There comes a time for every rental property investor when the job of being a landlord starts to feel like too much.
It all starts to feel too heavy.
You’ll want to quit.
You’ll convince yourself that it’s much easier to be a passive stock market investor.
When that moment as a landlord comes for you:
Don’t quit.
The long term benefits are too good.
Remind yourself why you bought a rental property in the first place.
I know there are tough moments. I’ve been there. Many times.
In fact, my wife and I had a couple of experiences recently that pushed us close to that point of quitting.
With the passage of enough time to reflect, I’m happy and proud of us for sticking with it.
We’re still on track to achieve financial freedom quicker than we ever could have without our rental properties.
Today, I’ll share a couple of experiences I’ve recently had as a landlord that had me thinking about quitting.
If you’re a landlord, I’m sure you’ve had moments just like these.
Here’s a look back at our recent experience leasing out two apartments.
This past lease renewal season started off looking very strong. We were thrilled that 80% of our tenants signed on for another year.
That left only 2 apartments to turnover.
This was great news because vacancy is a rental property investor’s worst nightmare. Every week that an apartment sits empty is money down the drain.
Vacancy can eat away your entire year’s profits. That’s why we usually offer current tenants the chance to renew at the same rent.
When you do the math, it almost always works out than continued occupancy beats the prospect of higher rent plus vacancy.
When you have an empty rental unit, doubt creeps into your mind. You start telling yourself that you’ll never find a new tenant and your place will sit empty forever.
I know, I know. A bit extreme, right?
But, I’m telling you. That’s where your mind goes. Any landlord out there knows what I’m talking about.
So, when 80% of our tenants renewed for another year, we were very happy. We assumed that meant we would have an easy leasing season.
As it turns out, that was not the case.
Here’s what happened in each of these two apartments.
For one apartment, we received an odd request.
Before these tenants decided to leave, they made an odd request.
As a side note, this apartment was the unit where my wife and I lived for about five years. We brought two babies home to that apartment.
It’s located in the first building we ever bought and will always hold sentimental value for us.
OK, back to the story. This past spring, we actually thought the former tenants would renew for another year. That would have meant 90% of our units would have stay leased for another year, a major win.
When we first approached these tenants about renewing, they indicated that they wanted to stay. They were great tenants, so we were happy.
Then came a unique request.
These tenants were students and wanted to live at home for the summer. They asked if they could keep their stuff in the apartment but not pay rent for July and August since they wouldn’t actually be living there.
We’ve had all sorts of requests from tenants over the years. Keeping an apartment without paying rent for two months was a new one.
I understood the request from their perspective. Rent is a major expense. They didn’t need an apartment for the summer. They liked the apartment, but it was hard to justify paying for something they didn’t need.
The problem from our perspective is not hard to spot. If we agreed to their offer, we would be left with the equivalent of 2 months of vacancy.
Losing out on 2 months of rent payments is the equivalent of foregoing 17% of the total rent for the year.
We thought about it. And as tempting as it was to not have to find new tenants, that arrangement was not going to work for us.
Turnover is a chance to make property improvements.
After they moved out, we took the opportunity to refresh the apartment. We knew this would take some time and result in at least a few weeks of vacancy, but the apartment needed some love.
So, we replaced the flooring and painted the entire apartment. We did some needed repairs in the bathrooms (i.e. caulk, grout, new shower rod).
Plus, we made a point to tackle any deferred maintenance throughout the apartment.
We used a contractor for the work, so our involvement was limited to paying the bills and supervising the projects. Not exactly time intensive, but not exactly cheap either.
When the work was finished, we lined up a number of showings and had the apartment rented out after a few of weeks of effort.
In total, the apartment was vacant for 6 weeks.
What did we learn from this experience?
On the positive side, we now have a rehabbed apartment and fresh tenants. Plus, the apartment was empty for only 6 weeks instead of 8 weeks.
On the negative side, it was stressful to get the apartment fixed up and re-leased.
To state the obvious, it’s not fun spending money to fix up an apartment without a signed lease in place. Every week that goes by, money is going out without any money coming in.
During that phase, you can’t help but doubt yourself as a landlord.
Did we make the wrong choice?
Should we have let the former tenants stay, even if that meant automatically sacrificing two months of rent?
If we had gone that route, we would not have spent any money this year turning over the unit.
We also would have had a less stressful leasing season. We would have saved a lot of time and mental energy if we didn’t have to worry about this unit.
On the other hand, the apartment would still have needed a facelift as soon as it was empty. At some point, we were going to have to do the rehab. Now, that project is behind us.
We also have great new tenants who seem more likely to stay for an extra year or two.
In the end, I’m happy with the decision we made. That doesn’t mean it was right or wrong, but we made it through a unique challenge.
I’m good with that.
The second learning experience involved letting our tenants out of their lease after two months.
In our other vacant unit this past spring, the former tenants bought a condo so needed to move out. They had lived there for two years and were wonderful tenants.
This unit was located in a different building from the one we just discussed. The building is in a terrific location and the units are in great shape.
We’ve never had any trouble finding tenants. This year was no different.
After three showings and very little effort, we happily signed a lease with new tenants. As a bonus, the former tenants had moved out early, so we were able to fill this unit with zero days of vacancy.
All was well… until it was not.
Let’s just say that after about six weeks, it was apparent that the relationship with our new tenants was not working out. The tenants were not bad people, but it was clear that we could not meet their expectations.
Instead of living through a difficult year with these tenants, we offered them the chance to break their lease, without penalty. They accepted our offer and moved out two weeks later.
We all remained civil and amicably split up. The tenants left the apartment in good shape and we all avoided unwanted confrontation.
We re-listed the apartment and found a wonderful new tenant after one showing.
In the end, we lost out on three weeks of rent between leases but now have a very happy new tenant.
Upon reflection, I’m confident this was the right decision for all parties involved.
The tenants could find a place more to their liking, and we could start over with a new tenant.
So, what’s the takeaway from our experiences with these units?
As a landlord, you are running a business. It won’t always be easy.
You have to make business decisions, even when there’s no clear right answer.
Sometimes that means foregoing profit and dealing with confrontation.
In each of these instances, I’m happy with how things worked out. In the first instance, I sacrificed some of my profit this year to improve my asset.
For the second apartment, it was clear that the relationship was not working. Even though we lost some money in the process, all parties involved should now be happier.
These are tradeoffs I would readily make again.
Even with stress like this, I’m not ready to give up on being a landlord.
Compared to my day job as a lawyer, this is nothing.
Should you become a landlord?
The truth is my wife and I know so many people who have owned rental properties but did not like being landlords. There’s nothing wrong with that. It’s not for everyone.
If you’ve been in, or are currently in a similar boat, I hope these experiences resonate with you.
In the end, as stressful as it can be to run a business, this is also what makes being a landlord fun.
What do I mean, fun?
When you are a landlord, you are a business owner. You get to make the final decision. It’s your business and you are in control.
Having that autonomy is a nice change of pace for most W-2 employees.
Still, you may be faced with tough decisions. You may not know what to do in the moment. It’s helpful in those moments to have people to talk to so you can make the best decision possible.
I happen to like being a business owner. However, it’s not for everyone.
If just thinking about making decisions like these stresses you out, I would not recommend that you become a landlord.
If you can handle the job, you can benefit immensely.
Landlords- have you been in situations like this before? How did you handle the stress of the job?
Let us know in the comments below.
