Months went by, everything with the Vernon property was running smooth and felt easy. This time, I had tenants pay me via e-transfer for rent payments. My previous trips to the bank to deposit cheques became obsolete and meant one less task for me to do, but also provided assurance that the rent payments wouldn’t bounce. I also created a Lease Addendum to outline different legalities and items that I wanted mentioned on paper, binding to the lease agreement, and signed. There were systems that I was implementing and it made me feel even more in control.
At this point, my boyfriend and I had been together for a couple of years and together, we came up with the money to buy another house with a suite. He helped renovate the Vernon house but was not part of the purchase. This time, we opted to skip the 8 month renovation project because we were still recovering from the chaos and hard work of the Vernon renovation. Again, we did our due diligence for: market rental rates, transportation plans, city development plans, schools nearby, vacancy rates, statistics on housing prices for the past 5 years, work and industries nearby, etc. We built financial models again and determined that Nanaimo, BC was the next best place to invest. Nanaimo is about 2.5 hours away from where we live.
We found one house that came with tenants in place AND their rental amounts were near the current market rental rates, which is difficult to find. It was a 2015 home, 5 bedrooms, 3 bathrooms which included a legal suite, and a double car garage. Our financial models correctly forecasted the exact amount that the house was actually cash flowing; therefore, we made a quick decision and bought it. It was still a hot market in Nanaimo at that time and homes were selling very quickly.
A few months after purchasing the house, the downstairs tenants wanted to break their lease and move out. They had purchased a house of their own. As landlords, our responsibility is to mitigate risk and find another tenant as soon as possible. So that’s what we did. We held an open house on a Sunday and found a tenant that could move-in mid-month. We lost 2 weeks of rent due to the vacancy period, but that’s what happens when you’re a landlord. I’ve learned to be happy with only a 2 week vacancy period.
Between the investment properties there were various maintenance issues that would arise. There was a leak with a washing machine, resulting in us buying a new washer and having it delivered and hooked up, since we’re 5 hours away; the same happened with a dishwasher; the piping for our bathroom sink started leaking twice, resulting in a plumber coming in twice; the smoke alarms randomly alarmed, resulting in an electrician fixing the hard wiring. Everything else was minor and the tenants themselves took care of. For the most part, the investments take up on a monthly average, about 3 hours to manage and maintain.
My boyfriend was becoming more confident as a landlord as well and was able to fully understand the financial aspect of having the tenants pay down our mortgage and see the cash flow that landed in our savings account every month.
We live quite frugally, because we have a goal to save and invest in more properties. As a result, we decided to buy two apartments. One is 45 minutes away and the other is 2.5 hours away.
We officially have built a small real estate portfolio for ourselves.
Over a year had passed since purchasing Nanaimo and the 2 apartments – everything was running smoothly. We had booked and planned our annual ski vacation, which was 8 hours away from where we live.
About a month before the trip, our downstairs tenants in Nanaimo gave their one month’s notice to move out – which happened to land smack in the middle of when our ski vacation would take place.
This is almost to be expected now. We have learned that if any issues will arise as a landlord, it will be while you are going to be out of town or already dealing with another issue. That’s the way it goes and it’s all part of the game. If we ever grow tired of it, we can simply hire a property manager, but at this point, we have a bigger bottom line by managing them ourselves. Two sayings come to mind: “When it rains, it pours” and “Bad things come in threes”. Remember those two sayings for the future, they will confront you.
The downstairs tenant in Nanaimo had also bought a new home to move into, just like the previous tenants – we were more than happy for him. We started moving forward with finding a new tenant. Once again, we hosted an open house and were sorting through the applications of which ones we wanted to shortlist.
We have found that by advertising the unit as a suite where pets are negotiable, helps us command higher rent and we receive more applications. That helps tenants overlook that there isn’t a dishwasher, there isn’t a true coat closet, and the home backs onto Nanaimo Parkway. Minor exclusions, when you can find a house that allows a pet, right? We chose a lady that came prepared with a rental application and is a working professional. She could move in the day after the current tenant was going to move out – amazing! No vacancy period with this turnover.
The tenant that was moving out had taught his German Shepherd to turn off the lights in the bedroom. If you can imagine a full-sized dog jumping up to turn off the lights, and then imagine the number of times that the dog will miss and therefore claw the wall – that image in your head is probably close to what the wall actually looked like. Plus a TV was mounted on the wall in the living room. Needless to say, we needed to paint, but did not have time to paint ourselves and the new tenant was moving in, in a couple of weeks.
Luckily for us, our upstairs tenants of that house are excellent people. We asked if they were interested in painting the downstairs suite for us, in exchange for a rent reduction for the next month. They accepted.
We managed to have someone help us out and do the walk-throughs on the move out/move in day and hand the keys over.
The problems were solved, everyone was happy. Yes, we did give back the full damage deposit to the tenant. The new tenant was happy with the freshly painted walls, as I think she feared that we would be ‘those landlords’ and wouldn’t touch up the nasty walls.
Next up, Coronavirus becomes a pandemic…. Tune in next week for Part 3.