This is part of an ongoing series about how I became the owner of a rental property in Florida while living in Utah, and all the adventures I have had along the way. If you’re just joining me now, you can check out the first installments here:
- Life As A Landlord – The Beginning
- Life As A Landlord – The Approval Process
- Life As A Landlord – Down Payment And Closing
- Life As A Landlord – Loose Ends
- Life As A Landlord – Classic Problems
- Life As A Landlord – Where is the rent!?
Yesterday my story of buying a rental property in Florida got the part where I actually closed on the property. Closing was pretty exciting! Today I’ll detail the fourth portion of the story; loose ends.
Even though I had closed on the property and everything was final as far as the bank was concerned, there were a few loose ends that had to be tied up.
Tying Up Loose Ends
First, when I transferred the $34,000 down payment back to the investment company, for some reason, the amount they requested I send to the bank was higher than what they actually transferred into my account. I was short almost $2,000 of my own money! That may not seem like much when dealing with a $150,000 property loan, but loans aren’t real money, right? $2,000 cash coming out of my pocket would mean no food for the month here at home 🙂
Then I needed to figure out how the rest of the transaction with the investment company would go, such as when and how would they transfer the investor incentives to me ($5,000 cash + a $5,000 escrow account in my name).
So I contacted the investment company and they were happy to cut me a check for the $5,000 cash incentive plus the money that I had to pay out of pocket for the down payment. They overnighted the check to me and all was good!
As for the escrow account, I was told it would be set up after everything else was finalized, the property management contract and fees were taken care of and things were on autopilot as far as the rental side of things were concerned.
Getting all the property management stuff organized was pretty simple. The property management company was technically just another branch of the investment company so they already had all the information about the tenant and the property. They sent me some paperwork detailing their fees which came out to about half a months rent ($600) for lease renewal (the lease had to be put in my name) plus %10 of rent payments every month. The mortgage on the home itself was about $970.00 so after fees I would be taking home just over $100 a month (1200 -120 -970 = $110) on my new investment. I was pretty excited!
(note: just for those curious, these management fees are pretty typical of the industry; 5-10% of rent collected, half a months rent for lease renewal and a full months rent for finding and signing a new tenant)
Again I called to inquire about the escrow account that was owed to me, and again I was put off. They told me it would be addressed later, or another person in the company had to be contacted to get it worked out. So, frustrated with that, I put it on the back burner and focused on just making sure rent was deposited to me, the new mortgage bill was set up in my online checking billpay and that it got paid on time.
Aside from the escrow account, everything was done! All loose ends were tied up and I had a nice big $1,080 check (the management company collected the rent and took their fees before I ever saw any money) coming to me each month roughly on the 18th, and I had a new big bill of $970 going out on the first of every month. I felt all grown up 🙂
Things were pretty smooth for a while after this point, but it was just the calm before the storm…
Image by velo_city