Kristy & Bryce with their new edition in front of
The Turia Fountain in Spain
From JL:
Turns out you can still travel, even with a kid. Who knew?
Certainly not their detractors. For years they confidently said, “You can only travel as you do, and be FIRE’d, because you don’t have kids. Once you have a kid, you’ll have to settle down and very likely have to go back to work. At the very least you’ll change your tune on renting and buy a house!”
Nope.
They’re back from living nomadically in Spain for three months with the new kid, and they are still jobless.
I first met these guys when they showed up in Ecuador for my Chautauqua 2016.
They were in their very early thirties, retired from their engineering jobs, and wandering the world as nomads. They so completely embraced the ethic of Chautauqua, I invited them to be speakers at the future events which they did right through to the last one in 2022.
Now I’m not saying there is a connection, but promptly after I announced the end of Chautauqua they went off on a new adventure and got pregnant.
They recently moved from one end of Canada to the other and are still perfectly content to rent.
Here’s how, and why, they do it.
Yes, you can rent with kids
Back in 2016, JL published our guest post on this blog called…
“Buy Your Freedom and Rent the Rest”
In it we talked about how we chose to rent cars and our home, rather than give in to the societal pressure that owning is better. Instead, we chose to own our time by buying our freedom.
Now, 10 years later, 10 lbs heavier, and with a toddler running around constantly trying to break everything, a lot has changed.
We are no longer the carefree DINKs we once were, able to climb mountains, fly to Thailand to scuba dive on a whim, and sit in cafes for hours doing whatever we please.
Most days, we feel like involuntary fire fighters, except without the cool hat and the truck. Now we spend all our time changing sheets, picking Cheerios out of our hair, and dealing with constant emotional meltdowns (mostly ours).
Almost everything has changed, but one thing has remained consistent. We still rent.
We are the exception, not the rule. According to the US Census Bureau 65.3% of Americans own their homes.
And who can blame them? Renting carries a stigma that you haven’t checked off the “adulting checkbox” yet. This is especially true for families, because you now must worry about your children’s school district and being “renovicted”, a situation where the landlord “renovates” the home and kicks you out to jack up the rent. No wonder most American families want a forever home. No parent wants to worry about the instability of renting.
That said, renting can be stable and pay off, if done right. Homeownership carries overhead costs like maintenance, property taxes, and insurance, which, when saved and invested, helps you get ahead financially. In addition to those three, there are many other costs associated with homeownership you may not have thought of, mentioned in JL’s viral post Why Your House is a Terrible Investment.
Renting and investing gives you flexibility because your money isn’t locked into one asset and you get paid dividends and interest which goes towards covering your rent. That’s why we also like to say…
“You can’t live inside a stock, but you can live inside a home paid for by its dividends, capital gains, and interest.”
I know that families worry about being uprooted constantly but renting isn’t the risky move. Renting carelessly is.
Here’s how we do it strategically.
10 Smart Renting Rules for Families
#1 Ownership Structure
What’s the most important thing when it comes to looking for rentals?
The view? The size? The Location?
The answer is: none of the above. While those things are important, the most important thing on our list, that has served us well as renters in the past 20 years this:
Ownership Structure
In other words, “who owns the property?” Is it an individual’s house? A condo?
If the condo unit or home that you live in can be easily sold, that’s not stable. We only look for “purpose-build” rental apartments. These are entire buildings that are owned by an individual landlord or a corporation, built especially for renting. This way, the cards are stacked in your favour because owners can’t sell an individual unit, they need to sell the entire apartment building, which is far less likely.
#2 Vet the Landlord
Management companies for apartment buildings, like individual landlords, run the gamut from being awesome to being slumlords. Always Google the name of the management company to see if they’ve been named in any lawsuits or cited by the city.
Check out the common areas of each building and see how well maintained they are. Pay particular attention to lawns, laundry rooms, and amenity rooms. If the grass is neatly trimmed, they probably care about doing a good job.
We like to go to the building when the landlord is not there and ask a few tenants whether they like living there. If there are problems, you will hear about it.
You can also use this website that lets tenants review landlords: https://ratethelandlord.org/
#3 Treat viewings like interviews
Always be respectful, courteous, and punctual. If you say you’re going to show up at 10:00 AM, be there 5 minutes early. Look presentable. Comb your hair, trim your nails, and dress up. Landlords only have a few minutes to form an opinion about you, and you want to make it easy for them to think of you as a polite, organized professional that will likely pay their rent on time and not build a meth lab. You can always change back into your “May Contain Wine” T-shirt after you move in.
#4 Prove You Are An A++ Tenant
Good landlords love A++ tenants. This means stellar references from previous landlords, excellent credit ratings, and a bank account statement that shows you’re good for rent (ideally, at least a year worth of rent). If you’re the type of tenant who’s never been late on rent, leaves a rental in better shape than when you got it, and have all your paperwork (landlord references, credit check etc) ready to go, you are an A++ tenant. If you want the option to pick the best rentals, prove you are a desirable tenant.
#5 Leverage existing approvals
As soon as you get approved for one rental, immediately let other landlords know. This puts a gold star next to your name. Landlords now know you are an A++ tenant and others have already done the work of approving you. When I went to rental showings, as soon as I mentioned I was already approved, landlords pounced on me like hungry cats. As soon as you get your first approval, announce it at every subsequent viewing because competition makes you more valuable.
#6 Convenience, Size, Neighborhood. Pick 2 out of 3.
To bring down cost, be flexible about giving up the thing you care about the least. For us, that’s size. We hate driving and all the liabilities that come with owning a car, so convenience is important to us. We also need to be in a good neighborhood for good schools, safety, and access to pools and playgrounds. This is why we were willing to compromise on the size (instead of a 1200 sqft place, we ended up in an 800 sqft one) and get a place closer to downtown in a good neighborhood. We make it work with modular furniture and minimizing our stuff (which is tough when you have a kid, but can be done if you furnish your place right).
#7 Avoid the most desirable neighborhoods
It may be counter intuitive, but when it comes to renting, don’t pick the best neighborhoods. Pick up and coming ones adjacent to it. This will minimize competition while still giving you access to good amenities, safety, and schools since you are close to the best neighborhoods and more amenities will get built over time. When it comes to rentals, be in a good neighborhood, instead of great one.
#8 Magnet Schools Are Your Friend
Parents shell out big bucks to buy houses in the best neighborhoods to get their kids into the best schools, but depending on where you live, you might be able to access “magnet schools”.
These schools specialize in educational themes (like STEM, arts) that draw students from across normal school boundary lines. So even if you don’t live in an area with a good school, your child may be able to get into a good magnet school via academic performance, lottery, or audition/portfolios (for arts based programs). So don’t just focus on shelling out the most money to buy rent in the best neighborhoods. You can still access good schools by renting and finding good magnet schools.
#9 Craigslist is surprisingly useful
To find our dream rental, we used Craigslist. That’s right, Craigslist. The one with all the scams. Surprisingly, it’s also the site that had the best rental deals.
There are many newer sites you can use like “Zillow, Zumper, Trulia, Apartments.com, Facebook MarketPlace etc”. I’ve tried all of them. You do have to do more work to weed out the scams, but of all the sites I used, Craigslist had the best deals.
When using rental sites, don’t sign any leases without seeing the place, don’t trust any listings without sufficient interior pictures, and don’t pay anything until you sign and verify the lease.
Which brings me to my next point:
#10 Know your rights
Reading rental laws might put you to sleep faster than a truckload of Ambien, but it is the most important thing to do as a renter.
In competitive rental markets, unscrupulous landlords might try to scam you by getting you to pay a full year’s rent up front or charging you for an application fee. If this violates local laws that protect you as a renter, you need to be aware of this. If you live in a place with rent control or has strict rules against “renovictions”, you need can use this to your advantage. Knowing your rights will mean the difference between enjoying renting and hating it.
Instead of spending money on things, spend on investments to buy your time back. As JL says…
“Stop thinking about what your money can buy.
Think about what your money can earn.”
When your portfolio’s capital gains, dividends, and interest are enough to pay for your living expenses (rent included), you are free to live your life on your own terms. You can choose to pursue passion projects, travel, and/or spend time with your loved ones.
The more stuff you own, the more money you have to put towards insuring it, maintaining it, and storing it.
I’d rather own my time.
For more tips on how you can buy back your time, check out our new book
Parent Like a Millionaire (Without Being One) (www.parentlikeamillionaire.com). As a bonus treat, you will find an exceptionally well-written Foreword from the Godfather of FI himself.
Parent Like a Millionaire Trailer
Want a couple of free books?
If you comment below and answer the question “what is your biggest challenge as a parent?” we will randomly draw three readers to each win a free copy of our book (Due to shipping costs, for non-Americans it will be an e-book).
Plus, we held JL down and beat him until he agreed to add a copy of the new edition of The Simple Path to Wealth for a package deal!
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Addendum:
How we got INSANE Real Estate Investing Returns
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Should you be so inclined, you can sign up here for…
