I became a landlord sort of accidentally, like many people. In my case, it was a bit more sudden. My father, who lived in a duplex, has a stroke several years ago. He had a large mortgage and was incapacitated. It was an opportunity to attempt to purchase an investment property.
When a person has a stroke, you never know if they are going to walk away from it, be permanently incapacitated, or die. If someone dies, you know what to do with their stuff. When they are just wounded, it makes it more difficult. In my father’s case, he also owned a small office building, with a residence in the rear quarters. It also had a mortgage.
Of the four units, only one had a tenant. There was no lease. I did not know if the tenant had paid, or not. I did not know what the rent amount was. I had to rely on the tenant to tell me. The stroke was on New Year’s Eve, so rent was either just paid, or due. I had to find that out (and a whole host of other things…)
So, as I thought about the options, I had to make a decision. Sell the properties to pay for a nursing home, or purchase them myself. Knowing what I know now about investment properties, and the amount of work that was needed, the properties mortgage value was not exactly a great price to buy the properties at. If I sold them, after commissions and selling expenses, it would have barely been a break even proposition. Even if there was money, it would have gone to the nursing home. I thought that if I could rent it out, I could pay his expenses. The expenses were over $6K per month.
I immediately went to work to refinance the properties, mortgaging my own home to pay them off. My interest rate was going to be better on my personal residence, than a non-owner occupied property. My mortgage balance went up, and my payments went up. At about that same time, my work contract (i.e. income to pay mortgages) was coming to an end. It was a perfect time to increase my house payments, when I had no income (sarc).
So there I was. Owing more money that I ever had in my life; but I also had two properties paid off.
Off I went. I collected the rent from the one tenant. I cleaned up the apartment my father lived in, fixed all that was wrong, made a 2BR into a 3 BR, and got it rented pretty quickly. That took care of most of the bleeding.
I went to the office building and painted and cleaned up. My father was a bit of a hoarder, so there was a lot of garbage. Like 40+ yards of stuff. Remember, the last time he was there, he expected he was coming back the next morning. Once I got the office part painted, I enlisted the help of a property management company to get it listed and rented. It rented fairly quickly, and I paid a hefty commission to them for the next three years.
The rear section of the building was a three bedroom apartment. It had no kitchen. Not even water to the kitchen. Windows were rotten. Carpet was trashed. As I was fixing it up, a group of four people said they were looking for a place to rent. Perfect timing. They agreed to rent it and move in, in about two weeks. I put in the kitchen and I was getting ready. I did not even do a background check.
A few days before the official move-in date, six people showed up (the original 4, plus 2 more), and said they would take it as-is. They would help finish the work. Nice, even better. Collect rent now, and less work. So six people moved in. They were Hispanic roofers, talking advantage of the severe summer storms we had. Hard workers, and they played hard too.
The people kept coming. At one point, I think there were at least 15 people living in the unit. There were mattresses and sleeping places all over. At least three or four people per bedroom, and more were sleeping in the spider-filled basement. WOW.
The 2-yard dumpster I used for garbage was always filled with beer bottles. Once in a while there was a fight. Windows and other things were broken. It was a mess.
The roofers lived there for ~18 months and paid every month, in cash. One month, they traded a re-roof of the porch for rent. In the end, they stopped paying rent. One day when I showed up, after getting the “rent will be next week” a couple of times, I told them to leave. “You cannot sleep here tonight” I said. I was not aware of any eviction processes. Lucky for me, they moved out that day. Less than 2 weeks of unpaid rent.
When I got in to turn the apartment, I found the place was filled with roaches and mice. All of the old furniture was left behind. A mess for sure, but since the carpet was in bad shape before they moved in and windows has rotten frames to begin with, I continued the remodeling where I left off.
And that was my first experience to being an actual landlord, with all of the rights, responsibilities and privileges thereof.
What have your investment property experiences been like?