Being Landlord - picture of house for rent
Real Estate

Being a Landlord: The Good, The Bad, and The Ugly

This article may contain references to some of our advertising partners. Should you click on these links, we may be compensated. For more about our advertising policies, read our full disclosure statement here.

We’ve owned 2 rental properties for over 10 years. Truth be told, we probably overreached when we bought them. And even though becoming landlords has been one of the best financial moves we’ve ever made, you’d be wise to consider all of the ups and downs before diving in.

For example, we’ve experienced some recent wins and losses. Last month, one of our renters needed to break his lease after losing his job – which left with a week to scramble and find new renters. That meant paying for an ad, getting the house cleaned up, interviewing applicants; the whole thing was super stressful, and we were sure we’d be out at least one month’s rent. LOSS

Luckily, the house was in really good shape, needing only a good cleaning. Even better, we found renters who had to move into the house immediately. Like, our old renter moved out at 8 AM and the new renters were there helping me get the place cleaned up by noon! Oh yeah, we also threw a huge chunk of money toward the mortgage, so we’ll have this particular property paid off in about 3 months. Win, WIN, WIN

Honestly, we love being landlords… most of the time. Owning rental property is a great tool for investing in your future. But before you decide to run out and buy a property yourself, here’s some honest food for thought.

Being a Landlord – The Good

Diversification: We look at rental property as another tool in our investing toolbox. It’s not our only investment vehicle. Instead, it’s a way for us to stick a few eggs in different baskets. Eventually, these rentals will help supplement both our kids’ college education and our retirement. We think that’s pretty great!

Income: Did somebody say money? HOOOOO! Seriously, we love rental properties because they’re not just money for later; they provide an additional stream of income right now. We’re trying to create as many streams of income as we can, and you should too. The more money you have coming in from separate areas, the more financially stable you’ll be.

3 Ways to Earn: Speaking of money, rental properties provide you with 3 ways to earn. Our strategy is to buy the house below market price, make money while we own it, then sell it off (maybe) when we’re old and gray. So, we make money on the front, middle, and back end of the deal. BANG! Even more diversification.

Real Property: Another thing I love about real estate is that it is tangible. It isn’t paper money. A rental house is something that you can touch and use. It has real value, which means it will always be worth something. Beyond that, no matter where you live, there will never be a shortage of renters.

See Also: Why My Rental Properties are a Good Investment

Using Other People’s Money: We were able to afford our first rental because we financed it. For us, it was a good deal because our renters have basically paid off both properties. Within a year, we’ll own two rental homes outright… paid off with other people’s money. That’s pretty sweet if you ask me.

Being a Landlord – The Bad

Carrying a Mortgage: Don’t run out and finance a rental house just yet! Borrowing on a rental house means some fairly major risk for you. If your renter doesn’t pay, is late, or the property is empty, you still have to pay that mortgage bill every month. Before making the leap, be sure you’ve got the money to cover the costs for a few months if needed. (Side note: To reduce our risk, we plan to purchase our next rental using cash.)

Repairs: Being a landlord isn’t all fun and games. Sure, it’s awesome to watch the money roll in when nothing is wrong. Heck, we go months at a time without any problems. But, when something breaks, you are responsible to fix it. That means you need the money, the knowledge, or both to handle the issue. We’ve replaced heating and cooling units, refrigerators, roofs, and more. Just last week, we called a plumber to snake out a drain. Build these costs into your rental fee each month so you’re constantly saving cash for the next repair.

Finding Good Renters: A good renter can be worth their weight in gold. Seriously, we’ve had one group who has rented from us for about 8 years. Although we have the occasional hiccup, they are relatively easy to deal with and take excellent care of the property. Unfortunately, these type of renters aren’t usually the norm. So, when you find a good renter, hold on to them.

See Also: Confessions of a Landlord: I Never Raise the Rent

Being a Landlord – The Ugly

Major Repairs: After being a landlord for a few years, you WILL have your own horror stories. Walking into a property that is destroyed, finding dead animals, having to evict tenants – these things can crush your soul and cripple your budget. We once walked into a rental to find the front picture window replaced by a window found in a junk yard. There was also thousands of dollars in dry wall, carpet, and other damage to the house. In fact, all the interior doors were missing… the freakin’ DOORS! We spent over a week, day and night, cleaning up the mess – sending the babies to Grandma’s house and celebrating our anniversary by painting walls and ceilings. Not fun.

Final Thoughts

Don’t let the horror stories scare you. The vast majority of the time, being a landlord is easy money… and it’s one of the smartest things we ever did.

When I think about all the fuss, it all seems relatively minor. In a few months, we’ll have 2 properties that are paid off, generating cash for years to come. They’ll provide a great monthly income base for us, supplementing the cost of college and our retirement. Spending a few hours snaking drains and painting walls is definitely worth that!

Do you own rental property? Have you thought about buying a rental house? What horror stories do you have? Let us know in the comments below!

Similar Posts

Disclaimer: Comments, responses, and other user-generated content is not provided or commissioned by this site or our advertisers. Responses have not been reviewed, approved or otherwise endorsed by this website or our advertisers. It is not the responsibility of our advertisers or this website to ensure that all comments and/or questions are answered. Club Thrifty has partnered with CardRatings for our coverage of credit card products. Club Thrifty and CardRatings may receive a commission from card issuers.

15 Comments

  1. My parent owned a rental property before, but they decided to sell it. There was once an instance that the renters are very rude and they didn’t take good care of our place., so they decided to sell it.

  2. I hope you’ve filled your quota of horror tenants now and only see blue skies and LOTS of doors when you walk into your properties at the end of the lease.

    I’m not sure if we’ll ever be landlords, maybe, it’s definitely not on our radar right now though. One thing that is definite is that we try to be stunning tenants. We want to be those tenants that you mentioned are worth their weight in gold.
    The better tenants we are the more we hope we’ll get less rental increases, more of our requests dealt with nicely and get to stay on as long as we need – definitely worth being top notch tenants if we manage to get those things out of the deal.

    Jasmin

  3. Kalie @ Pretend to Be Poor says:

    We are very interested in owning rental properties, though we’re not there yet. Some of the risks, like difficult renters and major repairs, do concern me. But I love the idea of perpetually generating income in a concrete investment, and I think we have the right skills for it. We’d also love to eventually purchase in cash, though we might need to finance the first one or two to get the ball rolling.

  4. We became inadvertent landlords after we moved across the country but couldn’t sell our house. For us, it was all Ugly – we spent tens of thousands of dollars in repairs. It wasn’t necessarily the renter’s fault, but our home was built on shoddy ground and a series of bad weather events only made it worse.

    We eventually ran out of money to pay all the repair bills and it’s gotten so bad we can’t rent it out anymore (nor sell it), so we’re in the process of handing it back to the bank right now.

    Even though this was probably the worst rental real estate situation you can imagine, I’m still anxious to try rental real estate in the future, as long as the house is built on solid ground!!

  5. Thanks for the honesty in this post! I’ve always been curious about becoming a landlord. Obviously, there is income opportunity there, but I would be concerned about the quality of tenants and all the handy-work involved.

  6. We have 4 rentals. One’s just farmland rented on an annual basis, so it’s pretty easy. The others though take up some time since my husband does almost all of the maintenance. Nothing like getting those calls/emails in the middle of your vacation. There are a lot of benefits, though, particularly since the cash flow can be a lot higher than the taxable income.

  7. Thanks for sharing your experience, Greg! Buying a rental property is on our radar, and we hope to have one within a year or less. We are financing the first one, but have a decent down payment. We’re on the fence on managing it ourselves or not…I’d like to try to do it ourselves in the beginning and maybe turn it over to a property manager a few years down the road.

  8. Congratulations on almost having the property paid off! Very exciting, and I’m sure your cash flow is about to get a LOT better.
    I bought most of my rental properties at literally the worst time in history: 2007-2008. Still being flagellated for that mistake. But the lessons I learned from it have changed the course of my career, and led me to where I am today with my business.
    Thanks for the great article, definitely all information that prospective landlords need!

  9. I acquitted some rental property from my mother and absolutely hated the entire experience. A person truly needs the right intestinal fortitude to be a landlord. A couple of the tenants were dream renters, paying on time and asking for little. However, some others were already behind in their rent, or had trashed the place to the tune of $20,000 in repair when they moved out, and allowed water to accumulate in the basement due to a clogged drain they never reported….resulting in mold. I sold those puppies as fast as I could and never looked back. Being a landlord is not a passive activity where you just sit back and watch the dollars roll in. It took gut wrenching work that kept me up at night. Now that money is invested in a nice calm stock market…..LOL!

  10. We have thought of owning rental property ourselves, but live in fear of those horror stories. My former landlady before we married was a retired Catholic school principal and a widow,and she and her late husband had bought and paid off several three-family properties in our city. She was retired, and the properties allowed her to live comfortably without worries about money. I know she dealt with some awful tenants, however, because the guy who lived beneath me had a pit bull who he allowed to pee all over the hallways, and the lady on the first floor allowed her heroin-addicted sister to stay with her, and the sister basically ran a brothel out of the apartment while her sister was at work. Bedbugs are epidemic where we are in SW Ohio, and I have the heebie-jeebies just thinking of those!

    I think if we did it, I would want to have a property manager dealing with the shenanigans.

  11. Hi Greg,

    Nice post! Wow, looks like you have been through it all…sorry that you had to deal with evicting tenants.

    I am been looking into real estate for the past few months. I hope to acquire a rental property in the near future. If I do acquire a property, I would choose to go with property management.

    –Michael

  12. There are ups and downs to owning property. I think it just depends on how much you want to handle on your own. Property management companies can be of great help as far as finding and screening tenants, helping with the lease process, collecting rent, handling maintenance requests, plus other things. Thanks for sharing your experience!

  13. We acquired our first rental 4 years ago. Both our daughters went to college in Wilmington NC. They both obtained a scholarship that included a living stipend. Instead of paying that stipend to another business establishment, we bought a townhouse there and they stayed there and got another roomate for the third bedroom. They have since graduated and has moved on. We rent all three bedrooms on a 9 month lease (school year) snd we use the place over the summer as our getaway!!! We are 10 min from the beach and less than a mile from the campus making it great spot for students! We love that townhouse!!

    1. That’s a great idea Sharon! We’d like to do that when our kids go to college as well. We also plan to use the rentals we have to help pay for part of their tuition.

  14. We have been buying properties for 20 years now. We now have 20 units. 12 houses and 4 duplexes. I can say I am happy we have done this. My real passion is making things pretty again. But the bonus is they pay our mortgages. It has been a lot of hard work but we have met a lot of very good tenants. I would say 90% have been excellent! We have a couple that have been in a house for 11 years another for 8. Average is 5 years. We purchased our first one using the equity in our home and then continued using the equity in our rentals.. The houses are a break even if you have a mortgage but I can say they tend to stay longer. The duplexes have instant income but I have had a lot of patience and decided to take the income to pay the mortgages down quicker. It’s a learning process but I am glad we have done this. Our future looks bright and we will have something to leave our 4 children. They can be landlords or sell them. So I give it a big thumbs up if you can fix a lot yourselves and have the patience to not take an income for awhile. Do background checks! And always call current landlords and previous landlords! And listen to your gut when you meet them for the showing. In 20 years I have had 2 people call me for a reference on my tenants! Then people wonder why they get stuck with the bad ones..?. You have to do your homework. Protect your investment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.