bootylicious said:
Hi Karen
Come to think of it, nothing went in a straight line anywhere in my life in 2004 (it was a 5Ki year, after all!!), so why should the properties be any different?
Some years are like that. I'm now doing the 2003 - 2004 tax returns and the total maintenance for that year across all properties was less than $3,000, but from July 2004 onwards the financial wheels fell off even though the situation was already unravelling from about January.
Into each life some rain must fall - and I really am not complaining as most years just potter along with something here and something there. As I said, 2004 ended with full occupancy, new leases, increased rents, all the maintenance up to date (including the painting) and hopefully the recalcitrant tenants sorted out.
I really only listed most of the dramas (there were more!) to illustrate the point that even us old hands can get a bad run no matter how much care we take.
To misquote General Custer at the Battle of Wounded Knee, 'Put your faith in God, but keep your powder dry!'.
Translated into property investing, this means make sure you have all tenants on leases at least to start with, make sure you have adequate insurance including landlord's insurance (which requires proof of original lease if making a rental claim), have an experienced property manager who you trust but don't delegate authority in a foolhardy manner, read you own leases and have a good working knowledge of relevant legislation, make sure you have some money set aside for a rainy day, and keep the sherry decanter well filled.
And every cloud has a silver lining. The air-conditioning tenants were paying $215 per week and the incoming tenants are paying $260 per week, the roses tenants $247, the new tenants $250, the new commercial tenants 10% more, the other commercial tenants agreed that the original lease stands with agreed amendments (which it legally does) the fire cost me $100 insurance excess, the eight weeks vacancy (approx $1,720) gave me enough time to fully internally paint the house (what would a commercial painter have charged for that?), the cat door tenant changed her mind when she got quotes to replace / reinstate the sliding door, all the plumbing problems were fixed including a trade off for the mould damage (I swapped that for an agi drain), the late and non-paying tenants are up to date and (hopefully) up to speed,, everything has settled down and at time of writing, is running smoothly.
Apart from the fire, well, and maybe the sewerage in the shower, and perhaps the fleas, and well and ... nothing was such a problem in and of itself, it's just that the whole year was one situation after another and none of it could have been foreseen, particularly Donna Reed and the little issue of the Police Warrant.
I think when you're new to something (anything) it's a big shock to discover that property investing isn't really about property, it's about people, and people do some very strange things like stop paying rent (nah-da-da-nah-da, whotcha going to do about it!?), parking on freshly sown lawns, not watering 20 standard roses because they begrudge paying for the water ($0.70 per tonne home delivered), or mistaking the landlady for their mother and wanting to ring up all the time.
But as time goes on, once you've swapped your Little Orphan Annie for The Brady Bunch, you just shout 'don't bleed in here!' instead of ringing for an ambulance for a grazed knee, and just get on with it.
So I hope that my previous post was not read as a lament or as a disillusioned investor but just that there are some times when it all happens at once. My favourite times, though, are when nothing happens except the rent(s) appearing by magic in my bank account at regular intervals, and when I have absolutely no reason at all to speak with my property manager.
Cheers
Kristine
