Workers forced to return to the office may soon become 'accidental landlords'

Clay Spence never really wanted to be a landlord. Lately, though, it's begun to feel like the only sensible option.

Spence, a 27-year-old financial analyst, lives east of Orlando in Florida's Brevard County. In September 2021, he paid $225,000 for a three-bedroom townhome in a subdivision lined with palm trees and tidy lawns. It seemed like an idyllic outpost for a remote worker like Spence. Even more attractive was the mortgage rate — at just over 3%, it's less than half the typical rate for a loan today.

"We probably won't see those rates again," Spence tells me.

That plum deal made it tough when, early this year, Spence and his fiancée set their sights on a newly built home in Winter Haven, Florida, about halfway between Tampa and Orlando. It's closer to friends, family, and, importantly, Spence's office, where he's recently been attending more meetings. The builder lavished on them sweeteners like a price cut and a mortgage rate buydown. But what to do with the old place?

Sure, they could sell — likely for a tidy if not spectacular gain — but the allure of holding on to the townhome has been impossible to ignore. Spence says he expects his old spot to keep appreciating in value, and he's in no rush to say goodbye to that mortgage rate. So he decided to list the home for rent. He figured that finding good tenants and handling the odd maintenance request would be worth the headache. Spence quickly secured tenants willing to pay $1,800 a month, enough for him to clear about $300 a month after paying expenses like the mortgage, taxes, and insurance.

Spence is what you might call an "accidental landlord": the kind of person who gets into the rental business through circumstance, not because they consider themself a budding real estate mogul. This breed of landlord is born out of trade-offs and clear-eyed calculations, a far cry from the caffeinated bootstrappers on HGTV or the investing gurus pitching their real estate hacks on TikTok. While there have always been accidental landlords, this Housing Ice Age — an era of middling home sales brought on by a steep rise in borrowing rates — is minting a new wave of reluctant rental owners.

Their ranks could grow with the uptick in return-to-office mandates. As employers like Amazon, AT&T, and the federal government herd workers back to their desks, some employees may have to ditch the far-flung homes they purchased during peak remote work. Property managers in places like Dallas and Atlanta, some of the prime destinations for pandemic-era movers, tell me they've recently seen a rise in inquiries from homeowners looking to get into the rental market. For those inclined to do it themselves, the internet is awash in recently published how-to guides for inadvertent investors. Selling a house is tough right now, as is finding a job that lets you work full time from the comfort of your couch. For those who can't — or won't — sell their old place, the landlord business may be a welcome alternative.

Spence tells me renting out his old home has been a cumbersome, multistep process. "But the pros outweighed the cons in this situation," he says, "especially right now."

Homeowners have two options when it comes time to move: sell the house or rent it out. During the high-flying days of 2021, the answer seemed like a no-brainer: Take the money! A flood of footloose buyers, buoyed by record-low mortgage rates, gave sellers the chance to fetch top dollar for their houses. That dynamic changed in the spring of 2022, when the Federal Reserve started jacking up interest rates to combat inflation. Mortgage rates followed, putting the brakes on the runaway market. These days, the average rate for a 30-year loan is roughly 7%, up from a low of about 2.6% in early 2021. Recent homebuyers are likely paying hundreds of dollars more each month toward interest than they would have a few years ago.

So the sell-versus-rent calculus has shifted: Giving up the cheap loan terms of yesteryear could be a mistake, especially when you can find tenants to help cover the mortgage. Prospective sellers, particularly in the southern half of the US, also face weaker demand for homes and more competition from others looking to offload their properties. According to the housing analytics firm Altos Research, there are roughly 630,000 single-family homes on the market, compared with just 270,000 at the same point in 2022. No wonder would-be sellers are turning to the rental market instead.

While all signs point to a rise in the number of accidental landlords, there's no definitive count of their ranks. There are, however, some ways to get an approximation. A 2024 survey by the National Association of Realtors found that 20% of repeat buyers kept their prior residence as an investment, rental, or vacation property. Parcl Labs, a real estate analytics firm, has also devised a useful proxy. The company identified some of the most popular markets for single-family rental homes — Tampa, Florida; Dallas; Charlotte, North Carolina; and Phoenix, among a few others — and then looked at how many owners had listed a home for sale, yanked it from the market, and then relisted it as a rental within 60 days. Parcl found that, depending on the metro, anywhere from 3% to 8% of people who listed their homes for sale in September had become accidental landlords by November. The percentages were even higher for sellers who listed from May through August.

In Atlanta, for instance, an average of roughly one in 10 stymied sellers swapped in a "for rent" sign over the past year. In Houston, the share of accidental landlords peaked in July at nearly 9% of all sellers. In June, Phoenix surpassed 15%. The metros in Parcl's analysis have something in common: They're all once hot Sun Belt markets that welcomed a wave of new residents as remote work took hold. As fewer people move into these areas and new home construction catches up to demand, sellers may not get their desired windfall.

"It's such a thin market on the sales side right now," Jason Lewris, a cofounder of Parcl Labs, tells me. "Folks want to move, and this is another outlet for them to try to do that."

Some accidental landlords may not even bother trying to sell their original home. In April 2022, Ryan, who works in healthcare, bought a house in southeast Austin for $615,000. His timing couldn't have been worse. (Ryan asked that I use only his first name to protect both his privacy and his pride; "I feel very foolish, and I don't like that," he said.) This was right around the peak of Austin home prices, which have since dropped precipitously — by almost 16%, according to Freddie Mac — thanks to a decline in new arrivals and a wave of construction. Ryan estimates the value of his house has fallen to about $450,000, based on other deals in the area. Homebuilders nearby have been offering generous incentives to buyers, which he says would only make it tougher to sell his property. He's also soured on Austin — too much traffic, too expensive, too hot. He recently got an in-person job in his hometown of Phoenix, where he'll be moving soon. And he says he's not ready to stomach a loss from a sale of his Austin home just yet.

"I'm going to rent it," Ryan tells me. "I'm going to see what happens over the next year and just kind of go from there."

Christopher Story, a co-owner of Story Real Estate, a property-management firm in the Dallas area, says that about half of the inquiries he gets from homeowners these days come from accidental landlords. "They've ended up in a situation where they can't sell," Story tells me. Todd Ortscheid, who runs Revolution Rental Management in the Atlanta area, similarly says his region is "just flooded with accidental landlords." Of the roughly 15 properties his company signs up to manage each month, Ortscheid tells me, about 12 or 13 belong to people who didn't intend to become a rental owner.

As emboldened executives order employees to return to their desks, accidental landlords may grow even more common. Remote work isn't going away, but it's gotten harder to find hybrid or fully remote jobs, which could still mean more movers down the line. Workers who bought homes in the boonies might have to backtrack if the bosses decide Zoom calls aren't cutting it. It's practically inevitable that some of these people will decide to hang on to their homes rather than sell.

"We think it's going to continue, and it's simply a matter of interest rates," Ortscheid tells me. "Until the interest rates drop down to under 5.5%, maybe 5%, you're not going to have many people selling their homes."

But the metros with some of the weakest for-sale markets — in other words, the places where someone might be tempted to rent out their old place instead — have shown signs of softening rental markets, too. Take Austin: According to John Burns Research and Consulting, asking rents for single-family homes were down by more than 2% year over year in November, while the number of resale listings, not including newly built houses, was up by more than 60% from 2019 levels, the last "normal" year before the pandemic. Dallas, Houston, Orlando, and Phoenix are some of the other metros with muted rent growth and a surprising glut of homes for sale.

Being a landlord isn't all it's cracked up to be, either. Property managers caution that homeowners may not be prepared for the unexpected costs and headaches of converting their homes to rentals. A vacant month or two can sink a year's worth of cash-flow projections, while surprise maintenance can eat up time and money. Enlisting a property manager doesn't come cheap; a typical firm will charge a month's worth of rent to find a tenant and a percentage of the rent each month after.

On the other hand, small-time rental owners have never had more tools at their fingertips. If they want to see what comparable homes are renting for, they can scroll through Zillow or visit the websites of big-money investment firms that rent out tens of thousands of properties. National firms like Buildium and Roofstock, mostly known for working with Wall Street investors, also offer management services and pricing advice to smaller landlords. Other startups allow rental owners to outsource annoying tasks like rent collection and bookkeeping.

"Not everyone in the world is cut out to be a landlord," Story tells me. However, he adds, "being an accidental landlord can be one of the biggest blessings."

The rental route has been a mixed bag for Casey Conner, a homeowner in Nashville who I talked to for a story a few years ago. In January 2022, he bought a single-story home in the suburbs and locked down a 3.2% interest rate. When I talked to him that fall, he had just gotten a job offer in Kentucky and was torn about whether to sell or rent out his property. Other homes listed for sale on his street were sitting on the market longer than expected, but he also figured he wouldn't make much by renting it out and hiring a property manager. Despite his hesitations, he eventually opted to be a landlord. The $2,300 he charged for rent was enough to cover the $2,100 mortgage and the $200 he paid the manager each month, but it left no room for the other maintenance costs that popped up, which ended up costing him well over $3,000.

Then Conner got laid off, and he and his wife decided to move back into the home in Nashville, where he figured he'd have an easier time finding another job. When I called him to catch up, he was settling into the old home and had just accepted an offer as a sales coordinator at a construction company. The cash-flow losses from his brief stint as a landlord were "painful," he tells me, but it was a financial win in other ways: At least he never had to give up that mortgage rate. And he's been grateful to have a home to return to in Nashville.

"Not that I am rich," Conner emails me later, "but I do understand when they say: 'The rich don't earn. They own.'"

James Rodriguez is a senior reporter on Business Insider's Discourse team.

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