Real Estate Investing #5: Rookie mistakes and saves
November 3, 2014
While we were traveling, a few somewhat unexpected bills came in the mail for the Investment House: utilities!
I tend to operate a little bit on autopilot when it comes to bills, I check the amounts and dates, then I go straight to paying them, particularly when a due date is in the past. I’m a bit allergic to paying after the due date, it gives me flashbacks to writing checks for Mom when I was a kid, not understanding why we didn’t pay on time, and then later to my late teens when I could only JUST pay bills on time after working hundreds of overtime hours.
My bottom line was about to take a beating when I took a minute to whine at my RE friend and he pointed out that the property manager should be able to bill the tenant for these – well!
I blame the heat, pregnancy brain, and totally being a rookie for not remembering that tenants almost always cover all the utilities unless it’s explicitly covered by the rental agreement. Heck, I was a tenant for years, my Dad still is and I pay his bills, so why it totally slipped my mind that we have always paid our own trash, sewer, water and electricity bills, I couldn’t even say!
Luckily, it was as easy as emailing the scanned documents off to get that sorted. Whew. Saved myself $200+. Never mind the slightly horrified lurking sense that if I nearly messed that up, what else have I done wrong? Ach. Live and learn.
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Paula from Afford Anything posted about being off for a month and how well that worked for her; she shared a story from a single income family that has been working away at this real estate thing as well and it was a bit heartening. Randy’s also following the same general thought process that I was: save enough cash to cover the first purchase, with some extra to cover unexpected expenses, and keep reinvesting any income to build up to the next purchase. If I have a good cash cushion that I can dip into, of course I will, but Little Bean potentially changes that landscape for the moment.
Taking this a step further, is it normal to keep the utilities in your name while you have tenants in the house? I have been a tenant for a long time (always renting from a corporate landlord, which I guess must be different) and the utilities have always been in my name.
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Good question and it’s not, in my experience as a renter, I’ve also always had the utilities in my name. Apparently in this one area, though, the county requires the sewer bill to stay in the owner’s name. I think that’s a bit strange. The others should be transferable. I certainly don’t have their electric bill in my name, for example.
Funny, here utilities are always in tenant’s name and organised for when you move in (you call the company to set things up for your move in date, and vice versa your move out date). Only exception is water – I don’t think that can be set up in tenant names as it’s a council thing perhaps? So generally LLs forward those on to tenants. These are quarterly and weirdly, our agency sends us monthly bills … think they must break them down that way for, I guess, cash strapped/disorganised renters.
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That’s what I recall as normal. I suspect that the first LL didn’t have things set up properly to begin with – perhaps they didn’t know what they were doing so they didn’t get things assigned to the tenant like they should have?
We have quarterly and semi-annual billing as well but my prop manager plans to send it as monthly, probably so that it’s not a lump sum due in one go.
Whew! That extra spend would totally hurt the roi and be for naught. Good thing you vented to a friend… Friends can totally save your butt!
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