Once we found a reputable property manager in town, we put our house on the market and had it rented out in less than two weeks. The realtor told us that the woman moving in was single, no pets, no kids and from out of town. What better tenant profile could you ask for? Of course these claims were shortly debunked. The day she moved in, we drove by the house only to see a huge party. Then in September when we refinanced (we originally purchased all cash), photos from the appraisal revealed a kid’s room, dog and boyfriend all in tow. But, she paid on time and from what we could tell was a good tenant so we left well enough alone.
During the 17 months that we rented the property, there was only one major problem which needed fixing. I was informed via email one day that I had a plumbing bill of 1669 for a clogged toilet! Frustrated, I phoned my management company and demanded to know why they hadn’t contacted me as my management agreement stated that for any repairs over 500 dollars they would seek my input (I have several plumbers who I thought could have bid the job). As it turns out, the plumber had to dig up one of the pipes in the front yard and discovered that it had been clogged with feminine hygiene products and baby wipes. When I told my manager that I shouldn’t be responsible for this, his response was ‘you can try to get the renters to pay for it but in my experience you won’t be successful’. After some debate and protest, we ended up paying for the repairs.
Shortly after we had rented the house for a year, we were approached by someone close to the tenant with an offer to buy it. Another recent real estate transaction had depleted our reserves significantly so we decided to consider the offer. We settled on 92,000 dollars and a few repairs. After making all of the repairs and paying my lawyer to finalize the sales agreement, they informed me that they were backing out and that she was moving out!
Having already set my mind on selling the property, I called my realtor to get it listed. We ended up listing the house in December, 2017 for 104,900 with the hopes of getting 95-99k. After sitting for a few weeks, we finally got an offer of 82,000. Seeing we weren’t even in the same ballpark, I simply emailed my realtor back saying “please reject the offer on my behalf” (we were perfectly happy to keep the house if we couldn’t get the right price). Surprisingly, she came back with another offer. I told her 95k was my final price and that I wouldn’t make any concessions. Still she persisted. Each offer I simply denied rather than countering. Finally, she agreed to the price of 95,000 after 4 lower offers.
Selling this house was a difficult decision. It produced strong return on investment, it was easy to rent and part of me thinks we should have never sold it (more on that in a later blog). At any rate, it was a good investment that we held for just under two years. Here are how the numbers played out.
|Purchase & Closing Costs||40,768|
|Maintenance & Repairs
Roof repair (500 dollar deductible), plumbing and repairs at time of sale.
|Taxes, Mortgage, Insurance & Management (17 months)||12,637|
(17 months at 850 a month)
|Initial Cash-Out Refinance
|Cash received at closing
Final amount in pocket after closing costs and mortgage payoff.
Final Income and Expense Totals