Deciding If We Should Become Landlords: Part 1

Could We Become Landlords?

One of the challenges we face as we work towards our goal of becoming financially independent will be deciding if we need additional income streams. Presently, the only revenue we have coming in is from our full-time jobs. But when I read other PF blogs, I am now wondering if we are doing enough in order to reach our goal of retiring early.

These other PF blogs talk mainly about doing side gigs like driving for Uber or hosting an Airbnb. While these gigs sound interesting enough, I just can’t picture either one of us picking up strangers in our cars or allowing strangers to move in – even temporarily. I admit that I’m a work in progress with my anxiety level, and that my mind runs faster than the Shanghai Maglev, but I keep hearing horror stories that I can’t seem to shake.

Another possible avenue would be to become landlords. This could be a more viable option where we chose to buy a detached condo. The reason why we decided to live in a condo is because we knew our careers would offer little time for maintaining our home. And before we purchased our condo, we did a great deal of research into the HOA, and were well aware of the potential pitfalls.

20160529_103332
Spring flowers in bloom.

Thus far, condo life has been exactly what we were looking for. We like having laws and restrictions because it keeps our property value up. The association does a good job of maintaining the property. We’ve only had one assessment for $1800 in the last 14 years, and it paid for a new roof which we thought was more than reasonable. Plus, our condo investment has reduced both our property taxes and homeowners insurance premiums.

In terms of becoming landlords, our property would fit the bill easily enough.

  • We wouldn’t have to worry about landscaping or snow removal because our HOA fee takes care of it.
  • Our home offers plenty of space where it has four bedrooms and two full baths.
  • We have a detached home with lots of land surrounding it which would provide a safe place for children to play.
  • We are in a prime location where the nearest interstate highway is less than three minutes away, and we are only minutes from the nearest shopping mall.
  • There are only a few condos currently being rented, so turning it into rental should be a fairly simple process.

When we looked briefly into selling our home during the Great Recession, the real estate agent assessed it at top value (for that time), and said that our home was in “immaculate, move-in condition” which could also help us sell it as a rental.

For all of these reasons combined, we believe that becoming a landlord is a possibility in our case. But we are also aware of the fact that being a landlord is not as straightforward as it seems, and that there is a lot to consider. So for the sake of Mr. FE’s sanity and my own, we’ve decided to take our time in weighing out the pros and cons of becoming a landlord over the next couple of posts, and decide whether or not it would fit our desired lifestyle.

Are you a landlord? If so, how is it working out for you? If not, any thoughts on becoming a landlord?

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24 thoughts on “Deciding If We Should Become Landlords: Part 1

  1. It will be very interesting to watch for your decision. I’m not able to offer any knowledgeable advice. Normally, I would feel that the stress of being a landlord would outweigh the pros but with the facts you listed, plus the fact that you’re home seems to be in such good condition, stress might not necessarily be a factor in your situation. Good luck!

    Liked by 1 person

    1. It’s a hard decision to make. We know we want to create some additional income, but we aren’t entirely sold on the idea of becoming landlords. It will be interesting to see what we end up doing since we still don’t know yet ourselves!

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  2. I was a landlord for about 7 years and I’ll be honest with you when I tell you that that is not for me. Why? Sometimes you get excellent tenants and other times you get tenants from hell; I went to court once, in 7 years, and although the judge awarded me what I asked for and I had receipts, pictures, statements, etc., it was very stressful; most tenants want to move out during Summer which means that your rental, hopefully will be rented again before kids go to school; you get phone calls during weekends for repairs and more; I had to talk to my lawyer because a tenant kept calling me every day for one thing or another when he just moved in rather than filling out the walk through form. Would I be a landlord again? NO. You have to have a pretty thick skin to do that. My rental was a townhouse with an HOA of, at that time, $65 which covered a lot of things like the ones you mentioned. Some people are quite successful at being a landlord and I don’t want to discourage you, but personally I’ve tried it and that is just not for me. The best of luck to you.

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    1. We really appreciate you taking the time to share your experience as a landlord with us! It’s a tough decision to make, which is why we are putting it out there so we can hear about experiences like yours, and hopefully arrive at a logical decision. Thank you again Marcela! We really appreciate it!

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  3. While I am not a landlord, I have to say that there are times that you’ll be lucky and not so lucky at many times as well. My sister is landlord and she has had both great tenants and bad tenants. She had no problem with the great tenants. But the bad ones, well, let’s say, she put back the rent money she received from these people to fixing the house. It was horrendous looking at the house when these tenants left. it’s like a tornado arrived.

    Good luck on whatever your decision will be. It would be interesting to see what you decide to do.

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    1. We are worried about the tenants we may receive and losing money on repairs. Our home is in good shape (although we could use some interior updates) and wouldn’t want to see it destroyed. Yet, we also realize that if you get the right tenant, it can be worth it in the long run. We just know that at this point, all options are still on the table when it comes to earning passive income. Thank you for sharing your sisters experience with us along with your thoughts on the matter. We really appreciate it!

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  4. We are landlords, we’ve rented out our first (condo) and now live in our house. I wrote a long post on our experience. We’d done well in terms of capital gains and the positive cash flow is now helping to pay our mortgage. But every situation is unique. I’m guessing in Part 2 you run will the numbers?

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    1. That’s good to hear that being landlords has worked out for you thus far. We do plan to share some numbers in the upcoming post. We are still awaiting two appraisals on what our home would be worth monthly, if we were to turn it into a rental. We should have these by the end of this week. We are also looking into management companies to see if that would be worth doing as well. We appreciate you sharing your experience with us!

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  5. I agree with the above commenters that your experience as a landlord will depend entirely on the character of the renters…which is hard to really know unless they are already friends of yours. On a side note, have you ever read Go Pro by Eric Worre? If being financially independent and having time freedom are your goals, that book is a must read. Let me know what your thoughts are about it.

    Liked by 1 person

    1. This really is a tough decision for us! We continue to hear stories that are both good and bad which makes it hard to know what to do. We’ll just keep working through the pros and cons until we find an answer that we are both comfortable with.

      I have not read that book yet, but love to read so I appreciate the recommendation! I look forward to checking that out!

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  6. We currently rent out our first house to a friend. The long-term plan is to fix it up and finish the attic so we can charge a lot more. Renting to our good friend decreases issues, but we’ve had trouble finding the time to work on renovations. One plus of rental property is the diversification of assets. My husband is really insecure about stock and bonds; it puts him more at ease to have physical assets he can see and touch.

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    1. It’s nice to meet you Harmony! It sounds like you were lucky in finding a friend who could rent it out. We hear you on the diversification aspect of renting. A lot of people (such as your husband) experience a level of uncertainty when it comes to the markets. This is partially why we are looking at the possibility of expanding our sources of revenue. Having tangible assets can help give that extra level of security in your finances. Smart! Thank you for the comment. We really appreciate it!

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  7. We rent out our basement room to interns and students seasonally. The best thing is that they are gone in three months and that we can skip a semester if we need a break. Out of the four we have had, three have been phenomenal. One was messy and inconsiderate and it made us miserable. There was so much tension in our house because of that. That is the only thing I would say about becoming a landlord – it could be really great or it could be really stressful. I think as long as you and your S/O put your relationship first then you will be OK.

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    1. From what we’ve been hearing thus far, it seems as though we have about a 60/40 chance at finding a good tenant. This is one of the reasons why we are also exploring the possibility of using a management company so we can properly screen the tenants beforehand. Thank you for sharing your story with us. We really appreciate it! 🙂

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  8. Good luck on whatever you decide to do. As a pure investment (never wanting to holiday in it) I think we’d prefer an REIT, to be completely passive and not have to do anything (plus no chance of a bad tenant etc etc). If we wanted to buy a holiday house maybe that would be different.

    Tristan

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    1. Thank you Tristan! We have looked into getting an REIT believe or not, and we may very well look into it again where we really are not sure we want to become landlords just yet. Thank you for the comment! We really appreciate it!

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  9. I personally couldn’t do it. I think I’d be a decent one (having rented for 10 years and dealt with so, so many shitty LLs) but I have no desire to take it on – I would find it far too stressful.

    Liked by 1 person

    1. A lot of the people we speak to about it feel that way. It’s definitely a tough decision to make in which all of the pros and cons need to be weighed out carefully. Thank you for the comment! We appreciate it!

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