RL Property Management has been serving owners and residents throughout the greater Columbus area for a decade. Read on to learn more about Peter Lohmann’s start as a property investor and gain insight into how to grow your real estate investment portfolio.
How did you get started investing in real estate? Tell us about your first property.
My business partner and I bought our first property in 2008. We were young, right out of college and completely inexperienced when it came to owning property. We bought a vacant, foreclosed, single-family rental near Ohio State directly from the bank. The property was in quite a state when we bought it, but we flipped the entire thing ourselves, and instead of selling it, we rented it out.
We learned a lot about owning and investing in real estate from this first property and though we were figuring things out as we went, we were young, single, and able to self-manage it while still holding down full-time jobs. We still own this property today.
What was one thing that surprised you about the process of investing in real estate?
So much has changed since then that it’s hard to recall everything, but I do remember being surprised that we were even allowed to do it. By that I mean, I was basically a kid at the time, and the bank let us buy this house. What’s more, all we had to do was let tenants live there and we got paid! I remember thinking this was a really cool feeling.
Of course, we were young and naive, but it almost felt like we had uncovered some kind of secret knowledge, which we hadn’t. That naive view of rent coming in minus the mortgage equals profit has long disappeared, but I still talk to people who think that’s the case.
The reality is there are a lot of expenses associated with owning a rental properly, but the expenses are “lumpy.” You might go several months in a row where you have nothing, nothing, nothing, and then bam, a $4,000 water heater hit. Being able to forecast expenses and then set money aside for reserves is a learning curve most newbie investors have to go through if they want to be successful.
Do you remember when you had to make your first real expense payment on the property – when that bubble of naivety burst – and what it felt like?
While I don’t remember when we had to make our first big expense payment on this property, I do have a very clear memory of another incident that brought property ownership down to earth.
It was a year or two after we bought the property, and we got a call from the tenants saying the pipes froze. It was the middle of January, and we had to go over there after work to troubleshoot the situation. We discovered that the property’s crawl space under the house wasn’t insulated. Of course, it was freezing cold, dusty, and we couldn’t see anything since it was the middle of winter. We were running around with flashlights, tearing off the siding, and trying to figure out where the frozen pipe and leak were. Finally, we found the pipe, fixed it, reinsulated it, and put everything back together. The funny part is that while it solved the problem for that year, the very next year, it froze again in the same spot! We can laugh about it now, but such is the reality of rental property ownership.
Stay tuned to the blog to read more from Peter Lohmann and gain insight into the realities of rental property ownership. And if you have questions for the RL Property Management team, get in touch anytime.