10 Things I Learned Becoming a Landlord at 25
We finally did it!
After 3+ years of working towards rehabbing a house, purchasing a new house, and signing a lease with tenants, we are officially landlords!
I remember writing about this plan way back in this article, and even though becoming a landlord isn’t easy or breezy, it’s sort of surreal seeing a plan that’s been this long in the making come together.
Last week, I wrote about our journey to renting out our house, from the purchase process, through the rehab, and the final product.
Today, I want to talk about some of the things we learned, either through the advice of others or learning them the hard way.
And I want to share them with you in case you are considering investing in real estate in hope that you can have a “leg up” over the resources that we had going into this whole rental property thing virtually blind.
You Can’t Start Too Young
We bought our investment property at 22, and then lived in in for 3 years. At that age, we were pregnant with our daughter, I was just out of college, and we had a lot of uncertainties. But still, we managed to make it work!
By starting young, we set future income streams in motion. These are streams that will continue to benefit us for the rest of our lives, and I’m sure glad that we put in the work while we’re young and still have energy, rather than 10 years down the road.
It’s kind of like investing in the stock market: the earlier you start, the bigger returns you’ll see.
It’s Ok To Be Uncomfortable for A While
Buying a home that didn’t have plumbing, needed wiring redone, and had been vacant for 7 years – while pregnant! – certainly wasn’t the most comfortable thing that we could have done. But it was absolutely the best financial decision.
In the time before our baby was born, we focused on making the house safe – not pretty – and the rest followed over time.
Sure, we weren’t the happiest in the house, but it put a roof over our heads, and our child was safe. She definitely didn’t know the difference between the dated/ugly decor, and the updated stuff. This was something that we had to remind ourselves of frequently, but it worked!
Build Yourself a Team
This house was the first we ever bought, and even though I had done TONS of internet research about how to buy a house, how to get the best mortgage rates, and more, I had to acknowledge that I still didn’t know close to everything.
So the hubs and I enlisted the help of my father-in-law who manages more than 25 properties and owns 20, and his realtor who specializes in foreclosed, short-sale, and REO properties to help us find a house that we coul get into quickly and that would be a good long-term investment.
If you’re looking into purchasing an investment property, I highly encourage you to work with people who know what they’re doing. This one thing alone is the what will set you up for future success.
….And Listen To Their Advice (even when you don’t want to)
We looked at some nasty, nasty houses all in the name of real estate investing. Some were so bad, that as a pregnant person, I refused to go in.
In the end, we were torn between 3 houses, all at similar price points, and in the same general neighborhood. I wanted one house, and my father-in-law really thought we should purchase another. I gave into my FIL’s opinion even though I didn’t want to, trusting that his knowledge was better than mine.
If you’re looking at real estate, and you’ve picked a good team, listen to them – especially if you’re pregnant and hormonal. You’ll thank yourself later.
It’s not easy to buy a home in school districts you don’t like, away from family, while you’re expecting a baby, but I’m a testament that it CAN be done.
Sure, it’s not fun, but part of real estate investing is long-term success, not present comfort.
Be Okay With Debt
For a long time, I was really against taking on extra debt to rehab our house. I understood the logic of taking on debt to make way more money in the future, but the risk scared me.
Now that we’re more diversified, the risk is much less and I’m all about using debt strategically – and within the hubs’ comfort level.
Your personal feeling on debt may vary, but I definitely encourage you to at least consider using debt to generate passive income – just make sure you’re getting the best mortgage rates, and that you’re NOT paying PMI.
When In Doubt – Ask
Quick story: I laid the tile in the kitchen of our rental during the kitchen reno, but I had never done it before. I watched videos, asked questions, and went shopping according to a very specific list.
But still, when we went to lay what should have been the mortar under the tile, we noticed that it was clear and didn’t have the right consistency – at all.
Not wanting to waste time, and really wanting to get it done, I kept on, until my father-in-law stopped me.
As it turns out, I had grabbed the wrong bucket, buying carpet glue rather than mortar. To this day, I have no idea how that happened, but that mistake cost us almost 8 hours.
When in doubt, ask! It doesn’t matter if you’re asking about fees, logistic, or even hands-on stuff, just ask!
Think About Timing Far In Advance (renting during winter)
One thing that we didn’t think about in advance was what season we would be trying to get tenants in our house in. Rental property is very similar to selling houses in that people like to buy during the spring and summer, and it’s really hard to sell a house during the fall and winter.
Our house was finally available for rent in October, and at the beginning of November, after a small rent reduction, we found tentants.
Just think ahead before you buy/list a rental property.
Wheher you’re doing a full remodel or painting from top to bottom, house projects will always take double the time and double the money, so start early so you can get everything done. We definitely discovered this with reno-ing the kitchen, and with all of the small projects that needed to be done before the renters could move in.
Please, make thing easier on yourself and start way earlier than you think is necessary.
Make The Slow-Cooker Your Friend
My last piece of advice is simple, but oh-so-important: make friends with your slow cooker.
During the moving process, the renovation, and everywhere in between, we made the mistake of eating a lot of fast food. Not only did we spend a lot of money, we really felt like crap while we were eating it, and regretted not cooking more.
If you don’t have one, invest in a good slow cooker today and Pinterest some recipes that are easy, cheap, and yummy to avoid the fast-food trap.
All told, investing in real estate, despite it’s challenges, has been one of the most rewarding decisions we’ve made so far.
If you haven’t yet, go read about our journey to becoming landlords.
And of course, stay tuned for our budget/net worth updates to keep an eye on how we’re coming towards our goals!
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