Robber Barons: Accidental Slumlords

The lessons of property ownership gone wrong

Jan 10, 2024

Be careful what you ask for

We had quite a few houses under our belts by now. We’d also learned to stay away from strata councils.

Rental houses seemed to be the best fit for us. They were small enough that we could afford them, and renovations were getting easier as we learned how to do things.

Sometimes we would flip them for a quick profit but more often we would rent them out to locals with nicknames like SqueGee and Carlybob.

Our retirement strategy was to create many small streams of income trickling into our savings.

There was a serious downside to this plan.

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Individual houses were a lot of work. There were outbuildings to maintain, fences to repair, and yards to mow. All of these separate places were becoming too much for us to handle. We couldn’t afford to hire a management company. We knew there must be a better way.

Someone suggested we look at a multi-unit building. It was a good idea, but I had one rule. NOT a strata. After our experience with the shady realtor, that was the last thing we wanted.

If we could find something with several rentals in one building and we could stay in full control, it might work. An apartment building would be perfect.

Then we were hit by the sticker shock.

Multi-unit buildings cost a lot more money than a single house. Duh. A lot more. It took a bit of a brain shift to get over that. A larger down payment. More debt. Higher costs to maintain the place. Not to mention higher risk.

When we got over the larger numbers we could see it was doable. We had to find the right place. It had to cash flow.

After searching for over a year, we had almost given up on the idea.

Then we got lucky.

Our realtor knew of a really old (but cheap) seven-unit apartment building in our neighborhood.

There was an accepted offer, but the sellers weren’t interested in negotiating. The first deal fell through. (yay for us)

We had a look at the building and it was showing it’s age, that’s for sure.

There was a large bulge in the stucco surface on one exterior wall. We figured it was either a huge building envelope problem, a money pit, or nothing. The basement was a dark, damp crawl space, and there were signs of water damage as high as the electrical panel. (flooding maybe?)
The front and rear doors didn’t lock, so people wandered in and out of the building at all hours of the day and night. The hallways were an old shag carpet that smelled like a mixture of stray cats and wet newspapers.
The two-story building was covered in an attractive greyish stucco with dilapidated wooden balconies barely hanging off the second floor places.
There were 7 units and the place was fully rented, but there were no rental agreements, just a list of names and monthly rents.

Our realtor told us that the owners were firm on their price and they wouldn’t consider any adjustments because of the condition of the building.

It was a take it or leave it moment.

We decided to take the risk.

Call us crazy, but we decided to go for it.

We sold all our other places and put everything into this one basket. We put together a budget that had a bit of money set aside for what we called ‘the bulge’.

We offered exactly what they asked for, with no conditions, and the sellers accepted it.

Now we were slumlords.

You could have smoked salmon in the blue haze in the hallways. It seemed like someone had used the walls in the building as punching bags.

There were more animals living there than people.

Stray cats roamed freely in the hallways through a two-way cat door at the front entrance. Raccoons lived in the crawlspace. One tenant had several parrots that flew around freely in their suite. The birds painted the walls in charming white streaks of shit. There several large aquariums and a couple of old gnarly dogs.

The tenants had a really effective, informal cooperative arrangement going on in the building. They all knew each other and helped each other out with repairs and other challenges like finding money for beer, or rent.

Local homeless people would do their laundry there cause it wasn’t a coin-op. It was essentially free. Sometimes they slept in the hallway.

It was not unusual to find people roaming the halls wearing pajamas, visiting other tenants. Most people were behind in their rent and all of them were barely scraping by. It was just a matter of time before one of them self-destructed.

Emergency repairs were the first drain on our meager funds.

We tackled the dangerous things first. Then we secured the building. We changed all of the locks and gave everyone new keys.

Putting locks on the outside doors angered a few people because they kept forgetting their keys and locking themselves out. Others were pleasantly grateful for the increased safety. A guy on the second floor got a ladder and used his balcony as his main entrance.

All the second-floor decks were rebuilt. The cats lost their convenient revolving door and the crawl space creatures were closed out with heavy mesh screens. That put a crimp in the style of some of the local varmints.

Neighbors and passersby waved and cheered when we hired someone to paint the outside and do some yard cleanup. The workers said they’d never experienced such gratifying feedback on a job before.

We replaced the old washer and dryer in the foyer with new coin-op ones.

We thought we had a plan.

The first thing to go was the stinky carpet in the hallways.
Next, we filled in the cat doors and holes in the walls, so pets and other critters couldn’t roam around inside.
A couple of coats of paint in the hallways really improved the smell.

We didn’t want to evict anyone, so we told them, that as long as they paid their rent, they were grandfathered in. So were their pets.

If a tenant left, we would fix up their unit and see what we could do to make it better.

Then we settled in to see who we had as tenants.

There was a drunk in #1, a generally harmless guy unless he was driving.
The self-assigned den mother in #2 would roam the hallways in her nightgown at odd hours. She had birds that shit on the walls, fish, and a big ol blind dog. And two kids.
A quiet French Canadian in #3 was hiding from something from her past.
The lady in #4 was a crackhead and used to sell drugs through the takeout window at work. Unfortunately, she also had a couple of kids.
A lady in #5 was behind in her rent and refused to catch up. She was likely going to be our first eviction.
The girl in #6 was pregnant and her boyfriend was in the city. He was supposed to be sending her money.
The couple in #7 was ok until the girl left and the guy went off his meds. Then the fun began.

Now we were slumlords.

From that day on, our decisions were a trade-off between dealing with crazy people and keeping ourselves safe. Neither of us would go into the building alone. Sometimes we had to ask the police to come with us.

Our motto was now “Safety in Numbers.”

We started this adventure by creating multiple streams of income with a few rental houses. This building shifted us into the big leagues.
Whoops.

This is a fictional series that explores the challenges of being a landlord. It also reveals the idiosyncrasies of various tenants. Some of the scenes are based on true experiences.

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