Becoming Landlords

I never envisioned us becoming landlords so soon. Maybe one day when we paid off a house, but not now. So when the suggestion of renting out the condo came up, it seemed totally out of the question. I anticipated a lot of stress and headache with managing a property. It could be worth it if we were making a profit, but as of that moment in time, the rental value of the neighboring properties was significantly lower than our personal expenses in owning the condo. After totaling the property insurance, HOA dues, taxes, and mortgage payments, we kicked ourselves for not having rented all along. We were paying more each month to own than our neighbors were to rent! After a hefty down payment and five years of home ownership, we had no equity to show for it. In fact, we now owed more on the mortgage than the condo was even worth. That’s what we got for buying it at the peak of the real estate market before everything crashed. And we were stuck with very few options.

Chris and I dejectedly admitted that we were going to lose more money on this condo no matter what we did. So we could either take a large hit up front by selling it right then, or we could rent it out and spread the loss out over time. Considering we would need cash readily available for our inevitable upcoming expenses, spreading out the loss was the more viable way to go. Also, this way we would at least get tax benefits and slowly work towards paying off the mortgage while waiting for the market to improve.

In calculating how much to charge in rent, we were surprised to learn that the monthly expenses of living in the new house in Wells Branch would actually be lower than the cost of the condo even though the new loan was over $50k more. But because the interest rate was 3.65% instead of 5% and because there was no more HOA, suddenly we would be paying a lot less money for a lot more house.  We also realized that if the rent we charged on the condo was similar to the monthly cost of the new house, it wouldn’t feel like we were losing as much since our expenses wouldn’t change a lot.

Yusuf got our condo listed on the rental market and we had showings in no time. We knew that we were priced higher than the neighboring units, but after we checked out the competitors’ pictures, we were certain that our place was worth the extra money. On top of having extra features and being more spacious (a lot of the listings claimed to be bigger than they really were), our place was just all around nicer. We had spent a lot of time, effort, and money making improvements to our place and it really showed that we were renting out a home that we cared about – not some dump. By the end of the week we had a lease signed. We were worried about the kind of renters we would get, but after meeting them, our fears were put to ease. The new tenants were sweet and seemed responsible, not the type to destroy a place (hopefully).

The week of July 25, we moved out and they moved in. The former owners of the Wells Branch house were kind enough to allow us to move our stuff in before closing so we were able to take things over in carloads instead of having to do everything in one day. Since then, everything’s been pretty good in landlord land, hope it’ll stay that way!