the one-third rule

It has been a while, so hello again! We have been all over the place this summer and have managed to neglect the blog, but that does not mean we don’t have things to share. It has been a bit of a level setting period. We got our 3rd short term rental up and going in late May and had our first busy season. All of our properties are in the Midwest where the cold months aren’t the months you run to the lake. 🙂 So this summer was interesting. We learned a lot and what I can tell you is owning a business is up and down and all around! 

I actually heard this really interesting concept not too long ago called the 1/3 rule. 1/3 of the time you are flying high and everything is going great, 1/3 of the time you are in a disaster state, and 1/3 of the time you are stable. I think we hit all three of these in 2 months this summer and I felt like it was time to share the lows now that we are back at our stable 1/3. If you can learn from our mistakes or downturns, we consider that a win. We know we have!

Let’s start out with the fun one shall we. We got our Lake Geneva home up and ready to rent only to find out that the realtor may have been incorrect about what kind of permit we could get in our area. We are not looking to rent for less than 365 days a year and the permit we can get was only 180 days. Not great for our numbers. Then we have 2 groups of guests come through and the air conditioner goes out. So, there is a guest there and it’s 90 degrees out and the air isn’t working. Luckily Wisconsin is full of wonderful people and we found an amazing company that came and fixed it in a day. But you still owe that guest a refund. Then the water heater went out on the next guest… So, we bought a home with pretty finishes but all the major things are OLD. Got all that fixed so we moved forward. 

THEN the guy that was there when the air went out, well his kid broke into our home at 4 am with a few of his drunk friends. Falling down the stairs on camera and going in the back sliding door a guest left open (luckily as I assume they would have broken it otherwise). This man is well known in the community so because we refused to drop the charges on his drunk 19-year-old, his friends starting harassing us and calling the city on us REGULARLY. Real neighborly! On multiple occasions I was ready to just sell it. I grew up in a small town and I know what being an outsider will do to a business. However, we decided to stick it out and see if they would let it go as summer settled. We have all the correct permits but the annoying calls from neighbors, police, and city officials was not pleasant. I still fear what the winter will bring but we have decided to keep it for a year and reassess. The numbers are working even if the neighbors aren’t! 

Moral of this story is check your own city ordinances and try to stay as discrete as possible! Police at your house a month after buying it really riles up the small-town gossip. 

Now we can head north up to Door County. Our two properties up there did amazing this summer. It has really been exciting to watch. However, cleaners are hard to come by and the ones you have are VERY busy. We thought having two would be perfect. Wrong! We went through 6. One of which just decided to not show up or respond to any of our texts for 2 weeks leaving the house uncleaned for a guest when they arrived. Needless to say, we are no longer working together. Another I had to spend 4th of July weekend searching for while on vacation myself because we had a cleaning coming up and no one to clean with a renter coming in the same day. We contemplated driving up to clean it ourselves! However, the women I found is wonderful and I am so glad we are working together. Her husband also conveniently works as a handyman on the side and was extremely helpful when our front door lock broke! In hindsight we should have been more prepared knowing the market would explode in the summer. And we should have had a handyman ready well before the summer months hit. Using your dad who lives 8 hours away is not the sustainable option. 

Now, back down south to Indiana to our long-term rentals. ALL of our air conditioners broke this year in Tipton. That’s 3 units if you haven’t been following along + the one in Geneva. Not to mention the 3 months we were without air and had to buy our primary home one as well. Needless to say, I know A LOT about the HVAC and condenser especially how much they cost in these three states! Then we had a few lease renewals go sideways and the property management contact we have finally gotten into a groove with left. 

Now none of this is particularly overwhelming on it’s own but ALL of this happened in June and July. It felt like we were bleeding money, time, and SANITY. However, the houses continued to bring in a profit and we managed to get no bad reviews (because I obsessively apologized and gave refunds when necessary). We had been flying so high getting all of these properties in a year, piecing together this puzzle, and seeing the future we wanted unfolding. We hadn’t really hit a rough patch. So, summer reminded us that if it were easy everyone would do it. 

We learned things we didn’t even know we needed to consider, we thanked ourselves for setting up systems (like the cameras when the kid broke in and making sure to get the right permits), and we also have amazing teams of people to thank for helping us get through all this summer fun in one piece. We will do more work to set those teams up BEFORE we need them next time so it doesn’t feel so UPHILL, but now we are in our stable 1/3 and feeling great. Now, I completely plan to derail that by buying something new soon. But in the meantime, we are coasting into fall, preparing for our first real year of income for tax season, and trying not to trip too hard into 2023! 

One thought on “the one-third rule

  1. Yikes, that’s a lot!!! Sounds like you handles it with Grace!! Hat a headache! Hoping that 1/3 stability lasts a long while!!

    How about getting a rental near us? Blue Ridge, Georgia is beautiful!
    😀Mimi and Larry

    Like

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