Accidental Landlords

Sometimes, what feels like a huge loss becomes the best opportunity. How we became accidental landlords. Photo by Erik Mclean on Unsplash

We had no intentions of becoming landlords. It was 2006; Mr. Moneyaire and I were engaged to be married and we made the decision to buy a home for us to start our married lives together. We decided that we would purchase a home based on Mrs. Moneyaire’s salary (something she would be able to afford plus basic living expenses if she were single).

After a bit of searching, we came across a 1 bedroom 1 bath condo in an “up and coming” neighborhood. It was 2006 and the real estate bubble was growing, but few people realized there was a real estate bubble forming. New builds and rehabs in areas previously forgotten were increasing in value month after month. We were encouraged not to rent but to buy a home we could live in, which made so much sense when it was coupled with phrases like, “you’ll be throwing your money away if you rent,” “you’ll be investing in your future together by buying,” “you’ll be building equity.” It made so much sense, home prices were soaring and we wanted to get in on it.


We bought our condo, and loved it. The unit was still being built so we got to pick our finishes. We were so pleased with ourselves for being able to go into the showroom and pick and agree on finishes so quickly. We bought furniture at the Room & Board. A perfect young professional couple making all the right moves.

And then about 2 and a half years after we moved in, the housing bubble burst and so did the value of our condo. We had bought our condo at $137k in 2007. By 2009, it was barely worth $60k. We were really upset. Upset that we bought into the hype. On top of that, we wanted to move to a larger home and start a family. We couldn’t sell our condo without taking a huge financial hit. How could we get a new bigger home and carry the mortgage on the condo?

Just Renting

One day we met a new neighbor and asked him what he had purchased his unit for. He said, “I’m just renting.” This sparked an idea for us. We could rent out our unit! And that started a rather fruitful real estate venture for us.

At first, it was difficult learning how to be a landlord, but we eventually got the hang of it. Although we eventually started breaking even, we initially had a small loss every month, but a loss we could manage. When real estate started to recover, we wanted to sell the condo for what we owed on the mortgage.

We asked our good friend and expert realtor, Liz Catalano about selling our unit. She invited us over to break the news – that we unfortunately wouldn’t be able to sell anywhere near what we owed. We were still very under water on the unit. Mr. Moneyaire and I were disappointed but it was fine. We were finally comfortable being landlords and weren’t losing money. After a few drinks, a thought occurred to me; what if we bought other depressed units and rented them out? After having bought our first condo for nearly $140k and breaking even on the rent we were charging, wouldn’t we make a profit if we purchased similar condos at half the cost of the one we currently owned but charge the same rent?

Mr. Moneyaire was uncertain. He was hesitant to buy more of the same kind of properties like our first condo. He was worried about going underwater again. But, we got to work looking up other condos for sale where the market rent would not only cover the mortgage, HOA fees and taxes but also deliver us a profit every month. After crunching the numbers, it seemed that it was possible. Mr. Moneyaire was becoming more open to the idea.

Embracing being Landlords

We purchased a 1 bed 1 bath condo in an up-and-coming town close to the city and public transportation for $72k. We financed the deal and put down $15k as a down payment. The HOA dues were $220 and our mortgage payment including taxes was ~$430 a month. Market rents in the area were $1,025 a month. We just had a few fixes to do in the unit before we rented it out. There was a lot of demand for our apartment and we were able to get it rented out for $1,025 a month, netting us about $375 a month. Not bad for a $15k investment.

Wait, you say, isn’t the investment really $72k?? Well, sort of. We had a loan for $57k we’re responsible for, but only $15k of our money was tied up in the property initially. All other expenses were paid for with the rent we received. After this successful deal, we went on to seek out more opportunities.

Being Landlords is Passive income?

Being landlords isn’t as passive as it seems. It wasn’t easy for us to really lean into becoming landlords. We worried about vacancy, about tenants not paying us, about maintenance and repairs and weekends being monopolized by fixing toilets and appliances. Coming up with a good lease seemed daunting.

There were a lot of reasons to avoid real estate investing. Mrs. Moneyaire had to work on Mr. Moneyaire to convince him to do it. For Mrs. Moneyaire, convincing Mr. Moneyaire meant working on finding good deals, showing him how the numbers would work out and also taking on more responsibility to rehab and maintain properties. We couldn’t get into this business without each other and to be successful in it we both had to be on the same page. That was the hardest part to get right.

Creating a Sustainable Process

What helped us get on the same page was agreeing on the following things:

  • The kind of property we would focus on
    • We decided to focus on smaller properties in buildings with an elevator and with in-unit or on site laundry facilities.
    • Another key element is the class of property. We invest in buildings in good condition that looked great – the kind of place we would have chosen to live.
  • The market we wanted to be in
    • We wanted to stay out of the city proper and focus on purchasing condo units on the collar of the city.
    • We made this decision because we wanted to be able to drive to our properties in about 30 minutes or less.
    • Properties in these areas weren’t as expensive as in the city and we’d be able to afford the initial investment and vacancy better.
  • The level of renovation work we wanted to take on
    • We wanted to focus on making aesthetic improvements we could do ourselves that we could earn sweat equity from
  • How to divide the work
    • Mrs. Moneyaire worked on finding the properties, tenants and negotiations.
    • Mr. Moneyaire focused on payments, renovations and maintenance work.

Team work

By working together we turned a problem into a profitable business. It was hard and we didn’t know the first thing about being landlords. We learned, took small steps and didn’t take on more than we could handle. We’ve made plenty of mistakes but at every single step, we’ve kept learning and working together. One of the biggest things we’ve learned about becoming landlords is to take it one step at a time and start small. If you don’t know how to do something, like drawing up a lease, there are a wealth of free resources that can guide you. Find the information you need, execute and learn. You don’t have to know everything all at once to get started. Know the basics well and get started – its how we got into it.

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