Second in a series of occasional articles tracing the experience of a newbie real estate investor who began as an accidental landlord and is now attempting to expand his horizons and portfolio.
Over the years I’ve been at RealtyTrac my education in real estate investing has been vast and varied. From the professional investors I’ve interviewed, to the books I’ve read on the subject, I’ve learned that it’s one thing to decide to get into the game and completely another thing to actually become a player.
I can actually say that I began my investment “career” (I can’t really call it that) as what’s commonly referred to in the industry as an “accidental landlord.” As the circumstances came to pass last year, I ended up taking title to my family home of 48 years as trustee after my 87-year-old father was no longer able to live in the house due to health conditions.
Relocation and Rehab
First, I had to permanently relocate dad into a good place for him to live. Then, it was up to my wife and I to clean out the house (an effort that took more than three months of weekends to complete). I had always intended to keep the home as a rental property — especially since it was free and clear and located in a nice area of Los Angeles County.
I began assembling my team right away while in the clean-up phase. I called upon a couple of local Realtors who have been long-time business associates of mine and requested referrals to general contractors. I solicited bids from a handful of them, selected the one I felt most comfortable working with, took out a construction loan, and updated the house (especially the kitchen and both bathrooms) to rentable condition.
Securing a Tenant
I called back the Realtor who referred the winning contractor to me and had one of his agents who specializes in rentals work on finding me a tenant. After going through two prospects, the third one checked out, and I had my first tenant moving in approximately six weeks after I listed it for rent. It was worth paying one month’s rent to the agent to escape the hassle of driving 150 miles round trip to interview candidates, do the security checks and everything.
My contractor even recommended a handyman to help out with the little maintenance jobs that may pop up around the house (a three-bedroom, two bath with attached 2-car garage and a storage shed out back).
Now with that property being cash flow positive, I’m moving on to my next project — finding a foreclosure in San Diego (either a bank-owned home or short sale) — for my son. More about it in the third installment.
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