5 Reasons Investors Fail

Today what we are going to talk about are five reasons we see investors fail.

First, one thing we’ve seen is that Landlord’s just do not seem to know and understand all the laws that govern them. They don’t realize that the landlord is the highest sued person in Real Estate. They are watched by more government agencies than anyone else in Real Estate. You have Fair Housing, Discrimination, the IRS, Texas Property Code, and you have a whole litany of people that are watching you along with the Texas Real Estate Commission. So a lot of people don’t realize that there are a lot of things they have to abide by, they just go into owning a property without really thinking about these things ahead of time.

Second thing is they don’t really realize and understand maintenance, what needs to be done, and the time constraints that things need to happen. A lot of times there are laws that protect tenants on certain items. Again, sometimes owners don’t realize that they cannot make the house unsafe or inhabitable. That could get them in trouble. The tenant could leave and they will still have to fix the problem. So they don’t realize the amount of work that goes into maintaining properties and making sure that they are abiding by all the laws.

The third thing that we see is a lot of times the owner gives the tenant too much control. They don’t really stick by the rules. If the tenant is late, they may let them slide on the rent. They may let the tenant dictate certain things, like what needs to be fixed and doesn’t need to be fixed. And what happens a lot of times is the owner at some point will end up getting taken advantage of. Then they get more emotional and that is when you get this heated discussion, these arguments that go south fast. So try not to let the tenant be in control. You have to remember that you are the owner of the property and you need to make sure that you are complying with all the rules, laws, and regulations that go along with that.

Fourth, a lot of times owner’s don’t realize what is poor customer service. The tenant is the client, if the tenant leaves, there is no money coming in, meaning there will be no cash flow. You still have to make your mortgage payment, if you do have a bank loan on the property, and you have to make sure you are treating your client respectfully. There are a lot of other places that they can go and rent. They don’t need to rent from you necessarily all the time and you need to let them know that you appreciate them. You need them as much as they need you.

The last thing and the biggest reason that we see investors fail is that they don’t have a business plan. They don’t have policies and procedures in place that they can follow to be successful. If you do not have a business plan to be successful, the chances of you failing are extremely high. If you don’t have a business plan, I would recommend that you partner with someone, try to get someone that has a business plan or hire a management company. But don’t go into buying properties without a plan and not having very strict policies and procedures on how you are going to operate.