Friday, June 15, 2012
Unfit to Be a Landlord
In 1962 my father sold his business and decided he needed to invest some of the money. So he bought a 1920s-vintage stucco house a mile and a half from ours, figuring he’d rent it out for a steady stream of income. That wasn’t how it worked out.
The place needed some work before it could be put on the rental market. Some of it — plumbing and wiring — had to be contracted out, and some of it we did ourselves. I have a vivid memory of going to that house with my mother and spending the better part of a few very hot summer days painting the interior.
For some reason I can’t remember the name of the first tenant. It was a family, and the man was in his late thirties or early forties with curly brown hair slicked down, as was the standard at the time. He used to drive over to our house on payday and settle in cash.
After a few months the paydays seemed to become less frequent, but when he had a good day at the track he’d come by and pay the rent — or part of it, anyway. For a couple of years he was chronically behind, but always managed to pay just enough to keep my kind-hearted father going.
Then one day the tenants up and left without any notice, leaving the place in need of repairs and my parents in the hole for a couple of months’ rent. There was another tenant after that, I recall, and the story was similar in its general outlines. My father decided he wasn’t cut out for the landlord business and sold the house. I had overheard enough snatches of conversations between mom and dad to conclude from the experience that I, too, would never be a landlord.
Stuff happens, though. Linda’s mother died recently after a long and full life, and we inherited her house. It’s a nice little place, but it’s in a location awash with foreclosures, which are depressing the market. Selling it now would be a bad move, so we have become what I swore I would never be. We are now landlords.
Even with a professional property manager, the landlord situation is putting a lot of stress in our lives. The ubiquity of foreclosures referred to earlier means that many of the prospective tenants out there have gone through foreclosure, bankruptcy or both. Even with decent jobs, they are just one income shock away from falling behind on the rent. If one of the kids needs an unplanned doctor’s visit, or one of the parents gets ill and loses a couple of weeks of work — well, their problem becomes our problem in a hurry. It’s as if the ghost of my father’s tenant has come back to haunt us.
At times like that, I try to maintain my serenity and gratitude. Our problems are not as serious as the tenants’ and at the end of the day we are fortunate enough to own that house. Eventually we will sell the place and put the problems behind us. Still, there are enough mornings where, at 2 a.m., it’s hard to focus on the big picture.
I was right as a kid when I decided I didn’t want to be a landlord. If you’re considering it, I would strongly suggest that you not go into the business unless you have a certain minimum number of units, say 12 to 15. The tenants who are paying at any given time will generate enough cash flow to allow you to sleep like a baby. Perhaps that sounds like Mitt Romney advice, but then that’s my point.