Man…let me tell you. When your tenant texts you that the basement floor is leaking water and the AC unit stops working even though it says its on, what is your first reaction? On a professional level, I’d say: “Okay I appreciate you bringing up the issue to me, I will be right on it and get it fixed right away.” Now, that’s what I said to my tenants. Now what I was really thinking to myself:
“AW COM’N MAN ANOTHER ISSUE I KNOW ITS NOT THE TENANTS FAULT AND I REALLY APPRECIATE THEM UPDATING ME WITH ALL THE ISSUES THAT OCCUR IN THE UNIT BUT HOW IS THE AC UNIT BROKEN?!”
Now, I’m human and it’s very natural that I’d react in frustration. Prior to purchasing the home, the place was fully renovated and the HVAC unit was brand new. Of course I’d be upset that there’s issues with the AC unit less than a year after I purchased the home and a little over 15 months from when the place was fully renovated. Again, no one is at fault here, but it does get frustrating. Luckily, I emphasize on a couple of things in relation to my real estate investing business:
- Keep cash reserves
- Track your spending
- Get things done ASAP
Again, I really do appreciate my tenants for always reaching out to me the second they see or hear an issue in their unit. Their communication is outstanding and I strive to return the favor to them. Regardless of who my tenants are in the future, I strive and believe in providing the best service to my tenants. So yes, earlier this month the AC unit in their unit stopped working and 2 days later I had a company come out to diagnose the problem. The unit turned out to be VERY dirty. There was an enormous amount of debris and dust that got onto the circuit board, which then caused the circuit board to break and stop responding. The technician determined that the people that renovated the home prior to me purchasing probably had the AC unit running while they were renovating, which led to drywall debris and other dust to circulate in the AC unit. This led to the determination that I needed to get the whole unit cleaned up extensively, the circuit board replaced, the AC unit rewired and a couple of wires replaced because they short circuited. End result = $2,100 cost after taxes (not including the initial fee to have the technician come out and inspect the unit).
*For you personal finance lovers = The company I used for the repairs needed a credit card on file for the charges, now since this was an emergency situation, I couldn’t open a credit card with a spending bonus in time to finance the repairs, so I used the next best thing. I used a 2% cashback credit card to finance the repairs and I received over $40+ in cashback for repairing the AC unit!*
**Also please note the credit card is already paid off**
Part of me feels like I may have overpaid to get the unit cleaned and parts replaced and repaired, but as my father says “it’s the cost of doing business.” I could have done more research and maybe have gotten a smaller company to come out and do the job. I would have done that if it were my own unit. However, I do feel uncomfortable leaving issues like a broken AC unit lingering in my tenants unit. That’s why I contacted the most known, highly rated reviewed and quickest company in our area, The Russo Brothers Inc. Don’t get me wrong, they did a FANTASTIC job and scheduling was very straight forward and the unit was cleaned out and fixed within 3 hours. I paid for the great customer service and quick repair. This issue led me the let you readers and investors to keep in mind that things do happen when you are a homeowner and a reminder of how you can stay prepared in the event issues do pop up.
I cannot stress this enough. Cash reserves are important whether you it is for personal emergencies or business emergencies. Do you see what has happened the past six months with all these huge corporations saying they have no money!? Should’ve had sufficient cash on hand right…I am right? I know it is difficult to obtain, but it is essential. I have added the link above on my post about emergency funds, but in this case scenario, this is for real estate investing purposes and this scenario was a mini-emergency in my opinion. Had I not kept a cash reserve for my property, I would instantly be in a $2,000+ hole because I didn’t prepare. I’ll be honest, it still a gut punch to spend all that money right away, but it’s necessary, I signed up for it and I prepared for it. Next time, it could be a roof replacement or a broken water heater. You don’t know what you don’t know, so why wait for something bad to happen to prepare or act on saving extra money? I hate keeping cash liquid because I could just invest it elsewhere, but real estate is a different game. Having cash reserves and cash on hand is just as important as having the cash for the down payment and closing costs. Do yourself a favor if you are able to, save that extra cash and be prepared. Your future self will thank you, because I know I’m thanking my past self for saving the extra money and keeping it in a savings account!
I also cannot stress this enough either. If you don’t know where your money is going, how are you going to build a cash reserve!? When you track your spending, it keeps you organized and prepared to properly save money. Like I’ve said in the past, you don’t need a fancy spread sheet or a whole system to track your spending. There are mobile apps and websites now that offer tracking such as Mint, Spendee, Personal Capital and more. Again like I’ve said, you could even take a pen and napkin and write down how much is going in and out each month! It’s just important to track your expenses! That’s how your cash reserve will be built and that’s how your wealth will be preserved.
Landlords already have a bad reputation because there really are bad landlords out there. Some became landlords out of nowhere out of inheritance and didn’t even want the title. Some value profits over care. I’ve been raised to do my best in whatever it is I do and that includes being a landlord. I get anxious when I have outstanding issues and I often feel like I have to get things done right this instant, even if its 2AM at night. The bear definitely helps me calm down and gets my head in the right space. She helps me process my feelings and helps me understand that I can’t do everything and anything right away and that I’m doing a great job. At the end of the day, I am just looking out for my tenants. Whenever there’s an issue, I address it immediately because they are paying rent for their unit. I’ve heard stories where people wait weeks to get something fixed in their rental unit. That’s not what being a landlord or even a property manager is about. Provide the best customer service, that is how your real estate investing business will thrive. I get it, there will be some bad tenants you will come across, but do not let one bad experience ruin your business and your attitude towards your tenants. Learn from it and thrive.
In my first year of being a landlord, I am definitely learning a lot of things and feeling a lot of emotions I am not accustomed to feeling. This is a risky investment, don’t get it twisted. It’s important that you are mentally prepared and in the right place emotionally. It’s important to also have a great support system so that you can get through rough times. I love sharing my landlord experiences in hopes that you can avoid some of the issues that I have gone through. Make sure your HVAC units are cleaned and maintained before summer and winter, track your expenses, make sure you have a cash reserve and be the best landlord/investor you can be! I hope this helps.