Fear of being a landlord
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I worked my entire professional life as a software engineer and I stuck with it even though it wasn't my passion because the job paid well and let me be part-time from home and because I was too risk averse. Now for the first time, I love my job-- I love being a landlord. The risk of being sued is always present (even as a home owner) but it can be mitigated by insurance, planning, and defensible business practices.
When you own your own business, you find out what you really value because you get to decide how you spend your time and money.
I truly enjoy building financial security for my family while providing GREAT service to a market where even average service is hard to find. The fact that we actually respect our tenants sets us apart from many others operating in the affordable housing space.
Your values rather than personality will play a bigger role in determining whether self managing properties is a good fit for you. Being a landlord isn't the right path for everyone and as others have pointed out, there are lots of ways to make money in real estate. But if self-managing buy-and-holds is the right path for you then don't let your fears stop you from realizing a dream. You might want to google risk and cognitive errors-- most people really suck at assessing risk.
45 Replies
- Developer · Point Pleasant Beach, NJ · Member since 2015 · 303 posts · 216 votes7y
I would say, live close to the property you invest in so you can easily see things with your own eyes. Make sure the property is in great shape, you have an attorney draft the lease and you thoroughly screen the tenants. As long as you cross your T's and dot your i's there really isnt too much to worry about.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
or invest in crowd funding deals.. or syndications and let them take on the heavy lifting.
nervous worry wart type of prop owners can be their own worse enemy.
but if you still go ahead then by all means buy the top of the market were your tenant will have a better than 700 fico
and a stable job . do not buy lower end as those properties do take a lot of hand holding.. I mean you can pitch it all to the PM.. but you still have to manage the PM..
Note investing by and large does not put you in the position of being sued like a landlord.
although if your buying NPN or performing notes on owner occ homes.. there are most defiantly rules you must follow.
non owner occ or commercial paper have far less regulations on how you deal with the trustor or mortgagor.
And frankly many people are not cut out to be a landlord.. they can be their own worse enemy.
example that sticks in my mind was one case were the child of the tenant stood on the oven door to try to reach something and broke it.. Landlord told PM no way I am not paying to fix that.. well being C class tenant just packed up and left.. Landlord still had to fix it.. less than 100.00 dollar but now had a vacancy now had to do some turn over now had to pay a new lease fee etc etc.. so that 100.00 get your nose bent out of shape cost them a few thousand..
and then just look at any of @James Wise photo's he post here on BP of what a tenant can do to a house..
Bottom line its good your recognizing your strengths and what would really worry you.. and there is so much to real estate buying a single rental is just one of them.. albeit the most popular because its the easiest to do for most folks and the least complicated to understand.
- 7yLien VuongBusiness MemberReal Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
I think that you should seriously think about the lifestyle you want to have and what type of property will give you that return.
In the case where you're a self recognized worrier you should not buy anything below a B class property and mostly turn key. Having nicer units in letter locations means they're more qualified tenants and less surprises. I will definitely echo @Christopher Lombardi in making sure all your paperwork is in order to protect yourself.
Additionally you could always hire a PM as well to manage your properties so you have less daily responsibilities with the units themselves and create passive cash flow.
The Elle Group5153 Reviews I worked my entire professional life as a software engineer and I stuck with it even though it wasn't my passion because the job paid well and let me be part-time from home and because I was too risk averse. Now for the first time, I love my job-- I love being a landlord. The risk of being sued is always present (even as a home owner) but it can be mitigated by insurance, planning, and defensible business practices.
When you own your own business, you find out what you really value because you get to decide how you spend your time and money.
I truly enjoy building financial security for my family while providing GREAT service to a market where even average service is hard to find. The fact that we actually respect our tenants sets us apart from many others operating in the affordable housing space.
Your values rather than personality will play a bigger role in determining whether self managing properties is a good fit for you. Being a landlord isn't the right path for everyone and as others have pointed out, there are lots of ways to make money in real estate. But if self-managing buy-and-holds is the right path for you then don't let your fears stop you from realizing a dream. You might want to google risk and cognitive errors-- most people really suck at assessing risk.
Originally posted by @Jill F.:
I worked my entire professional life as a software engineer and I stuck with it even though it wasn't my passion because the job paid well and let me be part-time from home and because I was too risk averse. Now for the first time, I love my job-- I love being a landlord. The risk of being sued is always present (even as a home owner) but it can be mitigated by insurance, planning, and defensible business practices.
When you own your own business, you find out what you really value because you get to decide how you spend your time and money.
I truly enjoy building financial security for my family while providing GREAT service to a market where even average service is hard to find. The fact that we actually respect our tenants sets us apart from many others operating in the affordable housing space.
Your values rather than personality will play a bigger role in determining whether self managing properties is a good fit for you. Being a landlord isn't the right path for everyone and as others have pointed out, there are lots of ways to make money in real estate. But if self-managing buy-and-holds is the right path for you then don't let your fears stop you from realizing a dream. You might want to google risk and cognitive errors-- most people really suck at assessing risk.
Jill ... I sound a lot like you. Even though my job is not horrible, it has become stagnant and boring. I have always loved real estate. Growing up, my Mom owned her own real estate office which is how I ended up selling real estate back in the 90s.
In my current job, I am always applauded for my customer service, which I don't doubt would transfer over to the rental arena. I do always think the worst about liability. I have umbrella insurance and even short-term rental insurance with a high liability amount since I do own a seasonal rental in Arizona. The good thing out there is that renters must be over 55 so you would think they would be a little more respectful of the property. Also, payment is due in full before they get the keys (minimum one month stay). I have had my lease drawn up by a professional real estate attorney out there so I think would be covered pretty well as far as that goes as well.
I guess it just comes down to the confidence of knowing things are going to be OK if I do things the right way.
Originally posted by @Christopher Lombardi:
I would say, live close to the property you invest in so you can easily see things with your own eyes. Make sure the property is in great shape, you have an attorney draft the lease and you thoroughly screen the tenants. As long as you cross your T's and dot your i's there really isnt too much to worry about.
Thanks, Christopher. Yes, have had the attorney lease drawn up. Just getting over the jitters, I guess.
Originally posted by @Jay Hinrichs:
if you still go ahead then by all means buy the top of the market were your tenant will have a better than 700 fico and a stable job . do not buy lower end as those properties do take a lot of hand holding.. I mean you can pitch it all to the PM.. but you still have to manage the PM..
Good advice, Jay!
Originally posted by @Lien Vuong:
I think that you should seriously think about the lifestyle you want to have and what type of property will give you that return.
In the case where you're a self recognized worrier you should not buy anything below a B class property and mostly turn key. Having nicer units in letter locations means they're more qualified tenants and less surprises. I will definitely echo @Christopher Lombardi in making sure all your paperwork is in order to protect yourself.
Additionally you could always hire a PM as well to manage your properties so you have less daily responsibilities with the units themselves and create passive cash flow.
Thanks, Lien. I currently own a season rental in Arizona dealing with renters over 55 years of age. Payment is required before they get the keys. We rent by the month with our busy season being November thru April.
- 7yKenneth GarrettPro MemberInvestor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
I understand, I work as an engineer and originally when I started got caught in paralysis analysis. Always looking for the math equation to confirm things are correct. Unfortunately that is not how this works.
I ended up being a buy n hold investor. Go figure. I had heard all of the horror stories tenant calls in the middle night, police calls and whatever else you could think of. I could not be anymore wrong. This is a people business. If you like people you’ll be fine.
Hire a property manager if don’t want to deal with the day to day. I truly believe in order to manager your property manager you should do some yourself so you know what it takes.
You will be fine. After the first one and you realize you made it through. No scars, no bleeding, just great experience.
Good Luck.
Originally posted by @Kenneth Garrett:
I understand, I work as an engineer and originally when I started got caught in paralysis analysis. Always looking for the math equation to confirm things are correct. Unfortunately that is not how this works.
I ended up being a buy n hold investor. Go figure. I had heard all of the horror stories tenant calls in the middle night, police calls and whatever else you could think of. I could not be anymore wrong. This is a people business. If you like people you’ll be fine.
Hire a property manager if don’t want to deal with the day to day. I truly believe in order to manager your property manager you should do some yourself so you know what it takes.
You will be fine. After the first one and you realize you made it through. No scars, no bleeding, just great experience.
Good Luck.
Thanks, Kenneth. Yes, I am analytical as well. I do like working with people. Just need to make it past he paralysis.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes7y
@Scott H. if insurance does not give you the piece of mind it should- then I would caution you against being a landlord. You will be called upon to deal with any number of things that will test your intestinal fortitude and if you can’t make it past the easy stuff you will be utterly paralyzed by the day to day issues that can crop up.
Once you get insurance and a CO completed, that’s ball game. If someone slips and falls and sues you, that is what insurance is for. You will have some control over it by being a contentious landlord, but not complete control.
Cash is a great incentivizer for landlords, will you make enough off of a SFH to test yourself?
I believe we are peeking or have peeled in the SFH market, personally I would save my cash and start making contacts. Wait this out a bit... certainly would not be looking at flipping. Study up on Small 3-5 unit MFH, there the monthly cash flow can really give you the incentive!
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes7y@Scott H. Have you considered note investing? You avoid all of that
7e investments53 Reviews Plenty of different avenues to invest in real estate. I would definatly advise you choose one of those over being a landlord.
I would not try to get through the road block, you will regret being a landlord if it is not something you can actually enjoy.
Originally posted by @Chris Seveney:
@Scott H. Have you considered note investing? You avoid all of thatI have, Chris. I think that might be a good route for me.
Originally posted by @Thomas S.:
Plenty of different avenues to invest in real estate. I would definatly advise you choose one of those over being a landlord.
I would not try to get through the road block, you will regret being a landlord if it is not something you can actually enjoy.
Thomas, I agree, but then I will always wonder if maybe it would have been something I could have enjoyed and been good at.
- Specialist · Fort Worth, TX · Member since 2014 · 528 posts · 226 votes7y
The real question is not landlording, Real Estate, syndicates, note investing or any other business venture for that matter, it’s are you willing to put forth the effort, the time, and the industry/business know how and so forth to make a life that you want that others are unwilling to do.
If your answer is simply,” I just want some decent returns or security of retirement”, then you can do that with any of the vehicles I mentioned above.
Don’t expect to become wealthy by passively investing.
Don’t get me wrong, there’s a place for both the Entrepenaor looking for big future payouts and passive investors looking for repeatable results at the table, that’s what makes all this go around. Just set goals and expectations before going in.
- Yuma, AZ · Member since 2015 · 140 posts · 137 votes7y@Scott H. Grow balls if you want to deal with rentals nothing hard about it. I'm lazy I only do notes hate people.. or for you PC people ... I dont play well with others. :) . Do what makes u feel good amigo. The lazy investor. Have fun
- Rental Property Investor · Torrance, CA · Member since 2016 · 724 posts · 1k+ votes7y@Scott H. Just hire a PM. You’ll still have to manage the PM, but at least you won’t have to deal with the tenants. When I was house hacking I learned that I hated managing rentals. I love analyzing deals and crunching the numbers, but I don’t enjoy dealing with the tenants at all. I enjoy thIngs I‘m good at. I’m honest with myself. I know I’m not the best at dealing with people.
- Kansas City MO · Member since 2014 · 357 posts · 349 votes7y@Scott H. Everyone I know was really scared on their first rental. But once you get one place rented you’ll see it isn’t that big of a deal. If you get a good property manager you won’t even ever have to deal with the tenants. And knock on wood my tenants have been the least of my issues when it comes to investing. Bad Contractors, handymen, PMs have caused me 10x the headaches of any of my tenants. And the only real nightmare tenant I had came from a PM who put them in without doing ANY background check. And the other nightmare tenant was a ‘friend’ that I put in there myself. If you screen properly ...good credit, job, criminal background etc then most of the time you won’t have issues.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes7y
@Scott H. One thing I've learned over the years is that we can't all be good at the same things. Some people make awful Landlords and/or investors. They can improve through study and practice, but even then they may be really, really bad at it. You may be one of those people.
There are ways to invest in real estate without being a Landlord. You can learn about notes, partner with another investor, flip houses, real estate investment trusts, etc. Try reading one of the books about this subject and find an area that works for you.
The DIY Landlord Book4.7247 Reviews - Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes7y
You wont know what you are good at until you try.. A lot of times the things I worry about at first turn out to be my strengths, and vice versa.
- Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes7y
Flipping has just as much liability as rentals - possibly more, so if you're worried about getting sued, don't do those. Note investing probably has less risk, but if you make mistakes, you are liable and could be sued. There is a risk of being in control. Any business owner or owner of anything is at great risk of being sued that those who are not. Either get over your fear or invest real estate that is passive, such as syndications, REITS.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes7y
@Scott H. the bad news is you can be sued when flipping or buying notes. Risk is inherent in all areas of life.
I like the story that Tony Robbins once told about fear holding people back. He gave the example of driving a car, something most people do every day. You drive down a road going 40 or 50 miles an hour with cars going the same speed coming the opposite direction. You pass hundreds of cars that are 3 feet away from you. The only thing that keeps those cars from hitting you is a line painted on the road. At any point, a car could cross the line and hit you head on, killing you instantly. So you are taking this amazing risk every day and you probably never even think about it. Why is that? It is because you have done it so much that you have become confident. The only way to address fears is to do what you are afraid of often enough that your fear goes away.
This doesn't mean to ignore risk. Always be mindful of risks and take actions to reduce liability. Like when you drive your car, wear a seat belt and have insurance.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes7y
Thoughts:
1. Good insurance will keep you from fearing being sued. Carry several million dollars worth of protection and there's going to be very few things that could ever get a judgment thrown at you that wipes you out. You can also go the LLC route. Easy hurdle.
2. Buy higher class properties and rent to higher class tenants. There's more money at the bottom but there's more work there too; attract people that you're comfortable with. All of our housing is B- to B+ in B neighborhoods. That keeps a good tenant flow - people with jobs, good credit, unlikely to destroy your home.
3. Get a property management company if you don't want to deal with it yourself. You trade some profit for just about hands-off experience.
I'll say this: I got seriously torched in RE early on. It took me a while to recover and we had our doubts when we jumped back in - but we took those lessons and made a serious profit machine. Buying my rental properties quadrupled my net worth in several years' time. Think about that.
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