One of my favorite things, is buying houses. Sorry to startle you there, I’m sure you were expecting something harmless like drinking beers, playing fantasy football, or using my hand to un-jam the snow blower, all quality activities in their own right, but I rather like buying houses more then any of those other pastimes. Generally speaking, I go for the ugly ones, they need bought too.
I dress them up, and rent them out.
I imagine it’s like being a pimp, except I’m dealing with property and not people, plus its legal. From 2011 until 2016 this was a pretty easy business, people needed places to live, but oddly no one wanted to buy houses. During that time span, I purchased 6 different properties to go along with the house I had bought in 2005. I live in one of the properties, allowing me to rent out the other 6.
The mathematicians among us have quickly calculated that I own 6 toilets, 6 furnaces, 6 bathtubs, and numerous other items sure to cause headaches (I also deposit 6 checks thank you very much). Surely, I spend all my time hiring contractors, chasing after rent, and dealing with property inspections.
Lately, that’s correct.
Within the last two months of summer, I’ve replaced a ceiling fan that kept burning out its internal wiring, I’ve hiring someone to replace a central heating and cooling unit, I’ve fixed a leaky toilet bowl, as well as a leaky toilet wax ring (In fact I did both of those repairs in the same day, I washed my hands with soap afterward). I replaced a few broken bathroom floor tiles, put out some poison for ants, and hard wired a combination smoke / carbon monoxide detector. I passed my housing inspection.
The last few months have been lively to say the least.
Now owning real estate can be summed up nicely using a few trendy phrases; “I don’t want any late night phone calls,” or “who has time to chase after rent every month.” First, let me say those phrases are dumb, if you can’t find 30 minutes each month to collect a couple hundred bucks, how do you have time to work? Here is another dumb phrase, but one that bears some truth.
“Cash flow is king in real estate.” These last few months my cash flow has gone right out the door, apparently I live upstream in relation to my properties, which leads me to another saying, “location is everything.”
Now, getting back on track, 5 years ago, I wouldn’t have known how to do a single one of the above mentioned repairs. The first time I tried to install a ceiling fan, I was startled to see sparks flying from the wire I was calmly fiddling with. I couldn’t even figure out how to get the power off. In my defense the panel box was clearly labeled by a toddler with stickers.
My first forays into plumbing resulted in the kitchen facet doing its best old Faithful imitation. I once ripped out all my kitchen cabinets and unable to face the looming task ahead of me, I left on a two week vacation. I’ve been too cheap to buy the needed tools making a simple task like drilling holes into concrete nearly impossible. In an effort to save on paint costs, I painted a bathroom red, which required about 5 coats to get compete coverage. In short, I’ve been and continue to be a fool.
But, buying real estate has given me the opportunity to learn and grow. I’ve learned that when you buy a vacant house it really doesn’t matter if you know how to fix things or not, you ask questions and then figure it out.
Houses are tough to break.
The friendly guys at the local plumbing supply store have walked me through several fixes, while picking out the parts that I need, and even giving me pep talks. They also provide free hot dogs on Fridays at lunchtime. All this to say that knowledge can be valuable. Each month the mortgage balances shrink ever so slightly. The cash flow, while occasionally having bad months, has enough good months that all my expenses are covered.
In 16 years or so, many, if not all these properties will be paid off, using the tenants money, not my own. At this point, they could be sold to cover college costs for my children, as this is one option I’ve considered. Realize that sometimes it costs money to learn skills and acquire assets, but over the long term, these new skills can become very valuable.