Hope you believed me when I wrote in January that I thought I’d retain ownership of that awesome little rental house for the long haul; that was the plan, Stan.
My old home, the original Merrypad, is a fantastic little place and property that I had no trouble renting out. Realistically I suppose, it could run itself for years and years. That said, I pulled the trigger and we are officially parting ways. Sayonara. Great experience. Exhausted. Ready to be financially savvy, focused on family, and explore the potential in our current home.
The succinct rationalization is this: I would rather focus on family for the next two decades, and eliminate the daily stress related to maintaining a rental property. I have ~12-15 years left on the mortgage. I am paying a little more against principal, because combatting interest is a great thing, even though it’s at the expense of not having pocketed anything for the 22 months that it was rented. Considering the additional upkeep and expenses that I would expect to incur on that property over that same time period, I would guess that it would take me an extra 2-4 years to pay my savings back with rental income from the fully-paid for property. When you think about it, that means I’ll be spending the next 14-19 years trying to pay off a mortgage, and paying myself back for the upkeep on my home. My daughters will be graduating high school and college by the time this house is “pure income,” and at that point, guess what, it won’t actually be “pure income” because there are still taxes, insurance (which is higher on dwelling properties than on your primary residence), and maintenance. Even on days when everything is running smoothly, I’m still going to be burdened by the possibility of something breaking, maintenance contractors who don’t follow through on jobs, hoping rent is on time, and inevitable repairs and tenant circumstances. I will have been stressed and nervous throughout my children’s entire childhood.
The financial reality that I’m considering is this (and it’s way deeper than I usually travel on this DIY blog, but I hope some of my logic resonates with other people considering rentals): If 20 years from now is when I finally have an opportunity to be socking some of this income away, will it have enough time to grow to pay off in retirement? What if I took the profits from the house right now and allowed that to grow further for 20 years? I think there’s some misnomer out there that rental properties are an easy retirement investment, but if that’s the case, I’m not convinced I’m “doing it right.” Thank goodness for financial advisors who can project figures and provide rational scenarios to help with planning. Retirement planning is more important than a lot of things, and I’m not trying to be like a Merrill Lynch advertorial, but I’d rather have a stable retirement plan of action now than spend 20 years thinking that my rental strategy might not pay off.
Scott McGillivray, I gotta have a talk with this dude. He makes the rentals seem like a fantastic idea, and I know I would have regretted not giving it a go, so for that, thanks man. I caught a lot of his HGTV show Income Property over the years–it’s one of my favorite reality shows ever–and I simultaneous credit and also teasingly blame him for being in this situation. I have newfound respect for all landlords, especially ones who operate multiple properties and are able to make good bank doing it. The reality of it all is that it’s scary, and it’s not easy, and those who say they’re doing great at the rental game… are they really?
As far as the sale is concerned, I have a plan to have it on the market this spring. I’m working with the same realtor who originally sold me the house (shout out to Michelle at Nothnagle), entertaining buyers who have already expressed interest, and hoping… for lack of a better term… that this can be an “easy out” so that I’m not fronting the full mortgage payment for too long without the support of my tenants. The tenants will be gone before it’s on the market, which is kind of unfortunate because they have it nicely decorated, and when they’re gone I’ll be left with a case of the empties (or staging costs), but the vacancy will give me some time to do pre-sale maintenance and cleaning.
One nice thing that came from the reality of the situation, is that photographers Anne Gridley and Gary Graves are willing to share their professional photos to accompany my listing. This duo came to photograph the house in November 2012 in its peak state. Their images accompanied an interview that ran in the Spring 2014 issue of Small Room Decorating, and they couldn’t have captured the home in a more perfect light.
They gave me their blessing to share the photos with you here too. If you know of anyone who might be interested in my old home, feel free to shoot me an email.