My relationship with owning rental properties is a mix of love and frustration. As I grow older, my preference shifts towards private real estate funds for their 100% passive nature and diversification.
The rental properties I own played a big part in giving me the confidence to leave my job. However, they also bring me the most investment-related stress. Issues with tenants or maintenance problems tend to dampen my spirits, often presenting unpredictable challenges.
To manage this, I’ve reframed my perspective. Instead of seeing these properties as a source of passive income, I now treat them as a part-time job. This mindset shift, although difficult to accept initially, has greatly improved my mental health, especially when dealing with property-related issues.
Here’s an insight into the duality of my experience as a landlord:
Dislike for Being a Landlord: Unpredictable Stressful Events
One August, I had relatives stay in one of my rental properties. That same night, a burglary occurred, resulting in a tenant’s expensive bike being stolen from the garage, which is a common area. This situation led to a debate over responsibility and insurance coverage.
Despite my natural tendency to be independent and not rely on others, I recognize not everyone shares this mindset. Being a landlord has taught me to respect different perspectives and the importance of compromise. In this case, I offered to split the insurance deductible with my tenant to maintain goodwill.
Going forward, I plan to include a clause in my lease agreements stating tenants’ responsibility for their items in common areas.
Love for Owning Rental Property: Stability and Control
Contrasting with the unpredictable nature of stock investments, real estate offers more stability and control. For example, during the COVID-19 pandemic, real estate demand increased as people valued housing more. Unlike stocks, rental properties are less impacted by external variables like international policy or global events.
Real estate investment allows me to focus on operations without daily market fluctuations. This long-term approach of property appreciation and principal repayment is a potent wealth-building strategy.
Balancing Landlord Responsibilities
Dealing with property issues also presents opportunities to teach valuable lessons to my children. However, there’s a limit to the number of properties I can manage personally. I own three rentals in San Francisco and would consider hiring a property manager if I added more.
Now, I focus on investing in passive private real estate, valuing the income and stability it offers without the hands-on management.
Advice for Potential Landlords
For anyone considering becoming a landlord, find your limit of manageable properties and stick to it. Exceeding this limit can turn the experience from enjoyable to burdensome. It’s crucial to maintain an asset allocation that aligns with your risk tolerance and life goals, ensuring a balanced approach to wealth building.
