My first appointment this morning took me to a property I am currently managing for a Chicago client. I met a plumber at the property to address a leaky tub and radiator and I will be meeting a painter at the property this week to complete the work. My client is one of many Chicago home sellers who have decided to rent their property as opposed to selling it in this slower market. The Tribune addresses the topic of becoming an “Accidental Landlord” in a very informative article.
If you are faced with this decision, weigh your options carefully and make sure you are up to the task of becoming a landlord. Consider the following costs and areas of responsibility:
Monthly Carrying Cost – Understand your costs for carrying the property each month. In most cases market rent will not cover the cost of Principle, Interest, Taxes, Insurance, and Assessments (PITI+A) in the case of a condo.
Tenant Placement – Understand how to find and qualify tenants, and draft a lease agreement. This is not a onetime event, but occurs at the end of each lease term in the form of tenant turnover.
Ongoing Maintenance – It is inevitable that issues will arise with the property. The obligatory leaky sink or tub are par for the course. In addition, during turnover, cleaning and painting may be incurred due to normal wear. Ensure you have budgeted for these costs and have the time and desire to address these issues.
Capital Improvements – If the goal is to sell the property in the near future then improvements may need to be made in order to bring the property back to saleable condition due to wear and tear and changing market tastes. Floors may need to be refinished/replaced, appliances replaced, carpets cleaned/replaced, and walls re-painted to name a few key improvements.
Think through details and don’t let your decision to become a landlord be the next accident waiting to happen. If the task is overwhelming for your already packed calendar or you need practical advice then reach out for assistance.
{ 2 comments… read them below or add one }
I appreciate the article and understand fully this idea of becoming an “accidental” landlord.
I am wondering if the author or any readers have advice or lessons learned about marketing a property for sale that is also currently rented out. I am attempting to do this now.
Andrew,
Thanks for stopping by. I have been involved in this situation on several occasions both on the list and buy side. There are definitely challenges involved. I refrain from giving advice on specific situations on the blog. Contact me offline if you would like to discuss in detail.
Jeff