I wanted to share in this video an example of what you need to be prepared for when you own real estate whether you’re an investor or a homeowner.
So I had a call from my property manager about 2 weeks ago that we need to spend $400 to clear a bubbling toilet and plumbing issue at one of my passive income investment properties. We need to spend another $200 to send a camera down to inspect the source of the problem. Well, I received another call today and, I’ll just quote the email. “Upon inspection at property address omitted, the tech states there is not enough fall and a problem at the tap. We will need to start at the tap and run approximately 60 feet of new PVC pipe and fittings to the right side of the home where we will tie the bathroom group into the mainline with a 2-way clean-out on the bathroom group as well as installing a 2-way clean-out on the mainline. We will then continue to the back right corner of the home where the kitchen and laundry tie into the mainline approximately 20feet away and raise the line so it has fall then cap off the line that goes to the garage as it is not in use. Total quoted amount: $2,650.00” So on a property that brings in about $1,100 a month I have to fork out $2,650 plus the initial $600 for a total of $3,250 or 3 months of rental income. Now I have to deal with a mortgage on this property as well which is a little over $700 a month compounded with taxes and insurance. I wanted to create this super short video to detail specific real-world pitfalls that arise.
A few months before that I had tenants who left the property in bad shape and that cost $3,500 to bring it back up to shape, then we have to advertise and find a new long-term tenant with a new lease contract which is an additional 1-month renter acquisition fee and that property only brings in $900 a month. Not to mention we don’t know how long the rehab should take, maybe a week or two, but more importantly, how long the property will stay vacant until we find the new tenant.
Of course, I’m going to be keeping my property long-term but this is why diversification is so important. If I was retired, coming up with 3 months’ rent income on my own could have cramped my retirement lifestyle. I would hope that in the future I would plan ahead and be ready, but we never know what the future holds and what if I had health issues to deal with on top of income issues and so my expenses were stretched just a bit too thin? This could be the straw that breaks this camel’s back, yes, pun intended because I was born to Egyptian immigrants. I also wanted to add, apologies for a little longer video last Sunday, I try to keep them all between 6 to 8 minutes long and will continue to try to do that in the future but still of course packed full of useful information.
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