Our Condo Investment
(Part Two of Renting Out a Condo)
By Steve Gillman - November, 2012
In our first report on investing
in a condo rental, we learned that rental rates asked are
not the best indicator of what units will rent for. We also discovered
that the financial situation of a complex can change quickly.
In any case, it still looked like we would make a decent return
on out condo investment, and we were ready to start fixing the
place up.
Lesson: Handymen are optimists. We found the best handyman
we have hired (and we've hired a few over the years). We are
very happy with the work he has done. But the work that was supposed
to take a "week to ten days" is at three weeks now.
This should not be a surprise. Every handyman we have ever used
is overly optimistic about the time frame for finishing a project
as well as the actual hours he'll need for each part.
This is really our fault. We hadn't hired a handyman in a
while, but we should have consulted with our past experience.
People who really know how to get things done tend to think in
terms of how long something "should" take, assuming
the best. Perhaps you have to be an optimist to be a great problem
solver, but with real estate there are always surprises that
take time and money.
We will use this particular handyman again, but here is how
we will do our figuring: If he says something will take "x"
number of hours, we'll double that. If he says the whole project
will be completed in "x" number of days, we will triple
that. As for projected materials costs, we'll add at least 20%
to his guesses and budget at least $1,000 for unexpected expenses,
or much more on a bigger project.
Lesson: Listen to your intuition. The hole in the wall
by the front door was not a problem of an old leak that was resolved
long ago. Just as my wife suspected, there was still dampness
in there. In fact, water dripped into the wall steadily (and
right onto the light switch) when it rained. The wall had to
be opened up, the inside bleached to kill or prevent mildew,
and we had to call management to fix the roof.
Once the roof was tarred, which was fairly quickly (we have
good management), we had to wait for a good downpour to be sure
the leak was fixed. Fortunately it was, so after a few days of
drying out the last of the dampness we had new drywall installed.
We could have gone after the association to pay for the damage,
since it was a matter of past negligence (there used to be bad
management) that led to the leak, but the fix only required two
panels of drywall and we were painting anyhow, so the expense
was minimal--not enough to go to battle with our own condo association.
The leak in the air conditioning closet was not as easy to
fix. It took two tries, and now, after the second attempt, we
are waiting for the rain to test the repair before closing up
that wall. The leak was through the conduit, dripping straight
into 220-volt electrical box.
Lesson: Learn prices. We haven't had to shop for major
appliances in years, so when the washer/dryer combo (one of those
vertical units) started to spew water on the floor, we figure
that the worst case scenario was $700 for a new one. After a
$69 service call confirmed that the cost of repair would be too
high to bother, we went shopping. The cheapest stacked washer
and dryer we could find was almost $1,300. Maybe we'll budget
more than $1,000 for unexpected expenses next time, even on a
"small" project.
It's a good idea to know what things cost so you can more
accurately figure what the project will cost before making an
offer. But it's also important to know so you can tally up the
possible surprises. At the moment the 40-year-old water heater
is working perfectly in our rental condo, but we didn't think
about the possible replacement cost prior to running all of our
numbers and making an offer. We still have not looked into that
yet, but we will. We have to be prepared for that eventuality.
It looks like we are a week away from finishing the job, and
then we will hopefully find a renter for $1,000. There are now
two condo units for rent in our little complex. One is asking
$1,000 and the other dropped the rate to $950.
Continues with this page: Renting a Condo
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