I mentioned in my previous two articles about buying a third rental property and closing on April 4th, 2014. I posted The Final Numbers where I computed a cash-on-cash return of over 8% which I consider pretty darn good.
I ended up spending about $1000 in repairs/landscaping plus replaced carpet in one room. I had the house on the market in less than a week after closing. My rental estimate was $1300 but I started the price at $1350. After low traffic for a couple of days, I started to question the process. It did cross my mind a few times whether it would be better to cut my losses and just sell the house. I wouldn’t have to go through the drawn-out process of selling it as I knew House Buyers of America would buy my house. However, I decided to firstly go ahead and lower the price right away to $1300. Within two days of doing that, I had multiple interested applicants. This proved that, for the right price, people are interested in renting properties. Driving interest in renting a property can lead owners to look into finding the best property management companies to help do this as they are likely experienced in sourcing suitable tenants. More and more people seem to think that renting is much more cost-effective than buying a property. There are so many places that people can rent from nowadays, companies like SPACE STATION in London, for example, seem to have a selection of homes that can be rented out. Perhaps I should have a look on there for some inspiration to make my properties more unique and modern.
Anyway, I received 3 applications that first weekend and my realtor started turning down potential renters at that point. They had to become pretty strict on criteria too, like ensuring that applicants didn’t have any pets. Most areas have a lack of pet-friendly apartments , which I wasn’t planning on contributing to but as I had so much choice, it was a no brainer. I could also be picky when it came to applicants’ financial health; each applicant paid to have their credit and background ran. The first applicant failed the background and credit check. They had very poor credit and lots of evictions. That was an immediate, No. The next two applicants both had clear backgrounds. The second one had decent credit and scored an 84/100 on the report my agent ran. The third applicant was a family with good credit and scored a 96/100. Not only that but they found the listing from the internet so they didn’t have an agent, which means I don’t have to pay another realtor. They scored the highest and I wouldn’t be required to pay the typical 40% of first month’s rent to another realtor. So I obviously chose option #3. The new tenants move in on the 9th.
So just a little over one week from closing, I had secured tenants on my property at the exact rental estimate of $1300. This was a major relief. The whole process went extremely smooth. It went so smooth that I’m considering a 4th rental by the end of the year. This would obviously cut into the amount I’m putting in DG stocks but it will be a tough decision. I’ll be saving some money and watching the market.
More stock or more rentals? I love the compliment that real estate adds to my dividend growth portfolio. I’ll take a little of both.