Undercover Landlord: From Homeowner to Renter
I told my wife last weekend that we are going to sell our house in the Spring and downsize. After she recovered, I was able to list the following reasons we don't need to own a large house/liability:
1 - We have already cared for our parents through hospice and don't need the same set up.
2 - We assumed my wife would go back to her RN position after having our kids, but we decide she would be a stay home mom.
3 - My wife no longer wants a two-story house because of her hip injury.
4 - We could rent an adequate sized house in our neighborhood for $1000 less per month. Lowering the overhead big time.
5 - I want to reduce our housing to 1/3 or my salary and not use our rental property income to live off of. That way the rental income can snowball like we intended.
6 - I want to clean up our balance sheet before I'm 50 and downsizing will make that an easy reality.
7 - We own enough real estate and we won't miss any of the benefits of home ownership.
So a new journey begins.
I will share my insights as an undercover landlord and give you my renter's perspective on way landlord's could participated in the process and what's it's like to search for a rental home in Sacramento.
Comments (11)
Great plan Al! We did this once. Didn't sell the place as it was right when the bubble burst. What we did was actually rent a bigger place in a better area and paid less in rent then we rented out our old home for. It was our first rental unit and still have it. We actually looked into doing it again this spring to cash out equity in our current place but I bought this place so damn well we were looking at paying like 50% more in rent to live in a way crappier place. :)
Shaun Reilly, over 11 years ago
Shaun Reilly you bring out a great point regarding paying less and getting more. There is a growing trend of people seeking access over ownership. We could move into a luxury apartment complex (pool, office space, gym, etc) and pay less than our home. The other risks associated with homeownership also go away (i.e., my water heater is starting to leak - that's the first sign of a $1000 (plus permit) cost coming on.)
Al Williamson, over 11 years ago
I like it. Now you can give the Honey Do list to your Landlord!
Dave Abbott, over 11 years ago
Interesting. I have seen people downgrade from one house they own to another house but never going from own to rent. I am really curious to see how this works out for you. It could be a new investment tool in the making. Good luck!
Francisco Nieves, over 11 years ago
Yep, you're spot on Francisco! This tool of beccoming a renter is a strategy pivot that is showing me more options that I've previously considered. I'm not really looking at the cost of housing and chosing to make trade off for private cello lessons, upgraded preschool, etc.
Al Williamson, over 11 years ago
We downsized a few years ago for many of the same reasons you have mentioned. We bought a much smaller and much less expensive property and quickly paid it off. I regretted selling our dream home for about 5 minutes and I have never regretted living in our small mortgage-free place. Life is so much easier! The only thing is I would not consider being a long-term tenant. Can you find a small place that is the same cost of rent?
Shari Posey, over 11 years ago
Looking to opening more options and not settling down yet. I just might have more money to invest in notes.
Al Williamson, over 11 years ago
May be a good time in the market for this move, Al. You can always buy again if you find the perfect home/deal.
Jon Klaus, over 11 years ago
As ususal, you're correct Mr. Klaus. This manuver even give me the ability to owner occupy the 1031 I'm planning in a couple of years. Maybe I'll end up renting a granny flat/detached complex to pay the mortgage on my residence. We could also do something extremely alternative and live mobile. I'm excited about the opportunties and upcoming lessons.
Al Williamson, over 11 years ago
Goes against convention wisdom and how we are socialized but putting emotion and sentiment aside, it seems to be a solid business case for unique circumstances. Looking forward to feedback on the process...
Ryan Ebanks, over 11 years ago
Right on! I promise to share my mistakes as well and any insights. My pain your gain right?
Al Williamson, over 11 years ago