Bye-bye rentals!
Thursday, Nov 9, 2006
Sometimes while my husband and I are planning, we will exhaust the possible scenarios ad nauseam. These talks last several hours. My husband will end the rabbit trail with, “And what if a meteor falls on our house?” The point being, you can plan wisely, but in the end, you need a smiling Providence.
I noticed an interesting pattern in a book I’m reading, Our Homestead Story. In the self-published book, the author recounts his comical journey toward a more agrarian or self-sufficient lifestyle, and just like my own life, things never go like they’re supposed to.
On the author’s farm, the cows won’t budge, the chickens die mysteriously, the orchard doesn’t produce, and the raccoons are merciless. I began to wonder last night if we both experience fiascos for the same reason (lack of good planning) or if we both just personify that cartoon guy with the black cloud and dust ball over his head.
A quick Google search revealed that the author (with eight children now, half of them grown) is still working at it though, which makes me think that the book’s playful tone is due more to a merry heart rather than flippant morbid resignation. In the book, the author stresses the importance of asking help from folks “in the know” instead of going hog-wild down a new path alone. This is good advice.
Last year, we purchased a few modest rental units. (I’m stressing the term, “modest.”) This move wasn’t so that we could make more money and thus buy more toys, but so that we could one day be financially independent, free from the corporate rat race. Greg doesn’t want to work until he’s 90, at least not at a regular job. All the gurus say that rental properties are the perfect passive income situation, which should make you wonder why all the gurus are cashing in on book royalties to tell you this if rentals are so lucrative. This is Clue #1.
In real life, all the people we talked with about rentals said, “They’re a headache.” Within the first month of our landlord tenure, we got to see what they were talking about. There were two death threats, an eviction, numerous repairs, our rent money stolen, and if that wasn’t enough—we received a letter from the city threatening to condemn the place in 30 days. (There’s more, but I don’t want to turn this into a book.) I figured, though, we were just getting all the bad stuff out of the way the first month so that we could get on with making a small return for our labor. In fact, it all seems pretty easy in comparison to that first month.
We have a contract to sell all of them now. We’ll have to fund our looming arthritis prescriptions another way. However, our education on the subject wasn’t for nothing. Why not use what we’ve learned? Like the author in Our Homestead Story, I’d like to dust myself off and keep going. After all, knowing what not to do is part of knowing what to do.
[Greg, dear. Honey. Don't have a heart attack. My next idea will be great. Trust me.]
Avoiding fiascos involves a whole lot of planning for possible outcomes. Accept the fact that there will always be stray meteors. As far as the little black cloud, though, all I can suggest is an umbrella and a merry heart.
and sends rain on the righteous and the unrighteous.
~Matthew 5:45b
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Oh Amy- we will get along great. Famous last words from me are, “Can I get us in over our heads again?” And Eric the helicopter pilot braces himself and gets ready to pick up the pieces… come on up to Kentucky. You’ll LOVE the room for crazy ideas!
Oh yeah- it is above the freeze zone, so those dust mites are not as bad up here I don’t think!
Comment by petersonclan (November 9, 2006 @ 5:08 pm )
Thanks for sharing Amy… You’re always such a wonderful encourager of how all things are hard work. Thanks for the heads up on rentals
Blessings to you~
Comment by kat (November 9, 2006 @ 6:47 pm )
I have this stupid dream of flipping a house. I know it would be a nightmare. I guess I’ll just keep watching HGTV and live vicariously through them.
Comment by Janet (November 9, 2006 @ 10:32 pm )
I loved that book Amy. It reminded me of our story. I am still writing it, but what I have already written can be seen at http://www.amazinggrazefarm.com/tails.html. I will pray that your rentals sell.
Comment by Marci (November 10, 2006 @ 2:08 pm )
Some things we will keep in mind for next time are:
1. Local. If you can’t afford to buy a place near you, you can’t afford to buy a place.
2. Stay away from “modest.” The way that lower income landlords make money is by not fixing things. Our conscience wouldn’t allow us to overlook the repairs. It nickel and dimed us. We couldn’t let it go in good conscience, and we haven’t met landlords yet who fix fixtures on low rent buildings. You can’t break even doing that.
3. Get tough. Send your “pay rent or quit” notice the first day. The stories are always entertaining so I do recommend hearing them. Don’t be shy about pointing out, “Your husband leaving you is not an excuse to not pay rent. You aren’t even married.”
4. Get used to aiding and abetting people who won’t work. You have no rights. Judges will use you as their welfare system. It doesn’t matter that the tenant has never paid you a dime. Give him yet another month, you pay the court costs, and then pay to have his furniture moved. We don’t want to hurt anyone’s feelings here. Welcome to a postmodern world. Go sign the petition for the Fair Tax while I’m on the subject.
5. Devise an incentive program for paying on time.
Comment by Amy Scott (November 10, 2006 @ 3:48 pm )
Wow!! We rented for the first several years of marriage and did everything we could to please our landlords, including doing repairs ourselves and at our own expense. I thought the goal was to NOT get evicted or fined - who knew it was as easy as paying on time
Thanks for the heads up on rentals as investments. It was a thought for awhile.
On another tangent, friends of ours do rentals but they get their tennants through HUD so that they are guarranteed rent will be paid. Honestly,I’m not sure how I feel about that entirely as I don’t like gov’t assistance, but it is an idea if you’re stuck with a rental you can’t get rid of.
Comment by emily gunn (November 10, 2006 @ 4:10 pm )
We are renters. We know the landlords well. They are renting to us instead of selling the place because home values continue to go up–but they are selling as soon as we move. Their previous renters included a doctor, a lawyer, and a quiet elderly couple. All were miserable tenants. We are paying a baseline mortgage, but we fix things ourselves (for the most part), pay on time or early, and aren’t disappearing with no forwarding address (like the sweet elderly couple. . .)
So, even though we have four active boys and are NOT easy on any material things, we are better renters than the respectable people these landlords have had. Which thoroughly convinces me never to be a landlord. . .
Comment by TulipGirl (November 16, 2006 @ 12:10 am )
REading through your blog. I got here from Cumberland Books. Very interesting. I am sorry that you had so much trouble with rentals. It isn’t for everyone. We have been full time landlords for 3.5 years and it is working. But we have had much education and many older wiser folks pointing the way to help us avoid pitfalls. The average landlord only makes it 2 years before they get out because of the problems you cited. We were desperate to make it succeed so I am sure that helped. There are/were no other real options for my dh here where we live. So God provides.
Comment by JEnnifer Dages (November 24, 2006 @ 11:27 pm )