Webzter
Full time employment: Posting here.
- Joined
- Jun 29, 2007
- Messages
- 567
Herein is the tale of my biggest financial mis-step. Let it be a cautionary tale of woe to all. Being a landlord is great; being one when you're not ready for it is dangerous.
So, for quite a while we've been trying to examine where we want to go with our lives. We've made some great friends here in Minnesota but it's never felt like things "fit". One place Dawn and I love more than anywhere we've been is Marquette, Michigan. But, there aren't any jobs there so we knew we could never make it happen. That's when we hit on the idea of building up a stable of rental houses there and eventually growing passive income from those to the point where we could move there (sort of a 15 year plan for happiness).
We put a ton of effort into finding the right house to jump into the market with. I'd say we looked through 200 houses online, and then another 30 in person before settling on one. It was a single family home in outstanding condition and in a prime rental area (one block from a bar, a restaurant, a grocery store and a liquor store, three blocks from the hospital and four blocks from the university). Houses there typically go for $300 a bedroom so, with a 4 bedroom house, we'd be right at $1200 a month no problem. However, we wanted to attract slightly better tenants and, preferably, rent only to females. Now, obviously, you can't discriminate like that, but we had an idea.
One of the things we noticed with all of the rental houses we went through is that, as a rule, college students don't own beds, much less furniture of any kind. So, to get rent up a bit, we furnished the house with beds and bed frames. That put us at a marketable value of about $1300-$1350; enough to replace the cost of the mattresses every year if needed. To push things over to attract female renters, we purchased more feminine frames and painted with pastel neutrals.
We also hooked up with a well-regarded property manager that seemed like she'd do a great job of managing the property for us. She had a couple minor tasks to line up for us, namely getting a railing around our second story "walk out on the roof" thingy. Unfortunately, she didn't quite seem to live up to her reputation and never quite got around to adding this railing... which, while not required by the city to meet code, felt like a huge liability (drunk college students with access to the roof. Bad idea!)
Well, we realized a few things. Being mentally ready for something isn't nearly the same as being emotionally ready. Dawn ended up with an anxiety disorder from her job at Target (100 hour weeks and being responsible for critical systems will do that to a person). Between the property manager's unresponsiveness, and realizing that we were two states removed from a property we had no control over led to a lot of turmoil.
We ended up pulling the plug on things the very night that four college girls had stopped by to pick up rental applications. In a sense, our plan worked perfectly (we got four women, just like we wanted) and failed miserably (we weren't emotionally ready for what it'd be like to be landlords).
We sold the house, at a huge loss, (that's another story), but we learned a lot along the way. Probably the best life lesson for us is that we went through an emotionally draining, stressful period and came out the other side more connected and committed to each other. We're not always sure if that was worth the $30,000 tution for this particular course in the school of hard knocks, but I think it all worked out.
Bottom line, in addition to knowing if it makes financial sense to get into an investment, also know if it fits with the rest of your life and needs.
So, for quite a while we've been trying to examine where we want to go with our lives. We've made some great friends here in Minnesota but it's never felt like things "fit". One place Dawn and I love more than anywhere we've been is Marquette, Michigan. But, there aren't any jobs there so we knew we could never make it happen. That's when we hit on the idea of building up a stable of rental houses there and eventually growing passive income from those to the point where we could move there (sort of a 15 year plan for happiness).
We put a ton of effort into finding the right house to jump into the market with. I'd say we looked through 200 houses online, and then another 30 in person before settling on one. It was a single family home in outstanding condition and in a prime rental area (one block from a bar, a restaurant, a grocery store and a liquor store, three blocks from the hospital and four blocks from the university). Houses there typically go for $300 a bedroom so, with a 4 bedroom house, we'd be right at $1200 a month no problem. However, we wanted to attract slightly better tenants and, preferably, rent only to females. Now, obviously, you can't discriminate like that, but we had an idea.
One of the things we noticed with all of the rental houses we went through is that, as a rule, college students don't own beds, much less furniture of any kind. So, to get rent up a bit, we furnished the house with beds and bed frames. That put us at a marketable value of about $1300-$1350; enough to replace the cost of the mattresses every year if needed. To push things over to attract female renters, we purchased more feminine frames and painted with pastel neutrals.
We also hooked up with a well-regarded property manager that seemed like she'd do a great job of managing the property for us. She had a couple minor tasks to line up for us, namely getting a railing around our second story "walk out on the roof" thingy. Unfortunately, she didn't quite seem to live up to her reputation and never quite got around to adding this railing... which, while not required by the city to meet code, felt like a huge liability (drunk college students with access to the roof. Bad idea!)
Well, we realized a few things. Being mentally ready for something isn't nearly the same as being emotionally ready. Dawn ended up with an anxiety disorder from her job at Target (100 hour weeks and being responsible for critical systems will do that to a person). Between the property manager's unresponsiveness, and realizing that we were two states removed from a property we had no control over led to a lot of turmoil.
We ended up pulling the plug on things the very night that four college girls had stopped by to pick up rental applications. In a sense, our plan worked perfectly (we got four women, just like we wanted) and failed miserably (we weren't emotionally ready for what it'd be like to be landlords).
We sold the house, at a huge loss, (that's another story), but we learned a lot along the way. Probably the best life lesson for us is that we went through an emotionally draining, stressful period and came out the other side more connected and committed to each other. We're not always sure if that was worth the $30,000 tution for this particular course in the school of hard knocks, but I think it all worked out.
Bottom line, in addition to knowing if it makes financial sense to get into an investment, also know if it fits with the rest of your life and needs.
