Full throttle

 

It is about to get busy around here.

Normally, the rental side of our investing business is what you call semi-passive income. The reason it is “semi-passive” is two-fold. One is because each month there is some “work” associated with processing payments, updating books and sending out demand letters for late payments. I put work in italics because most of this can be automated, but you still need to check on it to make sure it is right.

But rental property has a second part to it that can be flat out work. This comes in the form of maintenance and then turnover. And we are about to be neck deep in them.

 

There are two times in the year when maintenance is at its heaviest. That is when we get our first real heat, and first cold snap. Most of the calls we get during these times are air conditioning related. And we expect them. When the machines go from heating to cooling and vice versa, it tends to make capacitors go bad and the machine doesn’t work properly.

 

We just entered October, so by the end of the month we anticipate the AC calls to come in.

 

That being said, we had a strange call last night. The tenant informed me they heard a loud thud type noise and then the AC stopped working on half the house. This property is a double wide. And the way the AC system is designed is there is a trunk line on the front of the house, and a second on the back side of the house. The trunk lines are made of sheet metal and attached to floor joists from the factory. And each vent taps directly into those trunk lines.

Most of the time the AC unit blows into one side. And to get air to the other side, a piece of flex ductwork called a “crossover” is installed so that air can flow from the side the AC is attached to the other. When the tenants said one side was getting air, but not the other, that normally means something happened to the crossover. I figured it had fallen loose and when we got there, we would feel cold air under the house. That is not what we found. Instead, the house had settled just a little and caused one of the mobile home piers to fall over and land on the crossover. Three cinder blocks were putting a kink in it. And once removed, air was restored, and the tenants were happy.

 

No big deal, and not that much work.

 

But we are about to have five properties go vacant. That’s a lot for us and is very unusual. Just to give you an idea of how odd that is for us, I don’t think in the 14 years of us being landlords we have ever had five properties go vacant in an entire year… let alone in one month.

 

So, we are about to get busy. Now most of the houses have small rehabs. All need some paint, with most just being touch-up paint jobs. But some need decks stained and sprucing up because it has been years since the last time we painted. And that is because the houses have all had long term tenants in them.

 

But others have a little more expansive rehab. One had a big limb fall on it the last time we had windstorm that damaged the porch and its roof. We removed the limb immediately. But we needed to wait to fix the porch roof. Another has some sort of hump in the floor that is causing the LVP to bow. We need to pop up the floor and figure out what is causing the hump, repair that issue and then put the floor back in. And one has had the same people in it for close to six years. So that one is going to need more than the others.

But that is only part of the work. Once the houses are fixed up and clean, then we have to put them on the market and fill them. And this, to me, is the most work intensive part of owning rental properties.

 

That is because we have to answer ad questions, field phone calls, process application and do in-home interviews on five houses all at once. And since this is October, that means we will get a bunch of people who have to move, (as opposed to people who want to move who tend to be better tenants), applying for the houses. That means more work spent on not great applications and a harder time finding who we want.

 

Either way, we are about to be full throttle working on our rentals. And once all the work is done, it will be back to being passive again which is what makes rental properties so great in the first place.

 

Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.