Well, it’s been a pretty exciting two weeks for me personally but NOT so much FOR OUR investments. A couple of weeks ago I GOT MARRIED (I know, crazy, and yes that’s the last time I will talk about it) and spent a few days relaxing in the Bahamas afterwards. BUT NOW I AM BACK. Let me talk with you all about some of the issues we ran into in BOTH cities over these past two weeks and why it is important that we had coverage.
So, as we do, let’s talk Real Estate, let’s talk SH*T HAPPENS, IT’S OKAY, JUST BE PREPARED…
Most of us are fairly familiar with murphy’s law, no? “Whatever can go wrong, will go wrong”. I spent the past few months getting prepared for January so that I could take a few weeks off and enjoy the whole getting married thing. I honestly thought I had over prepared for these couple of weeks. I had site visits done, permits in place, Project Philadelphia was ready to close, Binghamton rentals had new roofs, furnace cleanings, salt for the snowstorms that may come their way. THEY WERE READY. BUT as Murphy’s law might tell us – we were bound to hit some bumps. Let’s talk through both cities, shall we?
I took a trip down to Philadelphia on Sunday January 8th where I did the final walkthrough with our GC before the walls went up. Inspector had come by to sign off on the electricity, drywall had been purchased -THINGS WERE LOOKING GOOD. However the next day I received a phone call that our permits were all wrong. What I was NOT aware of was that we were operating with a single family alteration permit (not a multi-family) which means all permits that had been pulled needed to be expired and re-submitted under a multi-family job. Now, this sounds pretty easy BUT because of this “mishap” they wanted to see the structural engineer we worked with to design the place…. here is the thing, the online engineer I worked with did not have a stamp that could be used in Philadelphia. Why? Well because THIS IS NOT ALWAYS REQUIRED. In fact, in the city of Philadelphia a stamp from an engineer / architect is NOT REQUIRED if the property is under 4 units (which this is). HOWEVER, since we converted this single family home into a “multi-family” aka the duplex, they wanted us to have an engineer sign off on it. Now, you guys, the framing, the electrical , the plumbing – these are all complete at this point. So to add this step, can potentially cause A TON of issues, time, and THOUSANDS of dollars to remediate. To help mitigate ANY FURTHER PERMIT ISSUES we have now teamed up with Philadelphia Zoning again (thank you!), and a structural engineer who is set to come out TODAY and confirm whether or not he has on board with the structural integrity of the home. Once he gives us the OKAY (fingers crossed he does, this home has ALL new framing and walls and we parged the entire thing so it better be structurally sound), we can then re-pull ALL of the permits and finish this baby up. Whew, that was a long one, now onto Binghamton…
In case none of you have been over there, Binghamton can GET COLD and snowy. To prepare for this, we delivered salt to the homes so the tenants could clear driveways, we repaired windows, leaky doorways, installed new carbon monoxide detectors in every room as the gas usage tends to increase during the winter. We had all of our furnaces cleaned and maintained. All of our furnaces received a clean bill of health however we were told a couple of them were “old” so I had a quote done a month or so ago to see how much it might cost to replace them just in case we ran into any emergencies…. which ta-da, you guessed it, we did! The second I left from NY to DC we had two furnaces go out in 1 building within 48 hours of each other. Strange coincidence in my opinion but thankfully we were able to get a team in there to replace them super quickly. In the meantime, my partners (JF & KF) were quick to organize the delivery of space heaters and final installations (THANK YOU).
MY POINT HERE IS GUYS…
Investing in real estate is COOL and you can make A TON OF MONEY (I am hoping to get there eventually), BUT it comes with a ton of responsibility. It is our job as landlords to constantly be on call and be able to provide a safe and functioning home for our tenants. These “emergencies” we ran into over the past couple of weeks were NOT expenses we had planned to incur right now but they were NECESSARY fixes. Without people we could rely on and an emergency fund we would have been totally screwed. Speaking of an emergency fund – how much should we set aside for that? Some have suggested, 3 months of your average property expenses for smaller landlords, however as you grow and diversify you can make this less and less as you should be collecting higher rental income amounts on a monthly basis.
NOW THIS ALL BEING SAID – these stories are not told TO COMPLAIN or for you to feel bed for us – DON’T, we are happy to do this if it means we get to continue to invest! It is merely a story of what CAN happen as an investor! AND for us to learn from one another on how to best prepare for these situations when they arise!
WHAT DO YOU GUYS THINK?! HOW MUCH DO YOU KEEP IN YOUR EMERGENCY FUND? DO YOU HIRE A PROPERTY MANAGER SO YOU DON’T HAVE TO DEAL WITH THESE ISSUES? IF YOU SELF MANAGE, WHAT DO YOU DO WHILE ON VACATION?!
Feel free to comment on the blog post HEREand let us know what YOU think!
p.s. we are getting more PERSONAL this year and now have a new Instagram handle – check us out at @erin.home.and.realestate
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Our team! This is based off of our personal experience