Me and Jack

Many years ago, Alabama real estate guru Jack approached Marty Sunshine and I about partnering on a home. By this time we had a pretty good idea what we were looking for in a real estate partner and thus a beautiful partnership was formed.

We bought one home before mine and Marty's under-capitalized issues caught up with us. That was ok with Jack, because he realized he really didn't need us anyway and had more control and variety if he went out on his own. Which he did. He has done very well for himself and we would have been a hindrance.

Our one home has done pretty well. We bought it under market. It is still worth slightly more than we paid for it. With our first renter, we were getting a decent rent amount. Our second tenant was an acquaintance of Jack's. In a moment of what I perceived as desperation, Jack gave him an awesome break on the rent, netting us about $50 a month in mad money. My feeling is Jack was afraid we wouldn't get the home rented and/or it would sit vacant for way too long (this is Birmingham where homes don't sit vacant, but I digress). At any rate, this guy got one heck of a deal on the rent.

In the ten months he has lived there, this guy has also asked for darn near everything. There was a leaky this. A faulty that. This doesn't close right. That is the wrong color. Even though Jack had to deal with all this (because the guy just flat-out refused to call me) I was sick of him. To top it all off, our $50 a month surplus wasn't really paying for the electrician/medicine man/ghost buster that our tenant seems to need. So, these repairs came out of our pockets.

I seriously don't know what happened to the home between tenant number one and tenant number two, because tenant number one never had an issue and nothing was leaking/broken/possessed when he moved out. I suspect if this guy didn't know Jack socially, he wouldn't be bugging him every month over every little thing.

This week our tenant called Jack and said he would like out of his lease. You see, he bought a home. Even though he is in a lease, he decided it would be ok to purchase. I understand sort of. There are great deals for people who are buying right now. However, part of me figures because of his personality and because he knows Jack, he figures another favor won't hurt.

This time Jack asked me what I wanted to do. Did I want to re-rent it? Sell it? Would I be willing to give the tenant back his deposit because he asked so sweetly?

I thought about this for quite a while before I gave him an answer. If I could get market rent (which is about $150 more a month than I am getting now), I would be happy to keep it. We aren't upside down on the property, but if we sell, we aren't going to net much.

But there are other reasons to consider selling. I think the world of Jack. He is a man of honor. He is a savvy business man and I have learned a lot from him. I have as much as told him so. But this property isn't Jack's niche. He prefers townhomes and smaller homes. This one doesn't fit his formula.

Also, I can't guarantee Jack won't feel the need to give another phenomenal break on the rent to the next tenant who comes along. Though Jack doesn't say so, he isn't inclined to manage our partnership the way I have trained Mr. Partner. Jack is more involved--which makes sense given he lives near this house.

At any rate, I decided it might be best to try selling the house. The tenant isn't moving out until May 1, so there are some logistics involved. Playing the bad cop, I wrote our tenant today, explaining that if he pays April's rent and if he keeps the place clean and allows real estate agents to bring in buyers we will bribe him by giving his deposit back. Except I didn't say bribe.

If our tenant doesn't agree to allow the property to be shown, I suggested to Jack that he put a for sale sign in the yard anyway. Either way, if we don't have any bites by mid-April, I told Jack I would like to try renting it out again too. This time for a bit more mad money.