In Which We Become Landlords for the First Time

When Frack and I met, he owned a house that he had purchased at the tail end of 2005 – in other words, the height of the real-estate bubble. It was a pretty nice house, about 1800 sq ft with 4 bedrooms and 2 bathrooms. It had an open floorplan in the kitchen/living area, and the master bedroom was a generous size with a walk-in closet.

We spent a couple years putting some sweat equity in it – landscaping the backyard, painting walls, putting in new wood flooring, etc. However, no amount of sweat equity was going to make up for how much the housing market had crashed. So when we purchased the new house in 2010 we couldn’t sell the old one, since the mortgage was higher than we could list it for. We planned to rent the house out; we could get at least as much as the mortgage. We enlisted a friend – who was also a real estate agent and ran a property management company – to find us some renters and manage their tenancy, since we would be out of state so often with our jobs.

Sometime between the 6 and 9 month mark of their tenancy, they started having trouble paying the rent. Mind you, this was supposed to be a retired gentlemen, living off a fixed income (which our agent assured us was more than enough to pay the rent), and his son. They had asked for some leniency on the water bill for a month or two, but were still able to continue paying the rent. Our agent discussed this with us and our sentiment was that we’d be willing to work with him, as long as the agent was able to do a home inspection and make sure everything was in order with the house.

Well, when our agent told them that he would like to do a property inspection, THEY REFUSED. And it wasn’t like he just showed up unannounced. He called ahead to schedule a day and time to see the inside of the house. They said no.

And for some reason, not only did he not pursue this any further, not only did he not see this as a BIG RED FLAG, but he also didn’t tell us any of this. So we assumed he had inspected the property and everything was in order.

By the time their lease was up, they still owed us for several months of water bills, and we decided not to renew them as tenants. It was starting to be a hassle and we were worried their inability to pay all the bills was only going to get worse.

What we found when they moved out was shocking.

See Part 2: Rental House Rehab