Duplex Updates: Big Value Increase $$, New Roof, and Missing Rents

Good morning, guys!

Got some fun things going on at my rental duplex this past month I thought I’d share with ya.

The first one is a pretty massive win, but sort of expected given this crazy real estate market…

Our Duplex Increased About $46,000 This Year!!

Hot dang! I just ordered an appraisal of my rental duplex and the new estimated market value is $266,225 (as opposed to 12 months ago at $220,000)!

That’s a bump of $46,255 and a 21% increase. Wow. 😬

For those of you following my monthly net worth reports you’ll have seen that for this whole year I’ve been using ~$220k as the value for this asset. So there’s going to be a massive bump in next month’s report (coming on Monday).

Sometimes I get asked about why I don’t check my real estate values monthly… And I guess there’s a couple reasons I do it annually instead… 1) Because there’s no quick and easy way to value a rental duplex (Zillow and Redfin can be horribly inaccurate, so gotta order a proper evaluation which takes a lot of time). And 2) since this is a long-term, illiquid investment, monthly ups and downs are kind of irrelevant. Even if we did sell, it wouldn’t be at the exact monthly valuation price anyway.

The only downside to annual evaluations is all-of-a-sudden big changes in the net worth reports. Which actually, now that I think about it, isn’t really a downside at all! 🤑

Comparing Property Growth to the Stock Market

I’m definitely grateful for this +46k property increase!!!… But I can’t help wondering whether I would’ve had better performance if money had been invested in the stock market.

I know it’s unfair to compare stocks vs. rental properties (especially only over a 1 year timeframe), but I’m gonna do it anyway, just for funsies.

First, the simplest and dumbest way to compare the two different assets is just taking percentage totals over the last 12 months and comparing them to each other.

My duplex value rose 21% over the past 12 months

And the stock market rose 30.72%! (using Vanguard Total Stock Market Index Fund ETF (VTI) as comparison.

Looking at it this way, stocks win by far.

But, this isn’t really a fair comparison because my duplex is leveraged.

At this time last year, the amount of equity I had in the duplex was only $115,098. (Prop value – mortgage + reserve cash).

With the new valuation, including principal paydown and positive cash flow throughout the last year, today’s equity total is now $161,152.

This works out to be a 40% increase in equity, which is of course much higher than the stock market’s return of 30%.

Pretty interesting how leverage can supercharge your returns. So for those of you who think all mortgages are evil… think again. Sometimes having a mortgage works to your advantage. In hindsight, I would have done even better if I did a cash-out refi last year. Maybe I’ll consider that this year? 🤷‍♂️

In other news…

We Got a New Roof

It’s a 25-year, shingle tab roof with new felt, aluminium vents, pipe jacks, drip edges, and about 10 other roofing terms I know nothing about.

Anyway, here’s what it looks like…

Quite underwhelming if I’m being honest. Roofs are ugly. 🤣

But, the good news is this roof only cost me $2,310. Earlier this year we had a big hail storm which resulted in an insurance claim. Since the damage wasn’t horrible and there was no urgency, we waited many months to do the replacement. The $2,310 out of pocket is my insurance deductible.

Now we don’t have to replace it again for the next 25 years. Or, until the next horrible hail storm comes 😅

And the last bit of news…

We “Found” $1,100 in Missing Rent

This story begins way back in early 2018… We had a bad tenant back then, and they were always late on rent. They ended up moving out suddenly, trashing the unit and vanishing with unpaid rents.

Here’s the lovely mess they left for us on the carpet.

From memory, it was a pretty quick turnaround. After new carpets and cleaning, we had the unit spic ‘n’ span and rented out to someone new within a few weeks. No big deal.

But it set us back about $3k after we applied their forfeited security deposit.

After chasing the tenants for a few months, we just handed the debt over to a collections company. The collections agency chased them up for over 3 years! And last month, the old tenants settled their debt for $2,200!

The collections company took a 50% cut, leaving us $1,100 in recovered rent.

Not a full recovery from the $3k we lost 4 years ago, but not bloody bad for a debt we had completely forgotten about.

I don’t know who this tenant is or why they decided to finally settle their debts…But my faith in humanity is somewhat restored knowing that people out there are taking responsibility for old actions and are trying to get out of debt. Honestly, I have half a mind to track down these old tenants and just give them the $1,100 back, just to encourage them to keep working on their financial situation. (This is why I am such a bad property owner — I’m a softy!)

Welp, that’s all I got for now.

As much as I complain about rentals, sometimes they’re fun to own :)

Happy Friday! Have a killer weekend! 😎

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  1. IF - Impersonal Finances December 4, 2021 at 1:39 PM

    Love the forgotten rent income! Obviously sucks that you got screwed out of it a few years ago, but that’s literally found money today! And I’m sure an interesting learning experience as a landlord haha.

    1. Joel December 5, 2021 at 9:36 AM

      All the ups and downs as a landlord help you grow a thicker skin. That’s why I like to celebrate the little wins (even though this event technically is a loss) it’s important to laugh it all off and keep chugging along. :)

  2. Mrs. FCB @financialchainbreakers December 6, 2021 at 8:50 AM

    OMG I lose sleep when my tenants don’t pay on exactly the 1st of the month, even though they have until the 5th. So your situation sounds like a nightmare, even though it could have been a lot worse. Well done.

    1. Joel December 6, 2021 at 10:09 AM

      I used to lose sleep about this stuff. But then I started caring less and less (and selling our properties is helping, too). Some things are just out of my control, so i’m doing my best not to worry about it (harder than it sounds that’s for sure!!)

  3. old fart December 8, 2021 at 9:50 PM

    I have a duplex I’ve owned since 1980? (I’m an old fart) and used to deal with collecting the rent, screening tenants, repairs, etc., etc.). I ended up switching it over to a property management company that charges 8% of the gross rental….. Best thing I ever did!

    My involvement now is a once-a-month email I receive stating $~1800 dollars has been deposited to my checking account. There are one-off communiques about needing new carpet or a patio door replacement, but overall, it’s worked well for me….

    If ya don’t look the hassle of dealing with the minutia with tenants, this is an alternative.

    Finally, I purchased the duplex for 70K, Zillow says; it’s worth 280K with a depreciated value of 40K. . Lotta capital gains for me if I sell it, gotta love capitalism!

    1. Joel December 9, 2021 at 10:02 AM

      Had to laugh at the name. My grandpa calls himself old fart. Even today when he writes to us letters he signs his name OFGP (old fart grandpa). Anywho, love that your duplex has worked out so well over the years. Having steady income is the goal, and appreciation like that is always nice too!