I have $8161.60 in my account right now. I think it’s safe to say that I will not reached my $12k quota for the month of November, and I’ll most likely miss my December quota of $15k. I knew the way I was reaching my quotas each month was going to hit me hard later on, so I was expecting a crash like this. I used to think that when I finally failed to reach my quota I would go crazy and get depressed, but I feel even more motivated than I was before.
The main financial drain came from the repairs I had to do in property Alpha’s upstairs apartment. I had to bring the unit to a point where I can move tenants in and out without having to do repairs each time. New bathroom floor, new bathroom sink, replacing the blower for the furnace, painting, mudding and labor costs for both Gonzalez and Alfonso cost me about $2000. Not getting rents from the Homos (just moved in) and Carver (paid in advance) for this month hurt me, as well as not getting the full $1600 from the new tenant Nicky. While this month was a complete financial failure, it taught me a hell of a lot about what to do and what not to do.
The first lesson is preventive maintenance. If I had made the repairs while Lex and the Indians were still living in the apartment, I would have been able to rent it out at the beginning of the month with very little turnover cost. Paying $100 for paint and painting for two days is much better than paying $2000 to make repairs that take a week. I have to start make repairs a little at a time while a unit is occupied so that I can turn around and rent it out a couple of days after they leave, as I did with the Homos in property Chi. Also, I have to make sure that my future properties only have one or two bedrooms. Three bedrooms may get more money but it narrows your clientele to mostly families, and families SUCK! Their kids are walking liabilities and many families would rather live in a full house than an apartment. I lucked out getting a single woman with a good job and ONE kid into a three bedroom apartment. One and two bedroom units have a much greater clientele group from all walks of life, and they’re more affordable.
The second lesson I learned had to do with advertising. I didn’t realize how difficult it was going to be renting out a three-bedroom upstairs apartment in the winter. Even though I feel that I got the right tenant in Nicky, I made the wrong deal. I should have made the rent $900 and the security deposit MUCH lower. I see a lot of management companies do “move-in specials” in the winter where a tenant only has to pay a fraction of the security deposit to go along with a full month’s rent, sometimes as small as $99 deposit. Think of the math: The apartment is worth $850 at least, right? Nicky moves in with a rent of $800. That means I’m losing $50 a month and, if she decides to leave when the lease is up, I have to return her full $800. Net profit on a 12 month lease: $9600. Now, if I did a “move-in special” of $300 security deposit and made the rent $900, I would be making $50 a month extra. If she decides to leave after 12 months, I’ve profited by $600 and I only have to give back $300! Net profit on a 12 month lease: $10,500. That’s an extra thousand dollars that I lost based solely on the structure of the lease. I have to take advantage of the fact that tenants are usually short-sighted, and I didn’t.
December is going to be a busy month. Already knowing that I won't be able to reach December's 15k quota means that I'll be looking to make as much money as possible. Getting a total of eight paychecks from both jobs (3 from the bank, 5 from the depot) will help out a lot, and I’ll finally be getting rent from Carver and the Homos. Debt-wise, Alfonso is replacing 2 windows that I’m having made: one for property Chi and one for Beta. I don’t have to pay any water bills, but I have to pay off my final debts for National Grid and Dell, totaling about $900. Operation LFS (Lie For Success) has been great so far, giving me an excuse to miss Thanksgiving and Christmas (overtime money for tuition). I learned a lot in November. Even though I missed my quota, the lessons I learned will help me make better financial and managerial decisions in the future—and that may have been worth the cost.
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