October had big changes.
First, we’re turning units in our 4-plex and 2 tenants have confirmed move-out dates before end of year. That means we’ll start remodeling in earnest and get the units rented out at higher rates soon. One long-term tenant decided to stay despite the higher rent, so we’re glad to keep them.
Remember last month when I said I’m working on a new case study to explain step by step how we got the 4-plex and our strategy to reposition it? I’ve been cranking it out, and the depth of details, tips, and insights are getting long and meaty, so I decided to split it up into a series of posts. There are 3 posts ready, with at least 3 more on the way. They’re coming soon, so keep your eyes peeled. 🙂
In October we booked revenue of $2,057, down -47% year over year.
Ouch! Obviously a big drop. And an ever important reminder to diversify your passive income streams.
Luckily, this new 4-plex will help us do that because it adds a big new passive income stream on its own, so we’ll have that cushion as I continue working on growing HYW.
OK. So what happened in October?
K and I have been living in a makeshift situation: we moved into the 3 bed unit initially because it was the only unit vacant, even though it’s way too big for our needs.
But now, two tenants are moving out, including the one residing in the unit we want to occupy. We’re thankful both units will be vacant in the next month, which means we can crank out our remodel plan quickly and then move into one unit, rent out the other, and finally remodel the big 3 bed we’re currently residing in and rent that one out, too.
At that point, all units will be rented out at market rates, we’ll finally be able to unpack our stuff, and we’ll be happy campers. I think we’ll get to that point sometime in January. Crossing fingers!
As we’ve started remodeling, it’s definitely been an extraordinary amount of work. Since we’re remodeling 4 units, and we have a limited budget, we have to make every single dollar count. We have to be confident every dollar we put into the machine returns more than one dollar back.
So we’ve had to wrestle with a lot of tradeoffs in engaging contractors. Prices and quality vary tremendously. I mean, absolutely huge.
And customer expectations frequently aren’t aligned. Customers who are not experienced at managing large home renovation projects often expect contractors to have Walmart prices, Apple quality, and Four Seasons customer service. They want it all.
Consider yourself lucky if you can get two out of the three…and even then you really have to dig around to find them, because they’ll be plenty busy. We’ve tried to engage contractors who we believe are low price and high quality.
Prices have indeed been low. Quality has been hit and miss. But customer service has SUCKED.
I mean, SUCKED.
Consequently, we’ve learned to get pretty handy ourselves. That way we can self-fix small things, using Google and YouTube as our teachers, without relying on contractors for everything, and without being beholden to their shifting schedules even for small things.
We replaced a kitchen faucet. Fixed a dishwasher air gap. Recaulked sinks. Little stuff. We’ll get to more complex stuff soon.
The other thing we’ve done is gotten militaristic about following up with contractors, because they often don’t respond timely; half the time they forget to respond at all, the other half they respond only to, say, one question you asked and ignore your three other questions.
I have found ways to deal with this effectively, which I will share in my post series, so stay tuned for that.
Just remember: no one will care as much as you do about your renovation project. So you better be willing to step in and step up if you’re not confident your contractor will do things to spec.
2. Case studies
Have been working on the case study series related to the 4-plex, but haven’t released the first post yet because I’ve been so “in the zone” batch writing.
I draft raw text for posts in Google Docs, one post after another. After writing is done, there’s still a lot of work in terms of formatting, gathering and editing images, making content upgrades, SEO-optimizing titles/links/metadata, writing copy for broadcast emails, teeing up social media.
Those aren’t my favorite things, but they’re critical for making a post effective, and they do take time. So that’s why the case studies have been taking longer…soon, though!
3. Growing traffic
This month was even more hectic than last, between coordinating house issues, a bunch of stuff going on in my day job, and cranking out new case studies.
Unfortunately, didn’t get to working on growing HYW followers (Twitter followers actually fell from 1905 to 1900) and email subs.
I do need to carve time to do these things and start pitching bloggers/journalists and guest posting on other sites to boost email subs. Gotta find time for it.
September net new subs: 59
September Twitter followers: 1,900
1. Vacate units, more remodeling
November will be intense remodeling all month. Another tenant is vacating at the beginning of December, so it’ll continue through end of year.
If you’ve been following the news, you know about the severe wild fires that recently engulfed much of the North Bay Area – Santa Rosa, Napa, Sonoma. Something like 175k homes were destroyed in the fire.
Consequently, in the next 6-9 months, I believe a severe shortage / imbalance of contractors, handymen, and builders will arise that could last for years to come as all that housing stock gets rebuilt and repaired.
Right now, the supply vs. demand is still OK because residents of those areas are just now starting to go through the rubble to assess damages. But as their claims make their way through insurance companies, money will start to get paid out and new construction and rebuilding will begin.
I imagine a lot of contractors who have mediocre business elsewhere in the Bay Area may flock up north to find work and make money amidst the huge demand that will arise there.
I am trying to do as much remodeling in advance of that as possible, so our 4-plex is set in terms of big renovations for at least a few years.
So from now until end of year, there’s gonna be a very big remodeling sprint for us. Another (smaller) sprint will happen next summer for the 4th and final unit.
I’m still monitoring Austin, Texas as well. Since future deals we do likely won’t be in the Bay Area, but rather Austin, I’ll continue researching there with an eye toward future investing. And I’ll teach what I learn back here.
So, if you’re looking to sell in Austin, but don’t want the hassle of cleaning, staging, marketing, and dealing with nosy open house neighbors, then click below and let’s talk.
I will close fast and get you a good price.
2. New real estate case study
Speaking of Austin, as I mentioned I’m working on a series of posts walking through all aspects of our 4-plex deal, negotiation and repositioning strategy, etc. At least one of those posts will cover a deep dive analysis, using the Austin market as an example, where I’ll show how to due diligence a metro area to determine its attractiveness for real estate investing.
I’ll also share our learnings from the 4-plex and the crucial tools we used in the process. It’ll be packed with actionable insights to help you in your own real estate investing efforts, so keep a lookout for it.
3. Grow traffic
As with last month, remodeling and tenant move-outs consumed all our time (plus a couple other things I’ll be sharing about soon). I still have to continually set monthly goals for growing HYW to hold my own feet to the fire on it.
So, goal for November is to learn 3 new list building techniques from the list building video summit I recorded months ago, and make HYW on Twitter break 2k followers.
November net new subs goal: 60
November Twitter follower goal: 2,000
OK, will have a few big updates next couple months, so keep an eye out….back in November!