I Became a Landlord to Pursue the American Dream. It Landed Me in Therapy

Photo collage to accompany article on the costs of homeownership
Jannese Torres-Rodriguez (bottom left) learned her homeownership lessons the hard way.

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I’ve always been a woman who knows exactly what she wants—or so I thought. 

Even as a child, I visualized the checklist of things I planned to accomplish in life. My parents’ expectations were clear: get good grades, go to college, find a good job, and buy a house. That’s the American Dream, right?

My parents grew up in Ponce, Puerto Rico, and came to the mainland U.S. as part of the Puerto Rican diaspora in the 1970s and ’80s in search of better opportunities and a chance to give their children access to a more privileged life filled with possibilities. 

They were high school sweethearts who reunited in the U.S. after my dad shipped off to the Navy and my mom came to live with her aunt and try to make a living. Together they worked menial jobs and struggled with debt, even declaring bankruptcy at one point. 

When they were able to buy their first home in New Jersey when I was 12 years old, thanks in part to the VA’s 0% down payment program for veterans, it felt like their sacrifices had been worthwhile. I watched home ownership change my parents’ lives. I always believed that in order to be a success, I had to own a home, too.

Generally speaking, Hispanic people place a tremendous value, culturally and financially, on home ownership, while at the same time overcoming great obstacles to buying a house. A 2016 Federal Reserve report found that housing comprised 39 percent of financial assets for Latinos, more than any other racial or ethnic group in the U.S. Home ownership is seen as an important wealth-building tool, and is quite often the only major investment that many Hispanic families own. 

I didn’t grow up learning about the stock market or how to build a business that generates passive income. The mark of success in my family, and many other Latinx families, is buying a home. 

Hatching a Plan

So after my husband and I got married in 2013, we set our sights on buying a home. We lived and worked in central New Jersey, and had been renting for four years. The area where we were looking had a hefty median home price of $515,000, which was out of our price range.

But we had another plan, inspired by my in-laws. Purchasing a multi-family unit and renting the unused portion allowed them to afford a more expensive home than they could otherwise pay for on their own. My husband and I decided that’s also the approach we would take. If buying a home was a success, then wasn’t becoming a landlord the ultimate boss move? 

Finding ‘The One’

In July 2018, we closed on a two-family home using HUD’s FHA program, saddling ourselves with a $3,000 per month mortgage for the next 30 years. 

Everything seemed great. It was a well-kept home built in the 1930s, owned by the same family for multiple generations, and the downstairs unit (where we would be living) was recently renovated. The home inspection didn’t reveal any major issues, and we even had a new heating system installed as part of the purchase. Our realtor anticipated that we could rent the two-bedroom unit on the second floor for $1,600 per month. 

Jannese Torres-Rodriguez spent thousands of dollars renovating a rental property, making her “stressed out and anxious.”Photos courtesy of Jannese Torres-Rodriguez.

Trouble in Paradise

Two weeks after moving in, I came home from work one day and instantly smelled raw sewage. Turns out that during the brilliant DIY renovation, someone poured cement down the main sewage line. One emergency plumber visit and $900 later, the drain line was partially unclogged. 

The worst was behind us. Or was it?

  • Despite showing no signs of water damage during the inspection, the basement started flooding every time it rained. Price tag for a French drain system with two sump pumps: $15,000.
  • The main cast iron sewer line had to be replaced: $4,000.
  • The brand-new heating system wasn’t properly installed, and we woke up to hot steam spewing into the basement. The plumber who installed the system wouldn’t return our calls, and we had to pay over $1,500 to get it fixed.
  • The second-floor unit was too small to fetch the $1,600 we had hoped for, and we had to lower the rent to $1,300 to get a tenant.
The second-floor unit was too small to fetch the $1,600 Torres-Rodriguez had hoped for, so she had to lower the rent to $1,300 to get a tenant.

Here’s what happened during first six months of living in the home, and how much it cost us:

From the beginning, I was hemorrhaging money, and my mental health began to suffer. Two weeks after moving into the house, I was already ready to sell it. Stressed out and anxious, I would lie in bed crying for hours trying to figure out how to undo this nightmare I created.

Eventually, it got to the point where I had to see a psychiatrist—full-blown depression had set in. With help from my psychiatrist, I realized I’d been making major life decisions that weren’t aligned with my values. I had let societal expectations pressure me into believing that if I didn’t own a home, I was throwing away money as a renter. But what’s best for everyone else isn’t what’s best for me.

We sold the house, and I’m back to being a happy, stress-free renter. I couldn’t be more at peace with my decision.

Here are a few questions to ask yourself before you decide to buy a home and become a landlord.

Do you have commitment issues?

It cost $4,000 to replace the main cast-iron sewer line. As part of the renovations, Torres-Rodriguez also redid the driveway.

When it comes to making decisions, I’m prone to overanalysis and decision fatigue, especially regarding big-ticket items. I like having the option to change my mind, and that’s not something you can do when you own a house.

Buying a home can keep you in a place long after the charm has worn off. A house is the largest and most expensive physical asset you will purchase in your lifetime. In real estate, there is a five-year rule of thumb which says new homeowners should generally stay put for at least five years before selling their property or they risk losing money.

The reason? Closing costs and real estate commissions consume an additional seven to 15 percent of the cost of the house. Your home will have to appreciate up to the costs of buying and selling just to break even.

If you like keeping your options open, you need to consider the financial risks.

Are you a people person?

Every landlord is at the mercy of their tenants, which can lead to sleepless nights, especially in a downturn. You’re relying on another person to pay rent on time, something not always possible during dire economic conditions such as these.

My personality isn’t suited to depend on others for my financial security and peace of mind. If I purchase a home in the future, it will definitely be single-family so I can have privacy and not worry about sharing a living space with a stranger.

Are you prepared for hidden costs?

As a first-time homeowner, I thought I covered all my bases. After closing costs, I still had a few thousands dollars left in our emergency fund. Our home inspection report said everything was fine. But a few weeks after living in the home, we encountered the structural issues that needed immediate repairs.

There are many hidden costs that arrive with home ownership, and if you’re not prepared, you can quickly find yourself swimming in debt and hating your life. When the toilet starts flooding, you can’t call your landlord. You have to fix it yourself.

Here are a few hidden costs of owning a rental property.

  • Rental property insurance
  • Property tax increases
  • Capital expenditures and maintenances
  • Changes in laws, ordinances and building codes
  • Capital gains
  • Fees (legal, tenant screening, accounting, property management, etc)
  • Vacancy costs
  • The biggest cost … your time!

Bottom Line

Homeownership comes with many hidden and unexpected costs, no matter how much you try to prepare. In addition to upgrades like a new patio space, there are also things like faulty drainage and HVAC systems homeowners must deal with.

While I’m grateful that I was able to purchase a rental property, my experience taught me that I’m just not suited for that landlord life. 

I value not shelling out thousands of dollars to fix a broken air conditioner or repair a roof. I value being able to move within 30 days and not having to worry about what’s going to happen to my home. I value my privacy and not relying on other people to pay my bills. More than anything, I value the freedom of being a renter. I still invest in real estate, but now I do it through REITs (Real Estate Investment Trusts), where I can reap the benefits of property ownership while enjoying the flexibility of stocks.

Before you purchase a rental property (or any property), it’s important to make sure the decision to buy or rent aligns with your personal values. 

Don’t let society, friends or family tell you what you should be doing with your money. There’s nothing wrong about renting, or right about owning. Those are simply opinions, and the most important opinion influencing your decision should be yours alone. 

Decide what works best for your lifestyle—and do what feels right.