Real Estate Investing #21: The Wrap Up
November 24, 2020
In Update #18, pre-pandemic, I was talking myself around to being less irritable about the rental. This is supposed to be a long term investment, we were relying on the cashflow to cover the costs and the little left over to build up a buffer to cover long term costs. This property was the first brick, a cornerstone, of a decades-long investment strategy starting in 2015. I had grand plans.
However.
We started 2020 with clearing out the absolute shambles left behind by Tenant 2. I emptied out the coffers and added more money out of pocket to renovate the entire place from top to bottom. That was a lot of money and a lot of work even just to oversee from afar and I had hopes of a good fresh start.
Tenant 3 seemed lovely on paper. They had stable jobs which was nice and we were finally charging market rate.
Then the pandemic shut downs began.
Then the neighbors started being horrific trolls.
Then Tenant 3’s jobs needed them to move.
Then the PM wanted to quit managing the property because of reasons that I am almost positive are simply code for racism (or laziness).
Insert a very long sigh and some cursing and more sighing.
I finally admitted that I am not only not enjoying this investing venture anymore, I kind of hate it. I hate the PM’s inability to communicate clearly, I hate their refusal to manage in the way that I asked. I hate the HOA and their non-responsiveness to tenant issues and to my emails and the constant violation notices for the smallest of infractions. I hate dealing with people, period.
Everything about this experiment forced me out of my comfort zone. While that was a good learning experience, it turns out that everything about this type of investing rubs me the wrong way.
I did some initial research on both sides. I searched for a new PM and talked to my original broker to suss out the market. It seemed like a pandemic would be a terrible time to sell but the initial conversations suggested that it’s good enough.
After the broker did a thorough walk through, I made the decision that it was absolutely ok to simply not want to do this anymore. Luckily, financially, it can also make sense to sell now.
I gave the broker the go ahead and the man went to WORK. He had that property listed by the next business day, and held ten showings the day after that. We had offers in hand that night. I was stunned. Happy but stunned! We had a brief ten minute conversation and chose an offer to accept.
We had to have an appraisal, negotiate on the results of that appraisal, have an inspection done, and then finalize the details of the offer. I must have e-signed half a dozen addendums. Then we had a notary come out and I whipped through those forms.
Until the end, it all moved really quickly. We got stuck the week of closing on some incorrect demand statements from the local utilities and I had to spend about 6 hours that week sorting out the various utilities and talking the escrow officer through the discrepancies because I wasn’t going to wait around for my payment for 3-5 more days when we were so close to the finish line!
From the day I officially told our broker to list the place to the day we closed: exactly 7 weeks.
I will love…
Not dealing with the HOA anymore.
Not paying bills associated with the rental anymore.
Not dealing with the PM’s constant phone calls, instead of texts and emails as I had insisted we conduct business from DAY ONE.
Not dealing with the PM’s excuses for processing payments late even when the tenants pay on time.
Not dealing with the PM’s inability to proactively communicate.
Not having to vet new tenants.
Not having to drop everyone to deal with someone else’s broken utilities or appliances.
Not having to maintain a cash reserve for the rental.
The feeling of FREEDOM from this rental is glorious!
With glee, I happily deleted the scheduled payments for the HOA, the line items for the rent and the mortgage in my annual cashflow spreadsheet, and the rental mortgage off our net worth. I transferred the rental’s cash reserves back to our accounts since I had saved a full year of mortgage and HOA payments specifically for the pandemic out of pocket and it “owed” us about $10K in repairs anyway.
I suppose it’s possible that when I don’t have a full time job, one and a half kids, and two dogs to take care of, I might want to try some kind of ethical real estate ownership again but for now…
“So long, farewell
Auf Weidersehen, goodbye
Goodbye
Goodbye
Goodbye”
Read more of our experience with real estate investing!
We sold recently and it was similar. We had 1 offer pre-list, 8 more day-of, a bidding war, and sold for about 40,000 over asking price. Even with the post-inspection fixes and concessions, it was still ultimately well over what we were expecting. I honestly would have been glad for much less: we were So Very Ready to be done with having a second house that wasn’t really doing us any good. We could have sold at a loss and I still would’ve been happy. Selling at a profit was a nice bonus.
I like to imagine the new owners being happy about having the house, setting things up how they want, enjoying the space. That house was a good place for us when we were in it, but once we were out, it was just a burden. Much better for it to be a good place again. For them.
Oh wow, that continues to amaze me that some aspects of RE are going for such high prices. I’m glad you’ve also freed yourself of a burden.
Woohoo freedom!!!
Exactly!
Thank you for this honest post!!!! I have always felt like landlording isn’t for me, and you’ve really helped show why it can be a huge ordeal. I’m so sorry it didn’t work out, but am glad you feel so certain and happy with your decision to sell. Good riddance!
You’re welcome! I had hoped for a different outcome but this is how it shook out and I’m happy to share the honest truth of our experiences. I think it’s so well suited to some personalities and circumstances but not mine š
YAY!!!!! Congratulations!!!
I would NEVER want to landlord. It sounds awful awful awful. The people who enjoy doing it have much thicker skins than I do and can handle a terrible tenant now and then(or are just extremely lucky). Not me!
THANK YOU!
I don’t know how my investing buddies do it but they seem to enjoy it. To each their own š
I’m still savoring my freedom.
Real estate investing is definitely not for everyone. We’ve had lots of ups and downs but after building a portfolio over time, we are able to deal with a problem properties (like the one you have) without it disrupting our portfolio.
Glad you were able to get out of your investment quickly!
Thanks!
I definitely know I will never be a real estate investor. For all of your reasons above.
Damn good reasons, if I say so myself š
Yes! People underestimate the pain-in-the-assness and the risk of getting a bad tenant (or even getting hit by a good tenant’s bad luck). I do rent out a suite in my home but it’s close enough to keep an eye on things and build a solid relationship with my downstairs neighbours and make them want to do the right thing. Especially with how full your plate is I am glad to hear about your decision. My mum has a rental she is selling because the magnificent property manager is retiring and mum doesn’t want the hassle of trying to find a new one.
Personally I DEFINITELY underestimated my tolerance for the pain in the assness of hiccups with this type of investment. The money part is easier for me to manage but the in person stuff? No thank you!
I’m glad you have a better set up with your own rental! Best of luck to your mum in her sale.
So happy for you! Great decision – just what you needed!
Thank you!!
Well, that was an event and a half for sure. Just finished the rental saga that you went through and yeah. That sounded so exhausting, especially with the Fiasco and the constant HOA violations. Actually adding a new line to my lease about HOA violations now. ššæ
I am glad you were able to sell when you did. The market was awesome for that at this time. Hopefully, if I end up hating this, I will be in a good position to sell.
Congrats on being free!!!
Yay, glad that helped you protect yourself even a smidge!
I’m REALLY glad we sold when we did. There’s no way I could have kept it with a new kid during the pandemic.
Best of luck on the start of your journey, I hope you love it!