Le Sigh

The Waterford home is in the outskirts of Birmingham in a newish subdivision. We bought it several years ago when the community was being developed and right before the market tanked. This particular home is in a "master planned" community, complete with pool, tennis court, club house and nosy neighbors who have nothing better to do than whine to some all-powerful committee when you leave your trash can outside an hour longer than you should.

Normally I don't buy homes in these types neighborhoods. I don't see any reason to pay for additional amenities when I don't get to use them. And, from what I have discovered, my tenants don't use them either. However, I am finding there are those tenants who are drawn to this lifestyle are happy to have the opportunity to have a club house nearby. And there are those who really don't care. Mostly they don't care.

When we bought, this was an up-and-coming community. I happen to think if the housing market hadn't taken a belly flop this neighborhood would have thrived. At the time in Birmingham, this was a new and novel concept concept. Even today, looking around Birmingham, you will be hard-pressed to find middle-class affordable subdivisions offering these types of amenities.

Instead of the Utopia the developer assured homeowners would be their, this neighborhood is now riddled with rentals from desperate landlords who couldn't sell and foreclosures from well-meaning homeowners who bought above their means. For the most part, there are owners who take care of their yards, plan the neighborhood potlucks and do all the neighborly things we all want to see. But, in between the Smith's and the Jones' homes there are two rentals and a foreclosure. On every street.

My Waterford home is one of the Birmingham neighborhoods I tend to watch more closely than others. I am relieved to say right now the house is worth about what I paid for it--maybe a little more or less, depending upon who asks. I am also relieved to say, I don't classify myself as a "desperate landlord."

In the past, I have always managed to get more in rent for this home than I should. If this home were closer in town, right now, I wouldn't blink at my rental price. But, being in a faltering almost-up-and-coming subdivision where you can't swing a dead cat without hitting another rental, is making my exorbant rental rate a bit more difficult.

Beginning from the time Mrs. Waterford told me she was moving, I started following Craig's List to see what properties were renting for in this subdivision right now. There are two homes on this street renting for $200 less than I have been getting for rent. Are they in better condition? Do they have new carpet, a privacy fence and a two car garage? I don't know.

Considering I get top dollar and my homes are rented almost instantly in some scary neighborhoods for my homes, it is sad to have to compete way out here in the suburbs and hope I have a tenant within two months. The difference is there are very few rental homes in Birmingham. Rental homes tend to be out in the suburbs. Like this one.

Adding to the rent issue, now that Kirby is involved, I have the added expense of property management to contend with. Given my mortgage, my break even point is still higher than market rents for this area. And, it is hard to convince a tenant they want to pay $100 to $200 more when the same floor plan is for rent three doors down for less-minus the privacy fence.

Kirby brought me a potential tenant Monday. They want to move in Friday. They are both employed, no pets, one child. Her credit isn't great. He is a victim of the local economy and is currently grateful he has part-time employment. They like the house. However, they have been paying attention to the same rental homes I have been watching. They know what the market will bear. They know I am crazy. They know what the home a block away is renting for. When Kirby called, he wanted to know what I wanted to do--come down on my rent or let them walk?

The good news is they are willing to cough up slightly more than market rent for this home. The bad news is what they are willing to come up with, and Kirby's fee doesn't leave us with much of anything other than the mortgage payment and a swell tax deduction when all is said and done.

Fortunately, this home isn't that old. Fortunately, the home is in good condition. Fortunately, we have other homes that do cash flow to cover the expenses. Not having a paying tenant is probably more detrimental to us right now than having a paying tenant who is just covering the mortgage.

I could hold out for more money. But, I probably would become desperate and start lowering my standards. After all, it is my overall experience that people with obscenely horrid credit are willing to pay a lot more than market rent prices because they can't get a better deal. My experience with tenants with obscenely horrid credit is they are obscenely horrid renters. I am not up to dealing with awful renters right now. I would rather have someone babysit my asset and let the values come back up, even if I am not seeing much at the end of the month.