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House Poor: The Landlord's Prayer

November 08 2012

rent keyholeBelieve me, the last thing in life I ever wanted to be was a landlord. The thought of it reminds me of the old silent movies tying his poor tenant to a railroad track as she screams, "No, I can't pay the rent!"

It started at one of our Friday coffees at the Deli Delight where I get together with my real estate team—Bea Meriwether, real estate agent and Earnest S. Crowe, mortgage guy. Bea was selling a bank-owned bungalow two blocks away from me in my hometown of Mirage Mills, the Chernobyl of American real estate and the epicenter of the foreclosure crisis. Since there were two dozen fire sale-priced properties listed for sale within a mile of hers, she was having a hard time.

"It would be a perfect investment property for you and Felicia. You know the neighborhood like the back of your hand. It's close and easy for you to manage. It's in very good shape for the neighborhood and it's priced to move fast," said Bea. Her voice dropped a half-octave and she gently placed her hand on mine.

"And I know that the bank is dying on this one. They've taken a beating on it for more than a year and they'll do anything to get it off the books."

Nothing she said changed my mind. The bank could go on taking a beating for all I cared. Then Earnest started in on me.

"Homer, wise up dude. How much you making on your 401K in this market? I'll bet you're losing money big time."

How did he know?

"I've got clients with rental properties just like this one who are making eight percent or better on their money AND when the market recovers they can sell it for whenever they want for a tidy little investment. Dude, everybody I know In Mirage Mills is doing it."

Just a few years ago everybody Earnest knew in Mirage Mills was taking out subprime no down low down self-destructing toxic loans to buy homes priced twice as much as they were worth, but Bea butted in before I could remind him.

"Homer, we're your friends. All we're saying is that we've come across a terrific deal and we felt it was the right thing to do to bring it to your attention. We just don't like to see you losing money on your 401K."

How the heck did she know? Was Felicia complaining to her friends again about our finances?

By the time we finished up Bea had whispered in my ear a price for the bungalow that was considerably below what it was listed for and its list price was already discounted substantially below the going market value in depressed Mirage Mills. Earnest discussed financing options that would, with my 401K, give us enough to make the purchase and pay for estimated repairs.

That night I talked it over with Felicia, who surprised me by pushing hard for the idea. I grew increasingly suspicious that she had been talking to Bea and Earnest about my investment skills.

"Besides the money we would make, just think of all the investor stuff you would learn. You would become an even more expert expert homeowner," she said.

So I went to bed with my head spinning. The more I thought about it, the more I convinced myself it would work. However, I was still afraid. In the early hours of the morning I tried to get to sleep by making up a little prayer that goes like this:

The Landlord's Prayer

Help me Lord, for as you know
I've bought a rental bungalow.
It's small and plain and seen its day
Yet it's cost my 401K.

I pray to you in darkness and fear
As I wander the wilderness, far and near
Seeking cut-rate contractors who may exist
In the bottom ranks of Angie's List.

Forgive me oh Lord as I do penance
For all the things I do to my tenants:
Rental hikes and credit snooping
Cheap repairs and leaky roofing.

Bless my renters, give them skills
To patch and paint, to fix all ills.
Lord, keep the plumbing working right
So they never call me in the middle of the night.

Dear Lord I pray please hear my plea
Spare me the throes of bankruptcy.
Keep cash flow high and vacancies low
Or else I'll end my days in woe.