Is it really a wonderful life as a landlord?

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Is it really a wonderful life as a landlord?

Michael Guzik
Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes

Hey guys so last night I watched It's a wonderful life. Now being involved in real estate and thinking like an investor I saw the movie in a whole different way. George was a very lenient person and cared about the people and was very compassionate and understanding doing his best to help people live in the home of their dreams. However he gave a lot of people breaks and wasn't too stern with them on payments. On the other hand there was Mr. Potter who only cared about the numbers, not the people, and would always ask George "Are you running a business or a charity George?" I think this is where we begin to see what a "slumlord" is and why people always saw Real estate investors or landlords in a negative way. This is a mentality that people have had since the 1940's! My question is for those of you who have seen the movie, and if you haven't shame on you, who should I be like as a landlord? Should I care about the tenants and be understanding or should I only focus on the numbers and say pay up or get out? Is there a grey area or is it clearly defined? Thanks for reading and Merry Christmas!

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Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
8y

I bought my buildings from "George." He was very lenient on when he expected the rent, very understanding of irresponsible behavior and in turn he expected the same from the tenants. He owned the buildings for just short of 20 years and they spiraled down hill as the quid pro quo of irresponsibility fed off of each other. When it came around to cleaning house and clearing out the ne'erdowells you couldn't imagine how they bad mouth him. So all his understanding got him nowhere.

I give my new tenants a pristine apartment in an extremely desirable neighborhood. I am very responsible as a landlord and I fully expect my tenants to be.

People don't realize that it is the Georges who are the slumlords. The landlords who are responsible and dedicated know that they must demand the same from their tenants for their buildings to be a desirable place to live for responsible people and for their investment to grow in value. The slumlords don't care.

The people in my buildings don't want to live next to irresponsible people. 

I love being a landlord- it is a wonderful life.

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  • Daniel Suarez
    Fairfax, VA · Member since 2017 · 183 posts · 58 votes
    8y

    It's a hard question to answer. You can be on the middle, be understanding with people in case by case scenario, if you have a long term tenant that is good and may have a sudden medical problem you can workout something with them about rent being late, but remember that if you don't charge for rent you are giving money away so see how important that is to you, can you afford to donate money to them?

    1Reply
  • Von S.
    Boston, MA · Member since 2013 · 53 posts · 31 votes
    8y

    I've seen It's a Wonderful Life over 20 something years ago while in grade school but was too busy reading a book to pay attention. However, as a landlord I tend to be more like George but striving to be more like Mr. Potter as I get more serious about REI. It's like anything else in life-- most people are nice and normal and don't want to take advantage of you so being George is fine. However, there are a few bad apples who really try to take advantage of everything so that's when you play Mr. Potter. If I could do everything over again, I would start out as Mr. Potter and then after knowing how people are, be George on a case by case basis. On the flip side, I've had renters who pay late (they always pay in full) but are the most grateful tenants and I enjoy my dealings with them and I've had renters who pay on time that are just horrible and entitled and I dread seeing anything from them.

    2Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    8y

    Michael,

    I try to be somewhere in the middle, but in the end I am running a business, and we need to make money to pay the mortgage and take care of the property. I give people one break on late rent; I always ask "do you want this to be your one time break" or do you want to save it for later"? It helps because I am being lenient, but they also have to take responsibility. If they do have a medical emergency or divorce and need to end the lease, I let them go and move on.....

    [email protected]407-448-6679Podcast Guest on Show The Key to Scoring Discounted Deals in One of America’s Hottest Markets
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    2Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    I try to watch that movie once a year with family and extended family. When my grandparents watch it with me, they can remember when it would have been like that in a lot of areas (they were teenagers in the 40s) To answer your question, I think it’s best to be somewhere In the middle. Don’t be like a mr potter and don’t be a pushover. There are definitely some people on here who advocate to always treat it like a business but you can also do that without being mean about it.
    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y

    In todays environment the Feds would shut George down quicker than a blink of an eye 

    0Reply
  • Michael Guzik
    OP
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Daniel Suarez Case by Case scenario does seem like the best way to handle things. I definitely can't afford to donate any money to anyone lol thanks for the comment!

    @Von S. That is so true! It's sad that the bad tenants that take advantage ruin it for other good tenants. I like the idea of starting out as Mr. Potter that way the tenants have to earn the George in you so to speak lol!

    @Kim Meredith Hampton I love the idea of asking them that question that way you are letting them know how things are and making them choose. I haven't thought about dealing with a divorce before.. that is a very sticky situation. So you just cut the lease no penalty in that type of situation?

    1Reply
  • Patrick M.
    Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    I bought my buildings from "George." He was very lenient on when he expected the rent, very understanding of irresponsible behavior and in turn he expected the same from the tenants. He owned the buildings for just short of 20 years and they spiraled down hill as the quid pro quo of irresponsibility fed off of each other. When it came around to cleaning house and clearing out the ne'erdowells you couldn't imagine how they bad mouth him. So all his understanding got him nowhere.

    I give my new tenants a pristine apartment in an extremely desirable neighborhood. I am very responsible as a landlord and I fully expect my tenants to be.

    People don't realize that it is the Georges who are the slumlords. The landlords who are responsible and dedicated know that they must demand the same from their tenants for their buildings to be a desirable place to live for responsible people and for their investment to grow in value. The slumlords don't care.

    The people in my buildings don't want to live next to irresponsible people. 

    I love being a landlord- it is a wonderful life.

    11Reply
  • Michael Guzik
    OP
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Caleb Heimsoth My family does the same thing to! It honestly has really grown on me and become one of my favorite Christmas movies. It really goes to show that if you help enough people get what they want you will eventually get what you want. I agree with your last point many people believe you have to be either or and you are either a push over or an a-hole.

    @Matthew Paul lol you aren't lying nice people like that don't survive in today's world!

    0Reply
  • Mike S.Pro Member
    Real Estate Investor · York, PA · Member since 2017 · 23 posts · 3 votes
    8y

    I would say that it depends on your experience, objective/goals, mindset, Scale, and market.  The important thing is consistency and not running afoul of local housing/building codes and Fair housing laws.

    I tend to look at tenants as customers and the property as equipment.  If things are broken, they get fixed in a timely manor and are maintained properly.  If tenants have a question or concern, I address it.  If the tenant violates the lease, I address it and follow or amend the lease as needed.

    These days people don't fully read or comprehend what they sign, nor are they aware of the underlying local and federal codes that apply to a lease.  Opinion's varies widely as what constitutes fair.  It's easy for a tenant to be upset with a landlord if they do not keep in mind the implications of the lease they signed.

    Over the course of buying my first rental property, I could definitely pick out which were "slumlords" by how the property was kept and the various housing code violations I picked up on, conversations with tenants, and typically high ROI in the pro-forma numbers. When I performed my analysis, I scrapped pro-forma and based it on how I would run the property.

    In my opinion,  if you are asking the question, you care enough about your tenants and your business to NOT be a "slumlord".

    1Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    8y
    Originally posted by @Michael Guzik:

    @Daniel Suarez Case by Case scenario does seem like the best way to handle things. I definitely can't afford to donate any money to anyone lol thanks for the comment!

    @Von S. That is so true! It's sad that the bad tenants that take advantage ruin it for other good tenants. I like the idea of starting out as Mr. Potter that way the tenants have to earn the George in you so to speak lol!

    @Kim Meredith Hampton I love the idea of asking them that question that way you are letting them know how things are and making them choose. I haven't thought about dealing with a divorce before.. that is a very sticky situation. So you just cut the lease no penalty in that type of situation?

     I work with them until the property is re-rented, then let them go and give back deposit as long as property is left in decent condition

    [email protected]407-448-6679Podcast Guest on Show The Key to Scoring Discounted Deals in One of America’s Hottest Markets
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  • Patrick M.
    Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    I gotta confess I am more of a Christmas Story guy.

    But correct me if I am wrong, isn’t the culmination of the movie the town people bailing out the bank because of it’s reckless behavior?

    Sorry- hits to close to home for this 40 something. I have much more sympathy for an irresponsible 9 year old with a red rider B.B. gun.

    1Reply
  • Michael Guzik
    OP
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Patrick M. I never thought about it like that and can see why the "George's could become slumlords. Thanks for the comment! LOL that's a great movie to! At least with Christmas story I'm sure every young boy can relate.

    @Mike S. I completely agree pro forma's are a load of bull! Thanks for the comment and insight.

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    8y

    First off, Love that movie. I actually named my dogs after that movie because it is and always will be my favorite holiday movie. George Bailey (4 yr old goldendoodle) and Harry Bailey (1.5 yr old labradoodle).

    But when trying to determine which landlord you should be like, keep in mind two things.
    1) George was living in what was essentially an abandoned home that he had been trying to fix up himself over the years and it was still riddled with problems.

    2) There is a huge difference in letting people slide on money when tragedy hits and just letting them slide.  The thing was George bailey was that he was always there to help people. But only those that he trusted and that he knew would eventually pay him back.  And at the end, where george was in a jam, you see all those people he helped over the years pay it back to him and then some.  

    But the reality is, not a single renter that I've ever given a break on the rent or the late fee has ever done a thing for me and never will. And none of them will ever even show up to my funeral. Nor will any of the people that show up at my funeral ever have a clue of how many of those renters have gotten a break from me.

    So my answer would be this. If you want to be like George Bailey in your landlording then fix your houses up nice and get your repairs done for your tenants as soon as humanly possible. Thats what will make you more into George Bailey.  

    But don't equate being kind and generous to letting people get away with not paying or with constantly paying late. I'm not saying I don't do it because I do. But thats a flaw in me in terms of running a good business. Thats not something to be admired as a positive character trait of being generous.

    Ultimately, if you aren't collecting all the rent owed to you, you won't be able to do the repairs and rehab your homes to the level that will make your tenants proud to live in your homes. And, to me, that is the kind of landlord that I'd consider being closer to a Mr. Potter than a Harry Bailey.

    And here are my personal George Bailey (right) and Harry Bailey (left). :-)

    8Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    Poor simple minded George would be eaten alive by tenants today. The world has changed and so have people and business.

    I operate a business and make decisions based on money however this does not mean that I treat my good tenants badly or own a slum.  A good tenant is one that pays full rent on time and in return I treat them with respect and insure the property is well maintained.

    No pay no stay is a necessity to survive. There is however a grey area based on a tenants payment history. If they are a good tenant they will pay, if they are a new tenant or have a history of late payments in their past then no pay no stay is a smart business practice.  

    If a tenant clearly can not pay and will not be able to pay within the month a smart landlord will take immediate action to begin the process. Keeping n mind it can be canceled at any time. 

    A blanket approach is not prudent business practice, compassion is a landlords greatest nemesis. 

    No good deed ever goes unpunished. 

    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Michael Guzik that is my favorite Christmas movie. 

    They never say in the movie that George isn't getting payments on time. In fact when a friend needs money, he states it is a personal loan. The building and loan is clearly a low profit business. He expanded his business by giving fair loans and not gouging people like Potters Field. As a result, the building and loan had very loyal customers. Potter was losing customers to the building and loan at such an alarming rate that he would do anything to take George down. There is a valuable business less here, which is treating your customers right and giving them massive value. As a result you drive customer loyalty. Everyone hated Potter, but when George was in trouble, everyone was willing to loan him money. Real estate is a relationship business. Too many landlords come on BP with a Potter mentality. That reputation catches up with you. It is not about being soft on tenants, but rather giving them good value and treating people like you would want to be treated.

    The most important lesson from the movie is perspective on what is important. If you don't have family and friends to share your life, then you will become a bitter old man some day. 

    3Reply
  • Michael Guzik
    OP
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Mike H. LOL that is so funny I love your dogs! Thanks for the in depth post and opinion I appreciate it! 

    @Thomas S. Sadly you are right the world isn't filled with honest hard working people anymore like it used to be! I like what you said that they pay in full and on time and in return you treat them with respect and maintain the property! Thanks for the comment and wisdom!

    1Reply
  • Michael Guzik
    OP
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Joe Splitrock It's my favorite as well! You are 100% right and I couldn't agree more. He was providing real value and being an honest and caring person to everyone which is what everyone wants. His reputation was known across the whole town and that is something that money can't buy! I don't know if you listen to the MFCEO podcast, but you hit on some of the very key points that Andy always talks about. REI is a relationship business and relationships are built on honesty and providing value. Thanks for the perspective and in depth comment!

    2Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    The problem is that the stereotypical Potter or George in a simplistic movie like "it's a wonderful life" was not representative then or now of reality.

    Slumlords then and now still make the highest returns since they deal with a client base that is only suited to slums. Landlords do not create slums they are created by the tenant base. A landlord must operate their business to suite their investment environment not their moral standards. Choose the wrong environment and your morals could bankrupt you.

    1Reply
  • Sam Sal
    Investor · Oakland, CA · Member since 2016 · 21 posts · 5 votes
    8y

    That was an excellent movie, love Jimmy Stewart. You should see Mr Smith Goes to Washington. At 46 years old and plenty of experience as a landlord and investor I have learned that nothing is black and white with clear answers, let your life experiences inform you on how to act with your tennants. Here in California, the tenants would eat you for lunch with the full backing of the local laws if you were too lenient.

    I am more like Mr Potter but not in a mean, spiteful way. I am usually quick to serve 3 day notices to pay or quit, unless a tenant reaches out to me and works something out. Naturally, there are always exceptions 

    1Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    8y

    @Sam Sal

    Love that movie (Mr smith goes to washington) as well. I'll raise you one more that is somewhat relevant to their message. This one has Gary Cooper in it - Meet John doe.

    Nothing better than the "heelot" explanation by Walter Brennan. Or this snippet from another of his thoughts -  "I don't read no papers, and I don't listen to radios either. I know the world's been shaven by a drunk barber, and I don't have to read it."  :-)

    1Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    8y

    Dbl entry because website locked up. Sorry

    0Reply
  • Matthew Couto
    Realtor · Concord, NH · Member since 2017 · 48 posts · 30 votes
    8y
    Michael Guzik I’m in between! I help out as much as I can!! During the holidays especially, what I have noticed is this. 1) I treat my tenants like people & with respect and 99% of the time they do the same! 2) Crap happens in life! If your able to help, why not?! 3) When I allow a late payment with no fees, my tenants have always paid! I’m fortunate, I’ve screened great tenants and while I never give away money I do allow them to pay late with no fees, I never charge late fees and they appreciate how understandable I am, they really don’t want to disappoint me! It’s a win win! Just my 2cents! Merry Christmas all!
    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    8y
    Originally posted by @Michael Guzik:

    Hey guys so last night I watched It's a wonderful life. Now being involved in real estate and thinking like an investor I saw the movie in a whole different way. George was a very lenient person and cared about the people and was very compassionate and understanding doing his best to help people live in the home of their dreams. However he gave a lot of people breaks and wasn't too stern with them on payments. On the other hand there was Mr. Potter who only cared about the numbers, not the people, and would always ask George "Are you running a business or a charity George?" I think this is where we begin to see what a "slumlord" is and why people always saw Real estate investors or landlords in a negative way. This is a mentality that people have had since the 1940's! My question is for those of you who have seen the movie, and if you haven't shame on you, who should I be like as a landlord? Should I care about the tenants and be understanding or should I only focus on the numbers and say pay up or get out? Is there a grey area or is it clearly defined? Thanks for reading and Merry Christmas!

    If you want to run a charity, that's cool. If you want to run a business, that's cool too. The two aren't one in the same though. The rental business cannot be profitably ran if the owner doesn't enforce the rules.  People getting into it really need to understand that it's a rough business. A full contact sport so to speak. Myself I evict over 100 families per year.

    0Reply
  • Michael Guzik
    OP
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Thomas S. I agree you have to do a good job of screening your tenants or you are screwed!

    @Sam Sal Thanks for the comment I'll check that movie out sometime next week!

    @Matthew Couto I love your mentality and mindset I'm sure you will have no problem finding success with that mentality. Thanks for the comment and Merry Christmas to you too!

    0Reply
  • Jay Leisten
    Real Estate Broker · Louisville, KY · Member since 2014 · 362 posts · 232 votes
    8y

    I watch it every year at midnight on xmas eve. Other than last year that streak has gone on for 20+ years. Its part of what led me to school for architectural design, guides my decisions to help those who need help ( and are making an effort of their own) and now as an investor is likely to guide some near term decisions. I've just recently learned of a program that helps single moms coming out of family protective services. Im sure it'll blow up in my face a few times, but as someone raised by a very young single mother I'm willing to take that chance...

    1Reply
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