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?

17 Responses to “Scare the Real Estate Investor Right Out of You

  • Sounds like a rough patch. I actually think that’s another reason I like turnkey investing actually. I know that I’m the type of person who would fret over DIY solutions if I was nearby and it would stress me out. I am sadly not as handy as you, MMM, and Mr. 1500 are!

    In terms of repairs, I get a quote – I do some online research to make sure that quote is reasonable – and then I pay it. It’s tough, but I have budgeted repairs into my math from the start, so I bit the bullet and pay up. The good part is, I don’t have to worry about getting it all taken care of on the ground.
    Dave @ The New York Budget recently posted…Cheap Eats: Lychee PorkMy Profile

    • EvenStevenMoney
      3 years ago

      Thanks for sharing on how you handle the repairs for turn-key investing. I think right now, I like the hands on approach and being involved in making calls and decisions on pricing and quality, etc. I could see the turn-key investing and the opportunity to be more hands off be a better approach for me later, I’m not sure if I would do that or go with a REIT at that point, but that’s for another day.

  • Sounds like you did pretty good! Around here, $2800 installed is a great deal for a boiler!

    And done correctly, hopefully you’ll never have to deal with it again. If the tenant pays for heating costs, then a new boiler is a good thing to advertise since it means they’ll be paying less during the winter. Here in Boston it’s common for landlords to brag about their “updated” boiler in their craIgslist postings.

    And thanks for the mention! Thankfully I haven’t had to tussle with replacing a boiler yet, though ours was manufactured the year I was born so I’m sure it’s coming… 🙂
    Mr. Frugalwoods recently posted…Weekly Woot & Grumble: Why We Celebrate Christmas In JanuaryMy Profile

    • EvenStevenMoney
      3 years ago

      That makes me feel good about the boiler, I suppose it all comes down to if they mark up the boiler itself then the rate the charge and I feel comfortable with who we went with. I’ll make sure to add it to the rental ad, hopefully everyone stays, but if they don’t big bold letters New Boiler!

  • Yikes- sorry you have to pay so much! We have done a ton of expensive repairs/replacements on our primary home and rental properties. I think I am finally used to it now.

    • EvenStevenMoney
      3 years ago

      Besides the initial rehab, I don’t think we have had a major repair so I do feel like I got punched in the stomach, but the good news is we do have the money in cash for this, otherwise I might be a little less comfortable paying that much.

    • I approach most of my repairs and rehab with 1 one principle “the monkeys are going to swing on it, so I better build it monkey proof”

      • EvenStevenMoney
        3 years ago

        Sounds like a good principal to have, must be doing all the work yourself so that’s a good move to start with also.

  • I’m not sure what I would have done. I’m sorry that happened though as no one likes unexpected expenses. 🙁 And I’m with you that there is only so much DIY I can do. I would make things so much worse, I know it. 🙂

    • EvenStevenMoney
      3 years ago

      It’s not that I wouldn’t mind trying to figure out how to install a boiler, it’s not high on my to do list either, but I’m proud of doing some of the DIY like you said, just not all of it. It’s that I have tenants who need this completed asap, I mean it’s a Chicago winter, thank goodness we have a couple electric heaters for them.

  • Repairs are bound to happen… With my local properties, I always went ahead and contracted out the rehab work before leasing them out to tenants… So, they are essentially “turnkey” properties before ever being rented out… Hopefully they will last a few year, or decade before any major work is required.

    For the out of state properties, they were acquired as being fully turnkey ready and a few companies actually do quite an extensive rehab (not just lipstick on a pig)… New furnace, water heaters, copper piping, etc. So they should also hold up for many years.

    I’m not really handy myself, but that’s a skill I’ll definitely want to pick up when I get to early FI!
    FI FIghter recently posted…Ask the Readers: How Would You Invest $100,000 Today?My Profile

    • EvenStevenMoney
      3 years ago

      We had a large portion rehabbed with our current property, fact is it’s from like 1908 so it’s bound to have something come up from time to time. I definitely think giving some of the dyi stuff is worth a try especially if you have time on your hands.

  • Just saw this post… Sorry, and Thank you for the mention

    I have replaced a few furnaces in the past year, three actually. I do it myself, along with another guy. I have also hired it out. I can save ~$500 if I do the work with another guy. Probably save $1,000 if I did all the myself without help.

    If you can buy a furnace, and then hire a guy to install it, it will be cheaper.
    No Nonsense Landlord recently posted…Tenant Deposits, How to Reduce RiskMy Profile

    • EvenStevenMoney
      3 years ago

      The good news is the guy we used for our rehab, basically does all side jobs as a favor and at as close to cost as possible, so we are really only paying for labor for his guys, it’s pretty reasonable as we have compared against other contractors.

  • Great Read

    I remember I had an issue with my 1st rental property. Part of the roof needed repair. $2200 worth of work. It nearly scared me to death to fix that problem. I had only had the house for 3 months. It was purchased at a foreclosure auction and me and my agent chose to bypass the inspection to get a better deal. Lease options and Subject 2 investing have been a better course of action.

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