My adventures in rural real estate began - as all good stories on the matter should begin - with a meth lab.
The year was 2014, and my then husband
took a phone call in the morning, which was unusual. Turns out, the tenant of his
single-family rental, located in a town of a little under 20k people, surrounded
by corn and soy fields a sturdy three-and-a-half-hour drive southwest of
Chicago. She was in jail for the production and distribution of
methamphetamines.
Suffice it to say, rent would not
be forthcoming the next month…or the one after that. Further, due to the
production site having been located in the rental’s garage, significant
mitigation measures were required before it could be deemed legally suitable
for human habitation. And finally, the homeowner would be required to prove no
involvement in said criminal conspiracy in order to keep the home from being
seized by the police. All this, before coffee.
Fortunately, good local
connections and my ex’s possession of law degree helped mitigate the major
costs and hassle of resolving said snafu from a different state. The garage got
a makeover. We checked the box in the sale disclosures saying yes, there had
been a documented meth lab on the property. An active member of the local
police force picked up place for a discount.
In retrospect it seems obvious
that this was not an auspicious beginning to my remote property empire.
However, when I started looking at the spreadsheets I built to assess the potential
profits should we decided to rent, it was hard not to rationalize giving it
another go. Not every model spits out a
40% return on your money.
Nearly ten years later, facing a
vacancy which promised to be as potentially draining as the one five years ago
which involved about 60 inquiries, 40 life stories, 20 showings, 10
applications, and one white horse, I threw in the towel. The yield was great,
but the margin was thin. Good tenants were hard to find, as were reliable vendors.
Fat chance of you getting a last-minute repair attended to during deer hunting season.
People often ask me my thoughts on
purchasing a property in cash in some far-flung location they have never been
nor have any connection to and sitting back to watch the money roll in. Passive
income, or so it is often called. In my experience, paying 8% to a property
manager is not enough ensure both passivity and profits in the landlord game, especially
in the case of a single-family rental, where you are always one bad tenant away
from the red.
Mainly, I try not to look horrified,
or suffer any obvious flashbacks betraying my experiences. Maybe it will work
for them – I’m an optimist. Internally I smirk, at myself, at my folly for
thinking, when buying that next rental in 2016, how hard can this be? While
there were no more meth labs, and I didn’t lose money per se, it certainly wasn’t
the financial hayride I imagined. Instead of getting a camel for the price of a
donkey, I found myself chasing a unicorn while riding a mule.
