Covid and Money Fever

Covid. Third time and pretty bad. Feels almost over after thirteen days. That Paxlovid’s a miracle medication, but I’m afraid I’ll rebound from it. All very scary for a 79-year-old with an immune system compromised by an anti-cancer drug. Very little fever though, surprising given how out of it and weak I’ve felt.

Actually, most of my fever has not been of the temperature kind. It was more about my money or, more accurately, my fear of losing control over my money. Moving patients forward a couple of weeks and letting the funds ride weren’t the problem. Our collection of small properties is, as usual, at the core of my angst. We had two renters in a duplex move out almost simultaneously. Two vacancies at the same time is a rarity for us but, of course, it would happen when I’m on my butt with Covid.

Re-renting a unit is always a costly proposition. You have the lost rent, the expenses of primping the place for the new tenant and the property manager’s cut of the first month’s rent. My impulse was to email my portfolio manager (who doesn’t like phone contact) for his re-rental plans, but I stopped myself.

For one thing, my wife Alberta has taken over responsibility for overseeing the real estate, so she can get comfortable with it when I pass. Less anxious to delegate than I am, her MO is to trust Brian, the manager. “Steve, stop it already, what are we paying him for if you’re going to get like this every time there’s a problem?” Plus now, she had assumed the task of caring for her ailing husband, all the while maintaining her half-time psychology practice and—an accomplished chef–insisting on preparing three healthy meals a day.

In fact, Brian is competent and reliable, though he doesn’t seem to give a hoot about cost. He wants to clear things off his desk by using his own tried-and-true (for him) vendors. They, of course, know there will be no competing bids for the job and have just been handed a blank check. Controlling cost is essential for us because we like to keep our rents reasonable. That way, we can entice good tenants to stay and avoid those harrowing turnovers.

Truth be told, I am relieved to have Brian to count on. We are getting too old for this do-it-all-ourselves stuff. Particularly now, with me frightened by my illness and Alberta frantically doing her thing while trying not to get Covid herself (miraculously, she has not), this is no place for heroics. If there was ever a good time to have an effective property manager, having a pair of vacancies while you’re going through Covid is it.

We ourselves are veritable dodos about the nuts-and-bolts of property maintenance and have undoubtedly been taken to the cleaners often over these forty-five years. Real estate investors knowledgeable about repair issues have a big leg up on folks like us. Either you do the work yourself or have the expertise to tell a straight shooter from a crook.

We made most of our money by purchasing small residential properties in good (but not necessarily great) neighborhoods from sellers in distress who were willing to carry back a first mortgage at submarket interest rates. We managed them frugally and allowed compounding to do its thing over almost half a century. There are, of course, no mortgages, it’s all free-and-clear. Hey, I know it wasn’t clean like long-term investing in broad market index funds. We made it work, though at considerable emotional cost. Whether I would play my hand the same way again is a story best told another time.

While I was sweating uncomfortably in bed from the Covid and debating whether to contact Brian, I got an email from him that got me to sit up. While conducting the routine move-out inspection for one of the empty units, Brian saw that the tenant had a dog—of course, in violation of the lease. The pet had scratched up the wooden floor in the entry hall.

The wooden floor! How much would the repair set us back? Two thousand? Maybe three. As a  psychologist, I often admonished anxious patients to refrain from “rushing to catastrophe.” That was easy to say to them, but now I was the patient.

I yelled downstairs to Alberta, who thought her rickety husband was in crisis. I was, but it wasn’t the kind she was worried about. When she trudged up from the kitchen, I gave her the scenario.  She was hardly fazed. She did agree to send Brian an email about the need to get two bids. It turns out that Mr. Efficiency had already arranged to replace the torn-up floorboards. He hadn’t asked us for authorization because the estimate was less than the $500 limit we had set as the criterion for requiring it. Under the circumstances, he felt justified subtracting the expense from the departing renter’s deposit refund.

Less than five hundred and out of the refund! I was momentarily placated and lay back on the pillow. Then, abruptly, I shot up again and tapped Alberta on the shoulder. “Brian can’t put an ad out until we agree on the new rent. We need a pow-wow and quickly.”

“Steve, you’re sick and riled up and you need to rest. You thought you could just pass the baton to me, but you can’t trust enough to let go. You’re almost as hands-on as your brother Richard.”

I could only lay back again on the bed and take in the indictment.

“You haven’t checked for fever in a while. Why don’t you grab the thermometer and see how you’re doing?”