Hey readers! I wanted to give you a great update regarding my investment property:
Our tenants renewed their lease for another 12 months!
Honestly, the bear and me were 99% sure our tenants were going to renew their lease. I do not know their reason for renewing other than assuming they like the unit enough to stay another year + we are still in the middle of a global pandemic. While it is still possible, it is a health risk to be moving out and in to an apartment during these times, no matter how comfortable you feel! So, we’re excited to have our tenants stay for another year. They are very communicative and have kept our first floor and basement in beautiful condition. We have also provided them with excellent service the past year in my opinion at least! We have had a total of 10 maintenance issues within the past year and have successful resolved all issues within at least one week of when the issue was first requested. We do not let any issues go unsolved! How would you feel if your landlord does not want to fix any problems? I’m sure this is common, but for me I’m the owner of the house! If there’s something wrong I need to fix it, whether I’m living in the unit or not!
Small tip: If you have a current lease with your tenants you can provide them with a lease renewal/extension document rather than re-signing a whole new lease. My awesome agent provided me with a template that I could copy and make my own. All my tenants had to do was sign their portion of the renewal and for me to sign my portion, scanned it and sent to the tenants for documentation! All that in a couple of minutes!
Anyway, I wanted to share a couple of things that can/will happen the next year since our tenants renewed their lease.
Build More Equity
With our tenants renewing their lease, we are providing housing and quality service for our tenants. In return we receive a monthly rental payment from them which goes towards our monthly mortgage payment! With the money the bear and me pay for as “rent” we have a monthly cashflow. So far that monthly cashflow has been going to our reserve funds. Which we have used in the past for emergencies such as the broken AC unit in September, which had to be fixed because the heater wasn’t working either! As we replenish our reserve funds, we can throw in the extra cash flow each month to the mortgage principal, which will help us pay off the mortgage quicker! Thus building more equity on the home! We have been patient in opening a Home Equity Line of Credit on the home because lending requirements have become strict due to the pandemic. We are looking to get a good credit line on the home for a backup reserve fund to our cash, funds towards another property or renovations. Bottom line is for 2021, it will be a lot about building equity on the property and personally.
Keep Our Housing Expenses Low
As mentioned earlier, the bear and me both pay “rent” towards the property and my real estate business. Our funds go into a savings account where the funds used as reserves. We pay $600.00 each per month for rent for a total of $1,200.00 per month! Which is down from $700.00 each per month or $1,400 a month in rent before the refinance. Housing is typically a big expense for most people, so we are fortunate to be paying such a low number each month for rent. Once we hit our number for our reserve funds, we will low our rent payment again so we have extra savings! New Jersey is a high cost of living state, the fact that we are in the position to be paying $600 per month each in a property we own is such a privilege.
Opportunity To Either Move Out Or Master Small Space Living
The bear and me have juggled back and forth the possibility of moving out of our first home. We originally only planned to stay here for a year so I can meet my mortgage requirements of living on the property at least one year after buying the home. The plan after that was to hop from property to property until we found our forever home. Due to the global pandemic, moving doesn’t seem the most viable option right now. However, with the prospects of a potential vaccine coming within the next 6 months, things may look a little different come summer time. One thing the bear and me have always wanted to do is live in a luxury apartment. I know…I know it goes against a lot of the things that I preach. I’d be renting from someone else *GASP!* It’s something I’ve always wanted to do and something the bear has expressed desire for also. However, owning our own place has given us ultimate flexibility with things such as drilling holes in the wall and not caring when they will get filled (we have some holes that I just got lazy to fill in lol!), getting things fixed right away, having only one neighbor, etc. We don’t know if we’re ready to give that freedom up since we’d be living under a different roof with a different set of rules. Right now the plans with me buying a second property are on the shelf right now since my income does not qualify to get a 2nd residential mortgage. There is the possibility of me eventually getting an investment loan but then there would be no need for us to move into the 2nd property. Regardless we have options, which to us is a huge privilege. For now, we are trying to master small living! We’re figuring out which furniture works best for us and which isn’t. It is getting a little expensive but it’s an investment for us to have a home! Of course, us working from home changed a lot of our plans. I’ve mentioned before that we have two home offices now set up in our nooks. While we are planning to turn our living/dining room into a living/gym room with some new equipment coming in soon!
As you can see, our tenants renewing their lease is a huge money saver and it keeps a lot of our options open on what we want to do in terms of our living situation. Who knows, we may be in a luxury apartment in 6 months or we might just stay put in this property until I am able to purchase a 2nd property. The world is our oyster! We might even just save as much as we can in 2021 and go on a huge trip in 2022! It’s a huge privilege to have all these types of options. We hope you have these types of options or better throughout your journey.