So we have officially hit a bump in our road to realty. Right now, it seems like a minor enough one, but since technically we have not cleared it completely, the true impact remains to be seen.

Our property management company uses Buildium to interact with the owners and track all of the finances (rent, property management fees, and, of course, expenses). Now our agreement states that they do not need owner approval for any repairs less than $500 and they keep $500 in reserve at all times to pay for these reserves.

Imagine my surprise when I logged into Buildium and saw $200 worth of repairs during our first full month of having a tenant. There were two expenses, both of them costing about $100. One of them was for an electrical outlet in the kitchen which seems reasonable to me, although I am a little bothered that it was not caught in the inspection we did in late February. The other was to replace the address numbers. This one really confuses me because buying new numbers should only cost maybe $20 and $80 to install those sounds insane. But even then, I saw the house in February and the numbers were fine. It is hard for me to imagine what could have happened over a month and half to those numbers that we as landlords would be responsible for.

Once I saw the numbers, I immediately reached out to Adam, our liaison with Rent to Retirement. The idea with a Turnkey company is that the house comes ready and our expected repairs should, at least theoretically, be less. I know that maintenance costs are normal for rental properties and that we will have to pay them over the course of owning a home. However, $200 with only one month of having a tenant seems absurd. I should note, the house was still cash flow positive this month and that cash flow is only one metric used to measure the performance of an investment property. However, that doesn’t mean I like it cutting into our ROI (return on investment).

If Adam had responded to my email that such expenses were to be expected and to move on, I would have been at least somewhat appeased. However, he replied that he would follow up with Steve, the man we purchased the house from. That at least suggests that there is something strange going on.

Before Adam could meet with Steve, we got a letter in the mail from the city of Canton. Whenever a property that is not owner occupied (like ours) is sold, the city does an inspection of the building. The city did its initial inspection and the property has some issues that are (hopefully) mostly permitting related. At Adam’s request, I forwarded the letter to Steve and the Property Management Team. Steve assured me that the repairs will be taken care of before the deadline, July 23.

With the severity of the letter from Canton, criminal charges are mentioned, the original two charges were lost in the noise. It also remains to be seen whether we will be charged for the required repairs. I reached out to Adam again to discuss the $200 repairs. At the moment, it seems manageable. If we’re out $200 as a one time expense, I probably won’t even remember next year. If this continues to happen or we owe a lot on the city required repairs, we might have to rethink this particular house. Hopefully, Rent to Retirement continues to support us until and unless that happens.

I keep telling myself that it is only the cash flow that is being impacted right now. Already, the house which we have only owned for three months is increasing in value, meaning we already have additional equity. Also, we have made several mortgage payments decreasing the debt on the property. Even if these repairs end up costing more (fingers crossed they won’t), we will have to look at all the metrics to determine what our ROI really is.