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WHEN I WAS ASSIGNED a high school essay on business morals, I asked my dad if he knew of any books on the topic.
“No, Stevie, I don’t. From what I’ve seen in New York real estate, it would be a very thin book.”
For more than 40 years, that cynical quip has haunted me, coloring my view of rental real estate. I’m not emotionally suited to being a landlord. But I wanted real estate as a stock market diversifier—and I was drawn to the benefits of combining rental income with stock market dividends. Together, they would give me a passive income stream to pay for retirement even if Social Security in its present form were to perish.
As seniors, the urge to reckon with our lives is a natural component of what’s colloquially called the “wisdom of old age.” Some of you may have already embarked on a journey of savoring the memories of your successful choices and regretting the ones that didn’t pan out. What about me? I’ve found myself reflecting on the moral tests I confronted during my years as a landlord.
Lately, one particular transgression has been replaying in my mind. It’s a seemingly minor incident that happened when I was renting my first duplex in 1983. Its outsized impact on me may be attributable to the fragility of my budding values as an owner of small residential-income properties. I was a child of the Kennedy era of youthful exuberance and aspirations, and I fashioned myself as a humanitarian landlord. Faced with a moral dilemma, I imagined myself adjudicating with enlightened fairness and sensitivity.
But I soon learned how my worries about financial success could corrode my integrity. I had already rented the two-bedroom side of the duplex, but—after it had sat on the market for two months—was growing worried about the more luxurious three-bedroom unit. Just as the next mortgage payment was coming due and my concern was turning to panic, I received a call from a student at the nearby university. He and his friend were looking for a place, and they were interested in the apartment.
Even back then, I knew that renting to two fraternity brothers was a risk to neighborhood quiet and the property’s condition. On top of that, I suspected it might be difficult to find a renter for the remaining bedroom. But I was enamored by the idea of finally renting two of the three bedrooms. I walked the boys through the unit and signed them up.
I was one relieved neophyte real estate investor. After the guys took possession, my good fortune seemed unbounded when I received a call from a fellow in Placerville, a small city some 50 miles north of Sacramento. After an exchange of pleasantries and some questions, we agreed to meet at the property.
James was morbidly obese and walked with a waddle. Although struck by his awkwardness, I was not fazed by it. He was amiable, and seemed forthright and a promising rental prospect. His references and credit were exemplary, and we scheduled a walk-through. He met his two co-renters and then drove with me to a nearby coffee shop to leisurely sign the lease. Boy, I could really cozy up to this landlord stuff.
But my reverie was short-lived. Late that same afternoon, I got a call from one of the students. James was gross and disgusting, I was told. The boys would withhold their rent until I undid my arrangement with him. I did not relish the prospect of an expensive and stressful eviction process, along with the unraveling of my newfound self-esteem as a landlord.
After a few days of deliberation, I called James and explained the situation. The silence on the other end of the phone told me that this was not the first time he had been the object of discrimination for an illness that was probably biological and out of his control. He stuttered that he’d been looking forward to his new home but didn’t want to pursue renting it under the circumstances. He agreed to cancel our contract.
Clearly, James had more character than his landlord. It took a while before I could recognize and acknowledge my lapse. I can’t remember how I ultimately filled the vacancy, which didn’t seem to matter as much anymore.
Viewing life through the lens of retirement is not always painless. How deeply had I wounded James? Does his mind still wander to that phone call as often as mine does?
You may already be revisiting the decisions you made in young adulthood, regretting the missteps and delighting in the triumphs. Half a life later, I tell myself the same dilemma today would evoke a very different resolution. But I’m also aware that talk is easy—and it’s behavior that’s hard.
Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve’s earlier articles.
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If they had anything close to your level of decency, perhaps those 2 students have endured the pondered thought about their actions.
Thank you. I have often wondered who those guys turned out to be as adults.
I am more interested in the present, since, as Jeff says, I can’t change the past, and at 75 there may not be all that much present to enjoy. But every time I read one of your articles about being a landlord, I congratulate myself again on knowing it would a terrible fit for me. I have a couple of percent of my portfolio in a Vanguard REIT fund and that’s all the real estate exposure I want. And I’m thinking of selling out of that.
Hi
Yes, if I had it to do all over again, it would be REITS, especially in California where the.cost of housing is so high, your investment return is quite low. Why pass up a 3.5% dividend and 10% capital appreciation? I was just programmed the other way by my parents.
Steve, I echo Jeff Bond’s comment below, and admit that I still let my selfish motives override my concern for others more often than I like. I’m far from perfect. I say that not as an excuse, but as a truthful recognition that I need to continue to work on being better. Even so, neither of us is strong enough to carry the weight of all our mistakes. I hope you find a way to slip from under the burden.
Hi Ed,
Given the lottery of birth and my childhood, I’m not sure I had that choice. I benefit from a good deal of self-insight but, yes, also much guilt. But I do believe the child is father of the man. I wanted to be a sports writer when I was young, but I realize now it was no coincidence that I landed on psychology. I believe I’ve helped many people achieve insight that will help them not repeat the troublesome patterns of their past. But, yes, if I ever had the experience of having myself as a patient (oh, God), I might well think this guy may be in touch with himself, but he’s really a tortured soul! Always admire what you have to say.