Purchased rentals, spent savings and now I am worried about debt

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henbones
Posts: 5
Joined: Sat Jan 05, 2019 2:01 pm

Purchased rentals, spent savings and now I am worried about debt

Post by henbones » Sat Jan 05, 2019 2:58 pm

Hey All! - I am new to the forum but have been lurking for a few months. My wife and I stood up and expanded our Short Term Rental business in 2018 with the goal of her being able to run that business and for her to stay at home. We welcomed our 1st child in October of 2018. While going thru that process, we racked up some serious short term debt and it's been keeping me up at night for months. I've never been one to hold debts other than mortgages. While standing up the business and buying properties, I did use up a lot of my cash savings.

Also - In 2018, we bought a triplex, primary home, renovated 2 units and furnished 4. With STR, we went from 1 unit to 4 we own and manage 1 other. Total of 5 STR units. I did recently receive a promotion which has increased my base and bonus pay.

Our STR income is doing well and I am plowing as much as I can to the short term debt (Sofi Loan > Heloc > 401k Loan)

For the STR income - we grossed 150k last year, where expenses were 84k (furnished 4 units) This does not include the mortgage expense.

We are selling (sold) one of our LTR's in Feb. We will net around 60k and will pay off the Sofi loans which leaves us around 100k combined short term debt with the HELOC and 401k loan.

Our long range goal is to be financially independent or at least be able to live off our STR business within 5 years. I would like to take a mini retirement for 1 year before the kiddo goes to school, but I don't think that's feasible. I plan on renovating our fixer upper primary and will sell after we meet the 2 year requirement. (Bought for 260k, needs 40k, value will be closer to 350k) From there we want to travel for the year and stay in our STR's when needed.

TL-DR - I guess what I'm asking is if i'm missing something on the approach to funnel all extra cashflow to short term debt? Should i use of the proceeds from the LTR sale and plow some into an emergency fund? Are there any glaring concerns?

Thank you!

Figures below are from our yearly meeting... as of 1/1/2019.

Income Monthly
TH Pay Husband (123k yr gross) $5,300.00 (1444 deducted for 401k loans, max out HSA, 6 percent to 401k fully matched)
TY Bonus (24k gross) $1,200.00
LTR Gross $3,860.00
STR Gross $15,000.00 (Conservative)
Total $25,360.00
Per year $304,320.00

Expenses (Top 5 are mortgages)
Pine $1,100.00
Centallion $1,136.87
Cresson $1,348.56
Hermit $1,725.31
Bowman $1,772.00
Heloc $600.00
Sofi Loans $2,409.00 (Will be paid off in Feb)
Wife Car $277.00 (3 payments left. Will cut back to 1 car which is paid off. Didn't add to the assets section. 09 element)
Gym $45.00
Car Insurance $230.00 (This will drop significantly. I was also paying my fathers insurance up until this month)
Student Loan $125.00
Groceries/Dining Out $600.00 (Includes 50 each for personal spending)
Gas bills $300.00 (Rental Properties)
Electric $150.00
Comcast $30.00
Credit Cards $0.00
STR EXP $7,000.00 (This is the average for 2018. We conservatively averaged 8k net profit before mortgages with 5 units)
Savings $600.00
Sofi overpay $0.00
Cap EX $2,000.00
Vacation Fund $400.00
Lowes 500 (5k 0% until 12/19)
Total $21,848.74
Left Over $3,511.26

Assets
Hermit $350,000.00 (Triplex, 2 STR, 1 LTR)
Bowman $294,975.00 (Primary)
Cresson $253,108.00 (Duplex, STR)
Pine $242,228.00 (Duplex - Selling, closing is 2/14. Will net 60k)
Centallion $200,592.00 (Single family, LTR)
401k $56,848.61
Rollover $10,316.28
Bitcoin $9,951.70 (I know)
HSA $7,154.28
Roth (Husband) $5,529.10
Cap Checking $4,463.48
Business Checking $4,402.01
Rental Escrow $2,915.88
Roth (Wife) $2,487.82
Vanguard $1,575.76
Cash $1,000.00
Huntington $300.00
Cap EX $193.93
Vacation $100.93
Wife Checking $57.43
PFFCU $50.00
Car Fund $2.90
Tax Account $2.70

Properties $1,340,903.00
Liquid $107,352.81

Liabilities
Bowman -$255,773.31
Hermit -$245,920.89
Cresson -$191,481.80
Centallion -$150,923.80
Pine -$147,821.00 (Selling)
Heloc -$42,539.72
401k Loan 1 -$26,072.71
Sofi 3 -$25,137.18
Sofi 2 -$16,900.07
401k Loan 2 -$15,978.02
Sofi 1 -$15,040.62
Student Loan (Wife) -$10,088.10
Lowes -$6,714.04
Tiguan -$866.67
Citi Card -$44.98

Mortgages -$991,920.80
Short Term Debt -$159,382.11

Net Worth
$296,952.90
Last edited by henbones on Wed Jan 09, 2019 3:53 pm, edited 1 time in total.

Regattamom
Posts: 51
Joined: Sat Jan 06, 2018 3:40 pm

Re: Impatient with paying off short term debts...

Post by Regattamom » Sun Jan 06, 2019 12:57 am

How long have you been renting the STR units? It sounds like this is very recent, so I am curious how you came to a conservative estimate of $15,000 month gross from the rentals without having much of a history to look back on. Also, what interest rates are you paying on your debts? Valuable information for determining what to pay off first.

Regattamom
Posts: 51
Joined: Sat Jan 06, 2018 3:40 pm

Re: Impatient with paying off short term debts...

Post by Regattamom » Sun Jan 06, 2019 12:15 pm

Henbones,
This post was the last thing I read before I went to bed last night and I woke up thinking about it this morning. :shock: I'm still trying to wrap my head around all of it. So just to be clear, in 2018:

You bought several STR rentals and a primary home and mortgaged them.
You had a baby in October (Congrats!)
Your wife quit working
You spent most of your cash savings
You acquired debt outside of your mortgages to start your STR business

What a year! What concerns me besides your debt, is you don't have an emergency expense account for your personal expenses. I would definitely put money aside from the sale of the house for an emergency fund especially with a new baby.

It seems you are pretty much all in with rentals being your investment portfolio? I hope this works well for you and your family.

I also hope other people who have rental experience chime in and offer advice. You may want to retitle your post to something like "Purchased rentals, spent savings and now I am worried about debt" to get more attention.

Good luck to you!

Topic Author
henbones
Posts: 5
Joined: Sat Jan 05, 2019 2:01 pm

Re: Impatient with paying off short term debts...

Post by henbones » Wed Jan 09, 2019 3:49 pm

Regattamom wrote:
Sun Jan 06, 2019 12:57 am
How long have you been renting the STR units? It sounds like this is very recent, so I am curious how you came to a conservative estimate of $15,000 month gross from the rentals without having much of a history to look back on. Also, what interest rates are you paying on your debts? Valuable information for determining what to pay off first.
In 2017, I averaged $2987 gross per unit. in 2018, it was closer to $4000 per unit.

Sofi Loans - Rates are fixed from 4.9% to 8.9%

HELOC is variable at 6.13%

Topic Author
henbones
Posts: 5
Joined: Sat Jan 05, 2019 2:01 pm

Re: Impatient with paying off short term debts...

Post by henbones » Wed Jan 09, 2019 3:52 pm

Regattamom wrote:
Sun Jan 06, 2019 12:15 pm
Henbones,
This post was the last thing I read before I went to bed last night and I woke up thinking about it this morning. :shock: I'm still trying to wrap my head around all of it. So just to be clear, in 2018:

You bought several STR rentals and a primary home and mortgaged them.
You had a baby in October (Congrats!)
Your wife quit working
You spent most of your cash savings
You acquired debt outside of your mortgages to start your STR business

What a year! What concerns me besides your debt, is you don't have an emergency expense account for your personal expenses. I would definitely put money aside from the sale of the house for an emergency fund especially with a new baby.

It seems you are pretty much all in with rentals being your investment portfolio? I hope this works well for you and your family.

I also hope other people who have rental experience chime in and offer advice. You may want to retitle your post to something like "Purchased rentals, spent savings and now I am worried about debt" to get more attention.

Good luck to you!
Thanks for the kind words! You pretty much summed it up. One thing to mention is that we had initially bought one of the units as a live in flip, pulled out some of that equity and used that for the next reno and set of purchases.

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Purchased rentals, spent savings and now I am worried about debt

Post by Sandtrap » Wed Jan 09, 2019 6:32 pm

Okay.
Time to put on your "professional business person's hat".

1. Make a plan to payoff debt incrementally. Higher interest first. And do this as quick as possible without jeopardizing: Emergency Funds (personal), Operating Capital (business), and cash reserves (business.
So: IE: HELOC, high interest loans, higher interest mortgages, etc.

2. Streamline your reoccuring expenses; ie; maintenance, cleaning fees, management fees, repairs, etc, etc. Run your business as "clean" and "crisp" as you can. What you can do yourself, do it.

3. Cut personal expenses as well until you get back a bit more on solid ground. Defer vacations, new cars, and so forth.

4. Maximize your rental income through an optimal balance between demand/market/price/occupancy rate.

5. Where units are not at optimal for short term, convert to intermediate term (6mos leases), then auto renew to mo to mo and leave it at that. This gives you the option to switch back to short term if you want without being '"stuck".
The longer 6 mos lease units give you income stability while the short term VRBO/AirBnB optimize returns. Pay very close attention to your occupancy rate and ROI/CAP rates. Be flexible. Make it happen.

6. While you are doing the above, pay down debt, and especially build up your savings account substantially. This gives you a personal "sleep factor" and your business and operating "margin" of safety.

7. Again. Do everything that you can yourself within reason to cut expenses. Learn what you don't know. How to keep your "books", how to rent, leases, etc, etc. And, how to clear a bathroom drain, fix a light switch.

8. Compartmentalize. No "commingling" of personal funds and finances with your rental business. Keep each separate to the dime in separate accounts. IE: Do not use your personal accounts to buy cleaning supplies for your business.

Good luck.
j

mw1739
Posts: 544
Joined: Mon Mar 21, 2011 5:44 pm

Re: Purchased rentals, spent savings and now I am worried about debt

Post by mw1739 » Wed Jan 09, 2019 7:27 pm

Having that little liquidity combined with those monthly debt payments would keep me up at night too. I would definitely save the house sale proceeds and possibly clean up some of the smaller debts. Once the Sofi and car loans are paid you will have $2600 a month you can redirect to the other debts or savings.

marstaton4
Posts: 147
Joined: Wed Sep 15, 2010 11:52 am

Re: Purchased rentals, spent savings and now I am worried about debt

Post by marstaton4 » Wed Jan 09, 2019 7:39 pm

If it were me I'd probably sell the bitcoin and pay off small car loan and put the rest in an emergency fund. I might also consider focusing on getting those 401k loans repaid sooner than later in case you decide to change jobs.

Topic Author
henbones
Posts: 5
Joined: Sat Jan 05, 2019 2:01 pm

Re: Purchased rentals, spent savings and now I am worried about debt

Post by henbones » Thu Jan 10, 2019 9:06 am

:sharebeer
Sandtrap wrote:
Wed Jan 09, 2019 6:32 pm
Okay.
Time to put on your "professional business person's hat".

1. Make a plan to payoff debt incrementally. Higher interest first. And do this as quick as possible without jeopardizing: Emergency Funds (personal), Operating Capital (business), and cash reserves (business.
So: IE: HELOC, high interest loans, higher interest mortgages, etc.

2. Streamline your reoccuring expenses; ie; maintenance, cleaning fees, management fees, repairs, etc, etc. Run your business as "clean" and "crisp" as you can. What you can do yourself, do it.

3. Cut personal expenses as well until you get back a bit more on solid ground. Defer vacations, new cars, and so forth.

4. Maximize your rental income through an optimal balance between demand/market/price/occupancy rate.

5. Where units are not at optimal for short term, convert to intermediate term (6mos leases), then auto renew to mo to mo and leave it at that. This gives you the option to switch back to short term if you want without being '"stuck".
The longer 6 mos lease units give you income stability while the short term VRBO/AirBnB optimize returns. Pay very close attention to your occupancy rate and ROI/CAP rates. Be flexible. Make it happen.

6. While you are doing the above, pay down debt, and especially build up your savings account substantially. This gives you a personal "sleep factor" and your business and operating "margin" of safety.

7. Again. Do everything that you can yourself within reason to cut expenses. Learn what you don't know. How to keep your "books", how to rent, leases, etc, etc. And, how to clear a bathroom drain, fix a light switch.

8. Compartmentalize. No "commingling" of personal funds and finances with your rental business. Keep each separate to the dime in separate accounts. IE: Do not use your personal accounts to buy cleaning supplies for your business.

Good luck.
j
Super fantastic thoughtful actions! I shared your response with my wife this morning over coffee!

We do have several of those suggestions in action but not all of them.

We are working back from expenses and thinking of ways to increase income...

Our single biggest STR expense was paying cleaners for turnover; to the tune of 2-2500 a month. Our plan is for wife to take on some of those cleanings moving forward and I can be more involved on the weekends. Should ‘save us’ close to 1k a month. Just can be a little difficult with the kiddo.

Income

We may also expand our ‘cohosting’ business where we esessential take 25% of the gross profits to manage STR’s. This was our plan prior to kiddo but has been on hold a bit.

The wife does have her real estate license so that could be another option, too.

I do receive my bonus in March. Will be close to 30k gross so that will help too.

You guys are right - I need to pay those debts off and grow a cash fund.... for my sanity and so my wife doesn’t kick me out of the house :)

Topic Author
henbones
Posts: 5
Joined: Sat Jan 05, 2019 2:01 pm

Re: Purchased rentals, spent savings and now I am worried about debt

Post by henbones » Thu Jan 10, 2019 9:08 am

Meant to mention - I am paying back to that 401k via payroll deduction which is 1440 per month. Once that’s paid and the short term debts I think I’ll be in good shape.

WhyNotUs
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Joined: Sun Apr 14, 2013 11:38 am

Re: Purchased rentals, spent savings and now I am worried about debt

Post by WhyNotUs » Thu Jan 10, 2019 10:43 am

My first priority would be to build an emergency fund and pay off the short term debt. Given your debt structure and life situation, I would want 3-6 months expenses in the bank. If you can keep the income train rolling this can have a good outcome for you over time but you need to be prepared for the potential problems (bad tenant, leak, job loss) in order to protect your family while making such aggressive moves.

As Sandtrap points out, prioritizing debt repayment is important, highest interest is usually a good place to start if terms are relatively even. Sounds like you are eliminating one debt next month, then keep rolling.

You have bit off quite a lot, I also agree with Sandtrap that minimizing expenses for a couple years while you get your arms around this is wise. The first few years are make or break and you took on a lot of debt for your income.
I own the next hot stock- VTSAX

Snowjob
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Re: Purchased rentals, spent savings and now I am worried about debt

Post by Snowjob » Thu Jan 10, 2019 11:05 am

Sandtrap wrote:
Wed Jan 09, 2019 6:32 pm
Okay.
Time to put on your "professional business person's hat".

1. Make a plan to payoff debt incrementally. Higher interest first. And do this as quick as possible without jeopardizing: Emergency Funds (personal), Operating Capital (business), and cash reserves (business.
So: IE: HELOC, high interest loans, higher interest mortgages, etc.

2. Streamline your reoccuring expenses; ie; maintenance, cleaning fees, management fees, repairs, etc, etc. Run your business as "clean" and "crisp" as you can. What you can do yourself, do it.

3. Cut personal expenses as well until you get back a bit more on solid ground. Defer vacations, new cars, and so forth.

4. Maximize your rental income through an optimal balance between demand/market/price/occupancy rate.

5. Where units are not at optimal for short term, convert to intermediate term (6mos leases), then auto renew to mo to mo and leave it at that. This gives you the option to switch back to short term if you want without being '"stuck".
The longer 6 mos lease units give you income stability while the short term VRBO/AirBnB optimize returns. Pay very close attention to your occupancy rate and ROI/CAP rates. Be flexible. Make it happen.

6. While you are doing the above, pay down debt, and especially build up your savings account substantially. This gives you a personal "sleep factor" and your business and operating "margin" of safety.

7. Again. Do everything that you can yourself within reason to cut expenses. Learn what you don't know. How to keep your "books", how to rent, leases, etc, etc. And, how to clear a bathroom drain, fix a light switch.

8. Compartmentalize. No "commingling" of personal funds and finances with your rental business. Keep each separate to the dime in separate accounts. IE: Do not use your personal accounts to buy cleaning supplies for your business.

Good luck.
j
Going through my first home ownership experience and was contemplating getting into rentals. this is great, thanks for your time.

Good luck OP, rooting for you!

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Sandtrap
Posts: 5707
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Purchased rentals, spent savings and now I am worried about debt

Post by Sandtrap » Thu Jan 10, 2019 11:28 am

henbones wrote:
Thu Jan 10, 2019 9:06 am
:sharebeer
Sandtrap wrote:
Wed Jan 09, 2019 6:32 pm
Okay.
Time to put on your "professional business person's hat".

1. Make a plan to payoff debt incrementally. Higher interest first. And do this as quick as possible without jeopardizing: Emergency Funds (personal), Operating Capital (business), and cash reserves (business.
So: IE: HELOC, high interest loans, higher interest mortgages, etc.

2. Streamline your reoccuring expenses; ie; maintenance, cleaning fees, management fees, repairs, etc, etc. Run your business as "clean" and "crisp" as you can. What you can do yourself, do it.

3. Cut personal expenses as well until you get back a bit more on solid ground. Defer vacations, new cars, and so forth.

4. Maximize your rental income through an optimal balance between demand/market/price/occupancy rate.

5. Where units are not at optimal for short term, convert to intermediate term (6mos leases), then auto renew to mo to mo and leave it at that. This gives you the option to switch back to short term if you want without being '"stuck".
The longer 6 mos lease units give you income stability while the short term VRBO/AirBnB optimize returns. Pay very close attention to your occupancy rate and ROI/CAP rates. Be flexible. Make it happen.

6. While you are doing the above, pay down debt, and especially build up your savings account substantially. This gives you a personal "sleep factor" and your business and operating "margin" of safety.

7. Again. Do everything that you can yourself within reason to cut expenses. Learn what you don't know. How to keep your "books", how to rent, leases, etc, etc. And, how to clear a bathroom drain, fix a light switch.

8. Compartmentalize. No "commingling" of personal funds and finances with your rental business. Keep each separate to the dime in separate accounts. IE: Do not use your personal accounts to buy cleaning supplies for your business.

Good luck.
j
Super fantastic thoughtful actions! I shared your response with my wife this morning over coffee!

We do have several of those suggestions in action but not all of them.

We are working back from expenses and thinking of ways to increase income...

Our single biggest STR expense was paying cleaners for turnover; to the tune of 2-2500 a month. Our plan is for wife to take on some of those cleanings moving forward and I can be more involved on the weekends. Should ‘save us’ close to 1k a month. Just can be a little difficult with the kiddo.

Income

We may also expand our ‘cohosting’ business where we esessential take 25% of the gross profits to manage STR’s. This was our plan prior to kiddo but has been on hold a bit.

The wife does have her real estate license so that could be another option, too.

I do receive my bonus in March. Will be close to 30k gross so that will help too.

You guys are right - I need to pay those debts off and grow a cash fund.... for my sanity and so my wife doesn’t kick me out of the house :)
Depending on the local, state, county, "landlord tenant code", and "R/E brokerage/agent, etc." rules, regs, and laws . . . .having and using the R/E license can be an advantage, "but also a serious disadvantage to having your own rental business.
Look into this.
IE: as an owner, sole proprietor, renting out your own properties, there are rules, regs, and the "landlord tenant code".
VS
IE: as an owner, sole proprietor of your own business/properties, "with a R/E license" . . . things are different.

I have done this in the past but in the long run, it was not advantageous to enable the R/E license within my own rental buildings/tenants. Again, look into it, it might be different for your situation.

Also, you can edit and transform the standard R/E leasing rental/tenant contracts to favor yourself (landlord) within the boundaries of the "landlord tenant code" and local laws/regs. Often, the standard R/E agent contract/leases favor (protect) the agent over the owner. (yes, there is a distinction). Seek legal counsel if you need to. Get this right or it will bite you someday, or save you.

Also, get your "house rules" in order. Legally and so forth.

Also, your inventory/condition and check in -- check out forms/sheets. (duplicate, tenant and owner/agent signs and acknowledges, each gets a dated hard copy. (get this right or it will bite you someday, or save you)

As a landlord, the "landlord tenant code" and other state/city/county laws and regs for short term and other rentals, are your "business bibles". Know them inside out to protect yourself and your business. Know exactly what you can and cannot do and what tenants can and cannot do. (get this right or it will bite you someday or save you).

Good luck.
j :happy

Saving$
Posts: 1665
Joined: Sat Nov 05, 2011 8:33 pm

Re: Purchased rentals, spent savings and now I am worried about debt

Post by Saving$ » Thu Jan 10, 2019 8:16 pm

marstaton4 wrote:
Wed Jan 09, 2019 7:39 pm
If it were me I'd probably sell the bitcoin and pay off small car loan and put the rest in an emergency fund. I might also consider focusing on getting those 401k loans repaid sooner than later in case you decide to change jobs.
+100

Katietsu
Posts: 1730
Joined: Sun Sep 22, 2013 1:48 am

Re: Purchased rentals, spent savings and now I am worried about debt

Post by Katietsu » Thu Jan 10, 2019 8:35 pm

henbones wrote:
Thu Jan 10, 2019 9:06 am


Our single biggest STR expense was paying cleaners for turnover; to the tune of 2-2500 a month. Our plan is for wife to take on some of those cleanings moving forward and I can be more involved on the weekends. Should ‘save us’ close to 1k a month. Just can be a little difficult with the kiddo.


A 3 month old is probably the easiest age youngster to do this with. Take advantage of it now. Once they start moving, taking them along to a rental will be much more challenging.

MrsBDG
Posts: 105
Joined: Thu Apr 13, 2017 4:04 pm

Re: Purchased rentals, spent savings and now I am worried about debt

Post by MrsBDG » Sun Jan 13, 2019 12:16 am

Join the Facebook forums for STR hosts, Say No to the VRBO Fee has 5-6k members and you can learn so much reading others silly and serious questions & issues. The Hosting Journey is also good. If you are a forum person there is no better way to learn on the fly than reading how others did it right or did it wrong.
I also pursing STR as a major component of retirement, at least for a while, but I am much older than you so approaching it differently.

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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: Purchased rentals, spent savings and now I am worried about debt

Post by Watty » Sun Jan 13, 2019 1:03 am

Saving$ wrote:
Thu Jan 10, 2019 8:16 pm
marstaton4 wrote:
Wed Jan 09, 2019 7:39 pm
If it were me I'd probably sell the bitcoin and pay off small car loan and put the rest in an emergency fund. I might also consider focusing on getting those 401k loans repaid sooner than later in case you decide to change jobs.
+100
Another +1
henbones wrote:
Sat Jan 05, 2019 2:58 pm
From there we want to travel for the year and stay in our STR's when needed.
With multiple short term rentals that would be hard to do and hiring a good property management company for short term rental will add a lot of costs. Be sure to start thinking through how that could work.

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celia
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Location: SoCal

Re: Purchased rentals, spent savings and now I am worried about debt

Post by celia » Sun Jan 13, 2019 2:02 am

henbones wrote:
Thu Jan 10, 2019 9:06 am
You guys are right - I need to pay those debts off and grow a cash fund.... for my sanity and so my wife doesn’t kick me out of the house :)
Well, if that happens, I know of a place you can stay for a few nights close to where you live! :D

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4nursebee
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Re: Purchased rentals, spent savings and now I am worried about debt

Post by 4nursebee » Sun Jan 13, 2019 3:38 am

I am a landlord.

I stopped reading as there were too many acronyms for me to understand.
4nursebee

pennywise
Posts: 535
Joined: Sat May 31, 2014 6:22 am

Re: Purchased rentals, spent savings and now I am worried about debt

Post by pennywise » Sun Jan 13, 2019 8:22 am

Not cash flow per se, but a few things I haven't seen mentioned that are very important in your situation:

Insurance: with the level of exposure you have and the heavy usage be sure you are VERY well protected with homeowners insurance that is tailored for owner/landlord coverage. I"m an accidental landlord myself and just experienced a catastrophic leak in a rental property that resulted in a major repair, losing tenants etc. Fortunately my homeowner's policy was solid and I was made whole for not only the damage repair but loss of use and the professional remediation required initially. I also have a million dollar umbrella policy as part of my coverage.

In addition to damage, you are also vulnerable to someone being injured or filing a loss or injury claim against you. If you've not already done so (I didn't see a line item for monthly insurance so maybe you folded it into the aggregate expense list), be sure you are as airtight as possible in your insurance coverage. Which leads to the next point:

Legal protection of your assets: related to item above, if you've not already done so you and your wife may find it optimal to hold your properties in an LLC arrangement so there is some protection against a creditor or litigant coming after all your assets in a liability situation. You also want to have solidly written rental and lease materials to be used in both short term and longer term leases to avoid problems in the first place

Professional help-managing real estate means dealing with a LOT of moving parts. Despite the advice from some about becoming a handyman, and your wife doing housecleaning, unless you and your wife are both going to devote 24/7 to this business, and even if you are...my experience has been that it is essential to build your team of trusted practitioners you can depend on to do what needs to be done. Especially running a real estate business as a young couple with a small child this operation needs to be just that, a BUSINESS. We have a SFR rental property, and my mother in law's home which is now rented (she's in assisted living with dementia and won't return). We also have our own residence and a vacation property. So I'm managing four houses along with a FT job, although we are empty nesters not new parents. OP, your lives are only going to get more hectic and busy so buckle up now. You simply cannot do all this on your own.

I cannot imagine how I'd deal with everything without my team! Starting with the legal and administrative level I have a great attorney, accountant, realtor and insurance agent. I work with a fantastic contractor who in turn works with and has connected me with equally top notch tradesmen. I call the same plumber, electrician and handyman to service all the houses. I use the same landscaper etc. After the rental flood disaster my contractor was able to get everything repaired and ready to go in just a few weeks, over the holidays, in large part because we've worked together before and have trust and respect for each other--he goes the extra mile for me and I pay him well plus refer him to friends. I even have a top notch house cleaner who comes in when needed for my houses (she's my regular housekeeper at my residence).

Something I resolved and have stuck to is that these are business investments not personal hobbies or properties. So for example although my husband is super handy, I don't expect him to be the handyman for our properties. Same might be the case for your wife. Sure she can clean rental houses but frankly, you are probably better served to cultivate a good working relationship with a solid house cleaner or company and negotiate a rate going forward.

Obviously starting out you have to cut costs where you can however if this is going to be an ongoing revenue source, particularly your wife's FT job (which is what real estate management is!) it's good to 'start as you will go' ie set clear policies, build your team and be sure you are protected in every way against possible threats to your livelihood. Good luck!

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