As the economy is getting better, more and more people are jumping into buy up the last low hanging fruit in the real estate market.
Is this you? Do you see buying and holding property as a more secure investment than the stock market?
- If you want to give it a go, the number one thing you have to figure out is whether or not you can personally manage the properties. I have had a lot of investor friends that are way too nice to be landlords. They give people lots of chances, and almost always get burned. How any relationship starts out is normally how it will end up. If it is bumpy now with a candidate that won’t give you the information you need to qualify him for your rental, you need to move on.
Renters will test you. Sometimes in the very beginning, sometimes it can take years. The number one thing to know is that you have to have a system in place to handle your rental. For example, you should have policies and procedures in place regarding late rent. For us, by day five, the renter is charged the late fee. By day six, papers are filed for eviction if the whole rent and late fee are not paid. I know it sounds like tough love, but remember; there is nothing to do with love here. This is a business and you better run it as such or you will go under.
I once bought two rental properties from a rather large, and intimidating man. I am convinced the only reason he wanted to sell these properties is because he had a tenant and the mama of the tenant on a month to month contract. He and his mom, occupying two houses side by side, had not paid rent in two years.
My big, intimidating dude was a little pussycat inside and was terrified of the guy, so he couldn’t collect the rent. Luckily, for him, he owned the houses free and clear, but you can see how this can be a really energy zapper. Not to mention, he still had to pay taxes and insurance on these properties, so technically they were draining him of his hard earned money from his full time job.
Oh heck no! I’ll be darn if I am going to work hard to give some free loader a place to stay for free. We purchased them, gave notice to the tenant and tenants mama to vacate. He tried doing the bullying thing until the police showed up to remove him and his mama. You would think after two years of taking advantage of some poor soul this parasite would have the money to not just move but buy his own dang house! Luckily, Johnny law came in and saved the day. They didn’t even destroy the place. I guess somehow they realized that with the law onboard, we weren’t messin around with him.
You can hand your properties off to a Property Manager, but good luck finding a good one. I have seldom seen a Property Manager that is going to take care of a property like someone with a vested interest. There is a huge turnover with Property Managers even if they have done their job. Eventually, landlords will take back the properties thinking they can do a better job.
Either way, Property Manager, or no Property Manager, you need to know your strengths and weaknesses. What are you good at? Do you have a big dude in the family that isn’t easily intimidated? Can you crack a whip when need be?
Even if you get a Property Manager, you have to have boundaries, standards, and procedures with them too. The truth about yourself will keep you from making a bad choice. Landlording is NOT for everyone. You softies, or people pleasers….BACK AWAY from RENTALS!