The Journey of the “Accidental Landlord”.
I decided to write this post about the accidental landlord, in part because as a Cash Buyer, we often get calls from our marketing efforts, and then again, sometimes a landlord will often see our ads, and they have given up on the retirement dream of a few houses funding their retirement.
This could be you. If not now, one day.
It usually begins with a Probate home that was inherited, but somehow managing a rental was not what was intended.
Read the whole post to see what I mean.
Becoming a landlord is many times a deliberate choice, made by individuals that seek to invest in real estate and generate passive income.
Maybe somewhere they heard the expression about “Make money while you sleep” or “Tenants will fund your retirement”.
All of this sounds good but here are some of the realities of being a landlord.
The term accidental landlord often describes someone who did not set out to become a property manager but ended up renting out their home due to some unforeseen circumstance.
One common scene involves the homeowner who refuses to negotiate with cash buyers, leading to prolonged ownership and then the eventual decision to rent out the property.
This post will detail some of the challenges and the lessons they learn along the way.
The Initial offer, and then the Stubborn Stance:
Meet the middle-aged professional who inherited his childhood home after his parents passed away. The house, it was well maintained, but was in a neighborhood that had seen better days.
This man was emotionally attached to the house, but he was not in a real rush to sell it.
Finances eventually pushed him into putting the house up for sale.
Not very long after listing his house with an agent, he received an offer from a cash buyer like us.
This offer was below his asking price, but the offer was low enough that he got frustrated and figured we were insulting him.
His emotional attachment made him believe the house was worth much more, and he was confident he could hold out to find a buyer willing to pay his price. In his stubbornness, he rejected the offer outright and refused to even negotiate.
(This happens more than you would think)
The Market Got Real.
Months had passed, and the house remained unsold. The costs were coming out of his pocket and beginning to add up.
Although he received a few more offers, none met his high expectations in price. He continued to hold out for a better deal, convinced that his patience would pay off.
The market in his neighborhood had other plans.
The neighborhoods decline was happening, and combined with broader market conditions, the offers for properties in the area all but stopped.
Now the realization of the property taxes, maintenance, and insurance, plus utilities he was spending on, didn’t produce any return.
While he had hoped to sell quickly in the beginning to use the money for other things, he was finding out that his being stubborn was now costing him too much.
Ok, I Will Rent It Then!
Just renting out the house seemed like a good idea. Renting it out would provide some relief to the costs, why not?
The idea of becoming a landlord didn’t really appeal to him, but it could be a temporary situation until the market improved again.
He listed the house and found some tenants right away. Now the reality of being a landlord set up a whole new set of responsibilities and challenges.
Now he had to navigate lease agreements, tenant screening, and maintenance issues, everything he wasn’t prepared for.
The Reality of Landlord Responsibilities:
Mr. ”Accidental Landlord”, now he was dealing with issues he had not anticipated. These tenants had a whole set of requests and needs they called about all the time.
He had to address noisy neighbors’ complaints and fix toilets, and leaky faucets.
His weekends soon became consumed with problems, not the leisurely weekends he had planned.
One really challenging event was when he became the negotiator between his tenants and their neighbors about a dispute they had. This was pointing out the realities of being a landlord and property manager.
Financial Strains and Unexpected Costs:
The income from the rental covered some of these expenses, but he soon realized that being a landlord was not as financially rewarding as he had hoped it to be.
From plumbing issues and a leaky roof, plus the unexpected repairs, the costs began to add up.
Thid house in a declining neighborhood made it also challenging to find new tenants that wanted to live there.
Which in turn, means lowering his rent more and more to find someone new after a vacancy.
Which, while the house sits vacant, there is no income. He did, however, have to realize that with the house sitting vacant, it was also prone to vandalism.
The Emotional Toll:
Now this once cherished family home, was a source of stress and frustration. Constant demands of property management affected his emotions, which also led to beginning to feel overwhelmed and somewhat regretful about his stubbornness to negotiate.
It wasn’t only that he had these challenges, his friends and family suffered. He sometimes had to cut short plans with them to attend another tenant crisis.
Summary:
This story was presented as a way to help other people that have the desire to make as much profit from an inherited property as they possibly can, sometimes backfires.
Negotiation is key to understanding what a house might be worth to the market, not just the owner.
To show you what I mean, when we are making an offer on a cherished home that the seller feels is worth every penny of his price, the following 2 pictures illustrate the difference in what he sees and what we see when we meet. His image, above, and ours below.
Of course this is a little bit extreme, but this is where we both have to talk about the pricing on both sides and see if we can reach an agreement.
Next week I will be showing the hidden costs of being a landlord, either by accident or intent.
To wrap this up, if you are or happen to be an “Accidental Landlord” and don’t want to be anymore, please reach out, at OURCASHFORYOURHOME.COM