This was the very first house I ever purchased and also ended up being my first rental property. I was 24 years old and I could not have done this without the help of my beautiful mother. She is the sweetest person on earth and she paid the 10% down payment for me. At the time I purchased this house I was completely clueless about financing, real estate and just the world really. I had zero intentions of ever profiting from this house. It was just a place to live. As I grew older I started learning about real estate investing which led me to purchase my first investment property.
Years later (late 2013) when I was finally ready to fast track my road to freedom I decided I would convert this house to a rental and purchase a new house to move to. I had saved up enough down payment money and by this time I understood real estate investing and knew exactly what I needed to do and what I wanted. Anticipating this move, I refinanced this home to a new 30 year mortgage so that I could lower my mortgage payment and to help provide the most possible cash flow I could get. I spent right around $3000 to make this house rent ready making all the repairs myself. Since this house would not be far from my new primary house I decided I would self manage the rental and save some money by not having to hire a property manager. I prepared all the advertising myself to market this house and screened my own tenants. It took me less then 2 weeks to find a qualified tenant and I officially had my first rental.
Here are the numbers. I don’t break down the numbers on this one like I did all the other ones because I was not sure how to calculate the numbers properly with how much money I have put into this house because it was my primary house for so long. So the numbers below are purely from just a cash flow perspective and what my numbers look like from day 1 as a rental property.
As you can see, not too shabby. The rent values have actually increased and my tenants is paying under market value at this time. It should be rented for at least $1300 however I made the executive decision to not raise the rent that high because he is an unbelievably awesome tenant. Takes care of the house and pays on time every month. I would rather not lose this tenant and deal with turnover costs for an additional $70 per month. Please note though that I did increase it to $1230 from $1200. A small bump which he had no problem paying.
Do you think I should have increased the rent an extra $100 per month or do you think I made the right call by only increasing it $30 to retain the tenant?