3 Scary Bad-Raps For Real Estate Investors And How to Beat Them

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So, I am perfectly aware of how difficult is may be to read an advice article from a guy dressed like a pirate.  But hey…it’s Halloween and this is pretty scary stuff.  Make mistakes like these and you could be dressing like this for kids parties just to make a living!  And no, that is not why I am dressed up.  I have 4 kids and I would do anything to make them smile…

I was recently at a meeting with a group of real estate investors.  It was a group that I had stopped attending a while ago and for some reason, call it momentary amnesia — I had forgotten why I had stopped attending.  It did not take long for me to remember!  I was surrounded by the walking, talking epitome of the three worst bad-raps attached to real estate investors today.

It is not a secret that real estate investing gets a bad rap.  Property Management companies get a bad rap.  Unfortunately for both, the bad raps are sometimes earned.  For now, I will stick with real estate investing and save my property management comments for another article post. 

Real estate investors can get a bad rap as opportunistic vultures.  Real Estate investors can get a bad rap as slumlords.  Real Estate investors can get a bad rap as lazy business people.  All three are absolutely true, but can also be overcome with well thought out and carefully executed plans to combat each stereotype.

Real Estate Investors As Opportunistic Vultures

Somewhere after the advent of social media and instant communication sites (insert your favorite photo sharing, status updating, gloating website here), it became fashionable to go online and post copies of the check you just received from the closing attorney or title company.  Then, as if it could get any worse than that, the pictures of new cars, nice watches, fancy bottles of wine . . . anything you could imagine that says “hey, check me out,” started showing up online.

Now, I am a huge fan of using social media.  I think these sites are incredible tools for communication, education, and brand building.  On the other hand, it has absolutely fueled the impression among the general public that real estate investors are opportunistic and preying like vultures on misfortune.  Showing off and using gaudy images is a tactic that has been used by infomercial salesmen, including those selling how to products about real estate, for years.  This tactic made its way onto social media when product sellers began to use it to show how successful they were.  Before long, it began to show up on everyday posts from people who thought this was a good way to earn “respect” in the real estate world.  Unfortunately, in my opinion, those kinds of tactics are more likely to earn scorn.

As investors, many of us are buying properties where the previous owner suffered some form of misfortune.  None of us should care how that misfortune came about.  It is an event from the past that none of us can change and which we bear no responsibility for.  Who is to blame is not a question for us when we are buying the property.  Instead, we should be focused on how to bring this property back to market either as a property for rent or for sale, and how to make that transition a profitable one for us as investors.  Each time we have a positive story to tell, if we focus on the right story and leave the “bling” out of it.  Others are absolutely watching and still some are taking notes and keeping score — that is the last thing this industry needs.  On a small level, each time someone posts a pic of that “fat check,” someone else is telling a story of greed.

I want to point out one last thing on this first bad rap.  I am all for celebrating!  Anyone who spends time with me or seeks my advice will tell you that I believe in celebrating all wins.  I am a big believer that no matter how big or how small that victory is or how you define it, life has enough adversity in it that experiencing wins should be celebrated.  Celebrate with a big dinner or a nice bottle of wine or by splurging on yourself or your wife/husband/kids or anyone else who is important to you.  Celebrating can be going for a jog in the middle of the day when you would usually be working or taking the whole day off for that matter!  Whatever it is…do not stop celebrating your victories.  Just stop posting ridiculous pictures on social media!

Are Real Estate Investors Slumlords?

I am a real estate investor and I am NOT a slumlord.  The same cannot be said for every investor out there.  We are all aware of the problems associated with real estate investing and the whole notion of being a slumlord.  Some of it has been earned over time and some of it has not.  I recall a city council meeting I attended some years back with several hundred real estate investors, where a councilman referred to the “slumlords” in attendance.  It made a lot of people very upset, but not me.  I knew, just as many others knew, that there were slumlords in attendance that night, just not all of us.

You know who the slumlords are as soon as they begin to tell their philosophy on investing.  They discuss things like how to limit maintenance costs instead of how to prevent maintenance costs.  That is code language for ignoring needed repairs or complaints and keeping things running with duct tape if need be, instead of replacing.  They discuss things like how to get a property occupied quickly with promises of future fixes and then ignore the request for those fixes.  They discuss things like early morning visits to the homes that do not pay rent and carrying a hammer to bang on the front door (I would imagine to sound very menacing).  Now notice, this has nothing to do with the neighborhood and everything to do with the actions of the landlord.  Unfortunately, those that can least afford to move are usually the targets of these types of landlords and these types of ideas really only work in older, more run down neighborhoods.  Again, the targets of slumlords are often those that can fight back the least and cannot afford to move.

The solution here is a much harder one to tackle.  These thoughts and actions have been prevalent since land ownership began thousands of years ago.  They just come across differently today and with a 24 hour news cycle, the stories of slumlords come out much more quickly and in greater detail.  My advice is to distance yourself not only from tactics that are clearly designed to “hold down” the renter to increase your profit, but to also distance yourself from those slumlords all together.  Do not waste your time or your reputation by being in business, or by associating with investors that think this way.   Your best bet is to always treat your investments and your tenants exactly as you like to be treated.  Most of us would agree that firm but fair, is the best policy.

Are Real Estate Investors Lazy?

It’s funny that these types of bad raps can be so general and non-specific and yet any one of us can get lumped into an over-generalization.  Part of the reason this happens, is that so often those that want to get started or even take the plunge into real estate investing, say they are doing it to get rid of the JOB.  But what does that really mean?

Unfortunately, getting rid of the JOB can be easily equated with “I don’t like to work”.  That idea is sometimes reinforced when you look at the work, craftsmanship and sales pitches made by some real estate investors.  It is shoddy at best and often over-hyped.  But again, lumping all investors into this category is unfair. 

So how do you combat this bad rap?

Don’t be lazy!  With anything you do, make sure you have a well thought out plan and you execute the right way, paying very close attention to the smallest of details. 

That can include:

  • the way you present yourself at meetings
  • the way you present yourself to home sellers
  • the way you present yourself to homebuyers
  • the way you present yourself to banks
  • the way you present yourself to contractors

 
Do you get that I am a big believer in the way you present yourself?  If you do not want people to think you are lazy, clean up your act and at the very least, look like a professional!

I watched a video recently that a company posted from a bus tour they had with investors from out of town.  I was blown away by the way they presented themselves to potential buyers, especially considering the fact that ALL of the buyers were from out of town. You would think that an out of town investor is going to want to see the very best of your company, to have a level of confidence in you, in order to trust you with their investment.  Every person in the video from that company was dressed SUPER casual.  No big deal right?  Except they were in t-shirts with shirts un-tucked, wearing flip-flops, wearing ball caps and jeans with holes in the knees and backsides just to name a few, little details.

The words you hear on the video are about paying attention to details, but the pictures show a different story.  The properties shown were before they were renovated, and the buyers are hearing about how great they will look when they are done, and how closely the company inspects all of the details.  Now, I do not know how well their bus tour went . . . they very well could have sold a property to every single buyer.  In fact, they could run the tightest ship in the industry, where every detail is covered, but they gave the impression to me of being lazy real estate investors.  They gave the impression that little details really don’t matter.

I know how unfair that is, believe me.  I know that you should not judge people or even companies in such a way, but that is how people think.  How you present yourself is absolutely the judgment you will get from others.  If you do not want to be judged to be lazy, then do not give people ay reason to think you are!

As real estate investors, not only do we have a story to tell the rest of the world about the good we do in our cities and in our neighborhoods, but we also have preconceived ideas we have to combat.  We are constantly going to be judged by the lowest denominator in our industry.  In order for us to improve those stories and drown out the noise caused by the bad raps, we have to operate with the highest level of professionalism and highest level of integrity, and must pay very close attention to all of the little details.  That is how we overcome the stereotypes.  That is how real estate investors can do away with the bad raps.

Photo Model: Chris Clothier

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About Author

In 2005, Chris Clothier (G+) began working with other investors and has since helped hundreds of investors purchase over 2,300 properties in Memphis, Dallas and Houston through the Memphis Invest family of companies.

12 Comments

  1. Investors are opportunistic vultures: In several of my posts on the forum this would be those I see as chasing a hearse down the road to find heirs and invests in probate properties.

    Investors are slumlords: Much of this can be blamed on a certain amount of laziness by having a property management company in the middle. They get a check and are fat, dumb and happy while the property deteriorates due to mismanagement. In some areas you can drive through rental property areas and just by the condition see which belong to investors who care and those being managed by a management company. The “Pride of Ownership” is high for those doing their own management.

    Investors are lazy: One of the things you stress in this article is how you present yourself. You suggest that to be a professional you need to be all dressy. Once you reach a certain level in your investing – you wear blue jeans and T-shirts just because you can! You are the boss and it is up to you how you dress. I happen to take pride in being able to dress in jeans & a T-shirt while others have to wear a suit & tie to look professional. A suit, expensive shoes, watch, tie, shirt, etc does not make the person any more of a professional. Many hands off investors are lazy by hiring a property management company and then not making sure the company takes care of their investment. It just means bargain properties available for other investors.

    • Chris Clothier

      Dale –

      Thanks for taking time to read the article and post a comment. I have a ton of respect for your posts both on here and on the forums, but I’m not sure I agree with you on the property management statement and I think you missed the point on how you present yourself.

      I’ll address the property management bad raps in another article, but I don’t think an investor that hires a property manager is a slumlord or lazy simply “because” they hired manager. You made a point at the end of your comment that I do agree with…you cannot hire a manager and not have a plan in place to manage your management. So if your point was that not being aware of your investments can lead to being an absentee slumlord and in turn is an aspect of being lazy, then I would agree. But simply hiring a property management company does not make you a slumlord or lazy and in many instances, investors that do hire property management companies wold argue the exact opposite. But, we’ll save that for another article.

      On the way you present yourself it is simple. I never said anything about dressing fancy, or wearing fancy shoes, watches, ties or anything else. You are right that at some point you earn a right and the ability to dress however you want to dress whenever you want to dress that way. I have a good friend who lives in Aspen, Co. and he can afford to buy anything he could ever want and buy it whenever he wants. He makes me laugh because he loves wearing his favorite jeans and ratty t-shirts and shoes and then walk into a fancy car dealership to see their reaction. He loves seeing how people judge him for how he is dressed. But those people are trying to sell HIM something. When he needs to SELL himself or his company, he never dresses that way. Now he does not own $5,000 suits or super expensive watches and shoes either, but he cleans up very well.

      He makes the best presentation of himself when it matters most and wears whatever he wants to wear when it doesn’t. That was the point of number 3. If you are lazy with how you present yourself, then how can you expect someone dong business with you to have any other impression of you? I love wearing jeans and t-shirts too, but not to meet investors, never to meet banks and not when the people I am meeting with need to understand how important I take my day to day business – which happens to be operating a $50 million real estate business.

      Thanks again for taking time to engage. It makes writing articles all the more worth it!

      All the best – Chris

      • One thing I forgot to mention under “Opportunistic Vultures” were those who after hurricane Katrina swooped in to buy properties from those who had lost a lot in the storm. Then they go to investor meetings and brag about how good of a deal they got or how they defrauded the government into paying high prices to set up FEMA trailers on their properties. Some of the other investors actions make you sick and not want to be associated with them.

        Dale

        • Chris Clothier

          Dale –

          That is a comment I can get behind. Let me throw one more scenario around that as well. How about the companies that set up shop promising the moon to real estate investors and touted the recovery programs in place from the government to encourage investment. Many of the investors who participated now find themselves with properties worth less than what they paid and a lack of residents to rent them. That is piling disaster on disaster.

          But your last sentence was right and fits. You are who you surround yourself with so you’re better off not surrounding yourself with people at all.

          Chris

  2. Chris –

    You make some great points in your post. I believe that it up to each and every one of us to help change the perception that most of the world has of real estate investors. Like you, I do believe that includes how you present yourself.

    Most of us would agree that you really wouldn’t wear a suit and tie to look at a run down house. Should you wear a dirty tee shirt and jeans with holes in them? No. Not if you want to be percieved in a good way, and be considered a professional real estate investor. I do believe that it is perfectly acceptable to have on a good pair jeans and a nice polo shirt in most cases to look at a single family home. They are more often dirty than not.

    “Opportunistic vultures” can be found in every niche in real estate, but most people just don’t do business that way at least not in my circles. Do they look for great deals? Absolutely! Do they solve problems for folks? Every day.There is nothing wrong with this.

    As far as landlords go, some of the best landlords that I know that have a lot of properties have set up a second company to manage those properties. They have a staff that oversees the day to day problems. Even though it isn’t them driving to the house to fix a water heater, they are completely aware that the work is being done.

    Successful people work on their business, not in their business. You are living proof of that.

    Great post Chris.

  3. Chris Clothier

    Sharon –

    Thank you for taking the time to leave a comment. They are are always very valuable!

    There are probably a million different ways this particular article could have gone and only so much space to write. I tend to use all of it! In the end, most of my articles are written directly to entrepreneurs like yourself and are intended as “reminders” of important things to keep in mind. I am glad you put the last sentence in your reply…it is important to remember that working on your business is a faster way to success than always working in it.

    I’m not sure if you have noticed or not, but you will. Josh might be one of the best recent examples of working on your business instead of in it. I know he has been working hard recently to make massive improvements to website – a site that is already incredibly successful! That is what great business people do whether your business is a website or a real estate company or even as an individual investing in real estate.

    Thanks again for commenting.

    All the best – Chris

  4. Chris,

    Any industry that has the perception of piles of quick money will draw the vultures. Its up to the rest of us to present the positive side of the industry. As long as the public has these poor perceptions and we do not band together to change our image, our industry and livelihoods become quick targets for politicians, lawsuits, and distrust.

    People talking about how they have taken advantage of others in one form or another should be quickly put in there place and not encouraged.

    I agree and disagree on the laziness portion of your post. Your point is valid on presenting yourself correctly to clients and customers. Impressions can set the tone. But part of me rebels against the stuffiness of dressing up. Your product should speak for itself (which I know yours does). My left brain simply says, “what the heck does dressing up have to do with selling quality homes?” Does it serve any purpose for your clients? I tend to be put off by a suit and tie. My first impression is, what is he trying to hide. That’s probably the Coloradoan in me. I tend to trust a jeans and t-shirt guy as someone who has nothing to prove. Bit of a ramble, but I don’t think I’m the only one who feels this way.

    Either way Chris, solid post on ways to improve our industry’s image and help us ebb the tide of negative perception.

    Jason

  5. Easy money – that’s what it looks like from a distance! Not from up close! The market always balances itself and whatever profits are there are hard earned. Property management is involved work. Finding the right tenants, avoiding the wrong ones, managing or supervising a management company, getting educated, etc. Property owners take risks – bed bugs, meth labs, the local unregistered sex offender… you name it. Keeping our tenants safe and keeping ourselves in business – that is hard work!
    Opportunities are out there, but saving is hard business too. Not spending now, buying properties, managing them, making the mortgage payments, staying on top of it – this will definitely pay off! May not be able to spend quite as much other right now – but preparing for retirement. Buy 15 properties with a 15 year mortgage and your retirement is secure. Nothing wrong with that!

  6. Good article Chris,

    I am glad I am not alone on this thinking. Sometimes I find myself having a tough time deciding what to wear? For Example I was meeting a private money lender whom I was referred to & just couldn’t decide if I should wear my suit or a pair of Khaki’s and a polo. I opted for the Khakis and polo and when I met him he was wearing a pair of jeans and a sweater. Needless to say I am glad I wore the Khaki’s because then I might of felt overdressed. Funny thing I was wearing jeans and a sweater earlier because I was checking out projects & went home to change. I made a comment with the lender how I was wearing jeans and went home to change for the meeting. It was a great conversation starter and I closed the deal. The point is he wasn’t trying to impress me, he didn’t have to. First impressions are in no way a guarantee because I am sure you will agree some of those guys in those fancy suits can be corrupt and the guy in the t-shirt could be the most honest person you want to do business with. I agree you should dress according to the venue you are attending and casual business attire in most real estate or networking events is professional enough and sets a good impression. I try not to judge people but appearances could cast some doubt or at least limit the ability of that person to be taken as a professional. You shouldn’t make assumptions but why give someone a reason too!
    Who would think we would be talking about how to dress in a RE post. LOL.
    Thanks for keeping it real!

  7. Chris,

    I just wanted to say I read your recent newsletter and was happy to see you put into action what you are preaching here. Not that I expected anything less, but it was refreshing to see. Many folks are quite impressed to see how much money you have put back into the Memphis economy via construction and local contractors. That makes locals proud to have your business located there. Keep up the good work and thanks for setting the example.

    Jason

  8. Great article, Chris, thanks for that :)
    I think the laziness/clothing bit is really so cultural/scenario/location oriented, its quite impossible to have a singular policy that works everywhere and with everyone.
    If I was to show up to a meeting with a potential client in one of the mining towns here in Australia with the suit and the tie I have to wear when meeting new potential business partners in Japan, there’s no chance in hell I’d get his investment, no matter what I say, how well I say it, and how true it is.
    Similarly, if I was to show up to a meeting with a new realtor in Japan wearing the work shorts or jeans, t-shirt and outback shoes that’d put that miner at ease here in AUS, I’d never get a single listing from that realtor. I’m sure similar situations exist in your collective lines of work and environments. The bottom line is, dressing, much like any direct or indirect communication with anyone and anywhere, requires sensitivity, cultural and context awareness, and a bit of groundwork.
    Having said all that, that all mostly applies to new contacts – but isn’t it great when you meet someone youve already worked with, or alternatively through excellent word of mouth reference? You can all but rest assured that you’ll be judged alot more on the content of your co-op offer, than by how you happen to look or feel that particuoar day…one of the reasons existing clients are the best new clients and word of mouth is the best advertising – it alleviates so much of this annoying need to impress or “fly under the radar”.

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