{"id":130349,"date":"2020-10-06T15:00:59","date_gmt":"2020-10-06T21:00:59","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=130349"},"modified":"2023-04-03T06:21:20","modified_gmt":"2023-04-03T12:21:20","slug":"5-hardest-aspects-landlord","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/5-hardest-aspects-landlord","title":{"rendered":"Hands Down, These Are the 5 Hardest Aspects of Being a Landlord"},"content":{"rendered":"<p><iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC2325975770&#038;light=true\" width=\"100%\"><\/iframe><br \/>\nPeople love to hate landlords. But the simple fact is that landlords provide a needed service\u2014perhaps the most needed amenity of all.<\/p>\n<p>My partner and I have recently explored flipping raw land. One of the greatest temptations? We don\u2019t have to hassle with all the anti-landlord regulations and restrictions raging throughout the U.S. right now. Flipping land is profitable and free from regulatory headaches or entitled tenants. Yet flipping land is effectively pushing paper, with no larger societal benefit, while landlords get vilified even as they provide a crucial service.<\/p>\n<p>Vilification aside, landlords face other real challenges that most novice investors fail to grasp. If you\u2019re thinking about becoming a landlord, keep the following in mind as the hardest aspects of being a landlord.<\/p>\n<h2>Turnovers: Where 90% of the Labor &amp; Costs Lie<\/h2>\n<p>The overwhelming majority of the work and expenses involved in owning rental properties comes during turnovers.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/tenant-turnover-solution\" target=\"_blank\" rel=\"noopener noreferrer\">Tenant Turnover Can Wreck Your Profits: Here\u2019s the Simple Solution to This Costly Issue<\/a><\/em><\/p>\n<p>It starts with walking through the unit with the outgoing tenant to determine if they caused any damage that should be deducted from their security deposit. You have to send them a detailed invoice, breaking down all security deposit deductions.<\/p>\n<p>Then comes repainting, recarpeting, and other property updates, followed by advertising the vacant unit. And then open houses, <a href=\"https:\/\/www.biggerpockets.com\/blog\/rental-showings-social-distancing-creative-ways-fill-vacant-units\" target=\"_blank\" rel=\"noopener noreferrer\">showing the unit<\/a>, collecting rental applications, and <a href=\"https:\/\/www.biggerpockets.com\/blog\/advanced-tenant-screening-dont-be-fleeced-by-wolves-in-sheep-clothing\" target=\"_blank\" rel=\"noopener noreferrer\">screening tenants<\/a>. This includes pulling background checks, contacting references and prior landlords, and verifying income and employment. Fail to screen applicants well, and you end up with bad tenants (more on them shortly).<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-107284\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/moving.jpg\" alt=\"woman holding a moving box\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/moving.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/moving-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>After going through all that, you have to collect the security deposit and initial rent, sign a lease agreement with all legally required disclosures, and come full circle by walking through the unit with the new tenants for a move-in condition inspection.<\/p>\n<p>Woof. It\u2019s enough to make you reconsider buying REITs and ETFs instead of putzing around with brick-and-mortar investments.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2013-02-25-reits\" target=\"_blank\" rel=\"noopener noreferrer\">REITs: Invest in Real Estate Without Leaving Your Computer<\/a><\/em><\/p>\n<h2>Chasing Down Nonpaying Tenants<\/h2>\n<p>There\u2019s nothing worse than chasing down deadbeat tenants who haven\u2019t the slightest interest in paying their rent on time.<\/p>\n<p>They may eventually pay some back rent to prevent you from <a href=\"https:\/\/www.biggerpockets.com\/blog\/evicting-tenant\" target=\"_blank\" rel=\"noopener noreferrer\">completing an eviction<\/a>. And then you go back to square one, sending notices, calling them, cajoling, bribing, threatening, and eventually filing in court again. Round and round you go.<\/p>\n<p>Word to the wise: avoid this cycle through aggressive tenant screening. In my experience, there are exactly two types of people when it comes to fiscal responsibility. Some people take their bills extremely seriously as a matter of personal honor and would be mortified to miss one. Others never saw a bill they wanted to pay on time in their life. And you can tell the difference instantly by looking at their payment history on their credit report.<\/p>\n<p>And yes, \u201cstuff\u201d happens in life, and people occasionally experience a true crisis like a job loss or divorce. But you can still read it clear as day in their payment history, as a sudden stretch of late payments followed by a return to on-time monthly payments. Isolated blips serve as outliers\u2014the exception that proves the rule that it takes a true crisis to force fundamentally responsible people to fall behind on payments.<\/p>\n<p>People who regularly miss payments, however, are another breed entirely.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2013-01-27-tenant-screening\" target=\"_blank\" rel=\"noopener noreferrer\">Tenant Screening: The Ultimate Guide<\/a><\/em><\/p>\n<h2>High-Maintenance &amp; High-Impact Tenants<\/h2>\n<p>Some tenants pay their rent on time but treat you, the neighbors, and\/or your property badly.<\/p>\n<p>They call at 3 a.m., complaining that a light bulb went out. They blare their music or TVs late at night, driving the neighbors crazy. Perhaps they leave their dog droppings all over the communal grounds or the neighbors\u2019 lawns.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-112391\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/06\/frustrated.jpg\" alt=\"miserable-new-investor\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/06\/frustrated.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/06\/frustrated-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>Or maybe they abuse your property, <a href=\"https:\/\/www.masterflushplumbing.com.au\/blocked-drain-is-it-a-landlord-or-tenants-responsibility\/\" target=\"_blank\" rel=\"noopener\">clogging the plumbing<\/a> with flushed tampons then demanding that you pay for fixing it, scratching up the hardwood floors, spilling wine on the walls and floors. Others are just downright dirty, letting dishes and crust-strewn pizza boxes pile up. Roll out the welcome mat for the cockroaches while you\u2019re at it.<\/p>\n<p>Some people are just plain disrespectful. Avoid them at all costs as a landlord, but beware that occasionally they may slip through your screening.<\/p>\n<h2>Managing Contractors, Repairs, &amp; Maintenance<\/h2>\n<p>Rental properties are physical, real-world structures, and as such, they require maintenance and repairs. New landlords all too often underestimate these <a href=\"https:\/\/porch.com\/resources\/cost-of-home-maintenance-in-america\/\" target=\"_blank\" rel=\"noopener noreferrer\">maintenance costs<\/a>, or even ignore them entirely in their cash-flow forecasts. Then, they wonder why they lose money year after year.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/visualizing-cash-flow\" target=\"_blank\" rel=\"noopener noreferrer\">Visualizing Cash Flow: How to Accurately Budget Expenses<\/a><\/em><\/p>\n<p>Even though these costs don\u2019t hit you every month, it doesn\u2019t make them less inevitable. From <a href=\"https:\/\/www.biggerpockets.com\/member-blogs\/4446\/31127-what-you-need-to-know-about-roofing-repairs\" target=\"_blank\" rel=\"noopener noreferrer\">roofing repairs<\/a> to <a href=\"https:\/\/www.basementguides.com\/flooding\/\" target=\"_blank\" rel=\"noopener noreferrer\">flooded basements<\/a>, dishwashers to dryers, everything that can go wrong in your rentals does so sooner or later. Every component needs replacing or repairing.<\/p>\n<p>This wouldn\u2019t be so bad if your brother-in-law happened to be an expert handyman, happy to drop what he\u2019s doing at a moment\u2019s notice to help you out at reasonable rates. Alas, that doesn\u2019t happen in real life.<\/p>\n<p>In the real world, <a href=\"https:\/\/www.biggerpockets.com\/blog\/manage-workers-more-effectively\" target=\"_blank\" rel=\"noopener noreferrer\">managing contractors<\/a> feels awfully similar to herding cats. To begin with, it\u2019s hard to find reliable, experienced contractors and handymen who charge reasonable pricing. Make no mistake, there are professional contractors who show up on time for appointments and know their work well. And they charge a fortune.<\/p>\n<p>Why? Because they can. Because their competitors show up a half-hour late (if at all), with no phone call to let you know. They fall behind on projects, go over budget, spring surprise expenses on you halfway through projects.<\/p>\n<p>When we teach real estate investing, we warn that managing contractors is one of the hardest parts of being a landlord and investor. It takes an enormous amount of time and effort to painstakingly screen, hire, and manage contractors. Over time, through often expensive trial and error, you gradually build a network of good, affordable contractors. But it doesn\u2019t happen overnight, and you can expect plenty of strife along the way.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2010-04-14-6-rules-for-managing-your-contractors\" target=\"_blank\" rel=\"noopener noreferrer\">6 Rules for Managing Your Contractors<\/a><\/em><\/p>\n<h2>Regulation &amp; an Antagonistic Public<\/h2>\n<p>When I hear shrill housing activists demand greater anti-landlord regulation, I fantasize about offering them a deal. They can buy and manage my properties in <a href=\"https:\/\/www.biggerpockets.com\/blog\/low-income-neighborhoods\" target=\"_blank\" rel=\"noopener noreferrer\">low-income neighborhoods<\/a>, and if they still believe those regulations are fair after a year walking in a landlord\u2019s shoes, then they can implement them without any objection from me.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-70888\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/03\/resolve_tenant_lawsuit.jpg\" alt=\"resolve_tenant_lawsuit\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/03\/resolve_tenant_lawsuit.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/03\/resolve_tenant_lawsuit-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>Of course, that\u2019s not how democracy works. Anti-landlord activists will never own rental properties, never provide rental housing to the public. Yet they drum up support for ever-heightened regulation because there are far more tenants than landlords. Besides, \u201cThe rent is too damn high!\u201d makes for an easier rallying cry than, \u201cDon\u2019t alienate landlords or else middle-class people will stop investing in rentals, and you\u2019ll be left with nothing but faceless corporate landlords.\u201d<\/p>\n<p>I no longer invest in cities or states with regulation that favors tenants. I no longer invest in low-income neighborhoods. And regulation like the <a href=\"https:\/\/www.biggerpockets.com\/blog\/eviction-moratorium-extended-through-end-of-2020\" target=\"_blank\" rel=\"noopener noreferrer\">CDC\u2019s eviction ban<\/a> are leading me to <a href=\"https:\/\/www.biggerpockets.com\/blog\/6-ways-coronavirus-pandemic-changed-investing-plans\" target=\"_blank\" rel=\"noopener noreferrer\">change my investing plans<\/a> long after 2020.<\/p>\n<h2>Final Thoughts<\/h2>\n<p>Given the challenges that landlords face, it\u2019s no wonder so many tired <a href=\"https:\/\/www.homelight.com\/blog\/can-i-sell-my-rental-property-with-tenants-in-it\/\" target=\"_blank\" rel=\"noopener noreferrer\">landlords sell off their leased properties<\/a> and move their money to truly passive investments like stocks, REITs, private notes, and private equity funds.<\/p>\n<p>I worry that ever-increasing regulation will drive away middle-class landlords. I\u2019ve seen it happen in Baltimore City, where well-meaning investors get burned and sell out to either slumlords or corporate landlords, who know how to squeeze money out of even highly regulated markets.<\/p>\n<p>One friend of mine there sold off all his urban properties and now buys exclusively in the suburbs of the surrounding county, which imposes less regulation. Another colleague stopped buying rentals entirely after selling off his portfolio for a loss.<\/p>\n<p>I don\u2019t want to live in a world dominated by corporate landlords. Do you?<\/p>\n<p><a href=\"https:\/\/store.biggerpockets.com\/collections\/all-books\/products\/the-book-on-managing-rental-properties?utm_source=blog\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-94637\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/12\/manage-rental-property-book-ad.jpg\" alt=\"\" width=\"800\" height=\"130\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/12\/manage-rental-property-book-ad.jpg 800w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/12\/manage-rental-property-book-ad-300x49.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/12\/manage-rental-property-book-ad-768x125.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<p><em>What do you find to be the hardest aspects of landlording? Where do you see the future of landlord-tenant regulation heading?<\/em><\/p>\n<p><strong>Share below with a comment.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>People love to hate landlords. But vilification aside, landlords face other real challenges that most novice investors fail to grasp.<\/p>\n","protected":false},"author":158586,"featured_media":129040,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183,7119],"tags":[],"class_list":["post-130349","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/130349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=130349"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/130349\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/129040"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=130349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=130349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=130349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}