Talking to a Millennial Landlord
Stefan is a 32-year-old Communications Specialist living in Chicago — and he’s also a landlord.
ND: So, Stefan, what made you decide to become a landlord?
Stefan: Circumstance, ha ha. I was looking for a new place to rent in Columbus while I lived in Ohio, and the broker asked me if I wanted to buy instead.
I’ve never received that question, in all my history of renting! Why do you think the broker asked you? Did you look like the homeowner type?
Apparently! It was a new building, and the unit was the last one still owned by the developer, who was trying to divest himself of all the units for whatever reason.
It was a bit convoluted, which is how I imagine all real estate is, at least in downtown areas. The owner had a broker who was working on his behalf.
So you went in to meet with the broker, who said “hey, how about you just buy the place?”
Kind of. I was actually downsizing from my previous place in Columbus. I had ended up in a larger, more expensive place than I wanted just because I didn’t know the market when I first moved to Ohio.
I went to look at the place to rent, and the broker said it was also available for purchase. After I decided to move in as a renter, the broker began to pitch me even harder on buying. Ultimately, the idea that I could pay less per month as an owner won out.
If you asked me today if I was ready to buy a condo, I would say “ha ha, nope.” What made you say yes? Just the “less per month” thing? Did you have enough money for the down payment?
Actually, I was able to haggle an incredible deal. I got three months of rent towards the down payment, it was an FHA property, and I was also able to get credits for things like dings in the floor.
After all was said and done, all I was responsible for were the closing costs — and it worked out so that the developer cut me a check for a couple hundred dollars at close.
That’s incredible. You bought a condo and ended up coming out ahead. Then you became a landlord! Tell us about that transition.
Well, I knew when I bought the place that I wasn’t long for Ohio. I was there for a job and was only going to buy a rentable property. I decided to become a landlord because this condo was in a larger building, maybe 60 units, and within walking distance from the capital. I figured if I couldn’t rent that, then the whole state had collapsed into a sinkhole.
Knowing that the building had other rental units along with a full service condo association and building manager made renting it out seem viable in the future.
What do you need to do to become a landlord? Do you have to register somewhere, get a permit, anything like that?
I certainly hope not! I need one, ha ha. At the time I just sought out the broker who rented/sold me the unit and had him rent it for me.
After you left Columbus for Chicago, how did you set up your property management? Did you hire someone else to make sure nobody was trashing the place? Or did you just trust humanity?
Well, the lease was drawn up pretty tightly, and then you just rent to people with good credit and good jobs. Professors and accountants tend not to be too destructive, I figure. I moved to Chicago before it was rented out and have been here ever since.
Chicago isn’t that far from Columbus, in Midwestern terms!
Not when you’re originally from California!
Ha! Well, it’s close enough that you could go check up on the place now and again, make sure nobody’s letting mildew grow behind the sink. Do you ever do that?
It’s never been a concern, to be honest. The place is in a good building, and that’s what insurance is for. Most higher-end landlords seem to be absentee, and I kinda see why. If the tenant ruins the place, the laws are set up to protect the owner.
Oh, that’s really good to know. So are you still earning passive income from this property? Do you make a profit, after property taxes and everything else?
Well, it’s not the “profit” that is the big driver, it’s the equity.
Ooooh, tell us more!
I bought in the bottom of the crash, and I recently saw a similar unit on the market for well over 1.5 times what I paid for mine four years ago. Even if that doesn’t maintain, I pay down the mortgage every month and that is basically money to myself.
Got it. What else would you like Billfold readers to know about becoming a landlord? How can people decide whether being a landlord is a good choice for them?
Well, I can only recommend it if you are in a larger building and have a solid building management company. I know that when something goes wrong I can call them, since I can’t just drive down and fix the washing machine or whatever.
So being a landlord for a condo with a building management is different than, say, being a landlord for a freestanding house that you rent to college students.
Definitely! I can say I am not renting to OSU students. Nothing against the Buckeyes, but I prefer the professional types who pay rent on time.
Any other advice for Billfold readers?
Just that folks should always be open to opportunities when they present themselves. I was not looking to buy a condo in Ohio, but when it became a possibility it also became the best investment of my life and was in no way a commitment to staying where I was just because I now owned property.
The manager at the job I was working, when she heard about my purchase, said “So this means you’re staying in Ohio for a while?”
I said “If that’s what you wanna believe, then sure.”
This story is part of our Real Estate Month series.
Photo credit: jpmueller99
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