The Dragon House

When I first read Robert Allen’s book ‘Multiple Streams of Income’, I was hooked. Real estate sounded appealing as an investment, so we decided to become landlords.

I’d done a lot of research and knew that prices were lower in a small town near us so we went to have a look. There were several ‘For Sale by Owner’ signs, so we took some photos and made notes as we went.

After viewing several homes, we decided to put in an offer. The young man who owned the house was named Kevin, and he’d inherited it from his grandmother. It was going to be a private sale so we met in his living room.

He told us he planned to take the money and move to another town, following a girlfriend. It seemed like a risk to me.

Taking the money from selling your biggest asset and following a girl wasn't the best plan, in my opinion. But it was a business arrangement so I let it go.

We closed the deal and signed the papers.

At first, I felt guilty that we were buying his family’s heritage, but I got over it.

It was one of many things I had to ‘get over’ in the years to come.

It turned out that Kevin’s hobby was chainsaw carving and he had created an intricate statue of a dragon out of a tree stump in the yard.

As soon as we saw the Dragon, we named it the Dragon House.

Mortgaging our home to buy the rental was a huge step out of our comfort zone. We were risking our family home to make an investment that might not work out.

This first deal kept me up at night.

The house was old and needed more work than we realized. We spent every weekend and lots of nights during the week, ripping out walls, painting, and repairing things.

The small jobs turned into larger ones. and as we worked, we found more things to do.

When we replaced the windows, we discovered there was no insulation in the walls.

When we painted the attic, we found some wiring problems. We also found asbestos in the insulation.

We redid the bathroom and found plumbing repairs to do.

As we peeled off the wallpaper, we found another layer underneath. Other owners had simply pasted new paper on top of the old, making a thick hardened mess.

The last layer was orange and black, very retro.

We learned a lot about contractors. We bought windows from a company that offered to arrange someone to install them. They didn’t meet their own deadline and when we complained, they threw their hands up in the air and told us it was the supplier’s problem.

We live in a small town and know a lot of people.

I met with the manager and pointed out the implications of that. He could see that I was serious and their reputation was at risk. He made a few calls and the windows were delivered and installed the next week.

Lesson learned: Sometimes you have to be the squeaky wheel.

We had never been landlords before, so we approached the job with a dangerous mixture of confidence and naivety.

This was uncharted territory. We had no idea how to manage rentals, especially the people part. On the other hand, we were excited to be on our way to having a second stream of income.

We were Virgin Property Managers.

We were sure we knew how to be a good landlord. After all, we’d both been tenants before. Except we forgot to look at the situation from a landlord’s perspective.

Then emotions got in the way.

I really loved the house: after all, it came with a dragon in the backyard!

It had history and great character so I wanted tenants who would appreciate it.

So, we had an open house for potential renters. That resulted in quite a few applications. It was also a gong show as it was difficult to have a decent conversation with any single applicant.

We interviewed people on the fly and checked references for the ones that seemed like good possibilities.

Next, we weighed the pros and cons.

There was a lot of overthinking.

Should we rent to a family (more stable), or a couple (maybe partiers)? Did they have to have a job, or was a fixed income OK if they had proof? Was a single parent a good risk?

Our personal opinions clouded our thinking. Was it fair to choose? That felt a lot like we were playing god. Should we take the first applicant that qualified? That felt riskier.

Seriously. We were trying to be ‘fair’.

Eventually, we decided. We went with our gut feeling. Our first tenants in the Dragon House were a young couple. She was a single mom with two children and she had a new boyfriend. They ticked all the boxes. Clean, polite, both with good jobs; their references checked out so they moved in at the end of the month.

In hindsight, the warning sign was “New Boyfriend”.

When they moved in, we noticed they had a lot of belongings. The house was full to the brim. It was a surprise to us that a young couple had so many belongings.

A month later, the young man phoned me, IN TEARS. She had moved back in with her ex-husband because he was threatening to take the children.

Of course, he couldn’t afford the house on his own. It turned out that all of that ‘stuff’ was hers and she’d taken it with her. I’m not sure who was more surprised, him or us.

She broke his heart.

Lesson learned. Things aren’t always as they seem. Check the facts, keep your emotions out of it, and don’t overthink. And we didn’t have to be ‘fair.’

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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This story also appeared on Medium by Tree Langdon, the author.