The Catch-Up (Real Estate)

Procrastination really is a bitch. 

 

So let's get right into it. When I stopped writing on the blog in 2019, I had just quit my job with five properties to manage, generating good income. Then COVID-19 hit, which changed things dramatically. Some good and some bad. First, the bad.

Tenants were losing their jobs. I had to make payment plans and deal with missed payments. To make it even worse, the courts were closed, giving tenants even less reason to pay up. Despite these setbacks, I got most of the money I was owed through good management, a softer approach to rent collection, and luck. I was still able to eke out a profit overall, but it was just barely enough to live off of... especially with no job. Having to wait until the beginning of the next month to buy groceries sucked, but I made it through. And now to the good news.

Thanks to the limited supply of properties available for sale, property values skyrocketed. My properties appreciated way faster than I expected, which gave me a chance to unload some of them. With advice from Ann, an actual friend I made (I'll write about her in another post), I decided to sell three of my properties:

 

Property 1. Where It All Began

Property 1: My very first property. I sold it after 13 years for a little over 10K more than what I purchased it for. My main reason for selling this was to finally get away from having a property so close to the infamous Butterscotch Street, one of the worst streets in Smalltown. The fact that the property value only rose around $11,000 in 13 years made me think I made the right decision, but I see now that it's worth over 170K. Hmm... well, I'm still pretty satisfied with not having to deal with the neighborhood, so I have no regrets. Anyway, the sale of the property netted about $8,000. 

 

Property 3 Before

Property 3. This is the four-unit property I bought in 2009 that made me the most money out of any of them, returning my $15,000 down-payment by 2013 and its full $60,000 value back by 2019. It sold for a little over 90K, leaving me with a profit of about $23K after the mortgage was paid off. Like Property 1, Property 3 was in a sketchy neighborhood, and I got tired of having to “explain the neighborhood” to prospective tenants. I also had to lower the rent to entice decent people to live in the neighborhood. There was also only one furnace for all four apartments, which meant I had to make all the rents "utilities included." I really can't complain about that because it ended up being a huge selling point in getting good renters in the apartments. In the end, it made me a lot of money so I consider it the best sale. And to further support that statement, I present Exhibit A:

 

Property 3, Seven months after the sale

Apparently, one of the tenants was cooking meth or some kind of drug in one of the apartments, and it led to a chemical disaster... or explosion... or something. I dunno the exact story, but I definitely dodged a bullet.

 

Property 2

 Property 2: The two-family I bought for just under 60K back in 2008 had the biggest jump in value, selling for just over 100K. The profit from the sale was about 42K, which made me really happy. But late last year, I saw that property was worth over 250K! Driving by the property sometimes pisses me off, but at the time I had no idea the property's value would go that high. Now the value is at a reasonable 180K the last time I checked, but I learned a lesson from this sale: If the property doesn't give too many issues and it's in a decent / good neighborhood, KEEP IT!

In total, I received around $76,000 from the three sales. I used some of the money to pay off my Jeep, some to pay off the credit cards used to build Property 5's attic apartment, and then I put the rest away in investments. My two remaining properties are Property 4, the single family, and Property 5, the four-unit which I live in. Both properties are in good neighborhoods and I generally have very little problems with tenants now.

 

Looking back, I'm glad to get rid of Properties 1 and 3. I'm in my mid 40s, and I really need my future properties to be in good neighborhoods so that I don't have to deal with the Public Assistance, Section 8, and bottom feeding mammals that plagued my life for the first 14 years of my real estate journey. I've been in this business 19 years, and I've now proven that I can buy in a good neighborhood, attract good applicants, and then use my experience to make the right choices and maintain stable rents.

It's time to start buying properties again. But this time for keeps, and with the experience to make some real moves.

 

P.S.: Yeah, I read it too. 19 years. Geez, time flies like a mother.