Small business owner… Learning through mistakes

You may or may not know we bought a couple houses in Reno in 2017 and 2018. This was the start of our small business Rhyolight, LLC. After tooling around in the RV for a year we did our research and decided to start a business that could help us get income without having to be in one place all the time. Reno was shifting and growing with new businesses moving in and there was a shortage of rentals. The second house we bought was a fixer upper, we bought way under market value and was in a supposedly “good neighborhood.” We are able to make a bit of money on that one and have kept the original tenants for two years so far. That was the “good business decision.”On the other hand, the first house we bought was in a neighborhood known locally as “dangerous.” We were unaware of this perception. To us, it’s a cute little house on a large property. It’s close to the interstate, University, etc. We thought it was great and bought it at market price. Buying at market price is the part that bit us in the butt! By doing this, and then spending about $25,000 adding HVAC, new garage door, new fence, new flooring, etc we priced ourselves out of the rental market. Not out of the market for Reno, just for this neighborhood. Basically, the rent we had to charge was too high because of the perception that this is a “bad neighborhood.” Which, it’s not.
So, I (it was all up to me as I am the manager of the company; Andrew has a full time job) took chances on risky tenants, with improper ratios of income to rent and less than stellar credit scores. Out of the three sets of tenants we had at this house one group was solid. They paid on time and cleaned out as they left. The other two basically had to be evicted. This was VERY difficult for me as I am a bleeding heart by nature (I was an elementary school teacher).I’m now in the process of repairing the damage, painting and prepping the property one last time. Fortunately, we completed the upgrades slowly and matched the money we put into the property with the increasing sales price of homes in the neighborhood (good business decisions I made, yay!). We are still above water and will likey make money on the sale. All in all it was a good business opportunity.
This house also provided me so many great opportunities to learn. I’ve learned that sometimes giving people the benefit of the doubt works out well and other times not. I’ve learned that people lie (even if they don’t mean to or don’t think they are). I’ve learned not to take insults, lies and disrespectful behavior personally. I’ve learned a ton about being a small business owner and manager, making morally and emotionally draining decisions, and getting help from legal and other professionals as needed. I’m so grateful for all our tenants (especially the difficult ones) and this house! I am also grateful for the really wonderful neighbors in this neighborhood.
We will put the house on the market soon.

***Update: We had a full price offer on the day we listed the house! Closing is scheduled for March 17!!

Repairs after tenants