June 1, 2021
Last Updated
Filling you in on how it’s going selling my first rental property…
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It’s been an up and down week with the high being a successful open house and the low being a potential $5k+ sewer line replacement. I share all the details in this week’s recap…
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Show Transcription:
Speaker 1: (00:00)
Hey everybody, welcome back to another episode of RentPrep for landlords. This is episode number 273 and I’m gonna be talking to you about some things I’ve been learning from listing a rental property for sale and a few little tips and tricks I’ve learned from my realtor and just kind of filling you guys in on that experience and how that’s going as a first time, uh, that I’m selling a property. So I excited to talk to you about that and give you some of the ad latest updates. All right, let’s get to that right after this landlords podcast and now your host, Steven White and Eric Worral. So if you’re in the Facebook group, maybe you already saw the post that I put up last week. It’s kind of event post, you know those sayings that we have very common one is a things come in threes, right?
Speaker 1: (00:46)
So I was kind of having that type of week where you’re just waiting for that third thing to kind of pop in there was going to kind of ruin your week. So last week I paid to have a contractor come out to fix a piece of flashing that had come off the house. Also re pointing some of the m brick work in the garage area of the rental property. Uh, then I ended up having a massive bee infestation, uh, and had a uh, exterminator come out to take care of it. It kind of was doing the pros cons of doing it myself kind of thing. I’ll, I’ll say looking back, I’m glad I got an exterminator to come out. It was 125 bucks plus tax and not that big of a deal. Um, but I actually was stung by some sort of B or insects when I was a kid and it got hive so bad that they almost mercy flighted me to a hospital.
Speaker 1: (01:32)
So looking back I was like, you know what, sometimes it’s not worth saving 125 bucks. So they ended up coming out and saying that there was a almost a soccer ball size infestation behind the siding based on how many bees were coming in and out. They said, so got that taken care of. And then, uh, ended up having a few other things pop up and it was on the way to the rental property. Got a flat tire on the way, got a huge a screw, kinda like with a bolt head on it, uh, into my tire. So that was cool. Uh, I got home, uh, found out my sewer line is backed up and potentially might need to get the sewer line replaced at my house. So that was pretty awesome and just had this really, uh, just incredible week of just build up of like, you know, being really excited to list the property and go through this experience.
Speaker 1: (02:21)
But then just having all these last minute kind of things I was buttoning up or just issues I wasn’t planning on whether it be the sewer line or the, um, the be infestation. Uh, but we’re getting there, uh, which is nice. Uh, but uh, from going through this process, learned a few things from my realtor, kind of some the things that we kind of did as far as listing the property. Uh, the first one I want to talk about is Kinda just market conditions. So for whatever reason, uh, the block that I’m selling on, uh, three other properties went up for sale at the same time. Uh, and he was just kinda letting me know from his experience. He’s like, I know it seems kind of counterintuitive to wait on listing their property, but he’s like, it’s gonna do us any favors listing while these other houses are listed down the street.
Speaker 1: (03:03)
And he’s kind of a supply and demand thing if somebody’s looking at a specific street that they wanted to buy on. So we ended up waiting a couple of weeks before we listed and sure enough we went from four properties down to two. Uh, so we kind of got the gas supply on the street down a little bit. Uh, one of the other things you kind of mentioned is, and I thought this is pretty interesting when you’re taking photos of the property. He said you don’t always want crystal clear photos. He was saying that if you got a room that’s a little bit, you know, maybe there’s a, some, a little bit of wear and tear in the room. Uh, and this would apply to if you’re, you know, listing ’em, uh, for rentals and you’re trying to fill up your rentals. He’s like, if it’s not a hundred percent mint, he’s like, I’ll actually go with an iPhone photo and have it just at a medium to low resolution because it gives you the idea of what the property looks like, but people can’t sit there and nitpick every little thing by zooming in because you had this super high definition, high res photo, which I thought was pretty interesting.
Speaker 1: (04:00)
Um, that, uh, I’d never heard that before. So there might be a kind of a takeaway that you can use, uh, if you think that maybe, you know, you’ve got a little bit of wear and tear on an apartment that you’re still listing anyway. So, uh, I thought that was pretty interesting. Uh, so getting up, leading up to all this, you know, Kinda gotten to that point where I was just kinda waiting for is something will go wrong or something’s going to happen. It will go wrong this weekend. Uh, we had the open house on Sunday from one to three, and it just poured and poured like crazy for those two days on Saturday and Sunday. Um, but that was fine. Uh, the houses in good condition, I ended up having about 15 to 20 different buyer groups come out, some couples, some single people, um, looking at the house and we had two of them kind of come back, uh, later during the open house with the realtor and with the apparent and then a two private showings on Monday.
Speaker 1: (04:56)
Uh, one confirmed a real estate agent who said that their client is going to be putting an offer in this week and we’ve kept it where we want the offers to come in by Friday. So, uh, we’re letting the realtors know that if you want to put in an offer, hey, you know, you gotta have it in by Friday to be considered. And, uh, it’s exciting, uh, as I’m recording this, this is Tuesday, August 20th, never sold the property before. I’m looking to see how this goes, but excited about the possibility that we could have a good offering by Friday. And it sounds like I’d probably be more than one. Um, but you know, time will tell. And of course, you know, people can say they’re gonna put in an offer and there could be other people showing a lot of interest, but you don’t know what kind of timelines other people are on a, but it’s a, it’s a really exciting moment to be honest.
Speaker 1: (05:41)
Uh, it’s interesting being, you know, kind of involved in real estate, uh, to the level that I am where, you know, you got a few properties, you bought a couple of properties, you’ve got two units that you run out and uh, kind of, uh, going through a process that I haven’t through before in selling. I will say that I’m glad that I am using a real estate agent in my particular case because I’m pretty green on this. So, uh, he’s definitely helping out and, uh, I know we’ll probably be able to, um, navigate a lot of the conversations and different challenges of selling our property a lot easier than I would. Um, going with a friend, uh, who did a great job of, uh, helping us find our house that we live in a so he’s given us a good rate too. So, uh, he’s given us the 2% and that I will, uh, mention that cause obviously 3%.
Speaker 1: (06:28)
So a typical real estate agent fee and he’s willing to do it for 2% cause we’re friends. Uh, his wife actually, uh, was in our wedding party. But one of the, um, interesting books that I read recently, and maybe I brought it up on the podcast before I was, I will teach you how to be rich by a Ramit Sethi. I believe his name is. And one of the things he talks about, he said that he wants to teach you how to negotiate. And he said that one of the issues that he sees with a lot of people as they negotiate the things that don’t matter. So you go to a flea market and you try to get a used item from $8 to $5 or something like that. And he goes, that stuff doesn’t matter in the course of your life. It doesn’t really save you anything.
Speaker 1: (07:07)
But he said, when it comes to large purchases or you’re purchasing a vehicle, you’re getting a house, you’re getting financing on a house. Um, those are the things we are negotiating a really matters. So I thought about that actually because you know, I was planning on using this realtor, but I wasn’t sure if he was open to a reduced rate. I didn’t actually say anything and I kind of let him bring it up. And he was the one that brought up 2%, which was great because that’s exactly what I was going to ask for a, but it was great letting him bring it up so I didn’t have to Kinda, you know, be the, the chief’s gate. There’s like, Hey, by the way, would you mind doing this for 33% less than you normally would make? But it’s a good property. It shouldn’t hopefully required too much work on his end, um, with multiple showings and whatnot.
Speaker 1: (07:50)
Uh, but when you look at it, if this property sells for $250,000, that 1% on the real estate agent’s fee is 2,500 bucks. And if you’re in a situation where we’re dealing with a realtor and you have that ability to just essentially just by saying something and saying, hey, would you be willing to go to 2% or two and a half, even though it’s two and a half, you just put, you know, $1,250 in your pocket just from a conversation. Uh, and the thing that’s interesting about that is, you know, you, you maybe you work a full time job and who knows what, you know, I don’t know what your salary is or anything like that, but you can think about it in terms of how many hours do you have to work a week post-tax to make $1,250. Granted, you know, I’ll be taxed on that money anyways.
Speaker 1: (08:32)
So maybe I should say pretax, but you might end up working, you know, 40 hours or maybe, maybe 60 hours just to make that money. And it’s just a conversation, a quick conversation you can have with a realtor. But the, the book that I was reading from Rameet said that people, especially Westerners, feel like it’s taboo or they don’t want to feel like they’re cheap or that they’re a cheapskate kind of things for, they don’t like bother when it comes to buying a car or a, you know, getting financing on your house or your mortgage to really negotiate and try to get a better deal. So I kept that in mind. Uh, luckily I didn’t really have to do any negotiating because my friend made it easy and I was happy with the 2%. Um, but that’s something that I’m kind of keeping in mind as I’m going through this process.
Speaker 1: (09:16)
I don’t know how much I shared on previous episodes, but part of the reason I’m selling it is we got another kid coming along. And, uh, what I’m looking to do actually is use those funds to kind of, uh, be able to redistribute them, uh, more into college savings plans, um, and longterm, uh, real estate or not real estate, but longterm, uh, investing in like just our retirement accounts, which I know is kind of counterintuitive to a lot of the guests in this podcast. But one of the things I’m realizing is that for me, the time and freedom and, uh, lack of liability of the property is very crucial right now. Uh, I can see myself getting back into real estate and owning a rental property or two or maybe, maybe a bunch of rental properties in the future. Uh, but right now I’m trying to just simplify as much as I can and keep things simple.
Speaker 1: (10:04)
So selling the property, then going in the next year, having two kids, uh, you know, two young kids, uh, there’ll be two and, you know, less than one. And being able to, um, really have my life simplified to the point that I don’t have to worry about anything else except what’s underneath our roof and the family inside of it. Uh, is why I am doing that. Uh, it kind of gives me some runway, uh, for several years to, to, uh, you know, be able to try some different endeavors and things of that nature as well. So, uh, I’m excited to see what kind of offers come in, uh, first time doing this. I’m very, very excited to hear what happens. Try not to get my hopes up too much in case we don’t get any offers. Um, but it sounded good so far. Uh, but looking back, it’s interesting because you know, when you buy rental, especially with the buy and hold strategy that I’ve had with this rental on for over 10 years, you’re never really thinking about this day, right?
Speaker 1: (11:01)
You’re just thinking about, well, what’s the mortgage? What’s the cash flow situation? How much rent can I get from it? How much do I think it’s going to cost and repairs per year? What are the vacancy rates going to be? That kind of stuff that you’re kind of thinking about buy and hold. But I didn’t buy it thinking like, Oh, I’m gonna sell this in like 10 years when you know, I’m going to end up having two kids and I want to simplify my life. Like I didn’t, couldn’t see around the bend that far. Uh, but it is really interesting to see the appreciation of the property now where this property was purchased at 114,500 and now we’re listing it up around 269,000, uh, currently on the mls and on Zillow and other platforms. So it’s really cool to see the appreciation, uh, kind of finally coming to fruition besides just like an increased rent that has happened over the years.
Speaker 1: (11:50)
And I’m kind of getting the payoff of that. I know a lot of people listening are like, don’t sell, don’t sell. Like you got a great property, you know, it’s cash flowing, all that stuff. Uh, but I think it’s important to kind of like listen to yourself, listen to what you got going on, we think is right for your situation and uh, make sure you’re not just, you know, going down the same rabbit holes. Just because it’s kind of your, you know, your motive or maybe your just go to or just your, your routine or habit. And I realized that I was getting stressed out because I had a, I got a lot of stuff going on obviously with a young family. And being a landlord at this particular point in time was not one of them. I wanted to continue to do so after a lot of uh, conversation and thought, um, decided to sell the property and really kind of just reassessed what we’re trying to do and simplify things.
Speaker 1: (12:37)
So, uh, I think that’s important. I think sometimes we get caught up in, you know, there’s only one way to do something or you know, I’m a landlord or I’m gonna, you know, get 25 rental properties and live on that. And then all of a sudden you’re at like 15 and for some reason things just feel miserable and it’s not right for you. Like, you know, pivot, like figure out something else that you can do. Uh, not enough people, myself included, kind of consider all your options and realize like, hey, like I don’t have to do this. This is just a choice that I made when I purchased this property. This is not a prison sentence as it felt. Sometimes, you know, when you get a little bit busy or you get tough tenants or something like that, but you always have a choice. You always have a decision that you can make.
Speaker 1: (13:17)
You can always alter the trajectory of what you’re trying to do. And I’m moving in a new direction, so I’m, uh, looking forward to sharing some more details with you guys next week on how that’s going. I’ll keep you in the loop. Hopefully you got some good news. Uh, could definitely use it after a hearing that I might have to change out the sewer line up my, uh, uh, my primary residence. That’s, uh, not going to be a cheap one, but I will say it is worth always getting a second quote. I know I brought this up before. Uh, I read the Book Principles by Ray Dalio, really smart guy, and he said he would wanna his, what are the things that he lives by his, he always triangulate important decisions. So what he means is he always gets three point of views on really important decisions. So when he said his, he got a cancer diagnosis and the doctor pretty much said, you have less than six months to live, talked to another doctor.
Speaker 1: (14:06)
And this doctor said, you know what, like if we do this, you know, pretty invasive surgery and there’s a chance that you know, you could live a full life and this other doctor said, this isn’t a big deal at all, you’ll be fine. And uh, basically we just got to do some routine maintenance on you and you’ll be fine. So he went with that third doctor and he was fine. And here he is saying, he’s like, I can afford the best medical treatment in the world. And I had one doctor saying I was gonna die. And another one saying, no, you’re going to be fine. Like we just got to do some routine maintenance every six months. And when I read that, I was like, man, that’s crazy when you think about that, because, uh, if you don’t know, he’s, I believe he’s one of the a hundred richest people in the world.
Speaker 1: (14:43)
He owns the largest hedge fund, a company in the United States. And here’s somebody who was getting bad advice from top of their profession professionals. And it made me think about myself, average Joe who is, you know, getting a quote on a project and you’re just kind of, you know, oh, I guess that’s, you know, what the going rate is for it. And an example of that is I had a company come out to snake our sewer line and they told us, you know what, this isn’t gonna work. Uh, you probably need to replace the sewer line, which is, you know, going to cost $5,000, probably more, uh, going to have to rev up the driveway, uh, potentially the garage floor, like just an absolute mass. So I was like, you know what, I’ll stick with what, uh, that Ray guy said and I will try to triangulate this decision.
Speaker 1: (15:32)
So got another uh, contractor on the phone, explained the situation, and he goes, look, the guys you’re dealing with, they’re fine. I’ve dealt with them before. They’re not bad, but this is not what they focus on. He goes, they do not do sewer line replacements and all that. And he said, what I’ve found is I’ve been able to, uh, get the tree, I have tree roots that are going growing through the sewer line. He’s like, ah, through using different techniques and different tips on the actual a snake device. He said that a lot of times you can get through these sewer lines and he’s like, I’ve had customers that I’ve been able to just maintain it for them for another six, eight years. And then they replaced it eight years later. So he goes, before you go into like replacing it completely, he goes, let us take a look and see if we can’t get this thing cleared out for you by trying some different tactics that maybe they didn’t try.
Speaker 1: (16:22)
So I will follow up with you guys on that as well, because that right there, you’re talking 175 bucks to have them come out and do this and that. For me it’s worth it because if it means I don’t have to spend 6,000, 7,000, 8,000, $15,000, if you’re talking about putting in a new driveway to, because you don’t want the stone driveway in, um, it’s worth getting that second opinion. And maybe I’ll even get a third one too. Uh, but these are all things I’m just kind of learning as I’m going, you know, learning by doing. Um, one of the creeds or mottos I should say that I live by is I always want to be able to look back at myself every three to five years and kind of chuckled to myself about how either maybe immature or inexperienced or silly that person was.
Speaker 1: (17:06)
Uh, and I guess where I, this kind of comes from for me is, uh, when I was using Facebook more, uh, a few years ago, they’d always have these like, memories that would pop up, you know, and it’d be like, you posted this five years ago, and whenever those would pop up, it always be like something cringy to me. I’d be like, Ugh, like what an attention craved individual. Or like, I would never post that now, or why would I write that, you know? Uh, and for a little bit, I’d kind of just get like that cringy feeling of looking at my past from like five years ago. Uh, but one of the things I realized thinking about that is that, that’s good. You know, it’s, um, it’s, it’s showing personal growth, um, not, you know, not being hard on myself just being like, oh, I’m like a different person than I was five years ago.
Speaker 1: (17:50)
And that’s something that I always kind of go back to, uh, when I’m kind of working through something and realizing like just this particular case, uh, maybe before I would have just rushed into like, all right, fine, we’ve got to get replaced. This stinks. Let’s do it. And now I’m trying to realize like, all right, let’s get a few more opinions on this. Let’s take our time. I know that it’s a literally a crappy situation when your sewer line is backing up combined. Uh, let’s get a few perspectives on this. Let’s get more data, let’s get more information and then see what we can do and taking my time and not rushing into things and trying to figure those things out. And hopefully in another five years to, I’ll look at, you know, some of the stuff that I’m doing right now and just be like, oh, Eric, you were, you were a little little wet behind the ears.
Speaker 1: (18:36)
You’re, you know, a little silly and kind of some of the stuff you’re doing or the thought process you had on things. But that’s all part of the personal growth and figuring things out. And I think that applies to anybody, especially if you’re in real estate and you’re trying to grow a portfolio or trying to build and carve out your little niche of the world for yourself. Um, you got to make sure that you’re, you know, being kind to yourself, but at the same time, being able to reflect on things and grow as a person and as an individual and a, you know, always get better every day and, um, just learn from your past and past mistakes and figure it out as you go. So that’s enough of my rambling this week. Uh, but he’s wanting to kind of give you guys some updates on what’s going on. I personally, and, uh, yeah, I’ll fill you guys into a, as we go on into the next week. But, uh, that’s it for this episode and, uh, I look forward to catching up with you guys next week. Have a great week and take care.