After nearly 10 years as an accidental landlord, I am happy to share I am out of the rental game. I'm not the only one heading for the exit judging by recent posts. After learning so much from this forum over the years, thought I would share my story & learnings along the way.
Some background: My then girlfriend (now wife) purchased a nice (small) house close to a city centre at the peak of the boom (4Q 2006). It was a lovely home. Then little people started to arrive & we quickly outgrew the house. Unfortunately, property prices collapsed & we couldn’t sell. So, we started our unplanned journey as a landlord in 2012…
Financially manageable but another job to be done: Thanks to the tracker mortgage, it was financially manageable. We didn’t raise the rent every year, so after +4 years with current tenant we were behind market rates. Furthermore, it was an old house. Thus, we typically got a call on cold, wet Friday nights that the boiler (or something else) had stopped working etc. We’re in the squeezed middle – busy with 3 kids and aging parents as well as a high-pressure job. So after a long week this was another ask / job to be done. While we outsourced most of the maintenance / fixes, we did initially call out to the house to understand the issue so we could explain to trades person. After a long week, it was the last thing we wanted to do.
While our costs (incl. mortgage) just about exceeded the rent, we were slowly acquiring an asset – we re-assured ourselves this was a good additional to our pension portfolio.
The joys of being a landlord: Then, in December 2020, the rent never landed in the account. When I called round to the house, I was surprised to meet 3 people I had not met before! Furthermore, the garden was like a junk yard (with too many mattresses to count).
What happened? The tenant’s family had returned home early in 2020 & he had been sub-letting the 3-bedroom house out. Of course, there was a clause in the contract about NOT sub-letting! Judging by the letters & number of mattresses, it was a high turnover rental! He took up residency in the front room, so he could rent out the 3 bedrooms. He took the deposit, collected the rent every month as well as money for bills. This was during the pandemic, so he & his wife (who left the country) were receiving the PUP as well. Then in December, he collected the rent & bill money and left to go back home. I was not paid nor were the bills.
The 3 individuals in the house were interesting characters with their own history of challenges but on the mend. The contribution of the 3 did not cover the agreed rent & they also had challenges with reliable income. There were also Covid rules in place about evictions. Rather than pushing hard on them (eviction via RTB, etc), we agreed that they would move on the coming months (3 months at the latest). I was weary they could just dig in & it could take a lot longer to evict them (even if the law was on myside). Fortunately, they all found alternative accommodation over the next 2 months.
Note: we did issue proceedings against the tenant through the RTB even though he had left the country. I wanted a paper trail just in case he returned & also to tell the story if the tax man ever asked.
By April, we were ready to put the house on the market & have just recently sold it in December. It cleared the mortgage, but we did lose out versus purchase price vs selling price. However, I will make full use of the capital losses when selling shares. Most importantly, it’s a relief to close out my career as an accidental landlord.
Observations / Learnings:
Some background: My then girlfriend (now wife) purchased a nice (small) house close to a city centre at the peak of the boom (4Q 2006). It was a lovely home. Then little people started to arrive & we quickly outgrew the house. Unfortunately, property prices collapsed & we couldn’t sell. So, we started our unplanned journey as a landlord in 2012…
Financially manageable but another job to be done: Thanks to the tracker mortgage, it was financially manageable. We didn’t raise the rent every year, so after +4 years with current tenant we were behind market rates. Furthermore, it was an old house. Thus, we typically got a call on cold, wet Friday nights that the boiler (or something else) had stopped working etc. We’re in the squeezed middle – busy with 3 kids and aging parents as well as a high-pressure job. So after a long week this was another ask / job to be done. While we outsourced most of the maintenance / fixes, we did initially call out to the house to understand the issue so we could explain to trades person. After a long week, it was the last thing we wanted to do.
While our costs (incl. mortgage) just about exceeded the rent, we were slowly acquiring an asset – we re-assured ourselves this was a good additional to our pension portfolio.
The joys of being a landlord: Then, in December 2020, the rent never landed in the account. When I called round to the house, I was surprised to meet 3 people I had not met before! Furthermore, the garden was like a junk yard (with too many mattresses to count).
What happened? The tenant’s family had returned home early in 2020 & he had been sub-letting the 3-bedroom house out. Of course, there was a clause in the contract about NOT sub-letting! Judging by the letters & number of mattresses, it was a high turnover rental! He took up residency in the front room, so he could rent out the 3 bedrooms. He took the deposit, collected the rent every month as well as money for bills. This was during the pandemic, so he & his wife (who left the country) were receiving the PUP as well. Then in December, he collected the rent & bill money and left to go back home. I was not paid nor were the bills.
The 3 individuals in the house were interesting characters with their own history of challenges but on the mend. The contribution of the 3 did not cover the agreed rent & they also had challenges with reliable income. There were also Covid rules in place about evictions. Rather than pushing hard on them (eviction via RTB, etc), we agreed that they would move on the coming months (3 months at the latest). I was weary they could just dig in & it could take a lot longer to evict them (even if the law was on myside). Fortunately, they all found alternative accommodation over the next 2 months.
Note: we did issue proceedings against the tenant through the RTB even though he had left the country. I wanted a paper trail just in case he returned & also to tell the story if the tax man ever asked.
By April, we were ready to put the house on the market & have just recently sold it in December. It cleared the mortgage, but we did lose out versus purchase price vs selling price. However, I will make full use of the capital losses when selling shares. Most importantly, it’s a relief to close out my career as an accidental landlord.
Observations / Learnings:
- We did visit the house occasionally but should have “inspected” the house fully at least every 6 months if not every 3-4 months. (My wife had visited the house in October due to an external issue relating to Irish Water but did not enter the house due to Covid risks).
- We should have increased the rent in line with market rates. We didn’t need the income, but when it came to selling the house, it ruled out landlords as potential buyers.
- With selling a rental in mind, I wonder should I have (on paper) increased the rent on the RTB site to the maximum, without charging the tenant. On paper, this would have ensured landlords would be interested.
- Fortunately, I had created a paper trail with the RTB. When it came to selling the buyers, solicitors did enquire about rental status etc & it closed off the questions quickly.
- Selling a house can take time. Selling an old house can take even longer.
- While we were compliant with planning rules & permissions granted, we had to go back for retention to ensure there was no issues ahead of buyer engineer assessment. Our engineer felt it was “just” within spec, but another engineer may not come to that conclusion. So, this took more time (& costs).
- The buyer’s engineer required drains reports which unearthed a few issues that needed mitigation before the sale went through – that along took 5-6 weeks from drainage report to completion and more cost.
- The tracker mortgage made this financially feasible as an accidental landlord (we were slowly acquiring an asset over time). This is enabled by the low interests today. My father often shared stories with me about the double-digit interest rates % they paid in the 1980s. While a low probability event, the scenario of increasing interest rates was a concern of mine. So, one less worry…
- While the rental diversified our income, we are in a good position currently. So ok with living with the risk associated with being overly dependent on 2 salaries. May have come to a different conclusion if day job was not going so well.
- An important motivation for me is to simplify life (where I can). Retiring as a landlord means no more late-night calls & callouts, I can close one bank account (linked to the mortgage), simplify my tax returns, no longer need to log onto RTB website etc, etc… essentially less hassle in life. Can’t put a value on reduced hassle, but it’s worth a lot to me right now…