The ins and outs of owning rentals

On Instagram I recently did a few Before & After photos of one of our rentals then put the question out there about doing a post on the adventure of being landlords. (You can see the photos and answers to the questions here, in my profile under Rental Property in the Highlights)

Mostly people are interested in the nuts and bolts, the numbers, of it. It’s hard to say everything in stories so here’s a bit more.

First! Hi 🙂 I am not a financial advisor. I am not a licensed real estate agent. I am not your guru. There is no quick fix, get rich quick solution. There’s hard work and a lot of it. What I might be saying here is likely the culmination of years of saving and planning. We have made major mistakes in the Real Estate world and we’ve also used Real Estate to get out of tough situations. We own one single family rental and a duplex, all three units are occupied with 12 mo+ leases as of now.

You can interchange “Real Estate” with any form of savings or investing you do … and you should. Real Estate is not the answer for everyone, and essentially it’s just a different way to plan for the future, make passive income or save your money.

A few years ago I did a post on Budgeting and this past winter we did a No-Spend month (NO-vember) in which I talk a bit about money, budgets and finances. We screamed our DEBT FREE scream on Dave Ramsey’s radio show in 2012 and before that were die-hard Financial Peace University evangelists.

Since the budgeting post in 2016 we have paid off our mortgage, Aaron sold one of his businesses, we bought and sold another home (We were going to renovate and live there but the numbers dictated that instead we fix it up and sell. We lost money on that deal) and started buying rental properties.

SO.

How? How does one buy a rental property?

Why? Why real estate?

And, inevitably, what do you do when …

I mentioned this is my Stories, but none of the properties we’ve bought for rentals have been listed with the MLS, yet. Years ago we started telling our neighbors that if they were ever interested in selling their homes, we would be interested in buying them. A handful of our neighbors have come to us since then (five, actually) and out of those five – we’ve purchased one.

We are always looking, as well, but good deals happen between handshakes and off-market properties. Patience is the biggest asset to buying rentals. And having your ducks in order for the transactional side of things helps as well.

If you need to borrow money to purchase a home you should start the process with a bank now. Even if you don’t find something for months, maybe even years. Having the relationship with a bank will be your secret weapon to making deals happen and knowing what you can afford; what the bank is wiling to loan you – and where the rates are – are all very important factors when figuring out if a property will cash-flow.

Ways to afford the down payment:

You have the cash on hand, easy.

You have equity in your primary residence, get access to it. (HELOC or Home Equity Line Of Credit)

You have investors who trust you. We’ve never had investors or worked with other property managers (yet, who knows what we’ll do in the future) so I can’t speak to this, but I know of plenty of people who use investment from outside sources to build their portfolio. Speak to someone you know or trust who works like this, people who are already doing what you want to be doing are the best source of knowledge. Ask.

And then, you wait. We work with a Realtor we love and trust. I did, at one time, have my real estate license, and even knowing what I did (or do) … I still always want to work with a Realtor. Until recently – all real estate transactions have been super emotional for me. I get attached. Which is the worst thing you can do when it comes to rentals. You’re not buying into a home or story – you’re buying into your future. Having a Realtor between me and the transaction is the best safeguard I’ve ever implemented. It’s a ton of work, and some people can do all of that and are comfortable with the legal task of buying properties from owners or without representation. To you, I say, well done. That’s amazing. I’m just not interested in the added stress or detail work.

Why? Why real estate?

If we haven’t met or maybe this is the first time you’re reading anything I’ve written you will likely not know how obsessed I am with real estate. Homes, really. But commercial buildings? Vacant land? Multi-family units? I’ll take any of it. All of it. Every damn day. I. Love. Real estate. Period.

I am comfortable with real estate, our area, and the market. I know it well, I’ve been in it for almost 20 years. I understand location and value and fixer uppers.

I know nothing about the stock market. However, I know a thing or two about real estate. So … this is why. This is where I’m comfortable with risk.

And, inevitably, what do you do when …

… you buy a property that needs work?

Hopefully we’re already aware of what we’re getting into before we sign anything. When we do a walk-through we make mental notes about the big three: structure and systems (roof, furnace, settling), cosmetics (paint & flooring), and the plumb-houses (kitchens and bathrooms). Prices are always changing, but we feel comfortable enough with those items and have done enough renovations and projects to outline a small understanding of what might be needed. We just add that number to the down payment cost so we know what our investment will look like.

… you’re trying to get tenants?

Our first rental was vacant for a couple months while we did the work needed to meet the codes of our city, get inspections and obtain the rental certificate before we could advertise it was for rent. We bought the home as a 2 bedroom and, because of code, were only able to offer it for rent as a one bedroom, with a max of 2 person occupancy. This was a big disappointment. But, we changed our strategy for advertising and had to answer a TON of inquiries that always ended in “I’m looking for a place for me and my kids or me and 2 brothers, etc etc thanks anyway.”

We put a sign in the yard with one of our phone numbers on it that says “For Rent”, we put an ad on craigslist as well as Facebook Marketplace and we use cozy.co as our property management software – so when we input things on that end, it pulls the information to larger sites like houses.com or rentals.com and even zillow.

You answer a ton of questions. Just keep track of who you’re talking to, who makes appointments (and you need to remind them), who shows up, who applies, etc etc. It’s definitely a full-time job for a few weeks to get it occupied.

Know your answers – and if you’re unsure – be honest. The best thing you can do is say “I’ll have to check into that, when can I get back to you with an answer?”

Are you willing to work with Section 8? What are your benchmarks for applicants? (minimum credit score, income to debt ratio, background check, job history, references)

Phew. We made it! There’s still so much we’re learning about this. I will link to some helpful resources we’ve been using at the end of this post, but my biggest piece of advice would be to talk to someone (buy them a drink or ask them over for dinner) who is already doing what you want to be doing. Conversation within relationship is invaluable to learning new things, getting help or advice, and moving towards what you want.

In general, I’m not a fan of the way Real Estate Investors talk. Not everything is AWESOME, MAN! and not everyone is SUPER BLESSED TO BE ALIVE! Those are amazing attitudes, but they’re working too hard for me to believe them. If you get excited solely based on the millions you’re being promised, look elsewhere. This ship is not setting sail with a destination of Reality. You’re going for a wild ride, high on emotional value. Do you want to be a millionaire? Cool. That can be a goal you have and there’s nothing wrong with that. But WHY? Why do you need a million dollars? Or any amount?

Our reason for owning rental properties has everything to do with wanting to retire someday and knowing that, as entrepreneurs, we will need to either save a large amount of money or create passive income for our future. I’m not interested in owning 45 rentals. I think maybe 5-8 will be more than enough. But we’ll see what happens in the future, like I said, we’re new to this venture and still (always) learning.

Resources, books, podcasts:

Rich Dad, Poor Dad

Cashflow Quadrant

The Book on Managing Rental Properties

Bigger Pockets Podcast

Article: MY SEVEN STEP PROCESS FOR BUYING A RENTAL PROPERTY

Use your resources – the people you know already doing the things you want to be doing.

Ask your city officials a lot of questions about the rules for rentals. They have so much information to share and to offer. Listen.

And last but not least, you guys, use google. But, for real. Google leases, move in check lists, ROI calculators, how to rent a house, how to buy a house, how to change a light fixture, DIY backsplash and more.

An Icelandic stopover and The Blue Lagoon

We left Copenhagen at 10pm and got to Raycevick, Iceland around 11:30 or so (there was a time change, we went through so many time changes. Not only traveling but then we also went through Denmark’s “daylight savings time” in the middle of the trip. If we were worried about jetlag, we shouldn’t have been. Nothing made sense ever, we just woke up and ate when our bodies told us to. It all worked out, somehow.)

Iceland is set-up so well for these stop-overs. Or long layovers with connecting flights, it’s actually quite something. But because of the time we got into the airport – our hotel didn’t have transportation for us, so we hired a taxi and got to our hotel where we were able to get into our room without a hitch and all fall asleep. Hard.

It was the best night of sleep, ever. We stayed at the Geo Hotel for the night and were able to get a free breakfast and free transit to the Blue Lagoon the next day.

If an Icelandic stopover is part of your trip at any point, I would suggest doing all the research and booking the appropriate things as soon as you can. I knew we were going to do the Blue Lagoon but waited until we were in Copenhagen to book anything. It worked out, there isn’t any cost saving tips – Iceland is expensive, period. So be aware of that. Just know what you want to do and commit. I kept looking at other options and trying to make the most of our 18 hours in Iceland and finally had to just tell myself we were only going to be able to see one thing well.

The Blue Lagoon is amazing, Iceland is this other worldly experience. And I’m so glad we did and saw this. I honestly don’t think I ever need to go back, not because I didn’t like it, but had we not had a stop-over, I would have never chosen to go to Iceland on our own. I’m so glad we ended our trip this way, though. It was the perfect ending.

The Blue Lagoon

The Blue Lagoon

The Blue Lagoon

The Blue Lagoon

The Blue Lagoon

The Blue Lagoon

You need to book a reservation for your party at The Blue Lagoon ahead of time. You can spend as much time as you want there (average time spent is about 4 hours) but if you’re reservation is for 9am and you stay until they close, it doesn’t cost any more or less. The reservation system is just to keep the locker rooms from being over crowded.

There are different packages available for you to purchase when you make a reservation but we stuck with the “Comfort” package which included a locker (which locked), a face mask for each person, and one drink for patrons over 14. Our son was free to swim because of his age so if he wanted a drink (they serve smoothies, pop and alcohol) we just needed to purchase that separately. You also get a wristband which is pre-loaded with your freebies and then connected to your reservation/locker/credit card. So if we wanted more of anything while we were in the lagoon we just scanned our bracelet and settled up when we were all done for the day.

We all enjoyed our face masks, free drinks, and a couple of us decided for an additional drink. Champagne? Yes. I signed up for that, thank you.

You bet I did. Those bubbles did everything they’ve ever promised me, in my adult life.

Once we were done soaking and trying the saunas we decided it would be a good idea to get out and eat something before we headed back to the airport for our last leg of the trip home.

We had some time before the shuttle bus to the airport came (which you need a reservation for, so book this ahead of time, also) and we used that time to explore just a little more.

The Blue Lagoon

The Blue Lagoon

The Blue Lagoon

The Blue Lagoon

We flew home, all our flights for this trip were with Icelandic Air, which I cannot recommend more. It was seamless and a wonderful experience. Especially traveling with kids. Arriving in Chicago was euphoric. Reading street signs, driving a car, smelling the familiar air … and coming home to a place that, without a doubt, feels like home was beautiful.

I can’t explain what this trip was for our family. Years in the making, dreaming and planning. And we had no idea that when we planned and booked our tickets for the trip it would be bookended by one of the biggest decisions we would ever make.

It’s been hard to translate this for people when we get asked about this trip. We don’t need to go back to Copenhagen, we’ve already been. There are places in the world I love to go back to. Towns, houses, memories I want to visit over and over again. Copenhagen is more of a tide change in our lives than a vacation. It was an experience. An opening to the rest of the world for our kids. It was the beginning.

And what’s next? I have no idea, but it’s ahead of us. Not behind us.

Finding the Hidden Giants of Copenhagen

Saturday was our last day in Copenhagen before we caught our first flight toward home. Part of the reason we chose the airbnb that we did was for their check in and check out policy, it was flexible. And with our flight leaving Copenhagen at 10pm we didn’t want to be stranded in the city with our bags on our last day with nothing to do.

We loved the home we stayed in.

Photo

Copenhagen Spring Break 2019

Home for a couple weeks - Airbnb

Views in our yar

It was very much home for the 2 weeks were there. The kids each had their own room, we love traveling and having a full kitchen, and markets were a short walk from the house. It was so nice to have a place to come home to every day after our sightseeing and feel settled.

Earlier in our trip we found The Sleeping Giant and knew from all the research of our trip that there were 6, total. Because we didn’t rent a car I wasn’t sure we’d actually get to any of them, but we ended up being able to find 3 of the six.

On this Saturday we hopped a train towards Tilde, the little giant in the woods.

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Tilde was so enchanting. She was hidden away in a park, over-looking a pond. Her hollow core had little holes that were actually bird houses. Unlike Sleeping Louis, you couldn’t climb inside of Tilde. But the entire trek towards her was one surprise after another of things we would have never seen had we not looked for the giants. Parks, butterflies, swans, Icelandic horses (yes! they were in the park!), little cafes, walkways and neighborhoods, families …

And Tilde was very close to Thomas on the Mountain, so when we had our fill of the magic that was Tilde, we hiked it to Thomas.

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

And that was that! Copenhagen was amazing. The kids (and we agree) thought the Giants were a highlight of the trip. Our daughter also chose the aquarium and public transit, I would say the Royal Kitchen, Aaron would say the coffee and all the walking, and our son would say all the parkour practice he got all over the beautiful cobblestone streets and stone houses. 😉

We left ready to be home again, which is exactly how I’d like to travel. Ready to return to the place I needed a break from. We got back to our house, took showers and packed and headed for the airport. But we weren’t quite done with the trip. We had an extended layover in Iceland to look forward to …

Malmö, Sweden // A train ride away from Copenhagen

We were well over half-way through our trip and feeling ready to be home by this point. We had seen so much, caught our breath, and were ready for a little normal in our lives but before we headed home we decided to take the train to Sweden for a day trip.

I almost didn’t take my camera along, I was feeling the travel fatigue of capturing everything and staying on top of documenting the trip but I’m so glad I grabbed it at the last minute. Malmö is full of green space. There are parks (and beautiful ones, at that) everywhere.

Malmö, Sweden

Malmö, Sweden

Malmö, Sweden

We made our way towards Malmohus, another castle (they’re everywhere!) and stumbled upon a cafe in the garden looking for a public bathroom.

Oh man, you guys. The best meatballs I’ve had in my life.

Malmö, Sweden

We just got a snack to share, and thankfully Aaron and our daughter picked the meatballs. I grabbed a glass of red wine and a round of Coke’s for the table and we sat there in the middle of this garden eating the best meatballs in the world while listening to the chatter and birds and being bathed in the blooms that surrounded us. It was something else. If this was the only thing I saw or did in Sweden, I was a fan.

Malmö, Sweden

Malmö, Sweden

Malmö, Sweden

Malmö, Sweden

But we didn’t stay there, we walked all over and did some shopping, too. We were on the hunt for souvenirs to take home and just didn’t find what we were looking for (or what we wanted to pack and travel home with). Malmö has some great shops in the Davidshall area.

Our son wanted his photo taken with this windmill, which I happily turned in to a mini-shoot with him. We actually saw quite a few windmills and having one right in our backyard in Holland, Mi made this all the more fun.

Malmö, Sweden

Malmö, Sweden

Malmö, Sweden

We visited the Library, more parks, and found some statues before heading back to Copenhagen for the night.

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

Copenhagen Spring Break 2019

We had one more day to adventure in Copenhagen and possibly saved the best for last …

Tivoli Gardens of Copenhagen

The day had finally arrived! Tivoli Gardens opened for the season while we were in Copenhagen and we were there with bells on.

Tivoli Gardens

Um, let’s discuss this place for a minute, yes? It was magic. People say that Walt Disney was inspired by Tivoli and this was a big influence on the development of Disney World. I have to say – being there and seeing it with my own eyes, I can very much see the similarities. Only Tivoli doesn’t have characters walking around everywhere and this made my heart so happy. I am not a character kind of person, we went to Disney one time (when our daughter turned 5 so she could meet Ariel, yes, we have always been this extra) and we almost left the state of Florida divorced. We were not fans. Mostly of traveling in January with a 5 year old and 18 month old for a whole week with nothing to do and our hotel pool was closed. So. Different time of life … it schooled us hard in how not to go about traveling and our expectations and keeping our word to a five year old. But I digress.

Tivoli Gardens

Tivoli was amazing and if you’re planning a trip to Copenhagen during their open season, I cannot recommend this enough for an entire day. From the outside, it doesn’t look like anything special – it’s right next to Copenhagen’s Central Station and there’s a gate or a wall surrounding the entire thing (it’s a whole city block) but once you enter and the gardens open up to you and you hear water and see endless flowers and pockets of magic little details, you would never think you’re in the middle of a large city.

Tivoli Gardens

The kids both said this was the highlight of the trip for them. It was so much fun, roller coasters are the thrill ride I never tire of. We ate lunch at home and then spent the rest of our day being enchanted at Tivoli. Peacocks roam freely, you guys. Peacocks.

Tivoli Gardens

The rides were one thing, and we got our moneys worth on the rides, but there were also gardens to walk through and apparently a petting zoo (we never even made it to one part of the park!) and my favorite restaurant in all the land, Gemyse.

Tivoli Gardens

Tivoli Gardens

Tivoli Gardens

A greenhouse, fire pits to roast marshmallows, topiaries made out of kale, lemonade served with mint leaves and drinks by the fire. I will not ever shut up about this place.

Tivoli Gardens

The flowers and trees were just starting to burst in bloom and there were so many delightful little things to sink our teeth into. We even got Aaron on a couple rides and I’ll never forget how instead of screaming, my daughter just giggles like a babbling brook on rides. Like rushing water over smooth stones, her joy was as pure as it gets and it baptized me all over again.

Copenhagen Spring Break 2019

Tivoli Gardens

Tivoli Gardens

Tivoli Gardens

We left tired, full and happy. And other than using public transportation for the rest of our trip – this was the last sight we saw using our Copenhagen Cards.

Tomorrow we were headed to Sweden!