Tough words to hear, but true. I work with landlords every day, and I see all kinds of ways they get into trouble. Some troubles come from natural disasters and others come from malicious tenants, but all of it causes much distress to landlords.
So what can you do about it?
If you’ve voluntarily become a landlord, then you need to own these problems. If you haven’t dealt with them yet, then they are coming. By owning these problems, you’re taking responsibility for your own future, and you’ll find that you have far more control of your real estate investing business than you think. Here’s how I recommend you get started.
1. Accept That There Will Be Problems
Half of the battle is getting into the right frame of mind. This business is largely mental. Experienced investors do well with problems because they’ve been through it before, they dealt with it, and they’ve lived to fight another day. They also understand that, despite the problems, this is still the best business out there for them.
2. Be Careful About Who You Do Business With
As a landlord, it is assumed that you’re wealthy. Whether that’s true or not, that perception makes you a target – for deadbeat tenants, contractors who may overcharge you, or unscrupulous property managers. The list goes on. Knowing this, you need to be careful who you deal with. What are they really after? Will the relationship with them be beneficial to you? And what checks can you put in place to make sure everyone does what they’re supposed to do?
3. Keep Your Cool
As the landlord, you are the CEO of your rental business. Act like it. Tenants sometimes do foolish things. Often, they have reasons and, sometimes, they don’t. Either way, you’re always going to handle the situation best if you keep your wits about you. No matter what problems occur, you’ll feel it last in your bottom line. Remember that, and treat each situation like a business problem, and deal with it accordingly. No drama, no getting upset, just dealing with it, getting it under control and moving on. If you need to evict a tenant, then handle the eviction strategically, without violating the lease terms. If you can’t do that, then maybe you don’t have the right temperament to be a landlord. Or maybe you might want to look at a lower stress type of rental such as an NNN credit tenant investment.
4. Don’t Trip Over Dollars to Pick Up Dimes
Landlords, bless their hearts, are cheapskates. Landlords often start out buying property with their last investable dollars, and so they do a lot of the work of maintaining the properties themselves, handling the maintenance calls, taking out the trash, doing the books. That’s fine, to start, but old habits die hard. Like any business, you want to put your highest-value people on the highest-value work. Sure, you will save a few bucks by doing the little maintenance items on your properties yourself, but, at some point, your time becomes far too valuable.
Instead, you should hire someone to do that work, and you should stay focused on strategic considerations, finding more properties, or your day job. When you’re purchasing a new property, understanding the transfer policies permitted by the specific type of New York State deed is paramount. Rather than risking less-than-optimal closing terms, trust an attorney with the closing negotiation duties. Maintaining a steady cash flow from all of your revenue streams should be your absolute priority. If you really want to get crazy, you could use that time for some rest and relaxation! After all, isn’t that the reason you got into real estate investing to begin with?
These are just a few of the issues I see that come up constantly. It’s very easy to blame everyone else for the problems you encounter as a landlord, but casting blame is not going to fix a single problem. I know some of this might sound harsh, but I’d rather be tough on my landlords in private, than let them be exposed in a courtroom or worse. Real estate is an unforgiving business, and the best thing I can do as an advocate for landlords is prepare you for it.
The Flip Side
Now that I’ve bashed you for being the source of your woes, let me tell you about the flip side. That is, you have within you a huge part of what you’ll need to make things right. If you’re the source of your problems, then that means you also can be the source of your own solutions. This is a great thing because, in real estate, the vast majority of things that factor into your success or failure are largely outside of your control. Here, we have something that’s completely within your control. This means that, rather than waiting for these things to rectify, you can fix them yourself right now.
So I would encourage you to take charge of your business, accept responsibility, and rather than casting blame, make yourself a better landlord. Then, the next time trouble rears its ugly head, you’ll be better prepared to deal with it head-on.
And if you need some help getting started, give me a call, and I’d be happy to beat up on you some more! Whipping my landlord clients into shape is what I do best. Through our Landlord Edge Review, we take a critical look at your plans, processes and structures to identify areas of weaknesses, bulletproof your rental business and help you achieve peak performance.