ChicagoNow's June Blogapalooza blogging challenge: "Write about a decision you made that changed the course of your life for better or worse."
Oh sure, that's some light cocktail party banter. No, really, that's a huge question...
In 2001 I was four years out of college but still living in my sister's basement. I did not start out with an idea of being a real estate mogul. I didn't even have an inkling that I would end up being a landlord at all. I just wanted to have a place of my own.
I had never really considered getting an apartment because times were different back then. There was more of a general sense of optimism that a person's financial life would gradually get better with time and hard work. Especially a college graduate. Owning a home was still inarguably a part of the American Dream (not like today when the Great Recession and years of anemically slow economic growth have created an undercurrent of aversion to home buying). Plus I had grown up in a house where I watched my very resourceful mom and dad make all types of DIY repairs to keep a house going.
Just like millions of other families and individuals did each year, I went to a mortgage specialist to get pre-approved to buy a single family house for me to live in. Because I was single and I didn't make very much money, the amount of house the bank said I could afford was not impressive. As a first-time homebuyer I had the wonderful benefit of only being required to provide a 3% down payment toward the cost of whatever home I found. The flip side of that was since the bank would be on the hook for the other 97% they had all the say in just how much I could spend on a home. Makes sense. Banks literally "pay the cost to be the boss."
So I took my little pre-approval letter to my real estate agent and we started looking for a house to fit my budget. When I matched the amount the bank said I could spend with the available prospects my choices got really dismal really fast. This amount either put me in some pretty run-down structures or in some areas where I would not AT ALL feel safe to live as a single woman.
After months of searching my kindly real estate agent pulled me aside and told me he had an idea. He suggested I might consider making my new home an owner-occupied rental property. I could buy a 2-flat building, live in one unit and rent out the other. In other words I should become a landlord.
This was something that I had never really considered for myself. It seemed like such a big decision and a huge responsibility, but there were some real advantages. One benefit to me was that I could go back to the bank to get re-approved. This time the bank would not only consider my income from my job but would include the expected rent I would collect from the additional unit. As a result the new amount I qualified for was almost twice the original amount when I was was only approved to buy a single family home.
It's true that a 2-flat or multi-unit building would cost more than a house but on average they don't cost TWICE as much as a house. So switching to a search for a small apartment building was giving me much more bang for my buck. What this meant for my home-buying reality was that the 2-flats we started looking at were in much better areas and in much better condition than the single family homes I viewed at the start of my search.
And voy-lah! A newbie landlord was born. Fifteen uninterupted years later I still own rental property. No matter what people tell you, no matter how many books you read, no matter how many workshops you attend this is still a learn-as-you-go process. I have made a ton of mistakes and had some heartaches along the way. But I have also learned more than I could have ever imagined.
For all the ups and downs owning real estate has added to the quality of my life and I have no plans to give it up. Even on the worst day, my thought is not to turn back but "how can I make this better?" And on the best days--and there have been so many--I thank the Lord for helping me make that big decision all those years ago.
It's 10pm and my time is up. I have to stop writing.
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