Forced to become landlords
Article by: KIM PALMER , Star Tribune [Minneapolis]
Stuck with homes they no longer live in but can’t sell, owners who don’t want to walk away are reluctantly resorting to renting them out to try to cover expenses.
Tobias Shapiro and Anne Healy Shapiro rented their house but found it so stressful that they recently sold it for thousands less than an offer they turned down earlier.
Photo: Bruce Bisping
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About six years ago, when Jennifer Bryden was single and housing prices were rising like a helium balloon, she bought a condo in Uptown. She negotiated hard and thought she got a bargain. “I was so proud of myself,” she said.
Then Bryden got married, moved into her husband’s house, and the real-estate market deflated, leaving her with a condo she can’t sell for even close to what she paid. Now a busy working mom with two preschoolers, Bryden is stuck in a role she never wanted: being a landlord.
Owning rental property used to be a choice made by investors, not a last resort for desperate homeowners. But the housing-market meltdown has spawned a multitude of owners who want to sell but can’t, or who would take such a loss that they’ve resigned themselves to renting out their homes in hopes that the market will improve.
“Being a landlord is a challenge,” Bryden said. She’s tried her hand at refrigerator repair and painting, but she doesn’t have time to tackle bigger repairs so she hires them out.
“Every time I sink money into the condo, I feel so stressed,” she said. “My house needs repairs, too. I dread the condo board calling to say I need to contribute to a major repair.”
The rental market has seen a flood of formerly owner-occupied homes, according to Harvard’s Joint Center for Housing Studies. In 2009, almost one-fourth of single-family detached rentals were owner-occupied two years earlier.
Renting out a former home generates some cash flow, but many owners report they’re barely covering their expenses or even losing money. Others struggle to take on time-consuming and
stressful chores, such as finding tenants, dealing with repairs, collecting rent and sometimes eviction.
Instead of cutting their losses, as a traditional investor might, many of today’s reluctant landlords say they won’t walk away from their former homes.
Kurt Rees of Minneapolis lives 100 miles away from his rented hobby farm in Litchfield. “I don’t need the complexity of being a landlord,” he said. “I’m barely breaking even, and upkeep takes a lot of effort and money. I could let the bank have it in foreclosure, but that doesn’t seem ethical. That’s one reason the market is as messed up as it is.”
Jennifer Strangis Lundquist also has thought about letting her lender take over the townhouse she bought in 2004. “But I’m not going to do it,” she said. “I have a sense of pride.”
Instead, the Zimmerman newlywed rents out the Woodbury townhouse at a loss of several hundred dollars each month. Finding good tenants and dealing with repairs are “kind of a headache,” she said. She’d rather sell the townhouse than be a landlord. “But I’d have to come to the closing with 30 grand.”
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