If You Don’t Possess Some Level of THIS Trait, You May Not Survive in Real Estate
I’ve been watching people, myself included, invest in real estate for some number of years now. My experience has been working with investors who own rental properties, some with property managers in place and some without, and dealing with contractors when it comes to rehabbing a house. In watching all of these situations, I’ve come to realize that there is one absolutely non-negotiable trait that every investor must possess — or else.
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There are a few reasons not everyone invests in real estate. Some don’t like the risk, some just don’t know how to do it, and some barely know how lucrative it can be. But there is another category of people who either don’t invest — or shouldn’t invest. It involves this one trait that I am talking about.
No matter what kind of investing you do, no matter how active or passive it may be, and no matter what kinds of teams you are working with on your deals, the reality is that you absolutely, no questions, asked must possess some level of…
There is no getting around it — if you don’t possess some level of assertiveness, you aren’t going to survive in this industry. You may not necessarily need a CEO gangster level of it, but if you don’t have any, you will drown.
I’m going to present you three cases of real estate investing situations, ranging from the most active to the most passive, and explain why you need to be able to be assertive in each.
Rehabbing and/or Flipping Properties
Rehabbing/flipping houses is probably one of the most active methods of investing, and you are likely to have to be assertive in quite a few areas of it, one being purchasing the house, especially if everyone is trying to buy it. However, where assertiveness really comes in with this one is in having to deal with contractors. Unless you are so handy that you can rehab a house with your own hands, you are going to have to deal with contractors.
Have you dealt with contractors lately? Phew! It's not always pretty. Hopefully you have found that odd gem of an amazing contractor who not only does the work exactly as you want it, but also does it timely and cost-effectively. If you haven't though, be ready to put on your boxing gloves.
I definitely fall into the category of having really goofed up with contractors. I have very little experience with them since typically I buy fully rehabbed properties, but in the few cases, I’ve had to deal with them outside of those properties I have nearly sank. I find that contractors are very fast to tell you they are right and you are wrong. Or for some reason, they think they wear the pants and can do things on their time and quality schedules.
If you are unable to put your foot down to a contractor, you’re in for a long ride. You basically need to be able to tell them exactly how it’s going to be. Now, don’t do this right from the start when you hire one or you’ll annoy him too soon and he won’t come work for you, but this part comes in along the way. You have to stay on these guys. I learned this the hard way this year. I trusted a contractor to get things done properly, and it was a disaster. At a minimum, keep a close eye on what is happening. Then, as soon as you see something isn’t getting done as it should, you have to begin stomping your foot. In my experience, contractors are very hard to tell things to. They seem to have no interest. Again, hopefully you find a good one and don’t have these problems, but at some point you will have to become extremely assertive with a contractor if you want anything to get done.
Landlording Rental Properties
Less active than flipping and rehabbing is owning a rental property. If you are landlording the property yourself, though, you better be ready to put the smack down on tenants as soon as they start causing problems. Maybe you only ever have great tenants (a lot of that depends on the quality of the location and the property as to who the house attracts), but at some point when you own a rental property, you will have a less than desirable tenant.
I’ve seen tenants try to pull all sorts of stuff. They will give reasons why they can’t pay and you should give them more time, or they’ll suddenly have way more people and animals living there than you approve of — and the list goes on forever. They will often try to convince you of certain things, and oftentimes they will even try to play on your emotions as a way of convincing you. You must put your foot down. You will absolutely get run all over if you can’t be strict with tenants when the need calls for it.
I actually won't landlord my own properties because I know myself — I'd get run all over. I also won't be a police detective for the same reason — the bad guys would be able to fool me all day long. I know my strengths, and bowing up to people is not one of them. Even though I'm not great at it in rehabbing situations with contractors either, at least in those cases I know that I am paying for something in particular to be accomplished so I feel like I have more leverage.
When I’m paying someone to do a job right, it’s a bit easier to get bossy. Tenants and felons lying to me all the time? I wouldn’t know what to believe. I’m getting better with getting bossy and standing my ground, but I’m not ready to tell with tenants, that’s for sure. So you have to be ready for tenants if you are going to landlord your properties, and you may have to pull out all the stops in being assertive if you want to get your rent money. Whether it’s getting the money or filing for evictions or posting (and enforcing) a “perform to quit” type of notice, you have to do it and do it strong. “Assertive” could almost be an understatement in this case.
Owning Rental Properties Run by Property Managers
This one is by far the most passive level of investing, and it’s one where people don’t realize they do still need to possess an ounce of assertiveness. It’s actually my motivation to write this article. If you are rehabbing a property and dealing with contractors, you need to be able to be quite assertive. If you are landlording tenants, you need to be able to be extremely assertive. If you have invested in a rental property that is being run by property managers, you don’t need extreme levels of assertiveness at all, but you do need to have some stored away in your back pocket in case of emergency.
What I have seen quite a few times is a property manager stops performing properly, and the property owner either doesn't do anything about it, meekly asks questions, or won't stand up to the manager and tell them how it's going to be. Ultimately, they are intimidated by the property manager and think they hold the cards.
No. Property managers are like employees — they work for you. You own the house, you are the boss, and if they aren’t performing, you are the one who needs to crack the whip. I’ve seen very few cases in which the property manager starts performing poorly that ever get recovered. It’s like an old computer — once it starts going a little haywire, it’s inevitable you are eventually going to see the blue screen of death.
I say I’ve seen very few cases that this wasn’t the case, but that’s probably not accurate. I don’t think I’ve ever seen a property manager who has gone badly recover. In those cases, you being assertive involves you telling that property manager it’s unacceptable and you will be changing to a new manager (and then actually doing it, of course). Even if you are under a contract with the manager, I don’t care. You are the boss, and you cannot let your property (i.e. income) go to shambles. The property manager is not the boss. You are in charge, and certain things need to happen, period.
The big vehicle here too is communication. Ask the property manager questions, explain what the problem is — whatever you need to do. Don't not communicate with him, or you are as guilty as he is when things fall apart. Be assertive! Since I deal with turnkey properties a lot, I should put this out there, too — it is very common that turnkeys are advertised as being completely hands-off, with no effort on your part needed. For the most part, that can be true, but mind you, turnkey is only a method of buying a rental property, not of owning it. Once you buy it, you own a rental property like any other. You have to be capable of bowing up to the property managers if need be! I think the advertising of turnkeys lures in a lot of people who have no idea how to be assertive and certainly don't know they might need to be. So plan for it — at least have some assertiveness in your back pocket and ready to go if need be!
Real estate investing is not an industry where you are able to roll onto your back and be submissive. You have to stand your ground. Again, maybe it’s not to extreme jerk levels, but at least a shred of it needs to be in your capability. Have enough education to know what should or shouldn’t be happening, as that is the first step in knowing whether you need to get assertive with someone or not. Then, be ready to do it if the situation calls for it.
Experienced investors—can you give any examples of when being assertive has been a total necessity for success in your experience?
Let me know with a comment!