I Am An Ex-Landlord!

Well it’s been official for just about three months now. I managed to close the sale of my buildings as of the end of February, 2009. Is this a good thing? Yes and no. I feel a certain sense of lost identity, having been a landlord for 10 years. People used to call me “Carlton Sheets,” “Donald Trump” and “Slumlord.” It was a badge of honor. They used to screech with laughter, when after calling me a slumlord, I would correct them, informing them that I was “A professional property manager, focusing on the affordable housing sector.” There were times for sure that I felt like I was a slumlord. There were times that I hated my buildings, and when I visited, I just wanted to get away from them. It was amazing that so much of my net worth and identity was tied up in these properties.

There was a time when I was highly leveraged, and it freaked me out. I was making money hand over fist for about a six month period when I owned a total of four buildings with 48 units. But then the leverage got to me. So did the rough buildings. They have a saying on Wall Street, “If you can’t sleep, sell down to the sleeping point.” So I sold my buildings in Newark. I slept much better afterwards.

I feel like I got out just in time. I wish of course that I had sold when the market was higher. I knew when that was. I recently read on-line a comment from a laid off economist, “Just because you know a freight train is coming, doesn’t mean you can get out of it’s way.” I feel like that. Even though I had the sense that the market was near a top, I didn’t know what I would do if I sold. I thought I was a “Long Term Investor.” I thought the buildings would not only pay for my kids’ college education, I thought it would be the only way to do so. I still do.

My home is probably under water by $100,000. Not that I’m upside down on my mortgage, just that it’s worth that much less than I paid for it. I knew this was happening. So why didn’t I sell? I need a place for my family to live. Of course I could have sold and rented, but rental units are scarce and expensive in my town. I did talk about just renting when we bought this house, but ultimately I didn’t want to simultaneously be a landlord and a tenant. Financially it was the right move, but lifestyle-wise it was not. Also, even though I called a top in the real estate market, I didn’t call a freight train. As always, a crystal ball would have been helpful.