In our last episode in this series, I went shopping for an investment property and somehow bought two instead. Both were, to use the chipper term common in real estate literature, “fixer uppers.” My wife, who is from New Jersey, applied a different vernacular, and I believe the terms “hellhole” and “dump” were used more than once in descriptive fashion. Even I, who had deliberately sought a renovation project when I went looking for an investment property, was feeling a little overwhelmed at the prospect of tackling two of them simultaneously. Where to begin?
Actually, it gets a little more complicated because of a small detail I left out previously: Fact is, both houses were already occupied with existing tenants. Yes, as run-down as these places were, there were people living in them and paying rent. It was a ridiculously low rent, which helped explain why the tenants didn’t bother to complain about the houses’ condition, but it was rent.
So my first order of business was to figure out what to do about the tenants. They were each paying $375 per month. Average rent in the area was more like $750, which is what I planned to get for the houses after they were fixed up. But the houses sure weren’t fixed up at the moment. And so I had a dilemma on my hands.
Here’s how I saw things at the time:
– I couldn’t leave the tenants in the houses with the rent at $375. At that rate, I would never earn the money needed for necessary repairs. To simply do as the previous owner had done, which was to let the houses go to pieces while collecting rent from them, would redound to being what she had been, which was a slumlord. I did not, do not, and I hope never will want to be a slumlord.
– I couldn’t charge $750 for the houses the way they were. That would be ridiculous.
– Frankly, I couldn’t do the repairs with the tenants in the houses. I could do exterior work, but inside the houses there was simply no room to work on anything. Suffice it to say these folks could have done with a little simplification; there was barely room to turn around once you got in the front door, they were so jam-packed with clutter.
– I didn’t want to just kick the tenants out right away. I wanted to give them time to find alternative housing.
My solution was to offer the tenants a compromise: A six-month, easy-break lease at $500 per month, with no renewal. The understanding was that I would need the houses vacant in six months. And when I say “easy-break,” I mean that all they needed to give was 30 days’ notice, and we were good.
Both sets of tenants took the deal. My hope was that one set of tenants would take the “easy-break” option early on, allowing me to work on one house and finish it by the time the other became vacant. For a brief time, it almost looked like things were going to work out that way, albeit with the wrong set of “keepers,” and without the amicable parting of ways for which I had hoped.
It became quickly apparent which set of tenants I would prefer to keep if I had my druthers. You would understand if you met them both. So I’ll introduce them.
In one house, the one toward the middle of the block, resided an affable alcoholic electrician named Mickey and his family. Mickey was good people, even if he was a slob. He knew he was a slob. The first time I saw the house, back before I made an offer on it, he flat out admitted that, “Yeah, we sorta let this place go to Hell. Want a beer?”
I don’t ever recall visiting Mickey’s house and not hearing, “Hey Rick! How’s it going? Want a beer?”
In fact, Mickey belonged to a jolly group of friends who had a sort of après-work, outdoor social club going on the street. Every day around 4 pm, about a dozen folks would start trickling home and, after a brief stop indoors to restock their lunch coolers with beer, begin to congregate at one of the houses on the street. Sometimes a little impromptu barbecue would ensue; you never knew. It was quite an eclectic mix that contained, if I am not mistaken, at least a few Millionaire-Next-Door types. In a future post I may introduce some of them in more detail. For now I’ll just say they were a fun bunch to hang with on occasion, and Mickey was quite at home with them.
Notably absent from the Fun Bunch, however, were the denizens of my other new property, the one on the end of the street near an intersection with the town’s main drag. It was the one the agent had prophesied might go commercial some day and earn me a “home run.” For now, the “home run” was becoming a pain in the ass. It began to dawn on me that it might even be a no-kidding crack house, as in, not just a place where a couple of crackheads resided, but a place where dealing was going on.
I mean, when I first saw the interior of the home, I noticed that someone had rigged brackets on either side of the front door to accept a substantial crossbar. But it was just a little old lady living there. Her name was Faye, and she was all cleaned up when I met her, looking prim and proper. No pets. All by herself. So I believed her when she said the crossbar was just there for her peace of mind at night. Not for earning precious seconds to flush product down the toilet.
After the purchase, the Fun Bunch dispelled any illusions. They’d be sitting there shooting the shit, grilling hot wings or some such, and I’d be hanging with them during a break from some exterior project on Mickey’s house, and someone would casually say, “Deal going down.” And I’d look up the street, and there would be a car idling in front of my new house, with someone at the wheel, and someone else would be going to the door, and that someone would go inside for a brief visit, then come back out and hop in the car, which would drive away.
Of course it turned out that Faye had a live-in boyfriend and a couple of Dobermans. The live-in boyfriend was named Bobby, and he, as the police would later tell me, was a 55-year-old white male with brown hair and brown eyes, who stood five-foot-eight and weighed 175lbs, and who had somehow gotten off on a manslaughter charge after stabbing someone to death some years ago. All I knew at the time was that he bore a striking resemblance to Charles Bronson, and he liked to stand uncomfortably close when he spoke to you. I never did learn the names of the dogs.
I would end up talking to Bobby whenever Faye and I had a disagreement, and those became rather routine. I should mention that Faye never looked as good as that first day I met her excepting possibly the last time I saw her, which was in court. All the other times I saw her, she was pretty much in the bag. Hair disheveled, clothing stained, a cigarette hanging off her lip, eyes glazed. Although she had lived in the house more than a decade, it was only after I became her landlord that Faye decided there were things in the house that were simply not up to her standards.
Actually, she did me a favor there, because she pointed out some shoddy work that had been done by the contractors hired by the previous owner as part of the closing deal, and I was able to get them back to do the job correctly, on their dime. So Faye and I were both happy about that. I was less enthusiastic when she brought in some guy named “Billy” to effect certain other repairs, without asking me, and she handed me the receipt for those repairs in lieu of rent. Things sort of went downhill from there. There was a bounced check, then a stopped check. A few episodes of Bobby invading my personal space. And so I had to learn the eviction process.
When our day in court arrived, I didn’t really expect that Faye would show up, because I had grown so accustomed to her usual, stuporous state. I had forgotten how well she cleaned up when she wanted to do so, so I honestly had to do a double-take when she walked into the lobby outside the courtroom. She was a little jittery, but she looked legit. So there I was, the mean landlord in a suit going before the judge against this sweet little old lady in a flower-print, go-to-church dress. I felt an injustice coming on. Luckily for me, this wasn’t the judge’s first rodeo. I had put together a binder with correspondence, photographs, receipts, bank statements, etc., and he looked that over carefully, and in the end he didn’t give a crap about Faye’s flower-print dress. He allowed her about 30 seconds’ worth of complaining about the horror I had brought into her life, and then he told her to shut up and sit down. Judgment was in my favor; eviction was to proceed.
There was drama associated with the actual eviction, but I’ll leave that aside for now. I got past it. What was more disconcerting to me was the timing of Mickey’s announcement, right in the middle of all this eviction business, that he had found a house to buy, and he would be moving out by the end of the month. So my hopes for staggered vacancies were dashed, and I would have to cover both mortgages for some period of months. I got through it.
It has been more than ten years since I have seen either Faye or Mickey. For a while, Mickey would occasionally stop off to hang with the Fun Bunch after work. But he could no longer imbibe to his heart’s content, with his front door just a convenient teeter-totter away. He had to drive home. So he eventually stopped stopping by. Mickey’s wife, I believe, was never a fan of the Fun Bunch, so I am sure that suited her just fine. I am curious to know how things turned out with their new house, whether they maintained it better than the one they rented for so many years, and whether Mickey’s wife managed to taper off his drinking at least a little bit. I hope so.
I hope Faye turned things around as well, but I have less basis for hope in her case. I don’t think Bobby was as good an influence for her as Mickey’s wife was for him.
I’ll end this episode here. It doesn’t wrap up into any neat little lesson, unfortunately. It does illustrate what will likely be a common theme, that for most of us who actually try it, owning rental properties is far, far from a “passive” investment activity, especially if you have any decency in your heart. The thing is, these houses carry a lot of emotional baggage, because in reality they are not “properties” or “units” or any other neutered term current in the business vernacular. They are actually homes. Mickey and Faye had lived in these homes for more than ten years apiece. Mickey, for one, had extremely strong social ties to the neighborhood, and even if a little codependency was involved, he drew a lot of Robert-Putnamesque benefit from those associations. In Faye’s case, although she did not participate in the local community, she still drew comfort from the familiar walls in which she, her dogs, and Mr. Bronson had spent so many of their days.