My First Year Being a Landlord
In March 2007, I accepted a new job, relocated to a new state, and contemplated what to do with my first home when I wrote To Sell or Rent - That is the Question.
Once I made up my mind to rent my home, I went on an All-Star Tenant Search.
In less than 30 days, I found suitable tenants and was pleased with my selection. They paid the rent on time and I was a happy landlord. That is, until 5 months later when they threatened to break their lease…right in the middle of the Thanksgiving/Christmas holiday season!
When problems in paradise are mixed with affairs of the heart, the result is a bunch of ish gone wrong. Unwilling to intervene in private matters, I kindly informed my tenants of “their” legal obligation to me and told them to make a decision ASAP. Fortunately, an interim solution allowed 1/2 of the dueling duo to honor the remainder of the lease.
After the full 12 months, they were gone. Whew! And I conducted my very first rental property move out inspection. Boy, was I in for a surprise! Dirt, crap, and more crap.
After the repairs and clean up began, I received a rental property update from my maintenance guy. Things were so bad, it took him almost an entire month to repair, paint, and clean the property to make it “good enough” for rental again.
The total damage?
$200: Repair and maintenance (labor only)
$200: Paint (labor only)
$100: Landscaping (labor only)
$100: Carpet cleaning (labor only)
$300: Household cleaning (labor only)
$378: Supplies
$1,278
*sigh*
With a $1,900 security deposit (including a $500 non-refundable pet deposit), all was covered, but still a PAIN in the AZZ to deal with. They also left behind an unpaid water bill and a partially paid gas bill. Boy, they better HOPE they NEVER have to use me as a rental reference! Hmph!
Anyhoo…
This past Saturday was “D” day - the final walk through after all repairs were complete. When I entered the front door, I felt…uh, what’s the word…indifferent. Although I was pleased with the end result, especially considering where we started, it just didn’t feel like my home anymore.
After collecting 12 rental payments, conducting 4 quarterly inspections, experiencing one horrifying move out inspection, 3.5 weeks of grunt labor, over $4,000 in rental property expenses, and no rental income since June - I don’t know if I want to be a landlord anymore. I’m not cut out for the risks and the unknowns. My gut is telling me to sell the property.
Even if I have to do it at a loss.
~*~*~*~*~*~Work to achieve, not to acquire.
And always, BE FABULOUS!
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26 comments:
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Housing, Retirement, Investing… and Michael Phelps! (Pingback), 20 August 2008, 9:30
[...] My First Year Being a Landlord Any thoughts that I had about investing in real estate came to a screeching halt after reading this article. It sounds like a huge pain. [...]
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Have you read the Fabulous Financials comment policy lately?
If you are going to break even or make money..sell. If you will have a loss…rent again or at least until the real estate market regains. Unless, of course, you need the loss to offset your income during tax time.
Landlording is not easy. It is a learning experience and even the best landlords have bad experiences. At least you had enough of an security deposit to cover the damages. Hopefully, you already have an ad up to get a new tenant. Also, explore a property manager. I am contacting one for my rental property. For me, it will be worth it to have one.
It seems very exhausting, time consuming, and a energy drainer, follow your first mine and if selling is what you decide to do, go for it girl! It’s a shame the way some people live, like vikings and sh** and some people would have the nerve to want their security back. You know what I’m thinking, they probably demolish your place purposely because, they wanted to break the least early and you didn’t allow it and that’s when they became unhappy campers, that’s what I’m thinking and I could be wrong….losing the security deposit was nothing for them.
Have they call and ask were they getting anything back? I bet not!
They no they messed up.
Do what you have to do Sistah, I know you will make the right choice:)
Good Luck!
Peace & Blessings!
I feel your pain in my gut! There is not enough wine for residential rentals.
I have my property listed, evidently for cheap thrills. There are tons of properties on the market, but they are not even being glimpsed at in my area.
I go on the premise that God will take me where I need to be.
This sounds like a bad experience, but it could be worse. You don’t think it was a learning experience the first time around and the next time you will be more prepared? I dont like hearing of you taking a loss. But I guess peace of mind is worth more than the money you’d lose.
Another option could be to use a property manager if you were to keep it and rent again. I don’t know a lot of details with property managers - I’m sure they take a fee out of the rent collected and they would handle all of those headaches that you just describe. I don’t know about the housing market where you are but you may have to carry the mortage longer than you want to if you decide to sell. Just a suggestion.
Reading is fundamental - I just noticed the 1st post already suggested a property manager.
Have a great day!!
Ya know - I’ve read your heartaches and headaches with the rental property and I’m sitting here thinking “why is she not selling this place and buying something of her own in VA???” But maybe that’s just me.
Have you considered a month-to-month or even a 6 month lease? If you owe more than what you think you could sell the house for, keep it for a little while until you owe less than what you think you can sell it for. Is real estate that high in NOVA that you don’t think you’d be able to afford something of your own? Either that, or have you considered an investment property in NOVA so you don’t have to drive 2+ hours each way? Why did you rent out the townhouse in the first place? Think of what your goals were/are with that and use that to decide what you want to do. Good luck in whatever decision you make!!
MC
Oh how I feel your pain. I decided not to rent my last house in Atlanta because my heart was too attached to it. I knew that any renter I found would not take care of that house so I sold it. When I drive by that house whenever I’m in town, I still get a little ticked at the current landscaping. On the other hand, I am renting my other house to my baby sister. That was my starter home and I never got real attached to it. I’m glad I didn’t because every time I go by there and look at the house I just shake my head and add up all that I’ll have to do to get is ready for sale next year.
Thank goodness that the deposit covered it all! (Though it can’t cover the loss of rental income, sadly.) With something as volatile as landlording, I think that going with your gut is the best move. If the market is too soft right now, having a property manager might be a good interim solution, but it’s not worth the toll it takes on you otherwise. Especially since all of this damage was done since the last inspection!
I’m sorry things have been so tumultuous. There’s nothing I can say that hasn’t already been suggested, but I hope you find a decision that makes you happy soon, and I hope whatever it is, you make some money.
Seems like you just broke even, I hate to read books on real estate making it seem to easy. I would say sell the mugfugga, but in this market you probably wind up doing a short sale.
Hang on girl, The real easte market will pick up by the end of next year.
We are selling our rental property after losing our tenant of 5 years. We are making the trek out west to do a crash “revival” on the property and get it on the market. It has a new roof and a new A/C. We hope those two and the fact that we’ll pay closing costs will be enough to make a swift sale. Thankfully, we won’t be in the position to lose money. We stand to make $70K on the deal but we’ll roll it over into the current mortgage and possibly refinance it as well on the house we are in currently. We live 1500 miles from the rental and it is just too much to deal with long distance. I will not ever be inclined to use a management company either. We were ripped off royally while out of the country the first year it was rented. The tenantswere never the problem…just the management company!
It will be easier to find a buyer than a renter that wants to pay $1k for rent. Hopefully we can help someone become a home owner and end their agony and ours! Good luck on your adventure of managing your property.
I’m a big Dave Ramsey fan and he is really against becoming a landlord by default. You should go with your heart. As a landlord of a house in another state, I know the experience can be draining. However, if you get a good property manager it’s great. My property is section 8 so I don’t have to worry about getting my rent. Maybe you could consider this route. However, this option does come with some drawbacks. Good luck in your decision.
I am currently faced with the same dilemma and also have not had a rent payment since June. My family and I moved to the West Coast approximately two years ago and had only purchased our house 1 1/2 years prior. However, the relocation package and the career opportunity was great so we decided to move and get a tenant to rent out our home. That turned into a huge pain and with over 3,000 miles between us, it was definitely not the best of situations. After two years and countless hassles, we are now in the process of having our handyman fix it up and will be listing it with our agent within the next week. We will likely break even, but at least we can move forward without the aggravation.
As a fellow landlord, I would have to say hang in there and don’t throw in the towel yet. I was lucky my first time out. I didn’t do the proper credit checks, etc and just went on gut feeling. So far, I’ve been right. My tenant has been with me for over two and a half years and she has signed a lease thru July 2009.
If I were you, I would probably hire a management company to handle everything for you until the market turns around. Maybe by that time, you may have changed your mind and decided to keep the property.
Listen to your gut. You have already moved out. Maybe it is time to move on.
The house is beautiful, all I can say. If it was in New York, I would not hesitate to buy it - and my daughter painted her room same blue color as your BG did hers, so she would be probably up for a trade
too bad it can not be moved to New York, the house I mean
Thanks for posting this. Realtors always tell you the upside of owning a rental property … it’s good to finally see the “other” side. I’m sure whatever you decide will be the right decision for you.
I say take it back to the bricks..
I got ya back Gina..
but on a serious note.. and I already know you will do this..
DO WHAT’S BEST FOR YOU!
Maybe, review your options and re-consider tax strategy to offset the losses. To be more strategic.
What is life if we don’t task risks? Calculate the risk and protect it’s downside while using risk free options.
I’d keep renting it. You had a really rough time for the first year and it can’t get much worse than that. I’d bet that your next tenants won’t neglect the place as this one and they’ll respect the place. I wouldn’t throw the baby out with the bathwater.
Wow, I think it’s a cute place! BTW I did same: turned prior home into rental. By now you know the trade-offs…but..I’d say it’s really unfortunate you had such horrible tenants as a first experience.
Question: What is your goal with the property?
If you have a goal associated with it, it will clarify your decision making process for you and tie it to something larger (e.g. retiring early, place to move back to).
Wait I forgot to also say: Income producing real estate is the ultimate diversifier.
So when thinking this through, don’t just think of the larger goal the rental property holds for you, but also think about it’s role as a diversifier on your Balance Sheet.
Even if this place were making money, it seems like so much emotional drain and stress. Really, how on earth do you have time for this?
Thanks for posting this. I’ve been contemplating buying a rental property for the past year and I can’t seem to make up my mind. You always hear about the benefits of owning property, but not necessarily all of the grunt work and hassle involved. What percentage of your time would you estimate that dealing with property issues takes up per week?