Here I am last week at one of my real estate investments. It doesn’t look too glamorous, does it?
This is a home that we rent out to students by McMaster University. They are super excited about the new deck. I think I heard plans for a January party already. All I could think about was my poor house!
Now, building a deck in MINUS 5 degree weather really isn’t on the top of my list of fun things to do. Not to mention that the snow we were working in on Saturday night didn’t make it any more fun.
Yes, Saturday night! We took floodlights with us so we could work after the sun went down and the temperatures really dropped.
I am not sure if we are a bit crazy or really driven but I know in the long run putting in the work has really paid off.
I was jokingly recruiting extra help at the class I was teaching Saturday morning for some investors. I think we all had a good laugh at my plans to go to work outside afterwards.
For the record, my recruiting attempts failed 🙂
But seriously, I think it is important to realize that successful real estate investors are not lucky. I would be willing to bet they have all worked their tails off to build a successful portfolio.
Now the work might not be building a deck. But I can assure you that there have been some bumps to overcome.
Just the task of cleaning up after an old tenant and advertising for a new one is work. It is probably the most common work any investor has to do. And although it is not fun at the time you need to realize the income such limited work will produce.
I was being asked on the weekend why I would build such a big deck (it is HUGE!) for a student rental, especially at this time of year, and it got me thinking.
I can hear you already, “Uh oh, Nick got thinking, here we go!”
I will keep it short, but listen up because it is a big point many people miss.
The tenants in this home are leaving this year, which means, come January I need to rent out this home. The home is well kept inside but it is smaller than some other homes available to the students.
I know from past years that they loved the deck on the home. It was the top selling feature. The old deck was smaller and a bit worn but still very functional. I could have patched it up and left it for another 2 or 3 years at least.
But how would that change my investment? How would it affect my rental process in January?
I don’t think it would help.
So instead I decided to spend $7,000 on a new deck, which some people think is crazy. Not me!
This home rents for about $2300 a month. If you multiply that by 12 that is $27,600.
If spending $7,000 makes it easier for me to make $27,600 a year for at least the next few years (although the way this deck was built it should last much longer……it better!), then it was a great investment.
Different types of investment will require different types of work. And most of the time there won’t be a statement that tells you how much money you have made for yourself.
It is up to you to look at the big picture and figure it out.
To me, this $7,000 deck has made the next $100,000 of income on this property a much smoother ride. That is a Big Time return on investment.
So if anyone looks at me and thinks I got lucky with this house that produces over $700 in cash flow every month.
I will just smile, laugh, and think about what I was doing last weekend compared to them.
Oh, and by the way, I will be back there this weekend finishing up in case you want to help 🙂
– Nick Karadza
P.S. I forgot to mention I hit my pinky finger with a hammer pretty hard and still don’t have feeling in part of it. I’ll let you know if I get it back.