What percent of landlords make it past year 4 of being a landlord

Question

I hear the Tired Landlord Syndrome happens at the year 4 mark… sooner for class D properties and later for class B properties. But, on average:

What percent of landlords make it past year 4 of being a landlord?

Leo R. · Answer

@Mike Schorah I've been self-managing my properties for a lot longer than 4 years...but, my properties are mostly A and B class, with pretty high-quality tenants--and of course, that exponentially lowers the workload, and makes my life much easier... also, my properties perform pretty well (both in terms of cashflow and appreciation), which makes managing them much more enjoyable (the job would be pretty miserable if you're not making much money, or losing money).

I would assume you're correct -- that people who have C and lower properties (or properties that don't make much money) often drop out pretty quickly...managing a D property would be extremely stressful and difficult--not a job I'd want (not for any amount of cashflow)!

I would assume you're correct -- that people who have C and lower properties (or properties that don't make much money) often drop out pretty quickly...managing a D property would be extremely stressful and difficult--not a job I'd want (not for any amount of cashflow)!

Michele Fischer · Answer

Our rentals are D class and we have pushed on now for 13 years.  I would argue that the more fatigued you get, the more you outsource or avoid the headaches.  We stopped self managing when we moved and that helps a lot too.

There were months when we had 3 vacancies at the same time, that was rough.  Rent collection since COVID had not been great, that's frustrating.  I am not willing to expand with this current political climate, but I'm also not looking to sell anytime soon.  It has been good for us to have cash flow, appreciation, and something we can work on together to make money instead of spend money.

Henry T. · Answer

In Seattle the city council will decide for you. They've made it so miserable for landlords everybody quit or moved their assets out of state. So I guess these days the answer may depend on which state you're in.

Bill B. · Answer

Sounds made up. Let’s say the landlord bought in Vegas and 4 years later the property doubled. They can keep renting it out to make a couple hundred a month or they can sell and pocket 200-300k. Did they “give up”?

I think the first year or two you are either excited about it or you got stuck in it because of a problem or opportunity. Once you’ve made 2 years why would you quit other than cashing out? You’re doing less and less work and making more and more money.

Maybe they mean own the property 4 years? In which case it could be people who owner occupied for 2 years, rented for 2 years and then want to sell tax free? This sounds like one of those “according to facts I just made up…” stories. If you can’t prove they’re wrong what’s the downside for them getting paid to make it up?

Bjorn Ahlblad · Answer

@Mike Schorah  Did not know that, probably true and tied to people getting into this business without money and not knowing how to underwrite or screen. I was sick of the stock market after 4 years. Been landlording for 35+ years and still going strong; but who knows what the future will bring.

Nathan Gesner · Answer

I doubt anyone has numbers for this.

I would bet dollars to donuts that the majority of mom-and-pop investors today got started in the last ten years. A lot of them have no reserve and are living paycheck-to-paycheck like most Americans. When things turn south, they'll find themselves in a pickle and sell off.

A lot of people jumped into investing these last couple of years by cashing out the equity from their primary home, which means they got their start through blind luck (market appreciation) rather than financial discipline. They bought in a market that was swinging up. For those that invested in their first flips or short-term rentals, everything has been rosey and a strong market erased most of their mistakes. People that take the easy route in will take the easy route out.

Jay Hinrichs · Answer

Steve, I also think being local  IE your properties are local to you   and being out of state there makes a huge difference..  I mean I have been funding rental properties for investors now for over 20 years..  MS TN IN MI PA MD SC GA Al KS MO CA CO WA OR etc etc.  and I have in some of the mid western and deep south states funded the same address more than once and a few up to 3 times.. so those are burnt out landlords so I know it happens. Plus having walked through hundreds of rental rehabs properties that I am funding I yet to walk into one that was broom clean they are generally trashed pretty good and thats why they are rehab loans !!! And that is why wholesalers pick on landlords and this is where the inventory comes from.

Ben Riechmann · Answer

@Mike Schorah it’s about who learn to build better systems and those that do not.  Instead of tuning out those that said they did real estate for awhile and got out of it, I want to hear why.

Top reasons, please others chime in.

1. They do not improve on their screening system.  Not just how you check background and credit but where you market and how you do it will save you tons of headaches later on.  Learn from your own mistakes but learn from others as well!  I have added from talking to other investors horror stories and thought, yup my lease doesnt protect me from that and added to it.

2. Build a great team.  Weather they stay with you or not, everyone has something to teach you on what to, or not to do.  These are gold lessons and will help save you SOOOOO much stress.  Don’t try to be the guy or gal that knows it all and doesnt look for changing info.  Agreeable Grey for a long time was the color to paint rentals, that is changing.  I would not know that if not talking to people.  There are ways to make cabinets look brand new with paint from P and G that really holds up agains better against tenants then if you shelled out a fortune for new cabinets.  That could get ruined fast.  In this era where building materials are crazy costly there are places you can get high end things for less then the low end junk at Home Depot.  You find this out by reaching out.  Don’t be an Island.

3. Near 17 years been doing this and always trying to learn more and trying to help new and more veteran investors with there stuff.  When we work together we learn from each other.  A new investor may have a field of expertise that can give you an idea as well.  Network.  Helps you not feel alone and get more done.  Less likely to hit that 4 year.

Karl B. · Answer

Great question, plus I've never seen it before on BP so bonus points for being original.

I believe the majority of landlords own 1-2 rentals. Many will own for more than 4 years and over time they'll sell.

For example, my last buy was from a guy who was getting divorced. He wanted to keep his primary residence and had to give his soon-to-be ex some money to cover her share of the property and so he sold one of his two rentals to me to raise the funds.

His other rental is owned by he and his son.

I know a handful of others who owned one rental, couldn't handle the bad tenant(s) they put in there, and sold. Most of these people work a 9-5 and don't have it in them to be a good landlord who fixes things.

I have no clue on the percentages, however, most people don't have what it takes to landlord properly, nor do many have the fortitude to deal with stress.

What percent of landlords make it past year 4 of being a landlord

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