing the apartment to the next group.  This was a great way for me to ask little questions about them and get an idea of what they were like.  They were the clear choice and after a quick credit and background check we let them know the apartment were theirs.  The lease signing process, deposits, and getting them set up with our online rental payment system with Cozy all went pretty smoothly.  These guys might be only 22 but they had their shit together!

When the current tenants moved out on May 31st we had a fairly easy changeover with only some cleaning, replacing light bulbs, and some painting.  We painted the entire kitchen (we hadn’t done this in the 6 years we have owned the place), the living room, the bathroom, and just a quick touch up in the bedrooms.  We use the same color paint in all of our units so that we can do just easy touch ups if needed, like this, and it worked like a charm.  They moved in on the 1st and have so far been great.

For our other duplex the two bedroom unit was fairly easy.  One of the tenants wanted to stay but had found a friend to move in.  She has been very good with communications and responsible so we kept the rent the same and approved the new roommate without any fanfare.   Phew, sometimes it can be easy!

The last apartment is a four bedroom unit and it has been the most painful experience.  This apartment hasn’t fully turned over since we bought the duplex in January of 2016.  Periodically one or two roommates will move out but they will find new people to move in.  Since it has never been more than two people at the same time we haven’t bothered with backgrounds/credit checks and just signed new leases in the past.  Plus two of the guys had been so great with communications etc that we trusted them.  This time though three of the four were moving, including two who we really liked and had been such great tenants.  The one that was staying, let’s just call him “Jay”, is absolutely horrible at communicating with us.  His rent payments through our automated service have bounced more than once which he always blames on the rent processing website.  I am still not sure what caused the issue but it was always compounded by a severe lack of communication.  He actually double paid rent in April, after it initially bounced, and then didn’t respond to our texts, phone calls or emails for an entire month.  Completely unbelievable!  Anyways, he took it upon himself to find new roommates.  Fine, that’s not a problem.  But he just assumed that we wouldn’t care who they were and that they could just move in.  He actually started a Facebook message group with all six of us (me, Mr. SFF and the three new roommates) which is great because it is opening the lines of communication, an obvious weakness of his, but his first communication to this shared message was this:

“Hello everyone, I’ve made this group hopefully to reach out and establish a time/meet up for all of us to review and sign the lease”

Um, excuse me?  What lease?  In case you forgot we are the ones that own the building and write up the lease.  Yeah, already not off to a good start.  Ben did meet up with three of the four of them and thought that the two girls he met seemed nice enough.  We followed this up on Facebook messenger on April 19th stating we would need applications first, and then we would do the credit/background checks.  The two girls that Mr. SFF met responded right away with their email addresses so I sent the applications right along.  The Third new tenant responded to the group on April 22nd saying “I have plates”.  Well that is great and all but you don’t have a place to put said plates as we still need your application and we need to approve you.  Great, we are quickly realizing this is not going to be easy.  We approved the first two girls after they got the applications to us and successfully completed (and passed) the credit/background checks.  All along their communications have been great, which I have told that I very much appreciate.  Girl #3 was slow getting everything done.  After a couple of weeks and countless messages back and forth we finally got everyone approved we moved to the least signing which we do through a free service HelloSign.  This only took about a week.  Deposits were the next challenge.  The two girls were pretty good about this but once again the third seemed oblivious.  Did she actually read the lease stating this was needed?  Hadn’t she rented before and needed a deposit?  I am really not sure how this girl functions in society…  We did eventually get her set up on Cozy and after another reminder she paid her deposit through the online system.

Now comes the switching of roommates and the moving.  Since there wasn’t a 100% turnover this was a bit of a disaster.  Mr. SFF did a walk through at the end of May with Jay and one of the guys that was moving out to make sure there was no damage so we could give the security deposit back to the guys moving out.  This is when we found out that Jay had decided to do some painting.  Now our leases clearly state that no alternations are to be done to the premises.  But he had painted his bedroom red (ack!) and the living room bright yellow.  These are clearly nowhere near our nice neutral color for all of our other apartments.  He was moving to the larger bedroom in the unit and asked if he could paint it blue.  Um, no!  Yes it likely needs a touch-up because we haven’t been able to turn over the unit completely but if you are going to paint it we will supply the paint in a nice neutral shade that we can easily touch up down the road.  Mr. SFF went out the next day and delivered a can of our nice neutral color.

I am starting to get hopeful that eventually the pain will end but it just continues.  Jay’s payment bounces again so he decided he needs to get a checkbook.  Fine.  Now I know this can take a while but you can get a cashier’s check at your bank in the meantime (a couple of the girls did this).  But as the 7th rolls around, still nothing. After another text message to remind him he finally texts Mr. SFF back to let him know he is dropping off a money order check today, which of course is in the wrong amount.  At least it is for more than what I need so I will just cut him a check for the extra $50.  We finally now have the full rent and full deposit for all tenants on all three units.  But in the same text message he also informs Mr. SFF that he called the local locksmith to have the locks changed and fixed as they apparently never really locked correctly.  Um, excuse me?  You changed the locks on a property you didn’t even own?  Yes he dropped off two sets of keys for us but this is an obvious violation of the “no alterations” clause in the lease he just signed.  Plus in the 2.5 years we have owned this unit we were never informed this was an issue.  If we had known we could have gone over to switch them out or fixed them.  Mr. SFF’s text message back was pretty clear that he CANNOT make any alterations to the property per his lease.  Painting, ok not ideal…but changing locks?  Come on!  I have just about had it with this guy but we are just at the start of a year long lease.  I fear it’s going to be a long 11 months…

The silver lining in all of this is that at least we bumped up the rent from $2,000 to $2,100 on this unit.  So this in addition to the other rent increase means an extra $1,620 per year.

One this I have learned from all of this: adulting is hard for (some) millennials…patience is definitely needed.

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