The Rental House

OK, I made several posts last fall about one of our rental houses, and our desire to sell one of them. I made some significant progress on remodel work, but then stalled out when the shop sales grew significantly. I ended up spending more time here at Nemo's helping than I was spending at the rental house getting it finished. When I went back to work at Intel, I had even less time to spend at the rental house. When I went to work at Ft Carson, and Intel at night, I effectively had no time for the rental house. It has been sitting in the same state I left it in around November 2007. This is not a good thing for our personal finances! Starting a new business is difficult enough without an added drain on your finances. It costs about $1000 a month for the mortgage and escrow payment and to pay all of the utilities. I have thought about hiring a contractor to finish the projects I started and then sell it, but I wanted to get advice from an industry professional first. I met with a realtor yesterday, and her advice is to offer it for sale as is, at a reduced price. I have already purchased the materials for the remodel work and they are on site. We just need to find someone willing to buy into some sweat equity (reduced cost for the house and they finish the work). Our realtor believes that will not be difficult to accomplish, and we will still be able to walk away with some of our equity. To be honest, I am willing to sell it at a break-even discount, just to get rid of the payments!
Another option I considered was to hire someone to finish the biggest priority projects, and then rent it out again. I have had a number of people contact me over the last six months wanting to rent it. We have found that two bedroom properties make the best rental units. You tend to get singles or no-kid couples into a small place. This home is 2000 sq ft, four bedrooms, two baths, with 3 car garages, and a large yard. A home this big attracts families with kids, or immigrants who want to sign a lease with several people, and then they have 20-30 additional 'cousins' move in over the next month or so (sounds silly, but I am being serious... it really does happen). The families with kids tend to do a great deal of damage to houses. The carpet absolutely gets destroyed, and everything ends up very dirty. We have little holes everywhere from bb guns being shot inside. All of the glass globes for the light fixtures are broken and gone. The landscaping was let go and weeds took over everywhere. The fence is all broken and damaged. I could go on and on, but these are the reasons we no longer want large rental houses. We'll stick with the little two bedroom ones instead, thank you.
So anyway, we are going to try to sell this thing as is. We have enough equity in it to make it attractive to investors, and still walk away with some cash. I hate to give that equity to someone else with more time than I have, but it is the easiest solution for this problem. Let's hope it sells quickly...

Speaking of financial matters, this business startup forced us to be more frugal about things than we had ever been. We have plenty of surplus income right now with me working two jobs, but I have learned a few things from the last year.

First lesson in frugality: Children, especially boys, are hard on pants. Cheap brand pants don't last, but name brands like Levi's, Wrangler, Gap, Gymboree, Dockers, etc do fine. The problem is, name brand pants cost $30+ per pair, and are still in the $20's when on sale. I have found that Goodwill stores have name brand pants, in nearly new condition, for $3.99. And, if you go on the right day, the colored tags may be 50% off, making name brand pants $1.50 to $2.00. I still have a military ID, and with that discount, I hauled away a treasure trove yesterday for less than $14. I got Levi's carpenter style jeans for Josh and Ethan, a pair of Lee Jeans in 8 Slim for Jonah, a pair of Gap school uniform khakis for Jonah, a Docker's white button down dress shirt for Jonah, a pair of Gap carpenter khakis for me, and a pair of US Polo Assn jeans for Ethan all for less than $14. All are in perfect condition, with no stains or wear. I think that is a great deal...

One word of advice for parents out there... If your kids want to rent a really stupid movie and they ask you to watch it with them, do so without making any comments about it being stupid! Some of my favorite movies of all time are shows we have watched with the kids. A Bug's Life, Toy Story, and Monsters Inc are all just plain fantastic movies, regardless of your age. On the other hand, the new movie that came out called Game Plan is geared towards kids, but it is really lame. Tracy and I made a couple of comments to each other about how cheesy and stupid it was, and we then realized that it really hurt the kids' feelings. They were enjoying the movie, and our comments didn't sit well... If you are watching a show with your kids, just have fun with them and if you hate the movie, just laugh when the kids laugh and enjoy hanging out with them. There will come a time when they are too busy with their friends to hang out with us and watch a movie... We should enjoy this time with them and not ruin the experience by commenting on the movie, no matter how lame it might be!

I just did a spell check on this post in Word, and it told me that it is written at the 8th grade reading level. If you read at less than the 8th grade level, go get your Mom to help you out.

Gotta do payroll now...
Take care,
JD