Should I become a part-time Landlord? Part 1

One of the moRE common questions I get goes something like this:  Joe, I’m thinking about buying a rent house as a way to make a little extra money. What do you think?  (it’s not always a rent house.  I get a lot of flipping house questions too.)

I have three thoughts on this subject that have nothing to do with the financial considerations of the decision. These considerations have to do with your personality and interests, and they help point to whether real estate is the right investment for you:

1. You have to like or at least pleasantly tolerate the work.  Do you enjoy fixing up a house? Doing some landscape work?  Are you adept at minor repairs?  My experience is that people who tolerate (or even enjoy) this kind of project do better in the real estate biz.  Yes, you can hire this kind of stuff out, but you still have to coordinate it and it will cost you if you do.
   
   
2. This one is closely related to #1. You must have a tolerance for unexpected surprises, and you have to be good as responding quickly.  The call in the middle of the night that the AC has gone out, or the toilet is broken, or whatever.  I’ve never tolerated these unexpected agenda-altering events very well. Some people just take them in stride, which is what you need if you are in the landlord business.
   
   
3. Can you balance being a landlord vs being a social worker? Your renters are people with families.  They pay rent, but they also have issues and problems.  I owned a rent house many years ago and got the call saying “I just had emergency surgery.  I can’t pay the rent this month.”  This kind of thing happens on occasion, and it is impossible to just be the landlord.  It is also unworkable if you are only the social worker.  You’ve got to have a balance between the two. 

I hope you will give these three considerations some thought.  It might be the difference between a good experience vs a miserable one for you. 

Finally, I’ll finish with this story.  When I was a young man, new to the business world, I knew a guy named Warren.  Warren worked with me and had a few rent houses on the side.  Warren had a son named Chris, who was about my age.  One day Warren came into work and looked very tired.  He had gotten a call from the neighbor of one of his rent houses.  The neighbor said that there were dead rabbits in cages at his rent house.  

So Warren and Chris went over to the house at about 7 at night.  The tenants had abandoned the house AND the rabbits.  It was summer and it was hot. The rabbits were dead and stunk horribly.  They were in elevated cages and there were huge piles of rabbit poop under each cage.  Warren and Chris put the dead rabbits in trash cans and started shoveling load after load of rabbit poop.  They didn’t finish until 10 at night.

Then Warren started laughing and I asked why.  Warren said because, in the midst of shoveling dead rabbits and their poop, he turned to Chris and said, “Son, one day all of this will be yours!”  

If you find this story to be a heartwarming father/son moment, you may very well be a fit for owning real estate!

Look for my companion blog on the financial considerations for being a part-time landlord.