I’ve been out for a while.  It’s been a rough couple of weeks.

My tenants of three solid years graduated from college and moved out, and I had exactly 9 days to go through the property, fix what needed fixin’ and clean the crap out of just about everything in sight.

Fortunately for me, the girls that moved out did a fairly decent job of getting all their stuff out on time and doing some general cleaning before turning in their keys, and for that I am extremely grateful.  It could have been a whole lot worse, and I didn’t bat an eye when I gave them their entire deposit back.

Then there was the bathroom.  The old shower surround was probably 20 years old, or at least it looked it, and was yellow, brittle and moldy.  It had to go.

Unfortunately the plaster wall behind the surround didn’t want to stick around either, and it ended up going too.

Then there was the tub itself.  It was definitely original and the enamel had worn off to the point where it was rusting and streaking down the tub.  If it was going to be replaced, now was the time to do it…

Long story short, I muscled the old cast iron tub out of the bathroom, taking about 3 other plaster walls with it, and replaced it with a new, modern tub and shower surround.

I’d rather not do that again.

Luckily I got the placed refreshed and cleaned up just in time for the new guys to move in.

And now I’m back to collecting rent.

I’ll have some more of the saga in the coming days, but now it’s time to relax for a while…  and hope stuff doesn’t break… any more than already has…

Well, a good three year lease has come to an end, and my tenants have elected to move out.  Two of them are going on to grad school, and I’m not sure what the other is doing.

I must say, they were pretty good tenants.  Sure, I had some phone calls fairly late at night with a broken thermostat and an extinguished pilot light on the water heater, but that is to be expected.  Stuff doesn’t last forever.  Then there was the major plumbing problem in the basement, but my buddy the plumber knocked out that problem fairly quickly.

There was a case where all three of them locked themselves out of the house on Easter Sunday, just as I was sitting down to eat with the family.  But if that’s my biggest problem, I’ll take it.

The current tenants move out July 31st, and I’ve managed to land some new students who move in August 10th.  I don’t expect any major repairs between tenants, but I thought I’d give myself a good week in case anything major needs to be done.  I suspect I’ll need some paint on the interior, a carpet cleaning, and a good old fashioned wipe down.  But we’ll see.

As I suspected the old cast iron pipe had rotted out underneath the basement floor of my rental unit. My buddy Paul (who has his own plumbing company) stopped by to take a look, and after a few swings of the sledge hammer, found the bottom of an elbow joint completely corroded out to the point where the high flow rate from the spin cycle of the washing machine was forcing water out from under the foundation and back through the stone wall of the basement.

I told him to go ahead and fix the problem, as it wasn’t something I wanted to tackle myself. Twenty bucks in plumbing fittings, and a half days worth of swinging a sledge hammer ($500 in labor and mileage from a neighboring city) and the problem was fixed. Paul finished the job by re-pouring the concrete floor he took out.

Problem solved.

At this point in time I didn’t have time to do the job myself. On top of it all, I could have ripped out all the concrete and then found I was in over my head, and the tenants would have been without a kitchen sink and a washer and dryer until someone else came in and fixed the problem.

Part of being a handyman/landlord/real estate investor is knowing what you can do yourself, and knowing what your time is worth.

This is one of those cases where I’d gladly pay for a pro to come in and do the job.

Spurred by my recent plumbing problems, MJ wrote an excellent post on his blog concerning dealing with contractors, getting quotes, and following up on progress.

Anyone who’s never worked with contractors before will learn a thing or two based on MJ’s experience as a manufacturing engineer.

…any actual contractor should be able to cover all the costs of the work until it is complete, if it is a big project expect to pay 75% of the project costs when the work is 75% of the way done. In other words, the project should be close to finish at that point, and hold the last 25% for the actual project completion. -Source

I can’t agree more.

He also recommends using union labor because it is an indication that the worker has been through some sort of apprenticeship and been “certified”. I think this notion really depends on the type of job being done and of course the scale.

If you’re doing some light demolition work, union labor may end up costing you more for labor a high school kid could cost you. By in large, he’s right though, and the following rule of thumb applies to every project, regardless of scale:

You get what you pay for.

So I made the handyman trip to my rental unit last evening after the tenant called and told me that the washer was spewing water all over the place.

A few things crossed my mind when she described what was happening:

1. The outflow tubing came out of the drain fitting and when the spin cycle started the water ended up on the floor instead of in the drain.
2. The outflow tubing disconnected itself from the pump.
3. The drain backed up and when the washer tried to pump all that water down the drain, it back flowed out the pipe.
4. The water pump case cracked and is leaking from inside the washer.

Any one of the above I could have taken care of myself.

Unfortunately, none of those scenarios existed. At least not entirely.

After I arrived, I fired up the old Whirlpool about half way with water, and then put it right into the spin cycle. I can hear the water being sent down the pipe, and then I start to notice something.

Water is seeping in through the foundation wall right where the drain pipe goes through the concrete floor.

Evidently the drain pipe (that’s been buried in the concrete floor, has become partially blocked to the point where the high flow rate from the spin cycle pressurizes the pipe, and the water then makes its way either through a hole in the pipe or a broken fitting.

Regardless, the washer isn’t broken. It’s much worse then that.

I attempted to snake the line to try and relieve the clog, and those of you who have done that know what a joy it is. I ended up with a black greasy sludge from my finger tips to my elbows. Regular soap wouldn’t even cut it. I had to wait till I got home to wash my hands with the orange pumice hand cleaner… that was a long drive home.

Anyway, I was able to free up the clog, at least partially. There’s not nearly as much water coming through the wall as there was with the clog, but it does still come through the wall.

So I’ve called my buddy Paul who’s a plumber and asked him how I should proceed. Naturally I knew that the concrete was going to have to come up, but didn’t know how big of a job I was really in for. Plumbing I can do. I can work with copper and plastic PEX (wiki: PEX), but interfacing new PVC with old cast iron is out of my realm.

Paul indicated that any good plumber could do the work, and that he’d done a similar project for a guy a while back and it ended up costing the guy around $500 start to finish, and that included pouring the cement to fill the trench after the new pipe was laid.

So now I have to figure out where I stand. I have to fix the problem, and I’m leaning towards contracting it out. Breaking up 10 feet of concrete with a sledge hammer doesn’t sound like any fun, and may make a case for paying a pro to furnish the back breaking labor.

What do you think? Break my back tearing up the old concrete and learn how to replace the pipe, or just write the check?

In the mean time, I’ve told the tenants that they can use the sink (which drains into the same line) and can even wash their clothes, just expect some water to come in through the foundation when they do. It’s not a big deal, the basement is unfinished and the water will make its way down the floor drain, no problem.

I just received a call from one of the tenants at my first rental property. The clothes washer is leaking all over the basement floor.

Just last night I was thinking about how I hadn’t been called to fix anything lately…

Go figure.

So tomorrow I play appliance repair man.

It’s interesting to note that of all the appliances I have bought brand new, I have not had to fix, repair or replace anything. However, initially I bought both the washer and dryer used. I replaced the dryer with a new $200 version from Home Depot less than 60 days after the used dryer was purchased (the warranty was only 30 days). I’ve had to go back and fix a switch already on the used washer, and now it’s leaking all over the place.

I remember the debate when I first bought the appliances, whether to buy new or used, and the overall consensus was that the used appliances were a better way to go, as it would save me money. But now I have to spend another evening troubleshooting a broken washer, and may end up spending money to have an appliance repair company come out and fix it…

I understand the logic behind going with used appliances in a rental unit, but I would have gladly paid the extra $200 for new units up front if I new how much time and aggrevation it would save me down the road.

I suppose that’s what they call “hindsight”.

After my visit to the termite palace yesterday, the real estate agent told me she’d keep an eye open for more property in the area. The question then became: What is your criteria?

My first rental property ended up setting the bar very high. I bought it from a bank, put less than $10,000 into it for rehab and renovation, and rent it to students. Overall, my net cash flow is $345 per month. So I guess those traits could start the list.

1. The property must be within 3 blocks North of the local University.

Talk about narrowing the field! This is probably the most restrictive of my criteria, but I have good reason for putting it in place. The area to the South of campus is fairly worn down, crime is higher, and it’s generally just a less attractive area. By in large, this means that I couldn’t rent the same house to the South of campus that I could to the North of campus. In short, the margin is smaller.

Additionally, the campus is bordered by two main streets, one on either side. To the West of the main street are upscale neighborhoods that sell for more than $300,000. Not at all conducive to renting out, especially to students.

To the East of the opposite main street is what we call “the hood”. You can find houses for $20,000 but you better bring protection if you care to visit.

So that limits my search to about 9 square blocks.

2. Must be able to purchase for less than $60,000.

The general consensus is that a property should rent for 1% of the sale price. But that if the sales price matches the appraised price.

When you look at renting to students, look at what rent should be per room, not for the overall house. In my area, it’s not unreasonable at all for a single student to pay $300 per month for one third of a 3 bedroom house. So if you have a two bedroom house, the rent should be about $600 per month. Any premium to that should be justified by a service or resource in return.

3. The high dollar issues must have already been fixed.

This is one I’m willing to budge (a little) on.

I’m looking for a place that has already had the plumbing overhauled, electrical box and wiring replaced, and fairly new air conditioner and furnace installed.

I’m willing to foot the bill for a new air conditioner and furnace. That work would have to be hired out, but you’re not looking at a lot of labor expense, and the job can be done in a day, maybe two.

Plumbing and electrical is a major task, one I’m not up for doing myself, and not willing to pay to contract out.

However, if the price is right, I could be swayed on this rule.

4. The place must be structurally sound.

Along the lines of rule number 3, the property must not require major structural work. This translates into big money. Simple stuff like replacing deck structure I can handle, but I’m not willing to replace floor joists and certainly not willing to replace walls because termites ate them out!

5. The property must be a 3 bedroom, and 1 bath, minimum.

The fewer bedrooms, the harder it is to rent. The difference in list price between a two bedroom and a three bedroom house can not be recouped by using my $300 per room rule of thumb. Consequently, you’ll end up asking for a premium in rent for less square footage and end up having to concede more services (lawn service, laundry appliances, etc.).

6. Must be able to rent to students.

The university in the area is fairly affluent itself, and it caters to those who come from affluent families. Accordingly, paying for rent is not a large part of the overall college budget. Therefore, the students that attend this college are a bit less stingy when it comes to negotiating rent. And given the fact that there are few nice (and relatively safe) places outside of campus to live, the premium is somewhat justified.

So what do you think? Are my criteria too strict? Am I missing something?

This afternoon I went over an looked at the property I’ve been watching for a few months. From the outside looking in, it appeared to be a rehab project that simply ran out of money. It’s typically opportunities like this that widen the margin on a deal, as most of the expensive stuff has already been taken care of by someone else.

Walking in through the front door, it was evident that the place had been lived in since the renovations took place. The carpet was dirty and stained, and there were remnants of belongings (crayons, broken pencils, etc) left in the kitchen drawers.

The walls in the front living room were cracked (as they typically are for the area) and are in need of a patch job and paint, but all in all it didn’t look too bad.

The basement reveals all.

Then I took a trip down stairs. The basement will always give you an idea of what’s really behind the walls because it provides the most access to the structure.

The plumbing had been redone fairly recently, as the new-style PEX (essentially plastic) plumbing that all the new houses are being built with today was running among the floor joists on the ceiling. The electrical had evidently been redone recently as well, as the 100 amp breaker box still shined and the wiring still looked new.

The furnace and hot water heater were new within the last couple years, so there wasn’t much risk in all the basic services and utilities.

A quick look between the joists and everything went south. About half of the joists were brand new, indicating to me that someone really did an overhaul on the major structure. It’s not easy to just replace a bunch of floor joists, especially on the lower level, as these joists typically bear the load for the rest of the structure. Replacing them is like swapping out the bottom level of blocks in Jenga. It’s a very delicate procedure that carries significant risk. The question then becomes: why were they replaced in the first place?

At first, it appeared that the sub floor was rotten. Perhaps water damage rotted the floor, and while the floor was being replaced, it was a good time to replace some joists that were over 100 years old. My curiosity kicked in, and it was while digging around in the rotten floor that I noticed that this was no water damage, this was termite damage!

Termites had turned the old sub floor to a fine dirty powder in most places, and a soft wooden sponge almost everywhere else. Yikes. I was starting to become deterred, but not completely put off. I could pull the carpet up (it needed to be replaced anyway) and replace the rest of the sub floor, no problem.

One thing about termites, though, is that if they had enough time to chew out an entire floor, chances are they didn’t just quit eating after the first coarse was through.

Back on the first level, I noticed there was a small hole in the wall in a lower bedroom. I stuck my finger in the hole to see if the lathe was still in good shape. I ended up poking at a dry spongy material inside the wall. What once was the lathe behind the plaster was now leftovers from the termite feeding that I was now standing on.

The entire structure of this house had been dissolved from the inside out by termites!

If it weren’t for the termites!

The house had so much potential. All the expensive components had been fixed, remodeled or replaced. All it needed was carpet, a few patches in the walls and a fresh coat of interior paint… and oh yeah, it needed to be gutted and rebuilt.

There is now way my conscience would let me rent this place out to college students knowing there were some major structural problems with the floors and walls, and completely re-doing the structure would not leave me with enough margin to rent.

Oh well, there are other fish in the ocean, and I can afford to be picky.

I called my banker yesterday after I started thinking about how I was going to finance another rental property. When I call this guy my banker, he IS the bank, as in, he OWNS the bank. A good guy to know, indeed!

One of the benefits to doing business with a small town bank is that you know the bank and they know you. There is no pre-approval as long as your logic is sound and the margin is wide. If you have the cash flow to support the investment, they’ll lend you the money.

So the conversation with the banker (Bruce) went like this:

Me: Hey Bruce, I’m looking at acquiring some more rental property, would you be interested in writing the loan?

Bruce: Absolutely, what are you looking at?

Me: Well, there is a property two blocks North of the one I already own that’s owned by a bank, and they are desperate to get out. It’s come down thirty grand in the last three months.

Bruce: How much money do you need?

Me: They are asking $59,900 but I think I can do better than that.

Bruce: Sounds good. Just write the check or whatever you need to do, give me a call and I’ll make sure the money is there to cover the deal.

Man do I love doing business with a small-town bank. You’d never have a conversation like that with Bank of America!

I’ve been casually looking for another rental property next to the one I already own. For a long time, the people in the area have been very proud of their houses, asking nearly 5 times what they’re actually worth. Needless to say, those houses are still on the market, many for as long as 15 months and counting.

But there is one property just a block or two away from my first one that has been on the market for 4 months, and its price has been dropping like a rock. The reason? The bank wants out!

I remember back when this property was on the market the first time around, and was purchased for nearly $100,000 by someone with intentions to rehab it. Evidently, they got half-way through with the job and ran out of money. The foreclosure process began and the bank ended up with their very own, half finished rehab. Just what they wanted, I’m sure!

The initial list price was $89,900 and has come down $10,000 each month for the last three. The current list price is $59,000 but I’m sure the bank would take less if the terms were right.

I’ve got an appointment to take a look in the property on Saturday, but I got bored today and started snooping around outside and looking through the windows.

The stucco exterior is in good shape and has been recently painted. The windows look brand new all the way around, and with the exception of a couple of torn screens, won’t need any work.

The bushes in the landscaping have died off due to neglect, but it wouldn’t take much to spruce things up.

The air conditioner looks fairly new, as the finish on the side of it is still shiny.

The property lacks guttering all the way around, but it wouldn’t take much to fix that. The last guttering job I had done ran me $800, but I wasn’t terribly pleased with the workmanship.

Peaking through the windows, the kitchen has been completely upgraded with new tile and counter tops all the way around. It’s not contractor-grade stuff either, which may explain why they ran out of money during the rehab!

The carpet in the lower level looks like it needs to be replaced or at a very minimum steam cleaned, and there are a few holes in the drywall, which is an easy fix. The original trim is still intact and has been recently painted, but I’m not a big fan of the pinkish color.

Naturally, I wasn’t able to see the bedrooms in the upper level, or the basement.

A few things I’ll be on the lookout for on my visit Saturday:

1. The condition and extent of the electrical wiring.
2. The condition of the plumbing. Anything but newer copper could pose a problem.
3. The condition and structural integrity of the foundation. The stacked-rock foundations in the area are fairly robust, but this is a major area that could bust a deal really quick.
4. Overall integrity of the structure. Drywall I can handle, major structural issues, not so much.

The property is in a better part of the neighborhood than my first rental, but it’s also further away from the local campus.

More to come…

Now that I have things on cruise control with my rental house, it’s time to start putting some money into it.

Last week I contracted out a tree service to have the tree removed on the property line. I generally hate to remove good trees, but this one is right on the property line growing up through a chain link fence, and even worse, it was growing up through the electrical service lines to the house. That spells disaster when the limbs freeze up and take out the power to the house.

While they were at it, they ground out a second stump in the middle of the back yard.

All told, the bill was $800 once it was all said and done, but I think it was worth it, as the job is part of an effort to create a little curb appeal.

I really haven’t had any problems with the tenants, and I’m getting rent on time, which is a positive note.

Next, I’ll have some guttering replaced and some rotten wood trim replaced around the outside of the house, hopefully before the fall storms start kicking in.

A little over seeding this fall, and an additional landscaping project to add some color, and hopefully by spring I’ll have a good looking unit.

Along those same lines, I’ve contracted out a lawn service to mow the grass every other week. This eliminates the burden on the tenants, and alleviates my anguish of doing it myself.

It’s all coming together, slowly but surely…

It is now June 13th, and I have yet to receive rent for June, due on the 1st.

This will be the first time I have ever had a problem collecting rent from these tenants, and I think I know why.

Postage.

Back in the middle of May, postage went from $0.39 to $0.41 per stamp. Throw a thirty-nine cent stamp on an envelope, and you’ll probably see your mail back in your own box within a couple weeks.

After a phone call to the tenants, they indicated they mailed the check two days before it was due. I asked whether they put the correct postage on the envelope, and the response was…. uh, why?

Go figure…

The students I have living in my rental have decided they will renew their lease for an additional year. While they haven’t been trouble free, they have never been late with the rent, and haven’t torn the place up. So I’ve really got little to complain about.

I’ve also decided to raise the rent by about 5% to try to stay in line with the local rental market.

I’ve been told by several people that have or do own rental property that it’s very important to keep increasing the rent each year, within reason of course. This is primarily because the higher the rent, the higher the value of the house.

So while I don’t want to scare off the tenants that I have by going overboard on the rent increase, I do want to make sure that I continue to adjust for the increase in costs.

In addition to the increase in rent, I have decided to provide a lawn mower for the tenants to use. I’ve done this for a number of reasons.

1. I don’t expect college students to own a lawn mower
2. If I provide the mower, I may have less of a hassle with making sure the grass gets mowed.
3. It will psychologically justify the reason for the increase in rent. (it’s easier to swallow if you think you’re getting something for your extra money)

Right now, the tenants are responsible for keeping the grass maintained at a reasonable height, but considering the fact that there are only two girls living in the house right now, the chances of keeping it mowed are slim. I believe they are having someone mow it for them, which is fine, but I figure if I give them the tools to do the job, at least they can make the decision to do it themselves or hire it out.

Easter weekend was shaping up to be rather quiet and uneventful, right up until I was ready to walk out the door to go to Easter dinner.

“Yeah, Grant? My roommate and I both left our keys in the house, and we need to get in pretty quick so we can go to Easter dinner with our parents…”

My first thought was “yeah, me too. See you in a couple hours…”

Then, after preventing thought from turning into noise, I realized that I had provisions for this in the lease.

“That’ll be $50, payable by Friday, I’ll be there in an hour.”

So while I was 30 minutes late to Easter dinner, it was also the fastest $50 I’ve ever made. Of course, being a weekend, and a holiday, $50 is pretty cheap compared to what they would have spent on a locksmith. Perhaps something to think about when drafting next years lease.

The joys of being a landlord…

I got a call from one of my tenants on Monday indicating the pilot light went out, and she wanted me to explain to her how to light it.  A disaster waiting to happen: gas, a match, and someone who’s never brought the two together with the intention of containing the result.

So I told her to go to the water heater, remove the metal panel and look to make sure the pilot light was actually out.  Her response left me scratching my head.  “No, there’s a flame there”, she replied.

“So why did you think the pilot light went out? Did you run out of hot water?”

“No”, she replied, “the air vents aren’t blowing hot air any more…”

Oh boy, we have a furnace problem, and those aren’t cheap.  On top of it, there is not a pilot light on modern furnaces, they’re all electronic ignition.

So after work I went over to the house to examine the problem myself, and sure enough, the electronic ignition had gone bad on the furnace.  It was getting gas, oxygen, but no spark.  The third and most critical part of the triangle required to make flame.

After calling about 30 “emergency” heating and air services, I came up with nothing.  All of them had about 6 calls in front of mine, which meant it could be 6 hours (or around 3am) before they could get to my furnace.  On top of that, they would charge overtime rates, and add 20% to the parts cost (which kind of peeved me a little).

So there is the dilemma: Do I spend about 600 large to fix the furnace at 3am, or do I wait till the next day, all the while the outside temperature is dropping like a rock, with lows around 10 degrees for the night…

After discussing it with the tenants, they agreed to make an appointment for the next day.  Great.  But now I need to keep the pipes (and the humans) from freezing.

I had the tenants turn the water on to all faucets and fixtures through the night, shut their bedroom doors, and use space heaters to keep their rooms warm (of which they were doing anyway to save money on their gas bill).

The next day, the folks came and swapped out the electronic ignition to the tune of $180.  Not bad, all things considering!

So in the end, it cost me $180 to relight a pilot light that didn’t exist.  The tenants are happy, the pipes didn’t burst, and I saved a wad of cash by waiting till the next day.  Although I was prepared to spend what ever it took to fix the problem that night, I wasn’t going to wait till 3am to fix a furnace.  It kind of defeated the purpose.

I suppose I spoke too soon when I mentioned that I like the easy fixes…

As a landlord, I don’t mind being called in to fix a problem, so long as it’s an easy problem to solve!

My tenants sent me an email last night stating that the bathtub wouldn’t drain after taking a shower. I wrote back and asked if any water had drained between last night and this morning, and they replied that not a single drop had drained from the tub during that period.

This is some pretty useful information. If a pipe clogs due to hair, grease or other buildup on the inside wall of the pipe, it does so over time, not all of a sudden. This indicated to me that there was a mechanical problem with the drain stopper itself.

Sure enough, the lifter had detached itself from the drain and the drain was stuck in the down position courtesy of good ‘ole gravity.

A quick slip of the screw driver opened the “clog” in an instant and I temporarily wired the pieces together until I can find a replacement for the entire drain.

Like I said, I like the easy fixes.

Last night I pulled out my “Rental Expense Receipts” folder and started sorting them out so my tax preparer wouldn’t have to. A money saving effort on my part.

I turned to the good ‘ole IRS for some guidance on how many categories I need to establish, and what I can deduct and what I can’t.

Turns out, there are just 3 categories: Repairs, Improvements and “Other”.

According to the IRS, a “repair” keeps your property in good condition. It doesn’t materially add to the value of your property or substantially prolong its life. Repainting your property inside or out, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows are examples of repairs. Repairs may be deducted from your income.

However, they throw a catch 22 in the mess too:

“If you make repairs as part of an extensive remodeling or restoration of your property, the whole job is an improvement.”

An improvement adds to the value of property, prolongs its useful life, or adapts it to new uses. Improvements must be depreciated.

A list of improvements may be:

Additions: Bedroom, bathroom, deck, garage, porch, patio

Lawn & Grounds: Landscaping, driveway, walkway, fence, retaining wall, sprinkler system, swimming pool

Miscellaneous: Storm windows, doors, new roof, central vacuum, wiring upgrades, satellite dish, security system

Heating & Air Conditioning: Heating system, central air conditioning, furnace, duct work, central humidifier, filtration system

Plumbing: Septic system, water heater, soft water system, filtration system

Interior Improvements: Built-in appliances, kitchen modernization, flooring, wall-to-wall carpeting

Insulation: Attic, walls, floor, pipes, duct work, etc

The “other” category pretty much takes care of all the other expenses, such as utility payments while the unit isn’t rented, mileage, interest, taxes, insurance, cleaning, advertising, etc.

So I took all my receipts and characterized each expense, placing each one into one of three envelopes. I also put all the expenses (including dates and a description) into a spreadsheet.

It turns out that $1,100 of my expenses last year were repairs, $2,500 were improvements, and just over $1,500 were “other” expenses. Note that none of these values contain mortgage, tax or insurance expenses.

Hopefully this effort will save my CPA some time, and me some money!

There are times I love my insurance company, and other times I’m not quite as fond.

However, whenever your insurance company sends you money for no apparent reason, it’s always a good thing. Today I received my yearly USAA dividend check to the total amount of $58.91. Last year is was just shy of $100 and in previous years it has been upwards of $150.

Overall, USAA will return more than $6.4 billion to its members in 2006 in the form of dividends, claims payments, distributions and other monetary benefits. This adds up to almost half of the total revenue USAA brought in throughout the year.

While shopping for car insurance, USAA couldn’t be beat, and they narrowly beat out their competitors for home owners insurance. However, their landlord packages are terrible! Effectively, USAA will insure your rental property for the rebuilding cost in today’s dollars. So they initially insured my rental property (which is valued at $125,000) for $270,000! Consequently, my premium was $1500 for the year.

So while USAA does offer some great competitive rates, it still pays to shop around.

Click here to see if you’re eligible for USAA membership.

No matter how many times I’ve heard it, no matter how many times I’ve said it, every once in a while I have one of those “Doohhh” moments that reaffirms my faith in the saying:

“You get what you pay for.”

Once thought dead, the saga of the washer and dryer for my rental unit lives on.

Yesterday I got an email from one of the students in my rental stating the dryer was burning his clothes and ripping the buttons off his shirts.  In a previous investigation, I found the dryer drum was not turning true on the spindle and created a gap between the drum and the casing.  Long story short, his clothes were ending up in the gap and having holes rubbed in them.  He also noticed buttons were missing from his shirts…

You might remember that I found a heck of a deal in a refurbished washer/dryer pair, and picked up both pieces for under $300.  No warrantee of course.  With a service call running $49, then parts, labor, headache, aggravation….   You’re almost better off buying a new one when it breaks.

That’s what I did, and that’s what I should have done in the first place.

A trip to Home Depot and a couple hours later, I can rest easy knowing that the next phone call won’t be for dryer issues.

You buy ‘em books, and you buy ‘em books, and all they do is eat the covers…

My tenants want a cat.  It could be worse (i.e. Pit Bull, Rotweiller, Great Dane..).

So I have to write an addendum to the original lease allowing for a pet under certain terms and conditions.  My search for lease addendum forms on the internet turned up a host of different sites providing free forms for landlords and other real estate professionals.

In short, the addendum needs to outline the following terms, among others:

1. Type of pet, along with color, weight, height
2. The additional pet deposit due
3. Any increase in monthly rent
4. Responsibilities of the pet owner
5. Freedom of liability of the landlord

I took bits and pieces from the various templates I found, and wrote my own pet addendum.

My big mistake in this ordeal is that I made some verbal agreements with the tenants before I explored the topic in full.  I agreed that an additional $200 deposit would be required, and no additional monthly rent payments would be required.

I think I sold myself short on both counts, as I now feel the deposit is a bit low, and I should get additional monthly rent.

Seeing as how it’s only one cat, and I outlined some fairly stringent rules for the pet, I don’t feel I’ve sold myself too short, but I will know better for the next time.

As always, make sure you check with a real estate attorney if you have any questions.

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