For the first time, I experienced one of the things that most landlords dread.
A tenant did not submit a rent payment!
It’s dreaded because some landlords have a mortgage and may not have enough reserve funds to cover bills like insurance or property taxes without receiving the monthly payment.
Yes, I have a tenant who is using the Housing Choice Voucher Program (HCHV) and I didn’t receive payment for 3 months. Yes, from July through September, I didn’t receive rent money. My first thought was to panic, but I know I have a great property manager and a responsible tenant so the panic didn’t last long.
The tenant did what she was supposed to do in a timely manner. I called myself and spoke to several employees at the HUD office responsible for the area. During my calls, I found out they were experiencing a lot of turn over and my tenant’s case worker changed about 3 times before the issue got resolved which is what caused the tenant to be behind in rent.
When it was all said and done, I received back pay and I’m glad I didn’t go through the process to evict the tenant because it wasn’t the tenant’s fault. I’m also glad that I had a reserve fund to cover cost when things like this happen.
Bottom line, just because you have rental properties that are cash flowing doesn’t mean that you won’t experience difficult times and you must prepare for them.
A couple of months ago, I wrote a blog post about receiving a message from my Property Manager. The neighbor’s dog had come upon my porch and tore up the carpet.
That was in August, it’s now October and my Property Manager sent me a text of what the porch looks like now.
It is decorated beautifully for the fall weather. It looks like a porch you would see on HGTV. It has a dark brown carpet now. The tenant decorated a couple of end tables with orange and white pumpkins on them. She also has a scarecrow and fall welcome signs.
It’s all so tasteful and I couldn’t be more pleased to have someone taking care of my property. It has a special place in my heart since it was the first home my mom bought and paid off. As long as I own it, it will always remain part of our family.
If you read the first part of this story, check out the blog post.
I’m going to breakdown how much money I actually earned on the one I received recently.
The delinquent amount on the property was listed at $319.38.
I overbid $25.00 which means I paid $344.38.
The owner had accrued $57.49 in interest.
I received a check for $376.87 less than a year later.
$376.87 – $344.38 = 32.49.
I made a profit on one tax lien of $32.49.
That is a little over 9% interest I earned.
YOU CANNOT GET A RETURN LIKE THAT WITH A REGULAR SAVINGS ACCOUNT!
This year I have a better strategy. I wrote a 9 step checklist for myself to follow starting from reviewing my past purchased tax liens to placing pre-bids. It’s a similar checklist I have written about in previous blog posts. The checklist is in a specific order because there are things I have to do before pre-bidding starts. In 2020, I lost money and I wrote about in Another Tax Lien Redeemed and A Lesson Learned blog post.
In order to avoid this moving forward, I will stick to bidding 15% or less.