Top Three Things That Will Cost You Money When Owning a Property in Elk Grove
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Owning a property inevitably costs money. This is especially true when owning a rental property. Today we are speaking about property management in Elk Grove, California with Dan Hines. Dan is a Regional Manager here at Mynd Property Management in Elk Grove, and he will be giving us his top three things that will cost you money when owning a property in the Elk Grove area.
Alex Osenenko: Boys and girls, Alex here with Mynd Property Management. Today, we're talking about Elk Grove. Specifically, how to invest in real estate in Elk Grove, how to Win, how to make money, how to have a good investment experience that actually helps you achieve your goals. To unpack this and get more specific for Elk Grove property management, I have someone with a lot of experience in the area. Dan Hines my guest today. Dan, how are you?
Dan Hines: Great. Thanks. Thanks for joining us.
Alex Osenenko: Yeah, thanks. Look, Dan has got a lot of experience. We've done a number of these already, and today's topic is going to be around the three things that will cost you money specific top three things that will cost you money if you want to invest in Elk Grove. Let me set Dan up really quick. Dan has been in the industry for over a decade. He is a local property manager for Sacramento and Elk Grove. He co-founded a company called Raymond Property Management. He is now part of Mynd and the Regional Director here for Sacramento. Very excited to have him on board. But, let's unpack this particular topic. Three reasons, Dan, you see investors fail over and over again.
Dan Hines: The tenant selection process is huge. If you're not being very careful and heavily scrutinizing who you put in your property, you're rolling the dice. We'll see issues range from someone who will move in, they have a bunch of extra people with them. They never knew. Now, your property is taking a beating.Eviction issues can be a real thing if you don't trust or if you don't check out the financial history and wherewithal of your applicant. You know, that friend your family member wants to ask for the hookup—we see a lot of show what comes from that, too. So, you want to make sure to have very stringent and very clear qualifications for your residence selection. That's number one.
Alex Osenenko: Can I add some color to this, Dan? Another piece is making sure that you follow the fair housing laws and stay within the regulations and not discriminating. Because, if you're looking to have a family, as a resident that's already a red flag. There are very specific rules. So I think, my recommendation is, despite the fact that we are a property management company, either connect with local investors who have done it and know the rules or hire a property management company that can actually place a tenant for you. If you don't want to pay for ongoing service, that's fine, but there are companies out there that would go find you a tenant. So, that's just a little side advice. A little color. Dan, what is your number two?
Dan Hines: Yeah, and to that point, in a place like Elk Grove where so many people who are out there because it has great schools, there are all sorts of things to do for a wide variety of types of people. I can't tell you how many times I'll see marketing pieces from one-off landlords where it says, “look at the backyard. It's great for kids. Your children will enjoy this.” All of those are big no-noes in terms of fair housing. You cannot, and never should try to talk about a familial situation. You know, make certain—
Alex Osenenko: Race, color, religion, a whole slew of things. And yet, you want to have the best possible occupant in your property. So, you have to follow the rules, but they're also tips and tricks of the trade. And I think at least talking to a professional property manager will help you out. What’s number two?
Dan Hines: So, a lot of people will buy a home that is a few years old and they think that because it's new that nothing is going to go wrong. There's a lot of things, especially around the 10, 12, 15-year mark, things start aging out. Systems have certain life expectancies. Personally, I purchased a home that was about 10 years old and in the first six months, all sorts of things started going out on it—from shower cartridges to appliances. Even a tankless water heater. So, have realistic expectations with yourself on how new or how old the property is. Plan accordingly. That goes back to making sure that you’re doing research on what is the expected useful life with these types of things. Sock away a little bit of extra money so when things start popping all at once, you're not being surprised.
Alex Osenenko: What would you recommend this kind of rainy day budget for unforeseen things to be?
Dan Hines: So that really depends on the age of the home, the types of systems that you have during the purchase process. And that’s something that we've covered under different topics. Really make sure that you’re putting in a lot of attention and a lot of care during your diligence process. I know there are certain calculations you can do from a percentage based on the square footage of the home to the percentage of what your monthly rent is. There are lots of ways to go about that.
Alex Osenenko: What do you use, personally? Let's say there’s a 10-year old home. Rent is $2800 or whatever. $2600. And let's say everything is sort of original in the house. What would be your rainy-day budget and what would be the maintenance budget?
Dan Hines: I'm putting a couple of hundred bucks a month. You know, one water heater will be a thousand bucks. If it's a tankless water heater and it's over 12-years old, if anything goes out, it's $2500. You know those figures can get real pretty quickly.
Alex Osenenko: So put away a couple hundred. That's good advice. Did we cover all three, Dan?
Dan Hines: No, that was two. You asked for three. The last one, you know this is just good, prudent advice anyways, regardless of where you are, but burying your head in the sand. I see, a lot of people that ignore a problem. There's a level two or level three problem now. They don't want to put up the money. Well, in six months, now it's a level five or it’s a level six problem. If you're dealing with something water-related, water is the absolute enemy of real estate.
Alex Osenenko: That’s an interesting way to put it. Yeah.
Dan Hines: If you have a little drip, now, if you leave that thing for six months, you're going to do a lot more repair work than just making that drip go away. So, do it right the first time. Do it quick. Don't procrastinate, it will cost you more money.
Alex Osenenko: Yep. Sounds good, man. Well, thanks a lot. If you guys want to learn more about investing in Elk Grove, go to Mynd.co. Check out the website. Type in Elk Grove and you'll see a number of episodes that Dan and I have done together. Thanks a lot for watching. Dan, thank you for your time.
Dan Hines: Thank you.
Every property owner will face costs at some point in the life of their property. This is especially true for rental properties when even the process of renting a property can cost money. For example, being mindful when finding a tenant can help you avoid a costly eviction process, later on. Likewise, keeping up with repairs and maintenance—particularly for costly appliances—can prevent a small problem from becoming a much bigger problem, as well. Avoid burying your head in the sand and remain attentive to the different needs of your property. Doing so will save both time and money, in the long run.
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In the meantime, learn more about ways to start with a smaller downpayment here.