The world was in the ‘crash’ mode of thinking, but Buffalo had already been on its uppers for years, and while the Baltics (where I lived at the time) was in a deep recession, things were already so bad that the crash barely registered in Buffalo.

The house was a pretty standard, single-family home that you might buy for cashflow – it’s almost 100 years old so creaked a bit but generally had ‘good bones’. 

The first tenant paid $400 a month and moved out a few months after I bought it – plainly wanting to leave on his own terms as he was expecting a rent raise. A lick of paint later, I rented it for $650 per month in 2010, which was a fair amount back in those days and threw off a whopping 30% gross yield. Fortunately, the same tenants stayed for a good 8 years and I only made a couple of rent rises to $750 a month until they moved out of town in 2018 and I had an empty house on my hands again, with plenty of wear and tear. The market value back then was about $80,000 so at almost 3x my purchase price, it was tempting to just put it on the market and take a profit.

When a house goes vacant after a long period of occupancy, there’s usually a big job to be done. But it’s also an opportunity to add value and improve the asset and the resulting rent. And when good landlords all do that, the area improves in value. 

It does cost money though, so I called on the help of Amex and did a full remodel of the house for $13,000 – 1/2 the initial cost of the house! 

However it was worth it, and I quickly got a great tenant (2 full bathrooms helped) who’s still there right now. They started at $1000 a month and since Section 8 is picking up the tab, I moved the needle to $1300 this year. 

I just refinanced the house and the appraisal came in at $190,000, justifying my decision not to sell, and the subsequent decision to update the house. 

However, with $1300 rent and $190k value, a gross yield of 8.2% is a far cry from the 30% I got when I bought the house – so technically, it’s now a sell. For this decision though there are other factors at work. The neighbourhood is on the up. The house is occupied, and so buyers would be limited to investors, not owner-occupiers who’d be less price sensitive, so on balance, I’ve decided to hold on a bit longer, and if these guys move out someday, maybe I can stretch to a magazine spread makeover and pass the baton onto a new family.