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I Can't Sell my Home...I GOT a Great Solution; I'll become a Default Landlord.....

By Mark Watterson

Real Estate Agent 5660894-PB00

December 18, 2008 12:03 AM

This market is creating more and more default landlords. This seems to be the sign of the times.

What is a DEFAULT LANDLORD? Here are a couple of examples of a default landlord.

1. About two years ago I brought a house on a large lot because I wanted the land to subdivide. After I purchase the property, the market pulled back and made the development not financial viable. So I have a house I can't sell because I can't afford to finish the development. So I'm a default landlord.... house for rent

2. My son and his family had to move because of a job change. Unable to sell the current residence without doing a short sale. Trying to maintain his financial commitment he made when he purchased. He has decided to rent his home and is now a default landlord.

I know how to manage property and it's just not my bag. I only do it by default. I think I know what not to do when managing property. It seems like I have done everything wrong possible, so by avoiding all the past mistakes I manage to do more things right. I seem to learn the hard way.

diving

My concern is those who jump in the rental business as a default landlord, not really knowing all the risks and hazards. Can be in for a very hard landing. That's why I strongly encourage inexperience default landlords to hire the best property manager they can find.

We will never have 100% homeownership for many reasons. That means we will always need investors willing to be landlords and many will be successful. Those choosing to be landlords, I would prefer to see them make an informed choice to become an investor, not become one by default. Making forced (or feel like you're forced) decisions and/or quick decisions usually have negative results.

learning

There are many sound investment strategies. Learn them, use them and refine them to your style. Learn from your mistakes and never stop learning. Your odds of being successful will greatly improve and who knows you may become the next investment master.

Happy Renting....

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Janna Scharf

Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID

Coeur d'Alene Idaho Real Estate Expert

Hey, I was once a default landlord, and it is certainly not my idea of a good time! Your advice is right on the money. Merry Christmas!

Dec 18, 2008 12:07 AM

Stephen Kappre

KW Hometown - Mantua, NJ

Helping You Home

I'm a default landlord - for the most part it is working out very well. But I have my fears since so many people are losing their jobs.

Dec 18, 2008 12:21 AM

Maggie Baumbach

Search Homes for Sale in Maryland at HelpShop.com - Reisterstown, MD

A good property manager will save a lot of folks headaches, heartaches and from going under on your investment. And they can teach you a lot by example. Good luck to all the new landlords, great timely post.

Dec 18, 2008 12:21 AM

June Piper-Brandon

Coldwell Banker Realty - Columbia, MD

Creating Generational Wealth Through Homeownership

When I first read the headline I was thinking about landlords that default on their mortgages and leave their tenants homeless. I've heard of several landlords who have done the rent to own thing on homes that are about to be foreclosed on and the tenant is out the deposit and now has no home either. Thanks for posting.

Dec 18, 2008 12:27 AM

Ella Glover

Lubbock Homes - Lubbock, TX

What to you call a buyer that can't get a loan?????? A RENTER! I 'm with you.

Dec 18, 2008 12:27 AM

Connie Goodrich

Keller Williams Realty - McKinney, TX

CRS ABR (McKinney Realtor)Texas

I like that term - default landlord. That seems to be the cure all in my area or at least perception of a cure. Can't sell your home, oh, I'll just rent it. Unfortunately too many people have adopted that same philosophy and the rental market is down as well. They also fail to consider that renters don't necessarily care for the home well, can experience a financial problem or because they are needing to rent have a problem and may default on the rent. When possible unless this is your plan for investment ... try not to become a default landlord but embrace it with a business approach if it becomes necessary.

Dec 18, 2008 12:28 AM

Paul S. Henderson, REALTOR®, CRS

Fathom Realty Washington LLC - Tacoma, WA

South Puget Sound Washington Agent/Broker!

Mark, Wow what a thought provoking post. I really never looked it that way. I guess that why they call some real estate investing speculating...

Dec 18, 2008 01:42 AM

Anonymous

Wilfred Joseph

I've been a default landlord a few times. The first was after the crash of 1987. I held on and discovered that I wanted to be a landlord and learnt a lot, usually from the school of hard knocks. I decided that that was the way to go. It was profitable.

Dec 18, 2008 01:42 AM

Patricia Beck

RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO

Colorado Springs Realty

This is where a property management company is a wise decision, many of these default landlords may not have the experience or the time to manage the property.

Dec 18, 2008 01:52 AM

Patricia Kennedy

RLAH@properties - Washington, DC

Home in the Capital

Mark, a lot of people who decide to rent haven't thought it through. Be sure you underestand the local landlord tenant laws before sticking a sign in the ground!

Dec 18, 2008 08:01 AM

Mark Watterson

Salt Lake City, UT

Utah Real Estate

Jana- Not mine either. Happy Holidays

Steve- That's good. My first several rental experiences were not pretty.

Maggie- 100% agree. Hire the best.

June- There is that risk to the tenant and it is happening much too often with many landlord not being able to make their payments.

Connie- Your right it's not a cure and many are not prepared to treat being a landlord like a business. When the tenants don't pay they all have a sad story they want you to buy.

Paul- I have seen short term speculators become long term investors (default landlords) trying to avoid taking a loss.

Wilfred- Great success story. There is money to be made for those who are prepared to do it right.

Patricia- I agree, hire the best.

Patricia- Great point, understanding local law is critical. I know of tenants that have stay rent free for up to sixteen months because they knew the law and the landlord didn't.

Dec 18, 2008 11:06 PM

Bill Gassett

RE/MAX Executive Realty - Hopkinton, MA

Metrowest Massachusetts Real Estate

It is funny how times have changed. It is just as important now to do a back ground check on the landlord as it is the tenant. Go figure!

Dec 19, 2008 12:19 AM

Mark Watterson

Salt Lake City, UT

Utah Real Estate

Bill- I agree...?? At least the good tenants should. The one's who really don't intend to pay and are just looking to see how long they can stay for FREE, it does really matter.

Dec 19, 2008 12:31 AM

Sandy Shores FL Realtor®, Melbourne Real Estate

M & M Realty of Brevard Inc. - Melbourne, FL

Brevard County Real Estate, Florida's Space Coast

Hi Mark, It seems that we are hearing the same stories over and over again - landlording can be difficult and a lot of hard work. Many people get in for all the wrong reasons. Great post. Thanks for sharing.

Dec 21, 2008 12:30 AM

Not a real person

San Diego, CA

I became a default landlord back in Houston in the 1970s-1980s when the Texas oil boom went bust. It actually was one of the best things I ever did.

Dec 22, 2008 06:28 PM