Contrarian Landlording

General Landlording & Rental Properties
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Contrarian Landlording

Ihe O.
Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes

I have never paid more than $30k for a house.

I have never run a credit check or asked for a credit report on anybody who has applied to rent any of my properties.

I have never asked a tenant for their SSN, DOB or any other form of PII http://bit.ly/1mmC2Xo

I have tenants who are late every month. I rarely levy late fees even when the tenant is late.

I have never filed for eviction in the same month of a missed rent payment.

I allow pets in all my houses (subject to insurance restrictions)

I reduced the rent  of a tenant who witheld rent, took me to rent escrow court and lost.

I am usually the lone voice on the minority side of discussions relating to these issues.

So how am I doing. 

Well couple of months short of completing my 3rd year. 

Total Rents Collected - about $100k.

Number of evictions - 1

Rent Arrearage - about $2k

Total number of months of vacancy - 9

Total Unrecoverable Rent    - about $3500

I run a business but I do what makes sense to me rather than what everybody else does.

I'm a contrarian landlord. 

Are you?

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Thomas S.
Member since 2016 路 13k+ posts 路 12k+ votes
10y

You are basically operating on borrowed time. Luck is your primary business policy.

I operate my business completely opposite to you.

If I review my last 3 years:

Total rent collected-  approx.- $250,000

Number of evictions - 0

Total months vacancies - 0

Total unrecoverable rent - 0

I am a professional landlord.

Are you?

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  • Steve Vaughan
    Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes
    10y

    Congrats so far @Ihe O.  I guess it'll work until it doesn't.   

    I am not a box-check LL, either.  To go against the herd is one thing, but to not know who your tenants truly are before allowing them to occupy your property is another.

    Why not get their basic information (DOB and SSN) so you can run a free background check and check for evictions and judgments?  Do you check sheriff's websites for sex offenders? 

    If someone gets hurt by the hands of one of your un-verified tenants you could be in very hot water.   It works 'til it doesn't. 

    In my opinion, you are causing yourself to be exposed to a lot of completely unnecessary  risk.  Real risk of harm to others, not just defaulted rent and property damage.  I'd need a better reason than just to be different.  Curious to hear yours.  Thanks!

    3Reply
  • Nancy Curran
    Real Estate Investor 路 Chicago, IL 路 Member since 2014 路 286 posts 路 159 votes
    10y

    I don't always run the credit checks, but I get the info (dob, ss)  should I need it later.

    1Reply
  • Account Closed
    Retired Landlord/Author 路 Commerce Township, MI 路 Member since 2012 路 1k+ posts 路 1k+ votes
    10y

    So in other words you are rewarding bad behavior, and then when they come to us, we have to deal with it.  

    You speak of no repairs?  Tenants who have done this to you, will leave damages.  Heck, good tenants leave damages. 

    So you made $100 grand in 3 years.  You have $3,500.00 in unrecoverable rent.  And $2,000 in late rents.  But once again, what is your total expenses per month, for damages and repairs? You don't mention this. That will make a difference, and how many propertied do you own?

    I realize you believe you are being the "Good guy".  But allowing people to live this way, not teaching them to be  responsible  adults is not helping them.  It really isn't a kind deed, even though you think so.  

    Just my opinion. 

    Nancy Neville

    3Reply
  • Thomas S.
    Member since 2016 路 13k+ posts 路 12k+ votes
    10y

    You are basically operating on borrowed time. Luck is your primary business policy.

    I operate my business completely opposite to you.

    If I review my last 3 years:

    Total rent collected-  approx.- $250,000

    Number of evictions - 0

    Total months vacancies - 0

    Total unrecoverable rent - 0

    I am a professional landlord.

    Are you?

    6Reply
  • Catherine German
    Realtor 路 Sequim WA & Port Angeles, WA 路 Member since 2016 路 164 posts 路 78 votes
    10y

    I would consider about hiring a professional property manager to manage your properties. It is easier from a stress and accounting standpoint.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    10y

    I am in the middle... I have PM put them in so they run the background SS and stuff... so I am not at Risk like @Steve Vaughan states.

    were I run up stream is when they call and its a real cold winter and they can't afford heat so I waive too months rent until it warms.. up .. that made me feel good .. but then on the third month when they were suppose to resume paying they just up and left  LOL..

    then when I get really frustrated with these folks I just post on BP I have free duplex and I just give the sucker away.. that ends that tenant issue... :)

    although I can be that landlord as well.. I just bought a MHP and it was full of low life tweakers I kicked all their butts out.. and only kept the nice little old ladies that have lived in the park for years and we are a terror on letting anyone new in.. I don't care how long it takes the new tenants need to be perfecto.. Once you have a great tenant base in a MHP its a very nice asset.

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    1Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y

    @Steve Vaughan

    Thank you all for your comments. 

    @Steve Vaughan I didn't say I don't know who my tenants are or that I don't check them out. I just do it without demanding PII from them. You'd be surprised at how much you can find out about a person just by knowing their name.  I have always been able to find out as much as I need to know. I didn't say I do it just to be different, I do what makes commercial sense to me.

    @Account Closed My properties are professionally managed. My wife is a licensed realtor and manages apartment buildings for a living.

    Did I mention that all my tenants get a gift card for Christmas, even the ones that are late, even the ones with arrears. Last year one of our tenants got two envelopes. One with the gift card and the other an eviction notice. 

    Any more contrarian landlords out there.

    2Reply
  • Thomas S.
    Member since 2016 路 13k+ posts 路 12k+ votes
    10y

    Any more contrarian landlords out there.

    You are a unicorn.

    0Reply
  • Rosston Smith
    Investor 路 Warner Robins, GA 路 Member since 2015 路 1k+ posts 路 490 votes
    10y
    Originally posted by @Thomas S.:

    You are basically operating on borrowed time. Luck is your primary business policy.

    I operate my business completely opposite to you.

    If I review my last 3 years:

    Total rent collected-  approx.- $250,000

    Number of evictions - 0

    Total months vacancies - 0

    Total unrecoverable rent - 0

    I am a professional landlord.

    Are you?

     SHOTS FIRED 馃槀

    1Reply
  • Steve B.
    Engineer 路 Portland, OR 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y
    the Kardashians have their own successful TV show too
    2Reply
  • Account Closed
    San Jose, CA 路 Member since 2015 路 4k+ posts 路 3k+ votes
    10y

    Your numbers don't mean anything.  Gross rents vs what costs?  How many units?  Are you actually making a profit?

    You obviously have the right to do whatever you want.  Some people are more into gambling than others, that's all.

    0Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y
    Originally posted by @Account Closed:

    Your numbers don't mean anything.  Gross rents vs what costs?  How many units?  Are you actually making a profit?

    I've already answered most of that in my last post. I don't intend to replicate my accounts on a forum but  I am making a profit. Only one of my units is  cash flow negative, we expect that to  turn around within 2 years. As with all units my numbers are after all damages, repairs,  closing and acquisition costs.

    0Reply
  • Account Closed
    San Jose, CA 路 Member since 2015 路 4k+ posts 路 3k+ votes
    10y
    Originally posted by @Ihe O.:
    Originally posted by @Account Closed:

    Your numbers don't mean anything.  Gross rents vs what costs?  How many units?  Are you actually making a profit?

    I've already answered most of that in my last post. I don't intend to replicate my accounts on a forum but  I am making a profit. Only one of my units is  cash flow negative, we expect that to  turn around within 2 years. As with all units my numbers are after all damages, repairs,  closing and acquisition costs.

     Well, now, but how can we cheer your success without knowing the real numbers?  Or are you just being contrary? :-)

    1Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y
    Originally posted by @Account Closed:
    Originally posted by @Ihe O.:
    Originally posted by @Account Closed:

    Your numbers don't mean anything.  Gross rents vs what costs?  How many units?  Are you actually making a profit?

    I've already answered most of that in my last post. I don't intend to replicate my accounts on a forum but  I am making a profit. Only one of my units is  cash flow negative, we expect that to  turn around within 2 years. As with all units my numbers are after all damages, repairs,  closing and acquisition costs.

     Well, now, but how can we cheer your success without knowing the real numbers?  Or are you just being contrary? :-)

    I'm not looking for cheers. I'm looking for other landlords that don't follow the herd but make money. 

    You mentioned  gambling in the context of what I am doing. To me gambling is going to borrow a ton of money whilst putting little or nothing of your own cash into a real estate deal but  if someone came here and said they had done that many people here would be cheering them.  

    0Reply
  • James DeRoest
    Investor 路 Century, FL 路 Member since 2015 路 950 posts 路 603 votes
    10y

    I can pretty much match you line for line. 

    Bad debt - pretty much nothing.

    Late tenants - none apart from one we're supporting. We do have a Section 8 tenant who never pays their portion, but we're good with that as I don't need that apartment to rehab anytime soon. When I'm ready for the apartment, then she'll be moved on.

    As for not running credit checks - that's just asking for trouble. You will learn, and it will be expensive.

    0Reply
  • Robert Nason
    Lowell, MA 路 Member since 2014 路 260 posts 路 99 votes
    10y
    It be my guess that you are fishing in the bottom of the talent pool for your tenants. It may work out now but in my opinion this is a recipe for disaster. Why would you skip some of these simple steps?
    1Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y

    @Robert Nason 

    I had a tenant  from the top of the talent pool. No we didn't credit check him @James DeRoest, didn't need to. Zero drama,  paid his rent on time in full every month. 

    He never wanted a 12 month lease  in the first place as he anticipated being  reassigned. He  upped and left after 12 months, we were fortunate to incur a zero turnover cost and only 1 month of vacancy.

    The top of the talent pool is also the most mobile, mobile tenants lead to frequent turnover costs and vacancies. 

    The name of the game is to make money, not to fish in any specific talent pool .

    0Reply
  • James DeRoest
    Investor 路 Century, FL 路 Member since 2015 路 950 posts 路 603 votes
    10y

    You are playing Russian roullete if you don't screen properly. 

    1Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y

    Running a credit check != screening properly.  

    0Reply
  • Thomas S.
    Member since 2016 路 13k+ posts 路 12k+ votes
    10y

    Logic would dictate that your practices are high risk based on the history of our business. Risk reduction is the primary goal in the prevailing business practices in our industry. Your decision to not concern yourself with the higher risks you are taking is your decision. The rest of use simply prefer to mitigate risk. 

    This is by no means a new business and as such standard operating practices have been proven.  

    0Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y
    Originally posted by @Robert Nason:

     Why would you skip some of these simple steps?

    Sorry I forgot to answer that bit. If there is a step that you take that I don't take it's because it doesn't make commercial sense to me.

    @Greg S . You have a one dimensional view of what is high risk and how to mitigate it.

    For example  I've just explained why fishing for tenants in a high talent pool is risky because of their high mobility.  

    How much is the average price of your units. 6 figures is it.  Bought on a mortgage. Good chance you are at high risk of negative equity. Have large amount of equity. Then you are at high risk of a property price slump.

    See.

    0Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y

    Stepping back, most of the practices I see advocated here are focused on not being "ripped off" by a (prospective) tenant and for some being "ripped off" might mean not collecting every $ that the contractual agreement allows. 

    You might say  yeah I'm running a business, but even banks don't operate like that.

    @James DeRoest and I do not agree on credit checks but we seem to have common ground in not sweating certain stuff (he has a Section 8 tenant that doesn't pay her portion) because we have an eye on a larger consideration.

    0Reply
  • James Wise
    Real Estate Broker 路 Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH 路 Member since 2013 路 30k+ posts 路 20k+ votes
    10y

    No good deed goes unpunished.


    1Reply
  • Bryan O.
    Specialist 路 Lakewood, CO 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y

    @Ihe O. I know a lady that sounded almost the same as you. I asked her if she planned to quit smoking while pregnant and she told me, "I decided not to worry about that. I've had 2 friends that smoked when they were pregnant and their kids are fine."

    It doesn't matter if you can see it right now, but you are risking your baby.

    Some learn from others' mistakes and some just have to get burnt. Either way it goes as long as you learn from it you continue to move forward. Best of luck and happy investing.

    3Reply
  • Ihe O.
    OP
    Investor 路 Laurel, MD 路 Member since 2016 路 395 posts 路 191 votes
    10y

    @Bryan O.  My eldest unit leaves home next year (i.e will have paid for itself). My youngest is the only unit I that I would call a baby and I don't and have never smoked.

    0Reply
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