Scare the Real Estate Investor Right Out of You
It was a Tuesday night at the Even Steven Money household, not a creature was stirring not even a mouse, but we did receive a text message from one of the renters asking if our heat was working as theirs was not. Since our home was built right around when the Cubs won the World Series this was not a huge surprise, so I went down to check what I thought was the furnace. We had the heat go out once before and all we needed to do was put a flame to the pilot light and we were in business(thanks YouTube). However this time the pilot light was lite, but not in the same way it was before. This flame looked like a candle was lite and before it looked like a campfire was started. With our detective skills we did see some water where it shouldn’t be, but didn’t think much of it as we had a plumber recently fix a pipe that leaked a few months ago. What would you do next?
Since we don’t know much about furnaces, boilers, or hot water heaters we decided to set something up for Thumbtack, where you provide the project details and scope of work then potential professionals bid on the project, we used it before and received very competitive bids on our project. The more pictures and details you provide the more accurate they can be with the projected cost. Since we had limited information on what was actually wrong we were looking more for a diagnosis, we received an inquiry almost immediately and the great news was they were flexible and could be their the next morning before Mrs. Even Steven went to work. Since the renters only had a portable space heater, the sooner the better for everyone involved. After the heating and air guy took a look, he basically told us we hired the wrong guy……Oops. It turns out that what was not working was the boiler, the 1st floor runs on baseboard heat so the boiler which acts to heat the 1st floors was not working. He took some pictures and sent them to a colleague to give his diagnosis on what could be done, our hope was just a simple repair, like anyone hopes that they need to replace the entire thing.
After opening the boiler up to take pictures we saw the real issue, one of the pipes had been leaking and caused everything to rust, and figured a new boiler would be needed. Who wants to invest in real estate, raise your hand? What no takers? Don’t worry real estate is easy it’s all handshakes and bank deposits:).
We wanted a second opinion of course, so we called someone who we worked with previously to take a look and see if it could be fixed. He was very familiar with the plumbing aspect of it and told me he could try to repair it, but since the pipe that was leaking was connected to the boiler itself and had rusted most of it, he didn’t believe even the fix was going to be a long term solution, he mentioned that he hoped it would make it through the winter, but did not expect it to last more than a year or two. Good or bad that’s what I wanted to hear, could we fix it or did we need to replace it. After we opened things up I could see what he meant, much of the boiler itself was rusted and he also showed me a couple different pipes that should be replaced and perhaps a pipe where the original leak occurred. Well it had been confirmed we need to purchase a new boiler. Insert sad face here.
The next step was to get bids, the original person from Thumbtack was able to provide us a quote of $2700, Real Estate Investing anyone? I did not have luck with everyone on Thumbtack or using Yelp, which I’m not entirely surprised since it’s winter and every Tom, Dick, and Harry(I don’t know where that came from but I always laugh a little when someone uses it) needs a repair on their heater. Next I contacted Greg who is the contractor who originally rehabbed a good amount of our home, while he is very busy and usually works on larger projects he will do small projects and repairs almost as a show of thanks. I’m guessing building a home from the ground up is more lucrative than installing some basement windows for a couple hundred bucks like he did for us a couple years ago. At the time when I contacted Greg we were trying to figure out if the boiler could be fixed, I had already scheduled Greg to the house for Friday morning, I sent a few pictures and asked for an estimate. At this moment you are hoping it will be hundreds less than the competitor, instead it was about the same at $2800. In my head I was hoping for $2000, after looking at boilers online at places like Home Depot, Menards, and Google Shopping, I realized I was on the low end since a similar boiler at some of the discounted online stores would at minimum cost between $1500-$2000 just to set it on our basement floor and I’m not much a DIY guy, but I think you have to take them out of the box to work. The $1500-$2000 doesn’t’ include any parts, tools, salvage, labor, or expertise involved with installing a boiler. So I had 2 quotes that were similar this made me feel that this price was accurate, but I didn’t stop there because I WRITE A MOFO BLOG ABOUT CUTTING COSTS, PAYING OFF DEBT, BEING FRUGAL, INVESTING, DIY LANDLORD AND PROPERTY MANAGEMENT. I may not be like 1500 Days, Frugalwoods, Big Guy Money, or Mr. Money Mustache, who have been known to get knee deep in a DIY project, but I am here to get the best price for the best work. I went and received a 3rd bid from someone experienced with boilers, who had good reviews on Yelp and even mentioned having a “boiler guy” from multiple people. He was able to stop over same day and provide a price quote, the bad news is it was $3900, a full thousand dollars above what the other two quotes I received. While a specific brand of boiler was mentioned after some research it was made by the same company of my current boiler, so it seems most of the cost was a markup of price and labor. Who would you go with?
We decided to go with Greg, the contractor who had previously worked on our house, in fact one of the guys on his crew installed some old school radiators in our garden unit apartment at a great price so we were familiar with his work. As of today we are expecting to shell out $2800 to install a new boiler, makes you want to run to your local real estate guy and ask for a 1908 multi-unit home, right?
There are more steps in the process of this Non-DIY project, but I’m still calling it DIY Property Management, just think you could pay someone 6%-10% of your rent to take care of this. I’m curious has FI Fighter or The New York Budget had any experiences in repairs and what the process entailed for a turn-key property with property management? Have any of you had to go through replacing a furnace or boiler in your rental or current home? No Nonsense Landlord, this is probably your bread and butter up there in Minnesota, did I strike out or hit a home run or something in between? Any other readers out there how do you think I did? Would you have done the same thing?