As I was sitting here on a dark and rainy Friday morning seething quietly after cutting a check for a $1825 special assessment from my condo’s governing HOA, I realized it’s been a few days since I posted anything. What can I say, rage, it seems, beings out my inner soul as a writer – or maybe it’s just the catharsis I need after getting gang banged by a homeowners association board who must have been holding on to a shit ton of proxies when they voted.
I’m always curious about those who see rental income as a surefire pathway to wealth. Maybe it is under certain circumstances – if you’re local and can do many of the repairs yourself, if you paid cash and aren’t using at least a portion of the rent to make the note, or if you aren’t governed by an HOA that’s at least as good at spending other people’s money as the United States Congress. I’ve been renting out this condo since 2003 and I’ll admit that there have been a few good years – those years when nothing breaks and there’s no damage to be repaired. Those years are the rarity. Far more often it’s a break even proposition where you’re lucky to be about $500 into either the black or red by year’s end. Then, of course, there are those years where you end up pouring your own cash into the place hand over fist. No one talks about those years when they tell you what a great idea it is having a rental property.
At least the bastards got the bills out in time to use the whole damned mess as a 2018 deduction instead of having to wait an additional year to recoup a few pennies on the dollar. When your “bright slide” is consoling yourself that you have something to help offset the decreased federal deductibility of state and local taxes, you’ve really got to rethink the whole plan from start to finish.
This dark and rainy Friday is going to largely be about resisting the temptation to drive down there and nail a for sale sign to the door and being done with the whole bleeding mess.
Everyone assumes that when you have rental property you’re making money. That hasn’t exactly been my overall experience, but I accept that it’s the general perception of how things work. Most of the time, the cash flow from the condo in St. Mary’s offsets the giant sucking sound that is the negative cash flow coming out of Memphis. Between the two, I come fairly close to breaking even more months than I don’t. Of course then we have the occasional singularity in which both the condo and the house are sitting vacant at the same time.
That moment you realize it’s about to happen is probably one of the few times in life you’re ever going to seriously consider becoming an arsonist as a valid career option. When you go from happily paying rent and breaking even on everything else to sucking wind on rent plus two mortgages, let’s just say that all the fantastic financial management lessons you’ve learned from Suze Ormond or Dave Ramsey go right the hell out the window. The only thing that matters at that point is how fast you can bring cash in the front door and how fast you can shovel it out the back. It’s not so much a case of planning as it is an exercise in crisis management and triage.
Fortunately, the two leases almost never expire at the same time, but when they do you’d better believe that you’re about to get a serious lesson in why landlording ain’t for wimps.
1. Wood floors. I use to think wood floors were the bee’s knees. If I did’t have dogs, I probably still would. No matter how many times, I sweep, vacuum, and mop there’s always enough hair coming up to build my own pug. God help me, when the sun slants through the windows just right it looks like the floor has never even seen a broom. Until I lived with wood floors, I had no idea how much filth wall-to-wall carpet hid. Ignorance is bliss. I miss that.
2. Window air conditioners. Window air conditioners are loud, dirty, and don’t work particularly well. I have two of them, which means I have two rooms that are sort of cool-ish and the rest of the house which is basically uninhabitable most of the time. Don’t get me started on the bigs, dist, and occasional black mold the damned things seem to breed. Central air is officially a must have in my next place. Failing that, I’m moving to Northern Maine where the subject of air conditioning is purely academic.
3. Green algae. Two sides of the fabulous Rental Casa de Jeff never get direct sunlight and as a result the siding on those sides seems to have sprung fourth with a remarkably aggressive colony of green algae. It looks God awful, but since you can’t see it from the road, it’s mostly my own private shame. It feels like something I should attack with gallons of bleach and a pressure washer. At present, though, it’s not quite annoying enough to make dragging a pressure washer up a ladder seem like a good idea.
Sometimes I think the slum lords get it right. They buy the buildings cheap, pack in the tenants, collect as much rent as possible, and let the building fall apart until its time to abandon it and move on. Landlording is easy if you don’t bother to reinvest in the property. Sink not draining? Tough. Water heater acting “funny”? Who cares. Driveway collapsing? So what. By the time someone gets around to making them fix it, the building will be too far gone to save anyway and they’ll be on to the next deal. Yeah, sometimes I think the ones who just let the place fall in on itself have the right idea. Buying the property is the easy part. It’s the maintenance that’s going to kill you in the long run.
Some day, almost anyone who’s ever owned a home ponders the thought of being a landlord. Someone else is paying you to live in your place. Sounds like a license to make money, right? Well, let me disabuse anyone out there thinking about doing it of that notion. A rental property is pretty much a black hole into which you’re going to throw a never-ending stream of money. It’s like having a boat without the perk of, you know, actually having a boat. It’s going to start with an easy sounding $500 repair to the driveway, which will morph into needing to remove half of the driveway, which then becomes digging up the a trench across driveway and replacing a section of sewer pipe, and ultimately becomes a project remove the entire driveway, trenching deep enough to meet code (since the original builder didn’t bother with that), replace the entire sewer line from the house to the street, and then lay down an entirely new driveway over the freshly fixed and sparkling new swear line. By the time it’s done, your $500 “it’ll only take a few days” repair job will turn into a month long $7000 fiasco involving two city inspections, several pieces of heavy equipment, and a squad of bonded and insured union tradesmen. And you’ll get the joy of watching it all happen from 1000 miles away and hoping that someone down there actually has half an effing clue what’s going on.
So yeah, when you’re seized by the idea of being a landlord, save yourself the time and trouble and just go to the bank, take out a couple of thousand dollars, and set it on fire right there in the parking lot. You’ll have just as much to show for your troubles.
I picked up the mail this afternoon and seeing a letter from Delmarva Power, opened it assuming it was a bill for having the service turned on or for a partial first month. I was, of course, wrong. It was a “final notice” to the previous tenant. A final notice in the amount of $2,141 and change. Seriously? Two questions come immediately to mind… 1) How exactly does someone rack up a $2000 electric bill and 2) Why does Delmarva Power let someone rack up a $2000 bill? At first I was angry as a customer, because this is the kind of irresponsible deadbeat that everyone who bothers to pay their bills ends up paying for in the end… because lets face it, the power company is going to get their money one way or another.
After my moment of capitalist outrage, I had a brief flicked of understanding about why the property manager seemed to be so blasé about getting things done to the house. If they stuck the power company with that kind of bill, how much back rent did they owe? The natural expectations would be that after getting hosed the first time, the next tenant would pull the same act so deferring maintenance would almost seem natural. As a landlord, I can relate to that feeling. As a tenant, though, I know I’m going to pay my bills passing sympathy I had for the landlord and property manager evaporated quickly enough.
There’s plenty of backstory to go along with this, but for the moment, we’ll just say that the property manager is supposed to be here tomorrow to start addressing the laundry list I sent the owner yesterday. One or both of them is probably pissed off about this situation, but I doubt there in the same league of peeved that I’ve been in for the last few days. We’ll see how it goes.