For the first year of our married life together, my husband and I were still living with roommates in a small three-bedroom apartment in San Francisco. The astronomic cost of living in the city and the knowledge that we were planning to move soon meant that we were fine with our living situation.
At least we were. When an opportunity came up to buy a duplex in Chicago, my husband's hometown, the thought of being homeowners and not having roommates anymore was too good to pass up. Had we not been so eager for our own place, maybe we would have stopped to think about what owning a duplex and being a landlord actually entailed.
First, we had to become familiar with our new city's ordinances and renter protections. We had been very familiar with those in San Francisco, but Chicago was totally different. This meant sorting through legal documents to suss out our responsibilities and rights, contacting our accountant since the rental income would go to our household income, and drafting a comprehensive lease. None of these things I am particularly skilled with, but thankfully my husband is.
The cost of getting the place rented, luckily, wasn't too extravagant, and once we got a handle on the legal requirements of being a landlord, things got easier. It was just a lot of legwork in the beginning since we were essentially embarking on a new journey.
Trying to find easygoing tenants was more difficult than we had anticipated. Chicago has a lot of rental options so renters have many choices. Having the cost of the mortgage payment dangling over our heads was doubly stressful. We needed to find the right tenants quickly, all within a competitive market.
It became practically a full-time job trying to rent out the apartment. With taking and editing photos, cleaning, staging, writing the Craigslist advertisements, handling the showings, and verifying applications, we were pulled in a ton of different directions. At the same time that we were trying to create our own home, we were expected to do the same for someone else.
In the time that we've owned the building, we have had two different families as renters, both of whom were found through Craigslist. Since we would live below our tenants on the first floor, it was imperative that we choose families that we would get along with and be comfortable sharing the space with, and the familiarity of Craigslist helped with that. I had reminded myself that having tenants above us wouldn't be all that different from living in an apartment. At least this way, we'd get to pick who those tenants were. It turns out that decision was harder than I had expected.
As a renter, when the people above you are obnoxiously throwing a tap-dancing party and practicing the drums, you can storm upstairs and complain. As a landlord, it was never that simple. If our tenants were being loud, there wasn't much we could do. Sure, we could have stormed up to the second floor and chastised them for their midnight yodeling, but then they could just as easily lodge a complaint against us.
Every city is different when it comes to tenant law, with some places more strict than others about what each person's responsibilities are. Because we were going to be "live-in" landlords, there was more flexibility, but there were still protections in place. This meant that we couldn't be terrible people and deny renters based on any protected reasons, and if we were horrible landlords, they still had a way to be heard and respected. Thankfully, none of our renters practiced sumo wrestling, so we were able to shake off most noise issues, but they were still annoyances. Just because we were on a particular schedule, it didn't mean that our tenants were. Since they had young kids, when they were up and playing ring-around-the-rosy, we were up and sulking at our forced early rising. Since we picked them, we had only ourselves to blame.
One of the potential negatives of being a landlord is handling any maintenance request that arises. With one of our tenants, it felt like every little task - toilet clog, light bulb out, and sink dribble - was of immediate concern. Another tenant didn't notify us for any repairs and preferred to do it all themselves or let things go unfixed. For us, it was really a crapshoot, with the ideal balance being somewhere between the two approaches.
When it came to major repairs, we weren't as prepared to work quickly and to lose a lot of money. During the first cold snap after we bought our house, the boiler broke. So while we were desperately trying to get it fixed as quickly as possible so that we could stay warm, we also had to consider giving our renters a reduction in their rent to offset the inconvenience of frigid indoor temperatures. Thankfully, almost everything else in the building was new, so we were only saddled with one outlandish surprise repair.
Trust and Privacy
When you buy a home, it's reasonable to expect access to all areas of the building. Having tenants meant that we had to trust half of our home to what were essentially strangers. Of course we had them sign a lease and give us a deposit, and we chose people who we thought were likely to treat the building with respect. Yet, even with the best renters, there is still the chance that minor accidents may lead to permanent damage. Even with damage being covered by the deposit, it's still your time and effort being spent to fix it.
Then there was the issue of privacy. In our heads, we had bought a single family home, which meant that we would have total access to the yard space. If we wanted to drink mojitos in our backyard in our underwear, it would be weird, but no one would stop us. Having tenants who were equally entitled to the outdoor space meant that we weren't as free in our own home as we would have liked. Sometimes we would wait to leave the house because we knew that they were coming in. I don't remember caring about these little issues when I was a renter, but for some reason they consumed me as a landlord.
While being a landlord was problematic and stressful, buying the building that we did proved extremely beneficial for our future. As a result of purchasing the duplex, we were able to buy a nicer home in a better neighborhood. We also felt like the building was more protected because if we were to go on vacation, there would still be people there to keep an eye on things.
Additionally, while rents will likely continue to go up, our mortgage stays fixed. This means that within a few short years, we may actually be mortgage neutral from the rental income. With that kind of prospect, it's pretty easy to set aside stresses and complaints and focus on our long-term goals.