We are a property management company located in the Boston area, and one thing that we have learned is to never lose your cool. It is super important to stay level headed while talking with tenants and to try your best not to overreact in the moment. Although this may be difficult in the moment, it is super important in the long run!
Becoming friends with your tenant instead of making the relationship a more businesslike, tenant-landlord relationship. To a younger, newer investor this seems like the easier/more appealing route to go. The majority of the time this happens the landlord ends up bending over backwards for the tenant and loses money.
I'm guilty of this as well. I'm so busy that sometimes I take the easy road and not verify every number and make sure you call all the references. Guilty as charged. Don't do this! Do your work it's your property after all.
@Mindy Jensen I just purchased my first duplex in October (house-hacking), I can say my first newbie mistake was not vacating existing tenants on closing date. They've been difficult to say the least.
I vacated mine - hated doing it; it was a guy and his son who was there for several years but in MA if it didn't go well I would be in such a nightmare scenario trying to evict. The prior owner said "he's great, really!" but everything I've read on BP made me not want to take that chance.
Becoming friends with your tenant instead of making the relationship a more businesslike, tenant-landlord relationship. To a younger, newer investor this seems like the easier/more appealing route to go. The majority of the time this happens the landlord ends up bending over backwards for the tenant and loses money.
I am so worried about this since I will be in the unit below my tenants and I am a naturally chatty person!
Becoming friends with your tenant instead of making the relationship a more businesslike, tenant-landlord relationship. To a younger, newer investor this seems like the easier/more appealing route to go. The majority of the time this happens the landlord ends up bending over backwards for the tenant and loses money.
I am so worried about this since I will be in the unit below my tenants and I am a naturally chatty person!
In my opinion living in the same building as your tenants changes everything. In that case I would say becoming friends with them typically will work out in your benefit. Good luck!
My top mistakes, after 14 years, in no particular order:
Hiring friends to do work on the property.
If everything works out,
it's a great feeling to help a friend who needs work
they usually give you a better price
you can work alongside them to learn and save money.
When things don't work out,
it takes a lot longer to get the work done (costing you lost income)
they don't show up on time or for a few days because "you're a friend, and you'll understand right?"
they may not have insurance if they get hurt (luckily, I didn't get bitten by this before I stopped using friends)
it's harder to go back and demand re-work if you find problems with their workmanship later
Overall, hiring friends to help you do rehab feels like you're saving money but it can end up costing you a lot more.
Not screening properly (mentioned by others)
Finding out too late about domestic abuse/ sex offender/ violent crimes
Failing to call all the references. I've had two occasions where the reference they listed told me not to rent to them because they were violent, late payers, or too needy.
Not doing a criminal, credit, background check, which might have revealed criminal or credit problems
Being slow to evict (mentioned by others)
Believing their sob stories
Accepting partial payments
Failing to document every conversation or interaction
Not walking through the property to make sure they're taking care of it (I now walk through every 9 months so I can see problems in different seasons)
We've found crack pipes and other paraphernalia after they moved out
We've discovered piles and piles of trash (some bagged, some not) in closets, basements, sheds when trash cans and pickup service are included in their rent - all they had to do was carry it out, at no cost to them
We've Found smokers, pets, extra people
Overall, I've had great success as a property investor. Most of my tenants have paid on time, taken care of the property, and been respectful. When people ask me what I think of being a landlord, I tell them it's one of the best decisions I've ever made, and I wish I owned more (I'm currently at 25 units). Biggerpockets is a great resource to learn from other's experiences!
One thing I've learned recently, is the beauty of the GENERAL DISTRICT COURT ONLINE!!!! (or at least in VA)
Before, you didn't know anything about potential tenants, now, all I need is a name and I can quickly find out if I even want to continue talking to them! It helps you quickly figure out the person, if they are a serial-evictee, or how many tickets they have! I can quickly (and free!) pre-screen who I even want to meet. If I don't find anything on them, I can be very aggressive about contacting them!
Also, don't hire friends--hire workers--- make sure you know the difference. Friends think they are doing you a favor (yes, even if you pay them) , but workers are there to do the job and get paid!
Brief background: I still own rental property and relocated from TX to AL in 2017. I decided to rent a house for a year to decide where I’d prefer to live long term instead of rushing.
Straight to the point: I am buying my next home end of Feb and my current lease is not over until end of Apr. I have notified the owner the the house could be ready for a new tenant early as Mid-March.
His response: “I prefer to hold you to the end of the agreed upon lease and have no intention to find another tenant early.”
My question to the Bigger Pockets members: as a landlord myself, I cannot see any advantages. What am I missing here? Any idea why the owner would show no interest in another placement? (He is not likely to move in—this is one of at least two rentals I know he owns)
Just seems like he had the advantage of early warning. I guess I can say my conscience is clear for trying—but that’s why I’m posting this—I want to make sure I am not missing some perspective and it’s kind of driving me crazy.
Thanks for any useful feedback.
The one big reason I would have as a landlord is a lot harder to rent out an apartment in February instead of April. If I had tenants that moved between Dec and Feb, I would have new tenants sign a 15 month lease, so it will expire in May, so I won't be struggling next Feb.
Good stuff here. I'm about to rent my first home and would prefer a property manager. Problem is I was hoping for closer to $1000/mo rent while the market is telling me it'll be closer to $850. I'm hard-pressed to let go of the 10% fee. I'm following.
@Matthew Olszak I love the tip on overburdening. I am new to the investment game but I once had a landlord who would drive by every other day and had a storage shed he kept on his property where we were. He showed up once to sit in the shed and read a paper! I still laugh about that. We left shortly after.
Allowing the security deposit to be “delayed” - it never came and when they moved out they left the place a mess and I had to spend hours cleaning up after them. I trusted this person because she seemed trustworthy. I should have known better when I discovered an undeclared pet she was hiding.
Not enforcing lease abandonment. I need to be more strict and clear on what it means if they “cancel” a lease (eg no such thing).
Jumping at every little thing when they call instead of being clear when some things are their responsibility.
ALWAYS go to a prospective tenants house to see what condition its in. I just started doing this with any of our prospective tenants and gives you an EXACT idea as what to expect they will be doing to/in your rental. When I approve an application, I tell the tenant that I will 'drop by' to have them sign a hold deposit agreement to hold the property until move in day. When I stop by, I ask them to come in to sign the agreement; if they refuse, I just walk away. If they let me in, I explain to them that I would like to do a 'quick walk thru' to see how they live and make sure they caused no damages to their existing unit as this is how they would be treating my property. If they complain, I walk out. If their existing place is trashed or damaged, I tell them I forgot some paperwork in the car and just leave; no confrontations. Doing this will tell you how they will treat YOUR rental! I can't believe how some people live, or don't (I had an app with a bogus vacant lot as an address, not even a tent LOL). Also look inside their cars to see how messy/trashed it is.
When the tenant said we want to go month to month I said no and then they signed the lease and blew the lease off in January. I should have non-renewed when they said month to month. Cant filll a 4 bedroom in this area in january and they were slobs so you couldnt show the house.
Not double checking the heating company was coming when the heat went out. They dropped the first service call request thinking it was handled and I wound up being in the basement tinkering with the furnace till they showed up at 1 am after my second call. should have double checked at 3 hours. Had I not gone to the property would have had frozen pipes.
I just became a long-term landlord last fall. I have a vacation property that I rent but that is a different set of problems:-) I inherited two tenants on my three unit...I will NEVER do that again unless it involves ALOT of addendums.
They both smoke and have dogs , I knew that going in, but they have been in these units for 10 years . Really until they move out the damage is done. They do pay on time.
I just went on my quarterly walk-through...one of the inherited tenants just complained about everything the entire time and the other one now has her grown son and pit bull living with her. Everything is fixable...
However, no one likes change and these tenants don't , needless to say its been interesting and they keep me on my toes!
2nd rental: rushing post-rehab to get the house occupied between the Thanksgiving and Christmas holidays, rather than finding a quality tenant (more importantly: not listening to my wife who had her doubts about the applicants). Wound up evicting them 9 months later and having substantial repairs.
The good news: my wife insisted on a triple deposit ($4k) which more than covered the repairs and eviction costs. And we had it re-rented in a week to a tenant who is still there 4 years later.
Accepting all reservations on air bnb and using "smart pricing". The smart pricing makes it very cheap for last minute stays and attracts a certain crowd. A lot of junkies will make an account to book these cheap places last minute so all of their friends have a place to get high for the next week. I'm dealing with this right now...This guest has 5 more nights at my place doing meth and other drugs with his buddies. Air bnb and the police aren't as helpful as you might think they would be.
Moral of the story... vacancies are far better than an occupied unit with a terrible tenant
A couple hundred bucks isn't worth the damage he is causing to my place, not to mention the hassle of it all.
Purchased from auction.com property occupied and verbally negotiated with tenants who did not even reside at the house, just had all their furniture inside. Gave them 700 for a storage, instead of just taking them to court. 3 and a half months later, they still haven’t taken everything out. SMH
This thread is so helpful. I know I would have fallen for some of these things because I want to give people the benefit of the doubt but it's good to have appropriate boundaries in business.
Watch your Return on Investment (ROI)! My first rookie mistake was to upgrade/update one of my rentals to the tune of $10,000. I was lead to believe by my Property Manager, that if I updated the apartment that had become vacant, I could increase the rent by $200/mo. However, as it turns out, after spending $10,000, I could only rent it for $100 more per month. Big difference! In the end, I have learned that you have to watch how you update your rentals. Updating is good and should be done, just make sure your ROI is within your guidelines for investment returns.
Second mistake is choosing the right property manager. All property managers tell a good story, unfortunately for me, while the manager was a good person, the day to day operations was left to staff. And they did not know what they were doing. So do your research... upfront.
Trying to be "friends" with your tenants. A lot of the people I meet do not manage their properties like a business, rather they treat it like a hobby. I fell into this behavior with my very first rental property where my tenant took advantage of my kindness and 2 days late on the rent turned into 2 months behind in the rent and I ended up having to evict the tenant. While I was able to recoup the missed payments, I had to go through legal process to do so. This took up a lot amount of my time and ended up costing me money. I no longer tolerate late rent, I thoroughly screen my tenants (background, criminal, credit) and I make sure to keep organized and detailed records for all of my properties should I have to go to court.
