As a 24 year old landlord with limited resources, I didn’t take the time to do background check aside from the interview questions. For a small 8′ x 9′ bedroom, I was lucky to get anyone willing to pay $300 per month with a $300 deposit. With all three bedrooms rented out, I made $1250 per month while paying a $650 per month mortgage. I was house hacking, which is another way of saying that I was a live-in landlord. My tenants were my roommates. Throughout the years, my tenants kept to themselves and never really used the living room or dining room. They were the ideal tenants. When I brought on a middle aged female cashier to rent the smallest $300 per month bedroom, I didn’t expect that she would cause such as mess.
Breaking the rules, bothering neighbors, and bed bugs!
Because my house was clean and carpeted, I had a rule that no shoes were to be worn in the house. This tenant constantly broke that rule, and worse, spilled her drinks on the carpet and the furniture without cleaning them up. One day she locked her keys and ended up staying at my neighbors house until I got home to open the door. I had to apologize to my neighbors for the situation as I was already in hot water for renting out the bedrooms. After dealing with her mess for 1 year, my wife and I discussed kicking her out as her lease was renewed monthly. Only hours after we decided to end her lease, she ended the lease herself so that she can move into her new trailer park home.
When she moved out her room was a mess. She flushed things down the toilet that she shouldn’t have, causing over $380 in plumbing repairs. She brought in bed bugs, ripped the paint off the walls with her posters, and stained the carpet. I used her entire $300 deposit and then some to renovate the room with new paint, new hardwood floors, new closet doors, and a new bedroom door. I did most of the work myself to save money. It took us approximately 3 months to get rid of all of the bedbugs. Disposing all of the carpet and our mattresses helped eliminate the problem once and for all.
Shortly after, my wife and I decided to start a family and no longer rent out the rooms. We waited until everyone ended their lease before renovating the entire bedroom level with new flooring, walls, paint, outlets, registers, and doors. These renovations cost us less than $5000 while improving the value of our home by $23,000. Two years later, we sold the house to buy a new construction property. While we stopped renting out bedrooms, we plan to convert our basement into a 1 bedroom apartment with full bathroom and kitchenette. The basement already has a separate entrance and we have a laundromat a short walking distance away.
Being a landlord has its perks. There are so many people interested in being landlords. You get equity, increased net worth, and increased buying power. However you have to deal with bad tenants from time to time. If you want to invest in real estate without dealing with tenants, you can hire a management company that takes most of your profits or sign up with Fundrise and start with a minimum of $500 to invest in real estate.
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