I am definitely thinking that commercial RE is the way to go from both an appreciation and rent standpoint and I may consider this rental as being my only residential, unless of course I run into a killer steal.

I typically suggest retaining 25% of gross rents for either residential or commercial to cover contingencies (vacancies, repairs & maintenance, etc.) … when the fund gets too large, you can consider moving some back into investments (but, keep putting aside the 25%).

Something I’ve thought about is the amount you want to set aside for having a rental vacant. Granted that a single family home is more likely to see this, I would think that undercutting your competition will help ensure that your property is not the one that is sitting vacant, as long as you are not losing on it. I would also think that inserting annual rent raises, at least keeping par with the COLA (if you and Jeff are familiar with that (Cost of Living Allowance), “inflation” for the rest of us) then the rent will automatically grow to cover the new mortgage (which I assume you will now have “Fixed”? )and I would suggest a clause that addresses the rent would also rise based on the market conditions, but no less than a fixed amount per year (say $50-150, depending on what would be 2-3% or whatever inflation rate reflects a Market Basket of Goods for Louisville KY). With so many losing their jobs, you don’t want to end up with deadbeat tenants or a long vacancy because they can’t meet your rent rate. I am not sure what your major industries are, but I wouldn’t want to have to rely on the courts to help me evict a tenant who’s fallen on hard times (nor want to be the one who does it either). Just my thoughts on that…using a different strategy to be the one who’s not vacant (and perhaps keep them respecting the property? it sounds like it’s a nice place, a home)

The MBA program at OSU forced the teams (we were all teamed up) to do what Jeff discovered as well. The professors made sure that we did not have the time to do all the work that needed to be done, so we had to depend on each other to do parts and “come together” – I wish all my coworkers could always have been in such a program – we called it a “collegiate” atmosphere where I just worked, but even so, there was a much more gung-ho attitude in the program. Jeff seems to have some good ideas about those who need a little more hand-holding. I think my first hire (the one I left behind to fill my vacancy now) was a bit more that way than I expected. (Maybe I can discuss with you off-line one day Jeff and get some pointers so I am more cognitive on my next hirings )

@ Adrian – I have it already, it’s a great read!

@ Mark – You got it Mark, now’s a better time than ever to refi! I’m amazed that i’ll be positively geared on a home that i’ve only owned such a short time after refinancing, but the home is in such a phenomenal part of town that I couldn’t dream of selling it.

http://www.amazon.com/E-Myth-Physician-Medical-Practices-About/dp/0060938404

“The E-Myth Physician: Why Most Medical Practices Don’t Work and What to Do About It”

The hardest part you will find as you move forward leading your business is learning that you can trust others to do their job (although some need more monitoring than others) and that the result is what’s most important rather then the approach.

My greatest successes as a leader in the military started to come when I realized I couldn’t do it all on my own and that I HAD to rely on the good work of others. Most of your future followers will not do the work “exactly the way you would.” Overcoming this mental hurdle and letting go in that regard will multiply your successes quickly.

I look forward to watching it happen.
Jeff

It’s the way I started out for myself, but this year i’ve taken steps across the bridge to the other side as an owner.