The Accidental Landlord
Do you know someone who owned a condo, only to have life throw a few curveballs and need to move out and rent it unexpectedly? Perhaps this story applies to you … If it does, I can’t blame you for acting as you did. Here’s how an accidental landlord can best move forward, even if it’s been several years.
It’s rare this “accident” works out well
It’s a story I’ve seen told many, many times. Someone bought a home before the mortgage meltdown, then their family grew or their needs changed and they needed to buy a larger home. They were underwater on their first home, and instead of selling it at a steep loss they held onto it and rented it out. There was no plan, except the vague “waiting for the market to improve” so they could reach break-even or possibly have some equity.

The rationale that “it’s good to own rental property” is heard all the time, but just because you own a rental doesn’t make it a good situation. It may be easier just to hold onto it for now, but is it smarter to? There are many things the accidental landlord should consider when deciding to fish or cut bait.
Do you receive positive monthly income?
Rule #1 in deciding whether a rental property is working is whether you are getting positive cash flow. If so, great. If not —or you are in a position where you could sell without bringing money to the closing table— why wouldn’t you? Maybe it’s just that you’ve had the property as a rental for so long, and you’re used to it, so why change things. I get it.
But is this place your vehicle for retirement, your anchor for financial independence? If you have equity and are still having to kick something in towards the mortgage every month, I’m guessing you as an accidental landlord have been lulled into complacency. If you don’t know whether you have equity or not, speak with an experienced/respected agent and find out.
Is it a financial benefit, or an albatross?
At this point, it’s important to look at this property as a financial instrument just as you would any other investment. Is it delivering the financial benefit you want it to? Could the money that you have sunk into the place be used better elsewhere?

One argument often heard from an accidental landlord is that consistently making mortgage payments helps your credit — and yes, any ongoing on-time payments can’t hurt you. But that debt goes against your overall assets and liabilities, and can certainly affect your potential needs elsewhere — such as the kid’s college fund or a vacation home.
The ongoing risks you need to consider
There are many things that must be taken into account, especially if the rental you own is in a condo building. If you’re at a “breakeven” or slightly positive cash flow each month, these could substantially throw you off. They are:
- Property taxes. Taxes have gone up substantially just about everywhere, and if they haven’t for you yet, expect them to soon
- Monthly assessments. These can and often do get increased every year or two
- Special assessments. Deferred maintenance items or unforeseen repairs can creep up when least expected, and unless you’ve set aside money for this type of thing, you’ll need to pony up for your unit’s portion of the cost
- Ongoing incidentals. If you enjoy having to meet new prospective tenants when a lease ends, no problem — otherwise, you’ll need to pay someone else to get the vacancy filled, which is often equal to a month’s rent
- The “come fix it” calls. unless you have a management company handling everything for you (also at a cost), you’re still the one who gets the call to go and fix the leaky toilet
- Interest rates. Rates are at near all-time historic lows right now, which means that buyers who may otherwise not have been able to afford before may be able to at this moment
- Turning tides. We are seeing the market definitely change, after a run of many years of solid value growth. Real estate sales are cyclical, and we while we are nowhere near the situation surrounding the mortgage crisis, the market is likely not positioned to see growth in the near term

Final word: The Accidental Landlord
There can be numerous benefits to owning rental property and being a landlord. Rentals can be a great investment — they can be, but aren’t necessarily just because they’re an investment property. Buying a property intentionally for investment purposes using sound and proven guidelines is a far cry from continuing to hold a property that you’ve unintentionally had for years.
This nagging reason should also be considered: If you didn’t originally sign up to be a landlord and don’t thoroughly enjoy it, you need to weigh the hassle factor of just having this thing hanging over your head, and decide if you’ve finally had enough.