Ep. 075 - Should Christians Be Landlords? Stewardship and Rental Property

Episode Transcript

Spencer
Owning a rental property can be both a rewarding and challenging experience. Hospitality is one way that we honor the Lord and show the love of Christ to the world around us. How can we act with hospitality while being a landlord though? Today we'll dive into stewardship as a landlord.
Austin. Today again, we're throwing together two things that seem like they're contrary or in competition. Oftentimes, hospitality, acting as God's gracious element in the world and welcoming people and then acting as a landlord. But really, as we think about stewardship, oftentimes if we own rental property, that's what we are. We're throwing those two things together. So how do we think about these things well?

Austin
Yeah. No, that's a great question. And, you know, over the course of our marriage, my wife and I have either owned a rental property, had people live with us for most of our marriage. I think there's maybe only 2 or 3 years where we haven't had someone live within our home or rent a property from us. And so I think, you know, for us, there is both joy and difficulty in this, joy in that we can offer a space for people to live in, in difficulty with,
how do I charge them? How do I actually treat the property well? How do I treat my tenants well? And so I think we need to come into this with open hands and say, Lord, I need your guidance. I need your wisdom. We always come back to James 1:5 that we need to pray for wisdom and ask God for him to show us how to be a good landlord, to be a wise, hospitable owner of this property or possessor of the property, so that we can bless those people around us.
And I think it can often be a tension because my wallet likes to speak differently than the Holy Spirit at times. What I may want to charge, what I think is a good market rate that we could charge, may not be what the Holy Spirit is saying to do, and I need to live in tension with those, and see, how do I seek the good of the people that are living in my house?
How do I seek the good of that actual physical property that the Lord has placed in my hands? So I think we just need to say that it can be really joyful and it can be really challenging at the same time. But I think at the heart of it, the reality is that we as Christians, we're called to be hospitable.
We're called to love the sojourner. And I think if we look back at the Old Testament, that Levitical law, Leviticus has numerous laws regarding the treatment of the sojourner, the immigrant, the person that is not necessarily a member of the family, a member of the tribe. And we look at this a little bit differently in modern context and say, okay, our family of faith is pretty broad.
It's not divided on ethnic lines as it was in the Old Testament, but I think the thrust is the same. How do I treat somebody who is not necessarily either blood related, but maybe they are a brother and sister in faith, but they are not. Maybe how I would treat my actual biological brother or my father.
So Leviticus 19:33-34 says, when a stranger sojourns with you in your land, you shall not do him wrong. You shall treat the stranger who sojourns with you as the native among you, and you shall love him as yourself. For you were strangers in the land of Egypt. I am the Lord your God. And we look at this, and we're reminded that in Egypt they were treated very harshly.
The people of God, the nation of Israel, was not treated like well-to-do foreigners. They're coming in on a consulate visit. They're treated like slaves when they were in Egypt. And so God is saying, hey, remember that time when you were slaves, when you were mistreated? Don't be like those people. Be a different nation. Be a different people that are set aside, set apart to be hospitable so that when that stranger comes, when that foreigner comes looking to you for a place of respite, a place of rest, a place to lay his head and find a home.
Treat him well. Don't treat him like those other people that serve other gods did.

Spencer
Well, then we see in the New Testament really? Jesus when asked, you know what the greatest command is saying, well, it's love the Lord your God with all your heart, soul, mind, and strength, and love your neighbor as yourself. On these two command, you know, depend all the law and the prophets. So it's love your neighbor as yourself here.
And that can be a little bit of a challenge when we think about, okay, I own this property, how am I going to rent this or provide this to another person? Because I do have a responsibility as a steward. The Lord has entrusted this property to me. But oftentimes it seems like we either choose one path or the other.
We say, I'm a steward. I need to maximize my return on investment, or the Lord's return on investment, or on the other side of things. I just need to, give this away. And I need to, not charge anything. And I need to, not assume that it's going to do, anything from a financial perspective. So how do we grapple with that?

Austin
Well, I think that comes back to, okay, the Lord doesn't want us to be ill stewards, but also, I don't think that Christians can or should ever manipulate tenants purely for financial gain. And so I think we look at the range of that spectrum where it's one either I am done harm because I'm mistreating the property, I'm mistreating the resource that God has placed in my hands, or I'm mistreating an image bearer of God.
So I think those are the two poles that we say, well, it's neither this nor that. It's somewhere in the middle. We don't manipulate others. We don't manipulate our tenants purely for financial gain. Nor do we say, I need to be so miserly with myself that I'm being a bad steward of this resource that God has given me.
And so I think what it looks like is we need to take an honest assessment of how much is enough, that that question of what do I really need? What do I need to keep, what is gainful for me versus what does what, is actually benefiting this tenant? And I think that comes down to that, again, that question of how much is enough as I look at, okay, these are my expenses that are coming up every month.
Am I pushing the utility bill, the water bill, the, the internet bill, or am I pushing that to my tenants, or is it a single lump sum? If it's a single lump sum, then you can kind of aggregate your costs and say, okay, these are my costs. Okay. To break even, I need x, I need y. Okay.
What is a market rate? Well, if I just purely look at the market rate and I say, okay, well my costs are let's just say $1,000 a month, a market rate that I can charge is two, 3000. Okay, maybe I can charge that market rate. But I think the question then becomes, should I charge that market rate? Or are there tenants that can pay that market rate?
Or maybe I know friends or family members or brothers and sisters in Christ that may say, hey, I need a place to live. All I can pay is $1,500 a month. Does it make sense to charge a brother and sister in Christ 3000 when I can only pay 1500 and they're in need? And so I think that's the tension that we need to live in and say, okay, can I operate with some level of cash flow to where when the HVAC unit goes out, when it comes time to as I've looked over year end, am I tithing on the income that I earn?
All of these things I say, okay, I look at all of the costs that are at play. Am I charging an exorbitant rate just so that I can make more money? And what am I doing with that money that I'm making? Am I giving it back to the kingdom of God, or is it purely just so that I can enjoy a more lavish lifestyle?
I think that's the tension that we need to live in and saying, okay, what are, what is the purpose? Not just of the home and my stewarding the home. Am I loving my tenants or am I just trying to fill my pocketbook?

Spencer
So it sounds like really what we need to do is step back and say, okay, if I have this property, what is the Lord calling me to do with this property? Because there's a range of outcomes. Here's one that can be, legitimately more towards, a level of income that is sustainable and going forward and such, because we may have folks who are in, retirement who are in their 80s that are depending on a level of income
there just to buy groceries.

Austin
Yeah.

Spencer
So in those kinds of circumstances, it would seem that we need to lean a little bit more in that direction of saying, okay, well, you know, here's the market rate. I'm not going to gouge people, but I'm going to be very comfortable with the fact that there is a service that's being provided here. I have income, I want to make good decisions.
And honestly, I need to just be okay with the fact that maybe I'm not charging too much below market rate. On the other side of things, though, if we already have enough, we have to start asking, okay, where does it where did these resources go towards what's, what's the end here? And if I already have enough, is there a potential that the Lord would just be calling me to, welcome someone in?
Maybe at a below market rate? Now maybe also not at such a below market rate where we are losing, you know, funds on that because we've seen that story play out, too. And you really want to think about long term sustainability here too, because after about six months of losing money on someone being with you or in your property, it takes a lot of resolve to continue down that path.
So there has to be, you know, this, this willingness to get into the details of the financial elements here and, find that and ask the Lord what can be sustainable, you know, over time.

Austin
Right, absolutely. Well, I think this comes back to you to what you were saying earlier of that call of Jesus to treat others like we want to be treated. I think, you know, before we were homeowners, it's how did I feel when my rent rose significantly? Did it produce a level of anxiety, did it produce a level of fear of what am I going to do?
And so I need to, just like God calls Israel to remember, we need to look back and remember, okay, how did, how did good landlords treat me? How do I then treat those under my care? Again, there is always a play of what do I need versus what do I want, and balancing that. So even as cost to maintain the home increase as your property taxes increase, tell your tenants, hey, I'm going to increase prices by 3% this year.
It's not just because I'm gouging you. Literally, the gas prices went up by 3%. And I in order to continue to maintain this home, well, I need to do this. If that pushes you into a place where for the next 2 or 3 months that we need to maybe cut at 5050, we can do that. But we're getting to a place where I need you to know that I have to raise the rates.
If you communicate that well in advance and say, this is what's happening, this is why then your people are going to feel cared for rather than just say, hey, market went up by 10%, I'm charging you 10% more. This is about how do we treat people? Well, how do we treat people as we want to be treated like the Lord calls us to?

Spencer
So if we put on that hat where we say, okay, we need to have a strong rate of return, we're going to try to have, within the context of being loving, and being a good steward and landlord from a hospitable standpoint. We're also trying to have as much income as we can, because maybe we need that to put food on the table for our family or whatever it might be.
The key principles, you know, that we would really look at there. One, it sounds like would be, yeah, if we're thinking about how we would like, to have a landlord interact with us, there's a high level of communication. What are some of the other things that really, if we think about, okay, we're putting on this hat where we're where we do need to, prioritize income, that net income.
But we still want to be hospitable. What other things do we need to think through?

Austin
I think one of the big ones is maintain the home properly and diligently. We I think oftentimes when you're managing a property, it can be really easy to forget. What are those basic maintenance needs? And if someone calls, okay, if you don't have the time to get there, you need to have margin set aside in a separate account.
That's not your traditional spending account that’s saved primarily just for rental home expenses, so that if you can't get there in a timely manner and there's a water leak, you're calling a plumber and that plumber is getting there as soon as possible, or you're calling an electrician to fix the problems. There needs to be a level of prudence and care.
And I think oftentimes, you know, as I look back on our time as a landlord, we were also missionaries. Funds were tight. And so sometimes I did not want to pay to have the best work done. But I think there's prudence of saying, okay, I need to maintain this property. Do I need to install, platinum fixtures everywhere and the most expensive things in the home?
No, I don't need to put in marble countertops that are imported from Italy. Right. But if the countertops are cracked and broken and they were initially installed as floor tiles and they're chipping and it needs to be replaced, I don't just need to say, well, I'm just going to fix this one floor tile and it'll be a little bit similar, but not the same.
Like, no, let's take a level of care and prudence with the home. Maintain it, remind the tenants if it's their job to replace the air filters, check in with them. Hey, have you changed the air filters, like basic things to keep the property going, to make sure that it's a comfortable place for them to live if there are things that need to be done, or if they're complaints that they're made, hey, respond with grace.
I think these are just kind of basic things where, sadly, I think rental properties are not treated like primary homes because they're just thought of as an income generation machine. And so you minimize cost, you maximize the rent that you charge. I think as a steward, you need to say no, there needs to be some level of parity.
It's not just going to get the cheapest work done and I'm going to charge the most rent. It's okay, I want to actually care for this property well, because at some point I'm going to sell it or at some point I will die and it will pass to the next steward. And do I want to lay on that steward a weight of man,
this property was not cared for. I don't want to be that type of possessor of God's property because again, this property is not mine. It's God's property. These people that are living here are image bearers of God that need to be honored and respected.

Spencer
Well and I think that's where the rub is, because our culture, with all of these different books and programs and such, will say, hey, here's the way you do this. You put very little upfront, you finance it, and then you increase the rent as much as you can, and you cut costs as much as you can. So cutting costs, it means that you either do the work and perhaps you're handy.
But if you have one property and you're doing another job, it may be tough for you to get over there, especially if you have a family. If you have many properties, things sometimes go bad at, inflection points, you know, where there's lots of different things that you're trying to juggle. So it seems that the level of, overall income, sometimes we have to well, as Christians, we really have to be willing to sacrifice some of that, either for the timeliness of the repair or the response,
or by doing it ourselves, which cuts into our lifestyle, which is difficult to grapple with. I may have shared in the past, but I had a friend who a number of years ago, he just was not accounting for his own time. And, you know, I'm over here working a full time job, have a family. And he was like, you won't believe this, but I got 100% rate of return on this investment.
And I said, oh, tell me about it. This is about 15 years ago. He said, well, I bought a home in South Knoxville and I put $50,000 in there initially, and then I sold it, you know, a year later for over $100,000. And I said, okay, well, that's great. How much time did you put into that? And he said, well, I mean, I was working on it most of the year, just like, okay, well, you know, you put in $50,000, but you put in so much of your time through the course of that year, let's say you put in 1000 hours,
you know, in that year, well, if you if you if your time is worth $50 an hour, then maybe it was a decent, you know, return. But with all of the other things that you had to buy, the paint, the, you know, the, the other elements, my guess is that you made far less, you know, than that.
But you're not mentally accounting for that. You're just saying, well, here was the initial purchase and here was the sale. And so I'm going to, to say that we have to really say, am I called to this by the Lord by putting in time and focus and not just, hey, I read a book and it says I can get a 15% rate of return on this after, you know, all fees and expenses and such,
if I do it in this particular way, because oftentimes the intensity ramps up as we include things like leverage, as we're really focused on a particular rate of return and all of these kind of sets the, sets us at odds with our tenants. Because we need them to be, willing to pay us market rates,
we need them to, never have a need, you know, from us. We need them to always pay on time. All these different things. It's like no-

Austin
No, vacancy....

Spencer
No vacancy, we need, you know, bang bang, bang, bang, bang. And we need it all to come together. And then we achieve our goal, whereas our goal maybe never should have been that. Right. You know, our goal maybe should have been. Well, I'm a steward. I've got a lot of considerations here. One of them is legitimately oftentimes a rate of return.

Austin
Absolutely.

Spencer
And it can be a significant rate of return. But that can never be the only consideration. And I think that's where we go astray so often. The other thing, you know, that we could go to, though, is, is also that if we have a property, sometimes if we don't look at the numbers and we don't really grapple with what we are willing to walk away with and what we're willing to invest our time in, sometimes our time, you know, we get paid $0.30 on, on the hour and we say, am I really called to this?
Or should I be investing maybe in the familial relationships that I have and some other things at church or other places in the community? And we say, okay, I'm not managing this well, and maybe it's because I should have set the rent a little bit higher, you know, to begin with, closer to a market rate. But that was uncomfortable for me.

Austin
Absolutely. Well, and I think that that comes back to where we eventually landed was while we were, we were charging a rate that was fair to our tenants. We were not, we had great people that lived with us. The thrust for us was we want to create a space that is comfortable. We were making plenty of money on the property while not charging exorbitant rates.
Because we came into we came into a place when we moved back to Knoxville, that just was a tremendous blessing. But it got to the point a couple years ago when we were like, the amount of time and energy that it's taking to maintain it, the stress of, okay, what happens when someone moves out of the property, the stress of, hey, I get a call at, on Christmas Day that there's flooding because a pipe burst.
The stressors of it overwhelmingly said, this is not worth our time and energy anymore. Doesn't matter the rate of return that we got, it doesn't matter that, those other pieces. And so we communicated with our tenants and we said, hey, it's time for us to sell. And if that puts you out, just let us know, and we're going to try to do our best to walk with you through this next season.
But it's just gotten to a place where the money isn't worth it. The time that I spend thinking about, like, being concerned with the stress of it, it became overwhelming. And so I think in that regard, one of the best things that we can do as well, is pray for our tenants. And I think this is something that's oftentimes missed as a landlord is am I actually taking these image bearers of God before the throne of God and saying, God, how am I loving these people well?
Am I, how can I treat them as you would treat them? Do I need to pray for their financial growth so that at some point they can, maybe choose to move out and go buy their own property? All these things need to be a consideration as we embrace that role as a steward of these properties.
We first again, the first and uttermost most important piece is am I loving the Lord with my whole heart, soul, mind and strength? Is this causing me to, whether it's because of a great financial return and I'm just seeing dollar signs in my eyes, walk away from Jesus that way, whereas the stress of being a landlord and having people live in my property, where there's a 100ft tree behind it that I'm like, I don't know if I can afford to take it down.
And I'm worried that that's going to affect the people that live there. Like if that's causing so much stress and it's drawing me away from the Lord that way, it's time to really consider, okay, whether it's the money that's causing me to walk away or it's the stress that's causing me to walk away, am I willing to lay those before the Lord and say, I'm going to put this all back on the table?
What is best for myself? What is best for this property that you've given me? What is best for these people that live there?

Spencer
Well, and being able to say, Lord, are you really calling me to continue to be the steward of this property? Because it may be that with all of the other things that you have going on with life, that you may not be called in that direction because it sounds great up front, but about the third time you get a call past 10 p.m. at night, it starts to not be great.
You know, it starts to be just one more thing in your life. And even with people that you know and love and respect as tenants, you know, you get that call on Christmas Day and you just don't want to address it. You do address it. But, you recognize that there's a cost there. And if you know, if you're coaching youth sports teams and you have a game at 6 p.m. on Thursday night and you get a call at, you know, 5:40, that that's not easy, you know, to deal with because you're saying, okay, well, I'm going to try to, you know, get there after the game or whatever it might be,
it's just one more thing, you know, in life. And again, if you have if this is your job, and you have 10 of these or 12 of these properties and, and that's what you do then, okay, the next morning I'm going to get over there at 8 a.m. and I'm going to address this.
But for most of us, if, if we have another job and we've got 1 or 2 properties maybe on the side, that's a that's a tough dynamic. Because you're just fitting in something on an emergency basis into all the other things that you have going on in life. So with that, I think we come back to there is this level of care, you know, that we've got to apply as stewards and we really need a calling on, a piece of property to steward that
well, and know, what are going to be what are going to be the, the inputs, the expectations that I'm going to need to fulfill in a reasonable way, both financially and with my time to make this a fit for everybody involved?

Austin
Yeah, absolutely. Spencer I enjoyed this conversation about being a steward and a landlord, simultaneously. And I think the reality, if we come back to it at the end being a landlord can really be a tremendous way to bless people to honor the Lord, to be a steward of that property that God has placed in our hands for a short period of time, that we may bless others around us, make a rate of return, and then also just be a good steward of a good gift from the Lord.
If you have questions about what does it look like to be a steward of a landlord, of a rental property, of a set of rental properties, we would love to have that conversation with you. Feel free to leave comments down below and we'll see you again next time. If you found this episode valuable, share it with a friend and subscribe on your favorite podcast platform so that you don't miss the next episode.

Disclosure
This content was provided by Second Half Stewardship. We are in Knoxville, Tennessee and you can visit our website at www.secondhalfstewardship.com. The information in this recording is intended for general, educational and informational purposes only, and should not be construed as investment advisory, financial planning, legal, tax, or other professional advice based on your specific situation. Please consult your professional advisor before taking any action based on its contents.