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5 Lessons Learned In My Year As a Landlord

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I’ve been intrigued by real estate for years. I first saw it as a way to accelerate my path to early retirement. More recently, I’ve considered the benefits of diversifying out of paper assets due to high stock valuations and low interest rates.

But I’ve never been able to pull the trigger. I’ve been stuck on the sidelines for two reasons.

First and foremost, I hate having debt. You can invest in real estate without debt, but it requires tying up capital with little diversification.

Second, real estate investing seemed labor intensive. I was fearful real estate would become another full-time job.

Last summer, my wife and I found a home with the amenities, location, and price we were seeking for early retirement. The problem was the house was in Utah and we lived in Pennsylvania.

I had commitments to fulfill to finish my job, we needed to sell our home, and we wanted to allow our daughter to finish preschool. So we were a year away from being ready to move across the country.

We decided to buy the house anyway. We rented it out for a year, giving us a chance to dip our toes in the water as landlords. In the process, we learned five valuable lessons that will shape our future decisions related to real estate investing that will help others sitting on the sidelines pondering whether investing in real estate makes sense for them.

Full Disclosure

Before discussing our experience and sharing lessons learned as landlords, I want to acknowledge that we rented out one house for eleven months. This does not make me a real estate expert. We made some decisions that worked out great for us, but are generally not advisable.

We were looking to buy a house in Ogden, UT, one of the hottest real estate markets in the country. According to Kiplinger, the median home price in Ogden increased by 15.3% in 2017. Zillow reports prices increased 18% over the past year.

Conversely, our home town in western Pennsylvania has a stagnant real estate market. Prices are flat or even decreasing slightly. Waiting to buy when we were ready to move in a year was likely to cost us tens of thousands of dollars.

It’s unwise to speculate on appreciation. We took a calculated chance that worked out well.

We purchased our house with a home equity line of credit (HELOC). This allowed us to finance the home with no closing costs, no origination fee, no appraisal fee, and a 1% interest rate for the first six months. After six months, the loan had a variable interest rate.

This made perfect sense for our situation and worked out great. However, buying a home using a loan with a variable interest rate is rarely smart.

Our home would not be considered a solid rental by real estate investors. It failed the 1% rule miserably. Our primary concern was getting a good tenant in the house quickly, allowing us to avoid paying a mortgage, utilities, and maintenance on a vacant house for a year.

Despite our unique situation, we gained valuable insights as landlords.

There Are Ways to Make Money With Real Estate, Even While Losing Money

Chad Carson describes the different ways you can make money with real estate with the acronym I.D.E.A.L. It stands for income, depreciation, equity, appreciation, and leverage.

This acronym made sense conceptually, but I never grasped how tax efficiently you can build wealth with real estate until I became a landlord and analyzed our numbers. Here’s a breakdown, showing how it worked for us.

We rented the house for $1,250/month for eleven months, giving us $13,750 gross income. Our expenses included taxes ($1,762), insurance ($1,168), repairs ($870), and management fees ($1,375). After these expenses, our income was $8,575 prior to making our loan payments, about $780/month.

For the first 6 months, we paid only 1% interest before our HELOC had a variable rate. During this time we were slightly cash flow positive, making about $50/month.

Over the second half of the year, our interest rate was variable. During this time our interest payments jumped substantially. We were cash flow negative for the second half of the year, meaning we lost $250-400/month.

Applying the I.D.E.A.L. Acronym To Our Numbers

  • Income: After paying the expenses associated with our home and making our monthly loan payment, we had no net income. We actually lost about $1,600 over the eleven months we rented our property.
  • Depreciation: Depreciation is a required paper expense where a rental property (minus the value of the land) is depreciated over 27.5 years. I’m not clear on how exactly you determine the value of the land versus the property. We provided our accountant our records, and they calculated this “expense” at $3,172 on our 2017 Schedule E for the months we rented the property. At a 25% marginal tax bracket, this saved us $793 in income tax. Because we rented for half the year in 2018 as well, we will have similar depreciation. However, we’ll be in the 12% marginal tax bracket because I’ve left my job and the Tax Cuts and Jobs Act lowered tax rates, so this benefit will be less valuable.
  • Equity: In our experience, this was the biggest benefit of investing in real estate. Over the past year, we’ve benefitted by using someone else’s money to pay off our loan. Thus, we increased our net worth by approximately $700/month, or $7,700 for the year.
  • Appreciation: We purchased this house in large part due to speculation. This is generally not advisable. Real estate typically appreciates at about the general rate of inflation. That said, if we assume we bought our home at fair market price at $240,000 and got average appreciation for the area of 15%, we made $36,000 in increased home value in only one year.

Our net worth increased by over $40,000 between equity and appreciation in our home’s value. At the same time, we lost several thousand dollars between negative cash flow and depreciation, giving us a significant tax write-off.

Our financial win was in large part due to how we purchased the property, which brings me to our next lesson…

There Is Such A Thing As Good Debt

The “L” in the I.D.E.A.L. acronym is leverage. We utilized the maximal amount the bank would loan us on the HELOC, which was approximately $170,000. Thus we put $70,000 of our own money towards the property.

Initially, this made my wife and I uneasy. Fear of debt is the biggest factor that stopped us from investing in real estate previously.

My opinion on using debt to invest in real estate has changed dramatically after my year as a landlord. I now see leverage as one of the biggest attractions to investing in real estate.

There are benefits to buying properties with cash. They include improved cash flow, ability to close quickly on good deals, and decreased risk because you don’t ever need to make a mortgage payment.

However, buying properties with cash is very tax inefficient. It requires spending after tax dollars to purchase property and creates unnecessary taxable income for those who don’t need immediate cash flow. Buying with cash also adds risk by having to tie up a large sum of capital in only one property, rather than spreading money out across a diversified portfolio. 

Utilizing debt allowed us to avoid tax consequences we would have incurred if selling off investments to produce cash to buy the house. We kept our money invested to grow and collect dividends and interest over the past year. Leveraged real estate also allowed us to use our tenant’s rent money to build equity.

The next lessons relate to my other hang up that prevented me from investing in real estate…

Investing In Real Estate Is Not Passive

My core investment strategy focuses on investing in index funds. Index investing is about as passive as it gets. Conversely, real estate investing is not passive.

Prior to going to Utah last summer, my wife and I looked at about 100 properties online over several months to narrow down locations and get a feel for the market. Once there, we looked at about 15 properties in person. We then went back a second time to look at two properties before making an offer on one.

Once we made an offer, negotiated, and got the house under contract, we spent hours on the phone and computer over the ensuing month. We had to schedule inspections, line up financing, and interview property managers. After the inspection, we had to schedule contractors to make repairs.

Managing the property from the other side of the country made using a property manager a necessity. Even finding a manager we were completely satisfied with did not make the process passive.

We had to agree upon what to charge for rent, establish tenant screening criteria, and make decisions to do upgrades. This included painting a few rooms to make the property more attractive and installing railings for safety reasons. This meant more phone calls to ensure everything was being taken care of and more bills to pay.

On top of this, there was stress and anxiety knowing that until we found a renter we had a mortgage to pay. Even once we found a renter, we couldn’t be sure they would be a good tenant until after they moved into our house.

From the time the tenants moved in until a year later when it was time for them to leave, we learned our fourth lesson…

Investing In Real Estate Can Be Very Passive

It was a lot of work to find a good property, get favorable financing, get the property in shape to rent, and screen potential tenants. However, once the house was rented, we did nothing but sit back and collect rent checks for the next ten months.

Aside from one minor issue with the house, the only time we heard from the property manager was when they did periodic checks of the exterior of the property.

We received monthly statements from the managers showing the rent collected, their management fees, and the other rare expense. Our money was received by direct deposit to our bank account.

We passed the statements along to our accountant, making the whole process extremely simple, efficient, and passive.

The process remained passive and low stress until the month before we were ready to move. We had to coordinate, through the property manager, when our tenants would move out and we could move in. The house needed a thorough cleaning before we moved in. We also had to make some minor repairs including replacing a set of broken vertical blinds and doing some painting.

This brings me to our final lesson…

If You’re Going to be a Landlord, Be a Good Landlord

John Schaub dedicates a full chapter of his book “Building Wealth One House at a Time” to “Attracting and Training Long-Term, Low Maintenance Tenants”. He points out that you can decrease hassle and increase profitability by providing quality housing at a fair price to attract quality tenants. This limits turnover which is costly, stressful, and labor intensive.

Schaub asked landlords what they are looking for from tenants. They responded:

  1. A tenant who pays on time
  2. A tenant who takes care of the property
  3. A tenant who stays forever
  4. A tenant who never calls.

After identifying these ideal tenants, Schaub asked them to tell him what they are looking for from a landlord. Their answers were:

  1. A house in a safe neighborhood
  2. A house big enough to hold all our stuff
  3. A house that is clean and in good repair
  4. A landlord who will maintain the property
  5. Fair rent
  6. Fair rent raises
  7. Privacy
  8. A house that is not for sale.

In other words, to increase the odds that your experience as a landlord will be passive and profitable, be a good landlord!

Despite not being able to offer a house where our tenants could stay for a long time, we offered everything else on Schaub’s list. This increased the odds of having a positive experience as landlords, despite only being able to offer the house for less than a year.

We may have just been lucky to have a good experience with our tenants. However, if we buy more rental properties going forward, we will continue to follow this model of buying middle to upper end housing, pricing it fairly, and maintaining the properties.

It makes sense that this increases our odds of attracting the types of tenants we’re looking for, while decreasing the hassle and expenses that come with frequent turnover.

The Final Verdict

So after spending a year as landlords, will we be buying more rental properties going forward? Maybe.

After renting our house for a year, I no longer have the fears and doubts that stopped me from investing in real estate sooner. I’m now confident we could quickly become successful real estate investors without requiring a lot of time or excessive risk.

I still think it’s wise to diversify out of paper investments in this time of high stock valuations and low interest rates. Real estate is one way to provide that diversification.

So why not jump into buying more properties immediately? That leads to one bonus lesson we learned that is only tangentially related to our experience as landlords…

Having Enough

I need to take a deep breath, then decide where I want to focus my attention going forward. A wise person once explained why you’ll become busier after retirement.

I didn’t heed that advice and attempted to tackle too many projects I’d been putting off for years while working. In addition to this real estate experiment, I started contributing to this blog, wrote a book, sold a house, and made a cross country move in the eight months since leaving my career.

I’ve come to realize we’re at a place in life where we can search for activities with the greatest personal return on investment (ROI), rather than needing to seek optimal financial ROI. I’ve also learned that we don’t need to pursue every opportunity just because it is viable. We can say no to good opportunities to pursue great ones.

We’ve spent most of our adult lives building wealth in the pursuit of financial independence and early retirement. Frankly, we’ve been pretty good at it. Though we’ve achieved most of our financial goals, we’ve found it harder than anticipated to shift gears and focus away from accumulating more and toward enjoying the life our saving, investing, and planning has enabled.

My wife continues to enjoy her work and is not looking to get any busier with real estate investing. Despite the expense of moving across the country and setting up our new home, her income alone means we’re on pace to have a positive savings rate in my first year of retirement. This provides the slack we desire in our finances.

I’m enjoying my writing ventures. I’m also starting to see that my writing can provide another consistent, if modest, stream of passion income. I prefer writing over being a real estate investor, even if it is less lucrative and far more work.

Investing in real estate could generate even more money, but we have no urgency to pursue more. We’re focusing on figuring out how to appreciate having enough.

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Comments

  1. Katherine Laird says:

    Chris, you used a HELOC on your Pa home to finance the Utah purchase. You also said under fhe discussion of equity that the rent was used to pay the loan so the income was not taxable. Please explain how a HELOC on your Pa residence became an expense for your rental. I did not think the Code allowed that as i have a similar arrangement and my accountant so advised. Thx

    • Chris Mamula says:

      Katherine,

      You’re correct that we took out the HELOC against our home in PA to finance the home in Utah. We then closed the HELOC when we sold our former home and used the proceeds to pay off the home in Utah. Sorry if that was not explained clearly.

      As noted in the post, I am not a real estate expert. I leaned on my CPA for tax advice as a first time renter. I was also advised to seek this type of financing from a friend who is a real estate investor who has done this in the past. My understanding is that debt is debt, be it from a mortgage or HELOC and so it is treated the same.

      Again, I am not a real estate expert and I am also not qualified to give tax advice, so before using this strategy I would advise consulting with your own CPA and/or tax attorney. Sorry I can’t provide any more specific help.

      Chris

      • Chris – I am a RE investor and have been since 1998. I believe regardless of how you finance the rental (HELOC, Cash, traditional mortgage, family loan etc) – the income generated from the rents is considered ‘income’ and should have been taxed as such. I will verify with my CPA, but I believe this is true

        • Chris Mamula says:

          Cheryl,

          You are correct. Thank you for pointing out my error. The interest is deductible, but not the income. I deleted the line to avoid confusion.

          Chris

    • Hey Chris,
      Awesome run down of your real estate experience! Thanks for the shout out, and I love that you incorporated John Schaub’s wisdom into your landlord process.

      I think most negative landlord experiences arise because landlords don’t buy properties that attract quality tenants. It’s easy to chase great numbers and then own a property that’s a major headache to manage. If you never forget that lesson, I predict you’d continue to have a positive experience.

      I also like your wisdom of taking a break for a while. No reason to push too fast. You’ve got plenty on your plate! Enjoy that new home and the transitions that you’ll all make as a family.

      Can’t wait to hear more about how you like your new hometown!

      • Chris Mamula says:

        I agree totally with this. As with anything in life, there are no guarantees, but you can stack the odds in your favor. Conversely, you can set yourself up for disaster by jumping into things looking only at the upside and not having systems in place to mitigate risk and prevent or at least limit adverse scenarios.

        Thanks for the kind words. Surrounding myself with insightful people like you and Darrow has helped, but I have a hard time not wanting to do everything now!

    • Different CPAs will argue on this point. But the tax attorneys and CPAs I trust tell me that you CAN use HELOC money to buy a rental AND deduct the interest as long as you document those funds were used only for a business purpose. In this case, it was because you used the funds to buy a rental. Once you moved in, it became your residence.

      • Chris Mamula says:

        Thanks for chiming in, b/c as stated I’m not an expert. This was my understanding. As noted, we’re very debt averse and so opened the HELOC specifically and exclusively for the purpose of financing this purchase. Also as a condition of the sale of our PA house, we had to pay off the HELOC, so the loan is gone and we’re again debt free. All in all, pretty clear we used the loan for the business purpose of buying this house as a rental until it became our primary residence.

      • Here is the clarification issued by the IRS on Feb 21. It sems definitive to me.
        The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

        • Chris Mamula says:

          Thanks for sharing Mitch. We’ve already done it for 2017. Guess we’ll see what our accountant says when figuring things out for this year.

  2. Chris,
    Thanks for the write-up. You’re experience further confirms my belief about the hassles of buying and renting real-estate. I’m sticking with REITs. And I’m keeping my HELOC available for possible equity purchases if/when the market drops instead of buying real estate.

    • Chris Mamula says:

      We have invested in REITs for a while, but it’s really apples and oranges to investing in real estate as a landlord.

      Are you saying you will be buying stocks with credit? How will you determine when the market has dropped enough to make it a buying opportunity? Not a way I would consider using debt.

      • Agree REITs are totally different but am sticking to those instruments for simplicity but still get real estate exposure.

        My HELOC rate is lower than my margin rate and I’ll never bet more than I can lose. I’m only considering tapping the HELOC if the market drops to 2008 valuation levels and plan to dollar cost average on the way down using surplus cash I’m piling up since the market is so high now. I do not endorse this strategy for others. I’m not retired so likely have a higher risk tolerance than those that are FIRE’d.

  3. Tim O'Pry says:

    Good article – and glad your one experience was positive.

    My first foray into real estate was with my brother in the 80s. We purchased, rented and managed 4 homes (the goal was 10, but after 4 – I had enough). The time, effort and angst of dealing with the tenants wore me down. Late night, weekend calls, late rent, foreclosure issues, etc. Some tenants were great, others a nightmare (and it only takes 1). I would never again manage my own properties – a good firm is worth every penny.

    After selling those homes, I decided to take a different route – investing in LLCs that buy and manage multi-tenant housing. These have returned 8%+ on the investment amount (paid quarterly), plus the benefits of depreciation, appreciation and leverage. While the returns could be greater doing it all yourself, the lower risk + ZERO angst makes it all worth it to me. Currently, I’m looking for a savvy builder/handyman to do so some renos that we either fix up and resell or rent (but only through a manager).

    • Chris Mamula says:

      Thanks for sharing your experience Tim. As noted, my positive experience involved a lot of good luck (great tenants, ridiculous appreciation). However, Schaub’s book emphasized that it is often (but not always) possible to shift the odds in your favor of having “good luck” as a landlord by buying being the type of landlord that quality tenants want to rent from.

      Also, this property was not bought as a rental (it has a MIL suite, and so is essentially 2 units but only zoned as a single family residence), thus the awful cash flow numbers of rent compared to the purchase price. The numbers could be a lot better with a property chosen based on math, rather than buying a house that works for us in the long term and trying to rent it out in the short term. There is money to be made in real estate if some effort is applied.

  4. I am invested in real estate in a big way (30% of my net worth) but not as a landlord. I’ve invested through Real Estate Crowdfunding and all in all, I’m pretty happy with it. I don’t have the hassles that landlords deal with and I receive an 8% return of passive income NOT including appreciation of “I.R.R.”). No hassles, no tenants, an 8% preferred return. What’s not to like?!!!

    • Chris Mamula says:

      One thing not to like is that RE Crowdfunding hasn’t been around long enough to see a market downturn. There seem to be a lot of locations where people didn’t learn from 2008/2009 housing bubble burst. We’ll see if this time turns out different, and if not how crowd funding holds up.

  5. WADE SHANLEY says:

    Chris, thanks for the post. I’ve had many of the same concerns about dipping my toes into real estate. I like that you mentioned the fact that you were looking for a specific kind of renter. Did you interview your renters and how did you determine a good renter from one that isn’t a good fit? Did you just flat out ask them a list of questions? how did you determine that they were being truthful? did you ask for references and speak to past landlords? Just curious how much work you put into screening before you made the call that you had a good renter. Of all the variables, I feel like the actual renter is the biggest wildcard for a good experience in real estate investing.

    • Chris Mamula says:

      Agree that having a good renter is key. A big part of our stress was finding a good renter who was looking to stay for only 11 months, when we needed into the house.

      I would say our positive experience was in part good luck, and in large part a good job by our property manager who actually did the screening after lengthy discussions to set criterion that we both agreed upon. While we didn’t actually screen our tenants, we did interview three different property managers. The other two were selling us on how much we could rent the place for, etc, but didn’t have great answers as to how to prevent and/or deal with bad tenants.

      Chad Carson and another friend who invests in real estate were generous in sharing notes with me on what they do to screen tenants, giving me a reference when interviewing property managers. The John Schaub book cited in the post also discusses this at length. The property manager we ultimately chose had a variety of systems in place as well which we discussed prior to agreeing to use them including phone and face to face interviews, credit checks, and reference checks. This lined up with or exceeded what we were looking for regarding screening tenants.

      The manager, to their credit, turned down the first two applicants we had, even though they had incentive to get someone in ASAP b/c we paid them a straight 10% of rents collected. As he explained to me, he doesn’t want the hassle of a bad tenant at least as much as we don’t, b/c while we’re taking a bigger financial hit in a disaster scenario, he is the one on the ground who would be stuck picking up the pieces.

  6. I am surprised that you took depreciation on a rental of less than one year. My understanding is that this will be paid back, at least in part, when you sell the house. Is it really worth tracking for however long you hope to own your now primary residence.

    And yes, I agree with others, that one tenant for 11 months is only dipping your toes into the tenant experience. After 19 years as a landlord on the side, I retired after my last tenant accidentally started a fire. All of a sudden, my side gig became my full-time job for months upon months.

    • Chris Mamula says:

      Karen,

      We took the depreciation b/c it is the standard thing to do when using a property as a rental, and so we were simply playing by the book. As noted in the post the tax benefit of the depreciation was substantial, but certainly not life changing. I could understand not taking it, but I think it may have actually made the record keeping more complex than less.

      I understand that bad things can happen and part of our experience was a product of good luck. I noted as much in the lengthy disclosure to start the article. That said, I think we can often, but not always as your situation proves, create our luck by the choices we make and preparations we take. I will grant you that homes do burn down, but you also have to acknowledge that statistically that outcome is pretty unlikely, particularly in a well chosen property with good tenants.

      Thanks for sharing your experience, and sorry that you had to go through that.

      Best,
      Chris

    • I beleive you are required to take depreciation. It’s not a choice.

  7. Chris,

    Thanks for your candid narrative on your landlord experience. I unintentionally first became a landlord 5 years ago when I purchased a home in my out-of-state hometown for my future retirement home. While I did intend to rent it for 6-7 years until I retired, it was just to help pay the mortgage and expenses, not necessarily to make money (although in the long term I could see the real estate market there had been slow to recover from the recession and the rental vacancy rate was less than 2%, so poised to be a good investment overall). I did use a property manager, which has been a lifesaver.

    The experience was so easy and passive that I purchased 4 additional properties in the next few years. I recently sold one for a 55k gain (tax free due to accumulated paper rental losses) after less than 2 years in order to purchase my new future retirement home, which we are renting for 9 months, when we’ll need it to be available to begin our retirement move, the same as your scenario. The rent doesn’t completely cover the mortgage and expenses, but it saves us from paying those expenses on an empty house and, like you, we were more concerned in this case about getting good tenants for a short rental term who would take good care of our future home. We also wanted to buy before prices increased further, and this was before the trade tariffs!

    I’m a CPA and was very familiar with the mechanics and tax implications of rental real estate (and yes, you can trace the HELOC loan proceeds to the business use to deduct the interest), but had never considered investing in it myself as I had enough on my plate keeping up with the tax code and keeping my clients on track! Although I did have one bad experience where the tenant actually sued the management company (and thus me) after a water leak, the judge threw it out and the managemrent company did all the legwork, including the court appearance. I don’t expect that to happen again, and am poised to enjoy the increasing rental income as a not insignificant source of retirement income when I retire in 2020, all tax-free so far due to depreciation and mortgage interest deductions.

    All this to say I kind of stumbled into being a passive landlord myself, which has been relatively easy despite the annoyances of repairs here and there that nibble away at some of the net income but are unavoidable maintenance costs. Overall it’s been a positive experience and much easier than I would have thought.

    • Chris Mamula says:

      Thanks for sharing your experience Julie. I agree that with a bit of up front effort, real estate is a very reasonable option with better income, tax advantages, and ability to use leverage than paper assets. Like you, if I go into real estate, I’d like to have a few properties. I think it is easier to scale once you’ve learned your market, figured out financing options, found a good property manager, accountant, etc. I guess the only downside to having more properties is that, even if you do your homework well, it’s a numbers game and the more properties you have the greater the chance that an adverse event will eventually occur which can be a headache.

  8. My husband and I added rental property to our portfolio six years ago as another way to diversity our investments and increase our number of income streams in preparation for our upcoming early retirement. It has not been without hassles, but it has certainly proved educational, and we both agree that the work involved is definitely worth the cash flow (and, as you mentioned, the tax benefits) the property provides. Additionally, we have made improvements to the property that should result in a profitable sale if or when we decide to sell. As newbies, we found that “Every Landlord’s Legal Guide,” published by Nolo Press, provided a good foundation, which was supplemented by the help of an attorney in a few instances where we felt legal representation would be beneficial. Would we do it again? Yes, absolutely, but we are fortunate in that my husband’s mechanical and construction skills keep our expenses down considerably allowing the cash flow to work harder for us. Maybe our answer would be different if we incurred higher expenses for repair, maintenance and capital improvement projects, but buying rental property has proven to be a good move for us.

  9. I realize some would say I’m repeatedly trying to catch a falling knife. And using leverage to boot. I don’t recommend others do this unless they like the risk of getting cut badly.

  10. It’s nice to have baseline expenses covered by rental income. Then equities can go up, down, or sideways and one need never worry about selling equities at a loss. When 2008 came and went all I noticed was that my vacancy rates went down and my rents went up. Had I put money in real estate after the 2008 crash I could have retired much earlier. Moreover, I like getting out to the properties to mow lawns and turn apartments.

    • Chris Mamula says:

      Agree that real estate is much more attractive to me after my experience. I certainly haven’t ruled out buying a few properties in the near future, just taking a minute to breathe and decide if that’s a path I want to pursue.

  11. Thanks for sharing your experience with real estate. I think that perhaps one of the reasons why landlords have experienced some difficulty is that they purchase properties that they wouldn’t consider living in. Thanks for sharing.

    • Chris Mamula says:

      Agree Paul. There is certainly an element of luck involved, but I believe you can shift the odds of having a good experience in your favor by being the type of landlord you would want to rent from. Thanks for chiming in.

      Chris

  12. Sounds like you learned a lot in your year of being a landlord. It can be a great and lucrative experience. Let me share a lesson I learned. I rented out my house in College Station when I moved to San Antonio. After a few years of unremarkable renting, the management company let me know that the renters had moved so there would be no rent income this month, and they would take necessary steps to clean and prepare the house to be rented out again. I decided to drive over and check out the house myself, to see what it needed. Imagine my surprise when I got there and found the renters were still in the house, and they had paid their rent that month. They had let the management company know they would be moving in a month, so the agent tried to collect a little bonus for herself.

    • Chris Mamula says:

      Interesting story Mike. As noted in the post, having a property manager was very useful for us as first time investors, but agree that it does not make the process passive. You still have to manage your manager.