To all Landlords, what keeps you up at night?
San Antonio, TX · Member since 2013 · 20 posts · 6 votes
As a future landlord I am interested in understanding what things keep you up at night or make you worry about your property? If your property is in another city/state or if it's accross town. You've thoroughly screened the tenant, you are comfortable about who you have living in your rental but you still have little things that you worry about.
Brian Hoyt - I wonder what you were thinking with that typo in your previous post ... :)
Nothing. I take good care of the properties and the tenants and I sleep well at night.
I was a nursing home and hospice administrator for 25 years... that'll keep you awake at night.
Not much. I make my choices based on what I want and realize I control what I do, but not the outcome. Worrying about something won't change what is going to happen or not happen.
Occasionally I will just have general anxiety, though. Not often and not paralyzing. Owning rental property is a big responsibility as well as a potentially big risk. If owning rental property doesn't humble you a little bit, then I don't know what would.
Taking good care of your property, screening tenants well and having a good cash reserve are alway soothing to any worries that may crop up.For instance, a windstorm blew a couple shingles of one of my roofs and the roof needs to be replaced soon. Do I worry abou tit? No because I have enough money to replace it once I am ready to or once I absolutely have to. Really, there is no substitute for haviing a good cash reserve.
When/how I can acquire my next property!
As Deborah B. noted, if you keep up your properties and screen for good tenants, very little if anything should keep you up at night.
-Michael
Brian Hoyt hit it on the head. Keep adequate cash reserves. Early on I worried about some problem cropping up, tenants disappearing or not paying rent. All those things have happened. None killed me. So, I don't worry about those anymore. Still lots of worries that keep me awake at night, but not these rentals.
Brian Hoyt - I wonder what you were thinking with that typo in your previous post ... :)
Nothing lately. I used to worry about rent coming in or the tenants destroying the house. So far everything has gone great 2.5 years and 7 houses later. Now I am concerned on how much I spend on initial repairs and how long it is taking my contractors.
I think the lack of experience is what keeps you up at night as a landlord. Meaning that, in the beginning, every little thing was a huge unknown and significant problem in my mine. My first eviction was tough. A non paying tenant. A difficult village inspector. An overrun in my rehab costs on a house.
Every single one of those things would keep me up at night in the first few years. At some point, something just clicks - either because you finally get the cash flow to pay for all that without having to dip in your pocket or maybe because you just realize those things are going to happen - and it doesn't bother you as much.
That being said. I definitely think that a non paying tenant is always going to give me a sleepless night or two. I've been lucky that I haven't had one in over 9 months. But I'm sure I'll get another one eventually and I'm sure its going to keep me up at night because I do take it personally that someone is stealing from me.
I do notice that my frustration level with tenants tends to go up and down based on my occupancy rate. :-)
I'm much more lenient with the late payers when I'm at 100% occupancy and they're only a couple of days late. If I'm under 100% they're paying the late fee to the letter.
I am worried about an accident on my property. $600K judgement and my umbrella policy declining the claim due to some nonsense technicality. that's a game over for many of us. and it does not matter if u have ur properties in LLC or not. if u do all the work urself or you are the one who hires out ...LLC will not help. everybody gets named in the lawsuit. if u lose ..you, all ur LLCs and all other assets u have interest in are at stake.
It is funny when I read about “my attorney advised this”, “ my accountant suggested this” …many of you fail to realize …this is not YOUR attorney or YOUR accountant. Unless you have a strong long lasting relationship with the guy or it is actually you who pays 80% of his salary (cuz all he does is working for you)..then …it is just a guy who SOLD u some billable hours ..that’s it ! so whoever will represent me during those tough times…is not on my side ..he represents himself, trying to suck as much as possible out of me or my insurance. that's my worry ...
We own 2 SFRs in a marginal neighborhood...not a war zone, but not great. I lose sleep when either of them are vacant, and with good reason. The copper pipes were stolen from one in the 6 weeks the house was empty. All it takes is a thief posing as a tenant to see the house is vacant and where the pipes are.
After the first, and hopefully last time that happened, we installed an alarm system and if either of them are vacant again, we'll board up most windows and the back door and install an alarm. And we'll still lose sleep. We don't worry about vacancies in our condos, they're brief, and condos don't seem to be a target for pipe thieves.
With the first property I had trouble sleeping the few days around when we closed, and when the first rent payment was late for one of the tenants. Closing on the second property didn't bother me, and the same tenant pays late still and it doesn't bother me anymore- it's his habit and I am sure he'll pay. My husband didn't seem troubled by any of it.
Our first 'no heat' situation caused us both to lose sleep, mostly b/c the tenant didn't bother to notify us for 2 days, she thought the others in the building had or would call and she was almost out of minutes on her phone, so instead of calling Friday afternoon she e mailed Sunday night.
Currently, I am stressed about an upcoming vacancies- bunched of people have looked at one place since Monday but so far only one application and I'll have to reject them based on money owed to a past landlord. I have two more coming up in August that I haven't had a lot of interest in yet...
Thanks for the great, honest replies.
@ Mike H. I can see that happening. When I bought my first car, my first house etc, I worried about what would happen if I lost my job and couldn't pay. The unknown tends to nag. I've lost two jobs and still found a way so I don't worry about that anymore.
Marcin G Wow $600,000, what was the technicality, if you don't mind me asking. Is there anything you could have done differently?
Kelly N. Vacancies can be a problem if you don't have enough reserves as was stated earlier. Was that an issue with you or is it just that you have an asset sitting and not making money?
Kelly N. What is the other biggest financial issue with vacancies minus not getting that income monthly if there are any?
John Southard- We have the reserves, it's the not making money part. I purchased both triplexes with tenants, so I am used to having them full :) At the one property, I have one renewing his lease, one is leaving but I already have a new tenant, and the third wasn't sure what he was doing (graduating and looking for a job) so the vacancy is coming up quicker. At the second property, one is renewing her lease, and I just started marketing the other two- we closed on the property 2-3 weeks ago and they both move out in late August.
Junior Salters- other than a break in the money coming in, I don't expect much of a financial issue with the vacancies. All my tenants seem to be taking good care of our properties, so I expect to give back all or most of their security deposits when the time comes. I have a tenant leaving in July, so I put the apartment on the market, got a few calls, two couples came to look at it, both took apps, one couple filled them out that day, passed all the screening, and put down a deposit. The other couple was going to fill out applications but didn't do it in time. So that one was an easy one to place tenants in. The one I have been busy with this week is another story- lots of people looking at it, tons of calls, but just got the second app tonight. I think it's the price attracting lots of people, plus this unit is available at the end of the month so lots of people are getting ready to move. I have two more vacancies coming up at the end of August and not much interest in them yet, but I am hoping that will change as the time gets closer. I could also lower the prices a tad to attract more people if need be :)
Absolutely nothing, I turn my ringer off at about 9pm. However, my tenants know they can text/call me in case of emergency and although it may be late, I will respond once I wake up, no matter what time I wake up. I have a crazy sleep schedule so I may wake up at 3am and check my cell phone. In the case of an extreme emergency where they need to vacate the property, do so to ensure the safety of themselves and family members and leave me a message of a text and I will contact them once I wake up ..all my properties are local
biggerpockets!!!!!!! That's what keeps me up later every night! Learning!!!
@Marcin G. that is EXACTLY how I feel, I couldn't have articulated better.
Many seem to be concerned about tenant not paying rent on time etc, but that is the least of my concerns. If you can't sleep because you are worried your tenant is late with her rent, then landlording is probably not for you because there are other things way worse than having to evict a tenant.
Real estate is a LIABILITY generating asset, there are potential lawsuits lurking every which way, things you could hardly imagine possible.
Insurance of course is a must have, but seriously insurance policies are very technical and complicated. You need to have a PhD just to understand all the terms and terminologies. Insurance agents couldn't care less what kind of protection you need and very often, it's only when you file a claim then you realize about the things that are not covered by your policy.
Also, having insurance will NOT protect you against NEGLIGENCE.
Same goes for LLC protection, it will not protect you against NEGLIGENCE either.
One judgment can wipe out everything you own. No attorney or accountant can rescue you.
Having insurance and LLC protection is just a starting point. As a landlord you need to do a damn good job managing the property 24/7 to avoid potential lawsuits. You need to use your imagination to think of any possible way your tenants or third parties can sue you for whatever reasons.
You have to be neurotic about this, to give you an example, one of my properties have a balcony and I am currently looking for a licensed engineer to inspect the structure and issue a report that the balcony is sound and secure for day to day use. This way even if one day for whatever reason it collapses and someone is injured, I can show the court that I have taken the initiative to have a professional inspect the structure way before the accident happens.
I also shy away from single or multi family homes because I am worried the roof or stairs may collapse, or one of the tenants may get drunk one day and decide to blow up the water tank or mechanicals in the basement. There are all kinds of crazy people out there, you really have to anticipate the absolute WORST.
Consider yourself lucky if eviction is the only problem you have to deal with as a landlord.
At this point in my life there is not much that keeps me up at night and nothing related to my real estate investing does.
My asset protection strategy is broad and deep. That doesn't mean I couldn't be wiped out, but it would be very difficult for it to happen. Even if I lost everything I have, the assets and their protection for my kids and grandkids is completely separate.
But, at the end of the day, if I lost it all, the houses, apartments, offices, cars, etc. It is just stuff. And, I know I could get it all back if I had a few years to do it. And if I didn't have that time, I know my kids and their kids would get it all back with interest.
Once you know HOW to do this, it's just repetitive mechanical steps to do it.
* The time between discovering you have methamphetamine users (or other undesirables) at your property and the time it takes to get them legally out.
* "Professional tenants" who either try to get into your property or do and won't leave.
* Unsupervised children recklessly destroying your property, creating havoc in the neighborhood, tearing branches off trees & bushes, making graffiti, and creating a noise nuisance. Quick and hard to catch!
* Psychopaths. Images from the movie "Pacific Heights" - a must see for those new to landlording.
Experience is a great character builder. Time is a great healer. Humor is a great relief..... Take a look at this: http://www.brainyquote.com/quotes/keywords/sense_of_humor.html
Sleep well.
I really do not lose sleep over any issues. All of our properties our well maintained and with good tenants... but with all the cold weather in the midwest I have worried about pipes freezing. Also with terrible thunderstorms and tree's falling I always worry about one of our properties trees falling or a neighbors tree falling and damaging a dwelling of ours - but do not lose sleep.
Its all about mitigating problems and risk. Meaning, invest in the right product (which is the one you understand) close enough to home to where you can address any emergencies, and when supplying housing to people, you have things fixed properly so you do not have those "midnight calls" that people frivolously talk about. I have never had one, we have a company line and the machine tells people what to do in case of emergency; furthermore, we speak to our clients prior to move in and go over these things so they do not bother the property manager with frivolous matters that do not need to be addressed right then and there. So, to answer your question, fortunately, the only thing that keeps me up at night is my awful firm mattress. Do the things above, get a better mattress than I, and you will hopefully sleep sound as a pound. Good luck to ya!
The only time my rentals cause any anxiety is when I buy a new one and start rehab,,I'm always waiting to find something I didn't plan on, but if I do its not the end of the world.
Rentals after they are in service don't really cause me an anxiety, if one comes open I'll rent it,,
In the 2008 market crash I lost more money than I would want to admit,,,you know what, it like what Duncan said, I know I'll just make it some other way,,in fact, as strange as it seems, there was a LOT more anxiety then than my rentals will ever cause
EVICTION..if you can no longer afford the place, it's time to move......urg!!
As well as my tenant lying to me most of the time she is disabled and in a cast so she is either wheel chaired most of the time or lying on her couch. What worries me is when she tries to go from one room to another she will fall again and something really serious will happen. She fell at the hospital just yesterday that caused her another 2 weeks there than she will be back in my rental. She falls once or twice a week and have no business being in a house by herself and she don't keep her phone with her since it takes so long for her to answer and I end up hanging up and message her instead. I would love to evict her because she has broken several rules in the lease such as letting people smoke in my rental and her destroying things. She even allowed her worthless roommate bring cockroaches in with his clothes.
I have kept all of our correspondence from messenger and I can tell you I have called her out a number of times about lying to me by showing mine and hers texts.But it never fails she always come up with excuses rather than just admit she lied.
Almost half her screening answers were lies too but by the time I got through with me investigation she was already in my house after she gave me first months rent and deposit. The question about her, her relatives and friends smoking she answered "All non smokers" And that was a lie too because her mother smelled like a dirty ashtray and had cigarettes in her pocket when she brought over the rent. I also saw that guy that is suppose to be a caregiver and have been staying their taking care of her dog, etc, smoking.
I really hate this tenant and I'm hoping and praying she will move on her own after texting exactly what I thought of her. It was harsh but I'm really fed up with this tenant's lies and destroying things than denying them. Anyhow I have a lot of nights where I'm awake most of the night because I am so afraid she might fall thinking of the worst case scenario.
I'm really glad a judge where I live helped me to put my contract together to save me from a possible lawsuit.