Real Estate

This post is an update on my rental property in Philadelphia. In this section, I talk about my landlord experience – the good, the bad, and the ugly. All my posts that are related to the rental property can be found in the Rental Property section, including the bad tenant saga series).

June was one of the quietest months in a long time for the rental property. There was not many activities going on in the house. The tenant had paid the monthly rent of $900 in advance and everything seemed fine so far.

After my bad experience with the last tenant, I finally decided to hire Earl as my property manager. The property manager will add an extra layer between the tenant and myself, and it will help me free up my time. He will be in charge of collecting the rent, handling phone calls, dealing with tenant issues, etc. Earl charges a 7% service fee, which will be deducted from the monthly rent that he collects. The 7% service fee seems to be in the recent range, some property managers charge as  high as 10%.  Earl lives very close to my rental property, so can he walk over to the house if necessary. Earl has been my real estate agent for a few years now, and I have found him to be helpful, so I think it would be worth the service.

Monthly Rental Property Income and Expenses

Monthly Rent: $900
Property Management – Service Fee: 7% ($63)
Net Rent: $837

Read more:
Rental Property Update August 2009
Rental Property Update June 2009

This post is an update on my rental property in Philadelphia. In this section, I talk about my landlord experience – the good, the bad, and the ugly. All my posts that are related to the rental property can be found in the Rental Property section, including the bad tenant saga series).

In May, the house renovation was completed. I had ask my real estate agent, Earl to rent out the house. A few people called to inquire about the house for rent. He told me that the  best applicant was the ex-cop.  After waiting for two weeks, Earl told me that the applicant needed an answer and asked me to make a decision soon. The applicant had good income and had good references from previous landlords. I told Earl to fax the applicant’s credit history papers to me.

I looked at the applicant’s credit score and it was only mediocre. Earl told me to not focus on the credit score because most people in that area would not have a good credit score. Earl mentioned that he pay his credit cards and rent on time every month. The only problem was that he had outstanding balances on medical bills. Earl said that it was not uncommon for people to have problems with medical bills. The applicant had a sick kid and the hospitals/medical facilitates charged ridiculous prices.

Before my decision, I called two of my friends and asked them for advice. They agreed with the assessment that an applicant can have medical debt but can still be a good a tenant. I understood that health care in the U.S. is expensive and most people cannot afford to foot the bill, especially when the health insurance does not cover them. As long as the other indicators showed that the applicant was a good potential tenant, I tried to overlook the medical bills.

I gave it some thought and decided to rent the house to that applicant. Besides, I did not want to leave my house vacant for too long. I told Earl to proceed with the applicant. Earl had the applicant signed a one-year lease agreement, put in a two-month deposit, and pay the first month’s rent of $900. The first month’s rent money was collected by Earl as commissions for renting the house.

The house was rented for June 1 and applicant was expected to move in the house on the last weekend of May.

Read more:
Rental Property Update July 2009
Rental Property Update May 2009

This post is an update on my rental property in Philadelphia. In this section, I talk about my landlord experience – the good, the bad, and the ugly. All my posts that are related to the rental property can be found in the Rental Property section, including the bad tenant saga series).

April 5
I went to Philly during the first weekend of April to inspect the house. Earl had told me there were many damages and I wanted to see it for myself. I brought my camera to take pictures of the house. Earl was there and walked me through the house and show me the damages. He brought a contractor along with him so he can give me a price quote on the work.

Here is a list of things that was noted damaged or needs to be repaired:
1. The storm door (front of the main door) was smashed and could not be closed.
2. The living room window (front of house) had a hole about the size of a baseball.
3. The dining room window (back of house) was badly smashed and needed to be completely replaced.
4. There were two holes in the dining room wall (below the window), about the size of golf balls.
5. The walls were scratched up in the living and dining rooms.
6. The carpet was stained in the living room, dining room, and kitchen.
7. The kitchen carpet needs to be replaced (going to be vinyl)
8. The master bedroom carpet was missing a rectangular piece, approximately 6 inches x 2 inches. The entire carpet needed to be replaced in the room.
9. The second bedroom carpet had heavy spots of stains near the window.
10. The third bedroom carpet had a small spot of dark, reddish stain near the door.
11. The living room closet door had two heavy dents on it, and the door needed to be replaced.
12. The second floor hallway closet door had a heavy dent on it.
13. The window area in the bathroom had molding.
14. The toilet seat in the bathroom was in bad condition and needed to be replaced.
15. The towel holders in the bathroom were removed.
16. Many of the light bulbs in the house were removed.
17. The dining room chandelier was missing two glass panels and one light bulb.
18. The air vent cover near the floor of the living room needed to be replaced.
19. The refrigerator was dirty and smelly and needed to be deep-cleaned.
20. The basement sink was not flowing properly. The faucet was broken and came off.
21. The garage door electronic opener did not work.
22. One ceiling panel in the basement had flood stains and need to be placed.
23. There is a puddle of water in the back of the garage.

April 9
Earl told me that the utility company had cut the power from the house. I called PECO and try to turn the power back on. They told me that there is an overdue balance (from my ex-tenant) and that’s why they shut off the power. They asked if I want to pay the overdue balance. I told them no, and that I am not responsible for it.

I told them that I’m the owner of the property and I want to transfer the account to my name.They asked for two forms of ID: driver’s license and social security card, and proof of ownership of the house.

April 10
I submited the information required to PECO via fax and asked them to re-activate the power.

April 22
I called PECO to follow up with the status of the application for the electric service. They told me that the service will be activated tomorrow on April 23.

April 24
Earl called me at 8:30 in the morning and asked if the power was turned back on in the house. I told him that the house should have power now after I made the phone call to PECO early in the week.

He told me that he would call the contractor, Vincent to continue his work. He had already painted the walls, replaced the carpet in the master bedroom, and was in the process of replacing the kitchen floors.

I inquired about the tenant search. He told me that there was a couple who was interested in renting the place, however their combined income was too low. I reminded him that we should make sure that the credit score and credit history of the prospective tenants are good. He told me that the income is the most important factor, because you can have a tenant with great credit history but poor income. He suggested that we look for people with steady income over the years and who can pay the rent. He told me that the credit score of the people would not be in the 700 range, but more like low 600s and high 500s. Knowing that the renters in Philadelphia generally do not have a high credit score, I did not want to debate it. I told him to look for a “good” tenant. He said that he will continue working on it and update me later.

April 25
Earl called me in the afternoon and gave me updates on the contractor’s work. Earl told me that the work was already done and but there was a slight problem. The doors that were to be replaced in the house cost more than the initial quote. Earl told me that the total price for the doors was $250 alone, excluding the labor. He said that I was getting a great deal. He told me that the cost of material was expensive and that Vincent was charging a small amount for labor. I told him that I would pay only $200 in addition to the agreed price. The total price was now $1,500, instead of the initial $1,300. Earl asked me to send a money order payable to Vincent to his address on Monday. I asked him to look at the house after the contract work was completed and the quality of the work was at least satisfactory.

Notes:
Earl = My real estate agent
Vincent = Contractor
Names are changed to mask people’s real identity.

Read more:
Rental Property Update June 2009
Rental Property Update April 2009