Blog Post #1: Our First Real Estate Investment: The Good, the Bad and What We Learned
Hello there, welcome to AMG REI LLC!
We are Andrew and Molly, new real estate investors. We have one property that we have rented out and here’s what we’ve learned so far!
The Good:
Experience! We had our first renovation project, our first tenants, and our first tenant turnover! This was all valuable and we’ve learned a lot about how to work with different kinds of people and what is expected of us as landlords. Since we’re in Colorado we had to learn about landlord-tenant laws as well. Very important!
Positive Cash Flow! We got lucky and our first tenants were in a pretty unique situation. They had been displaced, and a company called CRS contacted us about housing them temporarily. Because their insurance was paying for (mostly) everything, we could get more than we were asking for. When we had tenant turnover we decided to ask for that same amount per month (which was a little more than the average rent in our area) we were able to get it, though we included some things like utilities and the first month free. This amount covers our mortgage and a little extra!
Appreciation! We happened to buy our property at a good time in terms of interest rates. We got a 3% interest rate on a 30-year mortgage and our property has increased in value by about $100k!
The Bad/less than Ideal:
Time Commitment of Renovations: Since this was our first renovation project we didn’t really have an idea of how long it would end up taking. Time is money! We needed a new roof and we were putting it on during a rainy period which presented with a few extra challenges like leaking. We also changed many things like the flooring, paint, countertops, door hardware, etc. I believe it all ended up taking about five months. So I’d say that you should expect things to take longer than you think and cost more! A good finished project is what you’re after at the end of the day and you don’t want to rush it.
Overwhelm: Putting your house for rent sounds simple, but it’s actually many smaller tasks in one. Once you have it renovated or otherwise emptied to be ready for a tenant, there are many things to do. You need to hire a photographer or take well-lit pictures of every room, create a listing, and field potentially many inquiries about the rental by many people who may not indeed be serious about renting it at all. After that, there’s the tenant screening, background and credit checks! Plus adhering to the landlord-tenant laws I mentioned earlier to be sure you’re being fair to everyone. It does sound like a lot, but you only need to take one step at a time, and you’ll get there!
