Monday, April 16, 2012

Mid-Month Money Manifesto - Month 4

Month 4:  On Being a Landlord

One of the biggest changes over the last year was my decision to move out of the condo I own (well, technically I do not own anything because the mortgage is higher than the value of the home.  So I own a mortgage).  For those who are newer to my blog, I had been pretty miserable in my suburban condo for quite awhile and last year when I got back from Paris, I had an epiphany and realized that I could choose to continue to live in a home I didn't like or I could choose a different path.


I chose a different path and decided to rent out my condo and rent a place downtown.  Buying a place was not an option as I did not have enough money for the down payment.

I definitely took a more unconventional approach to my living situation, but it has worked.  I know there are people out there who view my approach as moving backwards in life, but I don't view it that way.  I am so much happier downtown, and while my housing expense has increased, it's been partially offset by a decrease in some expenses.  Like going from buying gas once a week to once a month, no longer needing a bus pass or a gym membership (my condo has a really nice gym), and paying $70/month less for cable/internet (which makes no sense to me but I will not complain!).

I do feel extremely fortunate to have a wonderful tenant who pays his rent on time (or early most months).  He takes great care of the place and said he plans to stay there until he buys a home. I hope and pray that he stays in my condo for years!

Being a landlord has not been too bad, but it's not the easiest thing either.  I had to figure out how to draft a lease agreement, run credit/background checks, and apply for a rental license.  I did all of that in the weeks leading up to taking my 1st CFA exam when I was already stressed to the max.  Filing my taxes was way more complicated/complex and I had stomach aches until I filed them as I was worried about how my taxes might be impacted (it ended up having very little impact, thank God, as I had all those medical bills to pay and could not handle a big tax payment on top of that).  And I have the added worry of knowing that some day this tenant will move out and I'll have to start all over and maybe the next tenant won't pay so promptly or won't take good care of the place...

But in the end, it's worth the stress - because I am so much happier in my new home and can't imagine living anywhere else.  Some day I will buy again, maybe in 2-3 years, but for now, I am content with renting.   I look forward to the day when I will be able to sell my condo and close the door on that bad decision, but in the mean time - renting it out is the right thing for me to do.  Financially speaking - I'd prefer to own the home I live in as renting is sort of like treading water, to some extent.  Right now I want to buy in the development  I live in, but I want to give myself 2-3 years to make sure this is truely the lifestyle I want in the long run.

But this whole renting out my condo and renting a condo?  It's definitely been a step forward in my life - not backwards.

Do you own the home you live in?  If so, are you happy you made the purchase or do you wish you had waited to buy.  If you rent, do you wish you had bought or have plans to buy?  I unfortunately bought at the peak of the market, right before it burst. It's a decision I completely regret, but I have learned a lot in the process, and I will be a much smarter buyer next time around.  I am hoping to be in the position to sell my condo in 5 years as I should have some equity at that point.

17 comments:

Becky said...

We rent, and the only regret I have about that is that it's not going towards something like a mortgage. Northern Virginia prices are ridiculously high, so it would be nice to have that going towards really paying something off.

However, having said that, I have no desire to own a home right now. It's SUCH a responsibility, and I feel like I get stressed enough about our finances now I don't want to add that on top of it. Surprisingly, the amount of money it is (however much a month over 15 or 30 years), doesn't phase me. What freaks me out is the "just in case" situations. You have to have all this extra money (after down payment and closing and moving), just in case something breaks, because guess what? You have to fix it, you can't call a landlord. That's what I'm not too excited about.

One day I'll be ready for it, but I don't subscribe to renting doesn't create a home like owning one does - you create a home where you live if you want to, end of story. (My parents rented the whole time I was growing up and I never felt like we were gypped at all).

Omg this comment is a novel - ha! Happy Monday!

missris said...

We rent, and I'm happy to do so for at least a few more years. We thought about buying something, but there's nothing in Pittsburgh that's even close to what we want. We want a loft or condo, and they don't really have that kind of thing here, not in the neighborhoods we're willing to live in. What they do have are ancient, falling-apart houses that look like money holes to me. I also don't want to be trapped in Pittsburgh for any longer than we need to once D is done with his program, so I don't want owning a house here to keep us here longer than we want. We thought about buying but I think that while we live here, we'll stick with renting!

imlivinginadream said...

It's so important that you're following what feels right to you, even when it seems like no one agrees with your decision. If you're happy living elsewhere and renting out your condo, then for the moment that's great! And it seems to be working out super well for you. I would have done the exact same thing.

I've never lived out of my mom's house, and I don't know what circumstance will make me want to, other than when I meet someone. I think once I'm out with a significant other it will be much easier for me to not look back, as I don't think I'd purposely move out alone right now. Especially not with school and stuff. I've still got a few years until I need to worry about moving out I think, so one step at a time for me!

Anonymous said...

I own my condo and am very happy to have it right now. The housing market where I live has gone up significantly. I'm looking to make a large profit when I sell this summer. Large enough to repay my student loans all in one go! I'm looking at downsizing when I move to a more rural location this fall. Owning isn't painless, but in this instance, it's been a huge boon.

Stephany said...

I have absolutely no desire to own a home. None. I've rented my entire life and I really love living in an apartment. Sure, you sometimes get loud neighbors but being able to call when the A/C breaks or I need a new lightbulb in the bathroom (yep... they do that for us!) is so, so nice. I'm not a very home-ownery type of person, I guess.

I'm really glad you took the leap and found a place downtown. You seem so much happier and that's all that really matters.

Caroline said...

I want to own a home someday, but definitely no time soon seeing as I can't seem to stay in one place longer than a year : ) I like renting, so far. It's nice to not have to worry about up keeping it or maintenance issues.
I'm really glad you moved and love the area you live in. I don't think anyone should see choosing happiness as a "step backward"

Nilsa @ SoMi Speaks said...

With the way the real estate market is right now, I'm not sure I'd buy unless I was certain I'd be living in that home for no fewer than 10 years (and that's a long time!). Like you, I think we owe more than our home is worth (or at least, if we were to sell it, what we could get after Realtor fees and taxes and closing costs would be less than what we owe - sigh).

So, we know we'll be in this home for another 3-4 years. At that point (when Gavin is ready for Kindergarten), we have a number of options. (1) Stay put. (2) Sell and rent/buy somewhere else. (3) Rent out our place and rent somewhere else (like you!). In all honesty, even if we're able to sell our place, I'm going to be very hesitant about buying until I'm absolutely sure our new community and neighborhood is a place we want to stay ... because, it really sucks feeling like you're stuck living someplace with the added pressure of a future education for your child.

Kyria @ Travel Spot said...

I am so glad that you made that move. Even if it seems "backwards" (which I don't think is true) it was the right decision for you mentally and so that makes it great.

I am in the same boat as you. I bought a house at the height of the market and have been renting it out while I traveled. I was not as lucky as you with tenants however. I have had one bad tenant after another. I finally have a lady in there who I think is going to work out, but it's only been less than a year so far, so we shall see. One of the best things I ever did was to get a property manager. I hated getting calls from the tenants about things that needed to be fixed. Now, I don't get any. Sure, it costs me 10% of the rent, but it is SO worth it.

In the meantime, I am renting. And loving it. Best decision ever. So I am right there with you...

abbi said...

I'm glad we bought but we bought at the wrong time too. We keep thinking of buying a second property since prices are still good but it's too hard to make that leap and the financial commitment. I think what we did makes sense, especially since you were able to get a great renter!

Amber (Girl with the red hair) said...

Great post!! I think buying vs. renting is so dependent on where you live and what the market is like there. It literally made NO sense for us to continuing renting, we're currently paying $50 more per month for our mortgage on a 3-bedroom, 1300 sq foot townhouse than we were on our 600 sq foot basement suite with only one window... Rent is astronomical in our city! The housing market is pretty good here so I wasn't too concerned about being stuck and if worst comes to worst we will just rent our townhouse one day when we move since I know we'd have no problem renting it being so close to the University!

I don't think you made a "backwards" decision though. Anything that makes you HAPPIER is not backwards and clearly moving downtown was such a great decision for you!! I wouldn't be opposed to renting again one day depending where / if we move to a new city but for right now buying made way more sense for us!

Kelly (She Wears a Red Sox Cap) said...

I really am so curious who in your life tells you this is a "backwards" decision- I think it made perfect sense to you and it makes you happy so that is what matters.

I own a house in the suburbs- luckily I bought it at a more "down" time in the market, so we will probably make at least a little money off of it when/if we sell it. Then again, we probably would not sell for awhile so who knows what the market will do next! I like owning a house financially speaking, but Eric does the vast majority of the house repair type of stuff so I have that advantage. I also think owning a house does not give you a ton of flexibility, which for us has been okay but I don't think it's great for everyone.

Cherry Blossoms said...

You made the perfect choice and in all honesty you did what was best for you and that is what matters. I love the comment from 'imlivinginadream' response. I need to remember that for myself.

Now, if only I could be there sipping a glass of wine with you and looking over the city skyline!

Abby said...

I think your move into the city and out of the burbs was the best decision ever. You are so much happier, and it really is all about location! I was the most unhappy I've ever been when we lived in Sahuarita, and it had nothing to do with the house - it was being 45 minutes from EVERYTHING!!!

I also admire you for renting out your condo and making the best of the situation. Renting truly is a scary thing, and I'm so relieved you found a good tenant! Such a relief! I can't wait to see you apartment, by the way!

I also don't think moving into the city was a step backwards. You made a smart move that suits your lifestyle. One of the greatest luxuries to me is being able to walk to your hot-spots! We don't really have that, but we can walk to the grocery store & my favorite restaurant. I love it!

Carolina John said...

I'll also be quite happy if we end up renting again. The maintenance costs on owning a place can be astronomical and I just don't feel like putting up with it anymore. I'm also sick of being a landlord so we're dumping both rental properties, then going to sell the house we live in. We just didn't buy this one right by putting up a large enough down payment.

amy b.s. said...

good for you for sticking with the choice that works for you. owning something like that is hard work, but you should be able to feel good about it. sounds like you made that happen.

Jolene - EverydayFoodie said...

We own our home, but I totally see the appeal of renting.

pinkflipflops said...

we own our house and we pay less for our mortgage than we did for rent. we rented a town over but rent in this town would be more as well. i like owning and i love our yard but i could do with a better house. we bought in a hurry but luckily our house is actually worth more than what we paid. SCORE! ;)