This Case Study is an example of the Landlording Success Story.
What success would look like!
Joe bought a townhome in a new subdivision in the outskirts of the city as a first time home buyer. His wife was against the idea of moving in immediately. Because moving in now would mean changing their son’s school in the middle of his academic year. Hence, Joe rented it out. Being a methodical person, he paid a required attention to his landlordship and started doing his homework. He studied laws affecting landlord-tenant issues and attended some seminars. He started surfing the internet to learn how to handle tenant issues. His realtor helped him to find a good tenant couple for the short term lease of 8 months.
By the end of that lease period, Joe liked the idea of living in a rental home and keep renting his owned property as the tenants were good, and tenancy was running frictionless. Without him doing much, his mortgage was being paid and he was getting a modest amount of $200 per month for the cash flow. Because of this reason, the idea of being a landlord on a long-term basis was churning in his mind. However, again being a methodical person, he did not want to make a hasty decision. After discussing with his wife, they concluded they should give serious consideration to the idea. To buy some more time to think about the pros and cons of being a landlord, he offered an extension of the lease to the tenants for one year, which was accepted by the tenants enthusiastically.
Fast forward to now, after 10 years, Joe has become an independent landlord and owns 4 rentals in the different neighbourhood of the city plus his primary home. All of the rentals are single-family homes built under 5 years.
In the beginning, his wife and he thought of buying just one more property as their primary home apart from their first purchase and call it a quit. Because, both of them had high paying jobs, creating down payment at the regular interval and to take out the mortgage for multiple properties was not the problem for them. And Joe has pursued the part-time career as a landlord very well. So they kept acquiring single-family homes at the regular interval.
At this moment, Joe and his wife have accumulated 700K in total equity plus the appreciation as per the current value of all the properties. Because of Joe’s full-time occupation with his main job, he has optimized his landlord duty. He has bought all single-family homes built under 5 years. This is a calculated risk. The cost would be higher compared to older properties. But the newer single-family homes would require a lot less time to handle compared to multi-unit and older properties. They are collecting $10000 in monthly rent, which gives them modest $1500 of cash flow per month after deducting all the expenses. Both of them are still working full-time jobs of their likings.
However, they don’t intend to buy any further properties. Rather, they have shifted their focus in paying down the mortgages as quickly as possible. Both of them have a clear understanding of what they want to achieve moving forward. They are in their 30s now. Their goal is to retire at the age of 50, which seems pretty achievable.
Let’s See What Happened Here
First Half of the Success Story
- It was a circumstantial reason, how Joe got into the landlord business. That’s not how most landlord success stories come to be.
- Did success come naturally to Joe? The success which he got was not because of the luck or because of the circumstances. Joe and his wife smartly turned their lucky break into a success story.
- Joe was sincere towards his landlord duty when they rented out their townhome for 8 months lease. He worked hard to get educated so he can perform all landlord tasks well. The comfort level achieved because of the conscious effort of hard work and self-learning brought him to the point, where he thought this can be a good side gig.
- He did not jump on the idea without giving a due consideration. He thoughtfully discussed this with his wife and made the decision to give some more time to the idea.
All of the above points contributed to the first half of this success story, I’d say.
Rest of the things fall in place relatively easily in this landlording success story.
Because the couple had a good high-paying job, it was easier for them to spare the down payment money at the regular interval. They knew the required down payment after the first purchase would most likely be 20% or more. In North America, if you have a regular income and reasonably good credit credential, it’s not difficult to get the property mortgaged one way or other. They also got help from the appreciated value of their property for their last 2 mortgages.
The couple were already well-to-do and from the affluent class of the society. The important part of the story is that they would have spent the whole life working regular 9-5 job. Instead, their venture in landlording gave them an opportunity where now they’d be able to take early retirement and do whatever they like to do in the later part of life!
- Don’t be Afraid to take the plunge
- Hard work is a must of every success
- Always be thinking and consulting
- Keep thinking about the ultimate goal
I hope you enjoyed reading this success story of a landlord. Please share your views in the comment section below.