Building Wealth As An Accidental Landlord

accidental landlord

I thought my timing was perfect. It was 2006. The real estate bubble had burst and property values were plummeting in the D.C. area. After years of seeing other people make a killing off of real estate, it was finally my turn.

A few months earlier, I received a big raise at my job. My savings account topped $20,000 for the first time. I felt like I was rolling in the dough.

That’s when I bought my first property.

As we all know now, the bubble didn’t burst in 2006. It was only starting to deflate. My timing wasn’t so perfect after all as the bigger financial crisis was around the corner.

At the depths of the crisis, the value of my condo unit bottomed out at $50,000 below what I paid for it.

Not too long after the bottom, Mrs. RBD and I moved to a house in the suburbs to start a family. Instead of selling the condo at a major loss, we decided to make it a rental property.

Our former home became an investment and I became an accidental landlord.

For this week’s post, I’m sending you over to my friend Chad Carson’s site CoachCarson.com for an article I wrote for his Investor Profile series.

Chad is a real estate investor and blogger who owns 90 rental units! He’s an expert on using real estate strategies to become financially independent. He’s currently spending a year living in Ecuador with his family while his real estate business continues to flourish at home in South Carolina.

This is the first post in a new series profiling ordinary real estate investors. I’m no real estate mogul. Just a guy with a property who needed to rent it so I didn’t lose my shirt.

Five years after making it a rental, the property cash flows positively and is helping us build wealth. But that wasn’t always the case. I fought through a bad second mortgage and made big sacrifices to pay down additional principal. Then refinanced twice to make the cash flow numbers work.

I share all the numbers and a few pictures.

As an accidental landlord, I hope my rental story can help others in a similar situation. For anyone aspiring to become a home owner or investor, the piece contains many lessons learned about what not to do when buying a home or investment property.

To learn about successful real estate investing, be sure to subscribe to Coach Carson’s newsletter and follow his blog. Click the button below to check it out.

Visit Coach Carson to Read the Profile 

Over the life of this blog, I’ve written numerous articles about real estate investing and being an accidental landlord. It’s not my primary source of investment income, but real estate, in one form or another, is a solid asset that should play a part in building wealth.

In addition to the condo and traditional REITs, I’m investing on real estate crowdfunding platforms including EquityMultiple and Fundrise to build passive income. Check out these other articles for more.

A Beginners Guide to Real Estate Crowdfunding
Should I Refinance My Mortgage?
Should I Sell My Rental Property?
Why Buying A Condo Rental Is A Bad Idea
Rent Increase – An Easy Boost To Cash Flow
The Details Of My Rental Property

Please note: This is a testimonial in partnership with Fundrise. We earn a commission from partner links on RetireBeforeDad.com. All opinions are my own.

Photo credit Ján Jakub Naništa via Unsplash


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6 Comments

  1. Thanks RBD for pointing to Carson’s site. I like investing in real estate but currently more involved in commercial than residential. Looking forward to your experience with RE crowdfunding as I’ve been looking at those as well. –R

  2. so far so good with fundrise.com . Its only my first year . Intrest rates just went up and staryimg the 2nd year theu start charging fees. So i cant comment on thesd things yet.
    But so far so good

    1. I’m relatively new with FR. Waiting for my first dividend. We’ll see where there yields ends up over the long term. The user experience is quite good.

  3. Hey Ty,
    Ouch. I remember you mentioning that. Devastating is never a good word in the same sentence as financial! If you don’t want to put in a huge down payment, crowdfunding might be right for you. Message me if you want to learn more about either.
    -RBD

  4. This post was certainly timely and earily familiar. Bought condo in suburban ny area in 2007 with wife for 320k. Maybe two years later worth 220k. Refinanced down to a 4.5%. Moved to a nearby purchased house and rented out condo around 2012. Losing roughly 200$ a month with no reserve fund for repairs etc. Principal is down to 150k and we are finally coming to senses to sell this summer with a probable sale around 200k. Ouch but time to move on. A phone call on a Friday night from tenant that there is no heat while we have two kids two and under finally helped us come to this conclusion. Will take the money from sale and put it in vtsax. Somehow it may feel like we are gaining 50k ( sale price- principal remaining) although emotionally and realistically it is a 100k plus all repairs etc loss. Don’t think it’s wise to wait for a recovery and take on the risk of an assessment to the condo or any other emergency repairs. Thoughts? Love both these blogs.

    1. Mike,
      That sounds rough. Much worse than my situation. I didn’t get those kinds of phone calls. The condo association usually was at fault for the stuff like heat or hot water going out. Never had that call. But the longer I do this, the less I worry about it. I can always go there or call someone to fix the problem. But not a lot can go wrong. That’s one good thing.

      Ten years later and you’re still well below the purchase price. That sucks. Yeah if you sell you walk away with the $50k, not terrible. I think you have to look at it like a stock. There’s emotion in a stock if you buy high and it goes way down. You want to hold on in hopes it goes up. But hope isn’t a good strategy. You really have to look at it from today forward and not think about the past. How is this investment today? If you’re cash flow positive and the value has good prospects for appreciation, it may be worth holding, like mine. But if it’s sucking money from you and the prospects are not good for appreciation, and it’s a source of stress, maybe it’s time to dump it. Don’t quote me on this I’m not an accountant, you may be able to take a capital loss on the thing. That tax impact could help you. Definitely worth hiring a CPA to figure that out.
      Thanks for the kind words.
      -RBD