If you own rental property, then you know it has its perks and its downfalls. Having “mailbox money” that appears every month while doing “nothing” is incredible. Having a renter pay down the mortgage while you gain equity is an amazing situation. Answering emergency phone calls and responding to unexpected maintenance issues is less magical. Dealing with a tenant who doesn’t pay rent on time or damages the property is a nightmare. As I heard from a farmer who fertilized his crops with composted manure: “If you want something good in life, you have to deal with some crap.”.
Taking the good with the bad, we’ve gathered together some thoughts to help you decide if it’s time to retire as a landlord. We start with folks in the beginning of the process and finish with those cashing out their investments.
New landlords:
If you purchased a property and were given misleading, inflated rental numbers, here are a few things I would consider: try a different management company to increase the rent for long term rentals or try to increase occupancy and/or rent for short term rentals. If you can drive up your rental numbers, you could save your investment. Increased rents could also offset increased insurance costs, help pay for improvements to the property, and cover any unexpected assessments. A property manager can also help with destructive tenants and help you navigate through that process. If those steps don’t work, please contact us. We’d love to run the numbers to determine when and how we can help sell your rental property. Depending how long you’ve owned it and the market dynamics, hopefully we can help you breakeven or even net some money. Don’t give up on your dream being a real estate investor. We can help you identify a better property using better data.
Experienced landlords:
Even with the best properties, increased insurance costs, assessments and higher expectations of renters can wear you down. Maybe the condo building updated their rental policies or restricted your renter’s use of the amenities because you self manage. If you purchased your property before 2019, there is a very good chance that you have significant equity. Also, during that time period, you should have enjoyed significant rent numbers other than a government mandated shutdown during 2020. If there are other things you’d rather have than a property that continues to be a headache, let us help you sell your property and you enjoy the boat or RV and the less complicated life of not being a landlord. Please know- I’m going to try and talk you out of it. I am a strong advocate of rental properties but I also am a strong advocate of paying for your peace. If it’s a headache and would improve your life to sell it, please let us help you.
Career landlords:
If you’ve owned a rental for more than 15 years, congratulations. You’ve weathered the storm of issues that come from being a landlord. Your property has gained equity through a market that has gifted you with potentially 6 figures of added value and all the while the renter paid for the mortgage, taxes and insurance. When you were younger, you did the right thing and paid for a new roof, HVAC unit and a new appliance package. Now however, those items are getting older. You yourself are less likely to personally check on a leaking sink and maintenance costs using tradesmen has skyrocketed. It could be time to capitalize on your investment and cash out. Some things to consider: in lieu of selling, is it easier to hand it over to a property manager? Will the asset be easier to leave to your loved ones as part of your estate? It can be messy trying to split a property and having your heirs argue over list price, needed repairs and dealing with a renter. Especially during a highly emotional period of their life after their loss of a love one. Sell your rental while you can enjoy the fruits of your labor. Use the proceeds to help pay for the retirement lifestyle you want and then leave your heirs cash. Cash that doesn’t come with a to-do list and strings attached. We’re here to help if you’d like to talk through your situation.
Owning rental property can be incredible. Adrianne and I own two rental properties and we love it. We use a property manager and I highly recommend Byrd Palmer Property Management. Using a property manager has helped keep us focused on our clients and our family. However, there will come a time when it’s better to sell. Wherever you are in the process, if you have thought that it might be time to simplify or liquidate your rental assets, please give us a call. We’re happy to talk through your scenario and help you make the best decision that’s right for you and your family. We’re here to help!
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