30 March, 2008

Would You Rent From Us?

It's not like we're landlord virgins or anything. Ted and I are already renting out our condo in the Uptown neighborhood of Chicago--and to three recently-graduated-from-college twenty-somethings to boot. But we don't have to deal with the kids on a day-to-day basis. We don't have to live with them. This is going to be different.

We've decided to rent out the top-floor unit of The Box House, our unit.

Okay, we knew from day one that we were probably going to do this. It's not like we woke up this morning and said, "Gee, this sounds like fun." We bought The Box House in a bad housing market. We got it for less than what it would probably have fetched a few years ago. But the downside of a down market is that it's really not the best time to be selling our other properties. We didn't even bother putting the condo up for sale. After witnessing the sluggish housing market in Chicago and seeing first hand how units in our building were not getting what they would have even a year or two ago, we decided to rent it out rather than try to sell it. To everything there is a season, blah, blah, blah, and waiting a year or two to sell can only be to our benefit. The condo is in a quote/unquote "gentrifying area," meaning that once the overall economy improves, which it will, of course, the condo's location near a train line and in an up-and-coming area will only get us a much, much better price.

But it means we're still taking care of expenses on a property that we don't live in. The rent we're getting covers the mortgage, but it doesn't cover everything, and it doesn't make us any money.

Add to that the fact that Mom still has her other house. It's on the market, and it's adorable. A four-bedroom, two-story tudor-inspired house. But the media has scared buyers into thinking it's a bad time to invest, when the truth is that housing prices won't get any better than this. So like so many other houses, it's still on the market.

Now, The Box House is huge. Really huge. More square footage, even, than my childhood home. There are two units as well as a basement that is, technically, finished. At some point in the past, wallboard was added to divide the basement up into separate rooms. The basement just needs a few finishing details, like better flooring, updates to the bathroom, and fresh paint--lots of paint--to make it pretty again. The basement has the same square footage as each of the units, although, admittedly, some of that is lost to mechanicals and a laundry area.

The point is, The Box House is already too big for an almost-forty-something couple with no children, a retiree, and a dog. My office and Ted's are set up in the basement, we never even see my mom for most of the day. Why not rent out the top three-bedroom unit and use the rental income to work on the most critical features of The Box House--fixing the garage roof, updating the electrical, landscaping and regrading the yard, etc. And maybe have it pay for a really cool honeymoon through China or something.

Still, it may be hard--at least for my mom--to get into the mindset of sharing a building with people who don't fall under the category of "friends" or "family". She grew up in multi-units and apartment buildings in Chicago, but it's been nearly forty years since she lived that way. It will definitely be an adjustment to deal with other people in close proximity.

Anyway, I put up an ad on Craig's List to advertise the apartment, and we had A TON OF RESPONSES. Apparently, we are surrounded by Very Good School Districts, something that, as a woman without children, I paid absolutely no attention to before. Also, despite the fact that the kitchen and bathroom are kinda retro, the unit is very, very nice. We've had several people want to submit an application.

This is, admittedly, where it gets tough. Most of the people who came through seemed very nice. There are some we had a better "vibe" for than others, but in the end it all becomes a numbers game. We'll apply the same criteria to everyone, and select a "winner" based on those criteria. But I'm finding myself more stressed out about the process this time than renting out the condo. These are people we'll have to live with on a day to day basis. But I'm most worried about how my mom will be. She's a trooper; she's been able to handle so much more these last few years since my dad died than I would have given her credit for. But I worry, sometimes, about what I've dragged her into. I've spent the majority of the last two decades sharing buildings with strangers, but she hasn't.

My mom, Ted, and I knew that buying a building together would involve some sacrifices and compromises. And one of them was that, until the market improves and our other properties sell, we might be better off if we rent some of the space out as well.

So I get the not-so-fun-task on Monday of calling employers and verifying employment and checking backgrounds. Based on what we went through last fall renting out the condo, this is going to be a pain in the a**. Most employers are immediately suspicious of your intentions, and I have to explain over and over again, getting transferred from one supervisor to the next, until I am able to find someone to help me. This time, we have a form letter that the applicant signs giving permission for employers and landlords to release information. It should go better just faxing the letter around this time.

Anyway, here are the pictures we placed in the ad. Does it make the place look warm and homey? If any of you out there reading this are landlords, I'd love some general feedback to how you've survived the process.

From dining room looking into living room.

From living room looking into dining room

Bedroom three.

Bedroom two.

Bedroom one.



Anonymous said...

I would want to live there in a hearbeat. The place is beautiful, really beautiful. A quick question: Are you going to remain living there too? If so, I wouldn't worry so much. Or, are you planning on going back to your condo? Just make sure whoever you are impressed with during walk-through checks out and if you can, find people a little older who are quiet.

Ethan@OneProjectCloser said...

The picture show the house very nicely. I especially like all the hard woods. I've never been a landlord.... but would it help to have a "second" interview? Gives you more time with the applicant and hopefully you can get to know them a bit better. Good luck!

Jen said...

Well written post. I've never been a land lord, but I agree with the second interview. At work the second interview makes or breaks you.

Joanne said...

Anonymous--Ted, my mom, and I are living in the ground floor unit, and spreading out into the livable spaces of the basement. That's something like 11 rooms, no counting the bathrooms, enclosed porch, and storage rooms. Plenty of space. We won't be going back to the condo; We've outgrown condo living and will just hang on to it until the market improves and we can sell it for a good price.

Ethan/Jenni--A second round of interviews might not be a bad idea.

Jean Martha said...

It looks awesome! The commute would kill me otherwise, I'd be there with my bags - and your Mom could teach me to sew better.

Check out Phyllis' blog at Reclaimed Home. There's a link over on my blog. She has a few apartments in her brownstone that she and her husband rent out and she did a whole review about being a landlord and close proximity a week or two ago.

Joanne said...

Jean, Thanks for the tip. I'll wander on over there and check it out.

Jocelyn said...

It shows very nicely. We also live in the first floor and rent out the 2nd floor. We are quiet people (except when we are sawing etc...) and we have found it is important to establish that the tenants are on a similar page with noise levels. I'm not sure how good your soundproofing is, but one need to think about listening to a toddler running around all the time as an example. Or what are your rules about loud music? You have wood floors so you might want to require a certain percentage be covered in carpets. In DC this is part of standard leases I am told.

My advice is to trust your instincts, take your time, and do credit checks-vet people carefully.
It pays off in the long run, even if it takes longer to rent as good tenants will be less wear and tear on the unit.

We've been landlords now for a number of years and our lease is quite detailed now. Good luck and if you ever want to talk further, you can email me jmm922@yahoo.com.

Jennifer said...

Very nice pictures.. I can tell why you got so many responses!

My gut reaction would be to choose someone with a similar lifestyle to yourself... they will likely keep similar waking/sleeping hours, levels of noise, etc.

Joanne said...

Jennifer--That will be hard! :-) Ted and I both work at home, so we get into the odd habit of working until six a.m. sometimes and sleeping until two! But we're very heavy sleepers.

Joanne said...

Jocelyn--Both our application and lease are getting pretty extensive...we had gone through dozens we found online and adopted a lease my cousin, who took a landlord class in the area, uses for his properties.

Still, I'm constantly thinking of things to add to the lease to decrease the chance of surprises down the road. I rarely even think of our condo rental, as the tenants haven't presented any problems and the place is only six or so years old, but now we'll be landlords of more than one place--and there are so many more issues involved.

Thanks for your offer to drop you a line--I would definitely like to pick your brain on various issues some time.

us said...

ohmigod I would move in in a heartbeat. Even with that slightly cheesy kitchen its a billion times nicer than my Brooklyn pad.
So nice!

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