How Multiple Real Estate Investment Properties Can Help You Cover Unexpected Vacancies

How Multiple Real Estate Investment Properties Can Help You Cover Unexpected Vacancies

welcome back financial investors my name
is Brent and today we’re gonna go ahead and cover real estate we’re gonna go
over my very first vacancy here in 2019 so if you are brand new to the channel
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comments and let’s go ahead and get into the video now this video I wanted to go
over my very first vacancy but I also want to go over go ahead and cover some
of the history of my real estate business now in early 2018 I made a
conscious decision that I wanted to go ahead and create and start doing
something other than the stock market I’ve been in the stock market since back
in 2004 when I started at my thrift savings plan and then kind of went from
there now 2018 I saw the stock market
beginning to kind of slow down and I also wanted to move and start building
something more for myself and something I could pass on to my family my children
and such you know build some sort of generational business that I could pass
on so I went ahead and transition and looked into building up a real estate
business so in May of 2018 I started the transition that way and by September
2018 I had made plenty of offers but none of them had been accepted but in
September 2018 my very first one I had you know I had Oh finally got one
offered on and accepted it was a single family unit and I got accepted now
September was my first one and second one in October came on the market a
duplex well it was not listed as a duplex it was actually listed as a
1-bedroom 1-bath did not have really any data to show on the actual Zillow where
the listing so when I went to this property
and checked it out it was actually a duplex a 2-bedroom 1-bath two different
units so it was actually four bedrooms and two baths well it wasn’t listed that
way so I made them an offer even though it had been on the market not too long
they accepted my offer and even accepted to fix some of the issues such as some
of the windows and some of the bathrooms such so it actually worked out really
well well my duplex I didn’t have the cash available to pay for this duplex to
get it under but I did have equity in my own home so I did a HELOC and use my
HELOC to buy my second investment property now by the end of 2018
I had rehabbed this property as I now had three units and they were listed for
rent by December 2018 but with December being a bit of a slow period with you
know holiday Christmas that friends and family everyone’s kind of traveling
spending time together these units were not filled in December January 2019 I
got a notification that both my units my duplex and my single-family home had
both been filled and rented out for what I had wanted to rent them out for now
earlier here in July I got an a call from my property manager about my
vacancy so earlier in in july 2019 my property manager called me up they said
hey Brent look we are doing our quarterly checkups my property manager
they do quarterly and send my annual checkups on their first year every on
the first year of the tenant here in Oregon after your first year it’s very
hard to get the tenant out of the property so the property manager wants
to insure that in their first year that they are doing quarterly checkup semi
annual checkups you know every quarter at least to make sure that the tenant is
being responsible they’re not breaking the lease they are not doing anything
that you know could cause harm or issues to the property or they’re not doing
something that was you know they were not supposed to do part of their lease
well as they were doing a drive and view on one of the properties they had
noticed an issue on one of the properties and had called me let me know
what was taking place and I asked them for a recommendation
you know I said you know thank you for bringing this to my attention you know
from this issue what do you recommend they told me a little bit about the
Oregon State law about if you have a tenant in place for over one year it
makes it really difficult to get them out even if you try and evict them so
what they wanted to do is this is why they do these performance or these
checkups either visually going by the property or just at the very you know
nine-month period though you will walk through and make sure that the tenant
has done a really good job of kind of keeping the property up and not damaging
it or keeping in line with the lease well they said that they had broken the
lease and they gave the reason why so the property manager recommended that
they do not renew the lease it was on a month-to-month lease they said look
we’re not gonna go ahead and renew this lease we’re gonna let the tenant know
and I said okay go ahead and do you know whatever it is that you must do and just
kind of keep me in the loop so that was back in july 2019 and they sent me a
notification via in the in the mail so they sent me a little letter in the mail
here i can’t see what’s actually being shown up over here on OBS so show me a
little notification of vacancies so that the property the tenant was giving
notice on the 11th of july and that they would move out by the 10th of august so
they must have made somehow they must have had a deal with the tenant because
I did receive my July rent early July you know on the 1st of July they accept
the rent but on August I did not get rent from that specific unit so maybe
what the property manager had talked with the tenant was saying hey we’re not
gonna be renewing your lease but what we’re going to do for you to kind of get
you out and on your feet is we’re not gonna charge you rent for August we’re
gonna go ahead and let you you know get your things together and look for
another property and use that rent towards another deposit and getting you
out so I didn’t get my rent check there but that is fine that kind of goes into
the whole other thing so the May the first part was that I had a vacancy
I got notified by phone my property manager which you know I
always recommend a property manager I don’t always keep up on the state laws
I’m not going to be able to keep them up on the state laws I don’t have time to
work my w-2 job to work my YouTube online media business and to continue
doing all that I am doing here both for the family and with my one kid oh and
another kid along the way so I myself am going to always be used any property
manager the feed that they charge the 10% fee is well worth it when you review
and actually get a really good property manager who does all that they do you
know the quarterly check ups they keep a budget they give you the Excel document
they give you so much information and you can always call them up and ask them
questions of either issues that you’re having recommendations of property so
it’s well worth it for me to use a property manager that 10% rental fee is
really nothing in the grand scheme of things and you always account for it in
the budget no so I’m really thankful for my property manager so they called me by
phone the tenant was notified they moved that on the 10th and I didn’t get my
rent check for August but did that hurt me I still have two other units that are
filled right now and fully rented so my single-family home rents for twelve
hundred bucks and I didn’t get to about twelve hundred bucks here in August but
I did receive my duplex rents so both of my units on my duplex they rent for 750
one of the units has a pet so it’s a thirty dollar pet deposit for that unit
so it’s 780 and 750 so between those two units that is one thousand five hundred
and thirty dollars so I didn’t receive my twelve hundred bucks for my
single-family unit but I still received my checks from my duplex now with the
fees and actually had a garden I pay water and sewer and trash out all these
units so with the property manager fee with the water sewer and trash and I
also had some maintenance they do yard work every quarter they go through spray
make sure that no weeds are growing on these properties because that kind of
keeps down on the maintenance and so I still had over a thousand dollars of
income or gross income coming in from that rent
so that thousand dollars was able to cover my mortgages now my single family
unit has about a it has a mortgage of about five hundred and twenty four
dollars and my duplex has a mortgage actually less than my single family unit
I believe that mortgage is surrounded on five hundred and twelve dollars so
together these mortgages are just a little over one thousand dollars and
these duplicate even though I had a vacancy who with my single family home
and I missed out on that twelve hundred dollars of gross income I was still able
to cover it if I needed to with my rental income which kind of made me a
little happier you know kind of gave me a better feeling about this business for
the long term you know I’m in it now for one year I have three units I have an
offer in right now I’m kind of waiting back it’s a bank property so they need
what my brother said ten days for them to have it set on the market before they
can accept an offer so I have one offer on one property right now I’m looking to
try and make an offer on another one but a lot of my offers have not been
accepted here recently everyone always tries to either a bid me or they have
less contingencies in place so maybe they don’t have any inspections or they
you know they closed in 15 days so I’ve made about 20 I believe 20 or 30
different offers here in 2019 and every single one of them has not been accepted
or they take another offer so it’s you know it’s funky that way I’ve
continuously making offers trying to get my goal for 2019 which is two properties
here but I’m not going to be over offering if it doesn’t make sense within
my my budget and my spreadsheet so kind of going back to the vacancies they were
you know it went vacant but the rental income from my duplexes you able to help
offset the mortgages and I didn’t have any sort of over expenses so I’ve
received maybe a gross income check for I believe fifteen hundred bucks – the
property management – the water sewer trash on all three of the units and
maybe in the yard fee I still had that what twelve hundred
left over that what that went towards both of the mortgages and even then I
still you know I always set aside other costs for capital expenditures
maintenance capital are what it’s the other one there’s other expenditures
that I set aside money for but here in the month of August it just didn’t
happen it got all eaten up but that’s still fine over the course of 2019 my
real estate business has grossed over $14,000 between the three units now yes
that’s gross income in every unit on in itself generally after expenses has a
net cash flow of around $200 so if we multiply 200 by 3 that’s $600 on average
of cash flow per month over we’re in eight eight months right now so 6 by 8
is 4,800 bucks of it of that 13 or 14 thousand dollars has been pure net
income so that has been a nice thing there now kind of going forward do I
feel better about real estate knowing that the more properties that you have
the more of a buffer that you build because you do build up net income you
build a larger portfolio that if you do happen to have one vacancy come up in
your properties the more properties that you have are able to kind of dampen that
blow so I missed out on 1,200 bucks of of rent but because my other units here
and they’re kind of dampened that blow in the mortgage and some of the other
they were able to kind of cover some of the other fees and expenses associated
what the other single family unit now as I continue to build out my
portfolio hopefully by the end of 2019 I’m able to get two more properties or
two more doors or you know however much I’m able to acquire that will help
continuously build it up not only my worth but also building up my
sustainability my buffer within my business so the more properties that I
have I don’t overload them I always do a 70/30 so I put thirty percent equity and
I take a loan for seventy percent and I always make sure that my properties will
always cover my water my sewer my try my capital expenditures my property
manager might you know any sort of fees I believe there’s a bunch of fees that I
specifically set out using the BiggerPockets calculator and or I have
actual excel sheet that I use now then I don’t have the BiggerPockets Pro but
still I always make sure that I take out every single thing I can and give myself
quite a bit of room just so that I have these buffers and as I continue to do
that into the future I can see that this real estate business is very sustainable
and even if I do happen to have these vacancies where this property that I had
the single family home it went vacant on the 10th of August
that was a Saturday I saw it relisted back on the market last week so it’s
already taking it’s already taking applications
I saw it listed I believe it right around the 21st of August so it had a
very quick turnaround the property manager probably went in there very
quickly painted did what they needed to do and they already have it listed for
rent back at twelve hundred bucks it should
get filled out here very soon and I’ll start receiving my rental income going
forward for that one so I took a hit here very short term where my other
rental and my other rental property so how we’ll have to cover that property
but that is fine and I feel much more comfortable acquiring more properties
and grow any larger buffer so that is basically all I wanted to cover in
today’s video I kind of want to go over my very first vacancy why it wasn’t as
big as a you know it’s not as big as it may seem once you start building your
portfolio up say you only have one unit yes that one unit going vacant and you
have a thousand dollar or five hundred or thousand dollar mortgage and other
expenses to cover on that property yes it may hit you that first month or so
that is vacant but if you have other properties that is able to help dampen
that blow it’ll definitely help and definitely continue to build your
portfolio up so that these vacancies if they do take place in the future you
don’t want them to happen but sometimes if there’s situation that
place where your property manager does not need to renew you the tenant lease
or maybe you don’t want to renew your 10 at least for some issue then you won’t
be cutting into your net income so that is it for today’s video if you guys did
enjoy this video hit the thumbs up I haven’t discussed a whole lot of real
estate on this channel I would really like to cover more topics of real estate
how to get invested in real estate as a beginner myself I’ve only been in it for
a past year so I’m not an expert in the whole business of it all I’m just kind
of learning as I go I watch a lot of Graham Stefan and meet Kevin so those in
bigger pockets so those are my three big channels that I like to consume a lot of
data from and also read a ton of books so that is that for today’s video if you
guys have not subscribed to the channel definitely subscribe to the channel red
button below I cover the stock market dividends and real estate if you have
any questions about the stock market dividends or real estate drop it into
the comment section below I do read and apply to all your comments and thank you
all for watching this video I will see you next time have a great day bye

7 thoughts on “How Multiple Real Estate Investment Properties Can Help You Cover Unexpected Vacancies

  1. Thanks For Watching, Remember To Subscribe & Hit The Bell To Be Notified Of New Content!

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  2. I saw your posts on another channel and wanted to say you are doing awesome dude.

  3. Good advice for commercial real estate investing as well.. Try to buy commercial real estate properties with multiple tenants so you can minimize risk of vacancies/etc.

  4. I agree, property managers are well worth it. 👍 Less headaches.

  5. Loving the real estate vids maybe in a future vid you could go over how you analyze a potential wedge deal?

  6. I don't have any experience in rental properties but it is always interesting to learn about them. Thank you for your sharing. 👍

  7. Great video. The real estate channels you mentioned are very much of the style "refi til you die". Nothing wrong with those. There are many other methods to investing as well.

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