Becoming a Landlord, was it worth it?

[Larry Johnson]

Hello,  I'm nearing retirement age and I'm considering buying a rental property.  Am I insane!  Was it worth it to you financially?  Did you lose money your first year?  I've heard horror stories and success stories.  Do most people lose money like first-time flippers, or do most become successful?  Is becoming a landlord more risky than flipping homes?  Thanks much.

[Bettina F.]

Yes, we have been very pleased with our investment.  We moved from a high cost area to a lower cost area to retire.  When we sold our paid for house, we were able to use that money to purchase a 6 unit apartment.  We are healthy, active retirees and do our own management, maintenance and landscaping.  We hire out the bathroom remodels and replacing rotted subfloors. For the first two years, we used the profits to fund building improvements and build up a contingency fund.

We are now able to take $3000 a month out of our LLC. Since we have low fixed costs, we do not stress if we have a vacancy, since we have plenty of cash flow. We do not put up with bad tenant behavior because we are not afraid of vacancies. We have not had to take much out of our 401Ks -- we are covering our day to day living expenses on Social Security and money from the apartments. We spend about 4 hours a week at the property.

As we get older and frailer we will have to hire more out, but for now it is very manageable.  My plan is to have my daughter inherit the apartment building (on a stepped up basis) when we die.  We are fortunate to have decided to settle in an area with rising property values and rising rents.  

I am a retired RN and my husband is a retired mental health counselor.  Our former jobs both focused on working with people, and setting limits.  This has served us well as landlords.  Life experience also has it rewards  -- my husband and I were timid landlords when we were in our 20s and rented out a house we could not sell.  With experience comes self confidence,less willingness to put up with tenant shenanigans, and an overall lower level of landlording stress.