Hey, bigger pockets family. I'm really struggling and getting burnt out with trying to own 3 rental properties on my own with no experience and trying to manage and learn every aspect myself. How can I reduce this stress I'm taking on with the least cost possible? Thanks.
Sell the properties. Take the profit and buy new properties where the CF will allow you to hire a property manager. Spend your time doing market analysis (90%), and then making offers, negotiating, and closing (10%).
I want to own an apartment complex, maybe if I buy several units under one roof, that will reduce my stress, and the managing will be easier since it'll be located in one place.
Joe Villeneuve from Plymouth, MI
replied less than a minute ago
Sell the properties. Take the profit and buy new properties where the CF will allow you to hire a property manager. Spend your time doing market analysis (90%) and then making offers, negotiating, and closing (10%).
Hey Jayden, I am also dealing with a lot of stress of dealing with 3 properties here in Indiana. It’s a process and trying to balance life with rentals can be very overwhelming.
I am trying to currently focus on giving my personal time more of my attention and not making profit and money my main attention because it’s easy to get lost on the cash. I suggest taking more time off to get away on a trip/doing something you enjoy and actually enjoying your free time.
No amount of money can re-coup your time and happiness. Good luck on everything.
Did you buy all three at the same time? How long have you owned them? If they are in good condition and you have good tenants, it shouldn't be that much stress. When the next one is vacant (or the next time there is a problem), walk through and do a detailed inspection and get someone in to do any necessary repairs. That includes things that are likely to be come a problem in the short term.
You could also get a property manager or sell the most problematic/stressful house. What is causing the stress?
Being in school full time and learning how to manage properties independently and do the work myself to save money. My grandparents were helping me for a while and then dumped everything on me due to family issues. I don't make much a month except the cash flow from my properties, so I pay a bookkeeper, and I have other bills to pay. I get it's 3 properties, but I'm 23 years old trying to do all this all at once. I can't do everything myself. I need to delegate, but I don't have the money yet to really do so. I have 100k liquid in my bank, but that's for reserves. I'm trying to decrease expenses and increase income. Plus, I'm dealing with a stressful tenant that disrespectful to me because I'm a young landlord. I can't be one brain doing all this, and I need to stick to my niche, which is the acquisition phase of investing. I have no desire to manage and renovated and rehabbed myself, but I'm taking all that on currently because I don't want to pay contractors to do it for me. The one home is paid off, the duplex I owe 115k on. I want to buy an apartment complex next, but I don't know if this will be too much for just myself to handle while in school full time.
replied less than a minute ago
Sub pit the actual maintenance. It is cool but it is a time suck. You don’t need 100k reserve for 3 properties.
Max T. Investor from Philadelphia, Pennsylvania
replied about 1 hour ago
Sub pit the actual maintenance. It is cool, but it is a time suck. You don’t need a 100k reserve for 3 properties.
Not sure what you mean by "Sub pit" Max? Thanks for replying to my post. Hope to hear back, thanks.
I don't know when it will happen, but at some point there will be another downturn in the real estate market and you'll be well positioned to add to your portfolio again.
My biggest piece of advice for avoiding this situation in the future is to purchase properties which are as close as possible to where you live. Something like unclogging a toilet goes from an hour of driving back and forth to a 10 minute pop in and pop out. Management is a TON easier when your not only a landlord but a neighbor.
@Jayden Hamilton hire a property manager. At least temporarily. It's not permanent - if you want to go back to self-managing in a year, or 5 years, you can. But it seems like this is a good solution for you in the short term...
Unfortunately, no way to help without more details? Why are you stressed? Are you rehabbing unit, dealing with tenants, losing money? What are the issues?
@Jayden Hamilton 1. Realize it's not permanent. Stress is part of learning new things and growing. We've all been there. You'll be thanking yourself in 5 years for sticking through it and not giving up.
2. Consider hiring a qualified property manager. DO NOT go with the cheapest option to cut expenses. I know your goal was to limit expenses and increase income, but a good property manager should take away a lot of your stress. You'll be able to focus your time on buying the next property with your $100k.
My 2 cents... Get a property management person/firm to take over the day to day and stop trying to do everything. Do something else for income to replace the expenses of the PM. It is not realistic to think you can survive on cashflow on only 3 properties.
Take the long view - you are going to look back on this 5 or 10 years from now and wonder why the hell you were doing what you are doing now.
Get out of your own way, focus on making more money - not penny pinching.
Some times saving the money isn't worth the price if you are burning out. By 3 properties, I assume 3 sets of tenants (you mention a duplex and single family home). You have some money in your bank, why not talk to a local handyman who can go out and do some of the work? When a tenant calls, give the handyman a call and let them deal with it.
For the one problem tenant, when is their lease up? If they are month to month, give them notice. Life is too short to put up with that crap.
Your instincts are right, an apartment complex while in school full time is going to be too much.
Delegating can be hard, but necessary because you can't do it all (speaking from experience, not with rentals, but my work).
@Jayden Hamilton my experience in real estate is that stress comes from not outsourcing the parts that drain me. It seems like that may be happening with you as well.
I love finding deals, being creative, getting loans and networking. These things give me energy.
Property management, maintenance and detail-oriented tasks drain me.
So, I outsource the latter and spend almost all of my time on the former. Practically speaking, I think you should make a list of things that you really like about RE and outsource everything that is not on the list.
@Jayden Hamilton if you think it is stressful being 23 with $100,000 in the bank and at least one paid off property, none of that is normal. At that age you should have boundless energy and be happily working your @ss off to build a future. I am not sure what skill, blessing or luck you had in life that got you so much net worth at such a young age, but you should be thankful instead of stressed.
Buying an apartment building will 10X your stress and problems. If you get married and have kids, that will 10X your stress. Based on the limited information you provided, it seems you need to hire work done and maybe even hire a property manager. That is the only way to reduce the burden and scale to the next level.
As far as respect, it has nothing to do with age. Respect is earned by how you treat people and the expectations you set.
You have to tell yourself that owning rental properties is a business like a liquor store, gas station, or whatever and every business has inherent problems, but the beautiful thing about real estate is once you get organized the money constantly pours in while you are sleeping or even on another side of the planet and real estate takes the least amount of maintenance compared to other businesses. So, a tenant's disposer is leaking. Find an honest and reasonably-prices handyman and you don't have any reason to get a headache.
I made this promise to myself the day my 28-unit building closed escrow. I walked into the courtyard and told myself that I would never ever let this apartment building make me upset or emotional and I honored that promise regardless of whatever happened.
The day the apartment building closed escrow we gutted an apartment to the 2x4's. We brought in a bulldozer and Bobcat with a jackhammer and we removes the swimming pool, all the concrete in the courtyard to the street curb. We removed 8,000 sq ft of driveway. A tenant came out and spit in my face because of all the mess and noise. I smiled and asked him when he was going to move. He asked me if I wanted him to move and I said, "yes".
My wife and a worker could not believe how calm I was when this idiot spit in my face. I sort of laughed because I wanted to honor my promise. But...there is a super major reason I love the real estate business and never get upset. It is because I think much differently than most people. I constantly crunch the numbers almost monthly to see how much money I am making when including the amazing increase in the property's value each time I raise the rent and I do my math over and over so that I am excited and I can do the math in my head.
So, when the tenant spit in my face my mathematical mind went into overdrive and this irate tenants idiotic move that resulted in an eviction just earned me a big fat paycheck. Wahooo! I hope more tenants spit in my face.
How much did I earn when the tenant spit in my face. The building is in a very desirable area in Torrance California and has the best public schools and high-end shopping centers and malls. The building has a Gross Multiplier of 18. Here is how much money I earned.
I evicted the tenant, remodeled his apartment and increased the rent for that apartment by $300.
My immediate earnings. $300 x 12 = $3600 additional income per year. Increase in propety's value = $3600 x 18 = $64,800 + $3600 per year = $68,400 and then when you stretch out these numbers 5, 10, 20 and 30 years your profit is amazing as in the chart.
Get organized. Get your mindset straight. Do things that reduce your maintenance costs like remove garbage disposer and dishwashers from every rental property. We own many units and we removed the garbage disposers and dishwashers from almost every unit and not one tenant complained. There was a time we would get calls and have to replace 5 garbage disposers in one week. I hate disposers because they are like having a garbage can inside your home that results in odors, nats and you can't put everything in them, anyway. My wife and I remodeled our kitchen, installed a dishwasher and never use it one time in 18 years. It cost me $60,000 to remove the lawns at 4 apartment buildings and I thought about removing the lawns for 5 years. Now, I am ecstatic regarding how much money we save on water, gardening and time.
Owning rental properties is the greatest business there is. You make money when you are sleeping, you make money almost exponentially when you increase rents for rental units. But...you need to constantly do the math to see how much money you earn when you raise rents and increase the property's value and all the other profits you earn like from depreciation recorded on your annual tax records, etc.
The biggest mistake I ever made in my life was when I was 23-years old, already paid cash for 6 single-family homes, did not like owning real estate because I was too immature, did not know the math, sold the properties, invested $1 million into a limited partnership and lost exactly $1,050,000 after paying attorneys $50.000.
Get your math and mindset straight. I am a buy and hold forever person, but since I am not 71-years old I thought about selling my Las Vegas properties for 5 years, pulled the trigger on that and it was a nightmare evicting the tenant and cleaning every house. When I walked into some of the homes I literally got tears in my eyes when I saw the filth and damage, but, again, I immediately recover emotionally because I made more than $3.5 million from those 28 houses in less than 10 years. So, why would a person really dislike dealing with tenants and filth when making money every day sort of like behind the scenes.
You need a philosophy you understand and adhere to!
Wil Gaston Rental Property Investor from Columbia, SC
replied 30 minutes ago
@Jayden Hamilton, my experience in real estate is that stress comes from not outsourcing the parts that drain me. It seems like that may be happening with you as well.
The problem is that If I spend money for a property manager for my 3 properties, I still have taxes and insurance on all 3 of these properties. The 100k is reserves, for any unexpected things where I need capital immediately to take care of a problem. If I'm purchasing a 8-12 unit apartment complex, do you think 100k reserves is enough for that many units plus the single-family home I have and the duplex...
Owen Dashner Flipper/Rehabber from Omaha, NE
replied about 1 hour ago
My 2 cents... Get a property management person/firm to take over the day-to-day and stop trying to do everything. Do something else for income to replace the expenses of the PM. It is not realistic to think you can survive on cash flow on only 3 properties.
Take the long view - you will look back on this 5 or 10 years from now and wonder why the hell you were doing what you are doing now.
Get out of your own way, focus on making more money - not penny-pinching.
I'd love your 2 cents Owen on how I can make more money with what I have now if you were 23 and owned a single-family home with no mortgage and is paid off, and a duplex with 114k debt service due to 100k liquid cash In your bank. What would you do in this case scenario to make money grow faster? I thought to buy an apartment complex and cash out to refinance the equity in the SF home for the down payment on the apartment. I want to get into flipping, but I don't know how to do the work myself. DM me if you don't mind; I'd like to hear your thoughts a little more if that's okay. I agree with your advice 100%; I need a little more guidance on the best decision to make with my age, school full time online, the real estate I own, and the liquid cash I currently have available. I love thinking about making my money grow, and I need help from others to help me make that happen. Thanks, BP Fam!
I sent you a connection request. I remember when I first started and felt the same way. It's about systems and balance. More than happy to talk and help.
@Jayden Hamilton Already you have more experience then someone who never started. You end goal should be reviewed and evaluated every 90 days. If you are on track, you keep going, if you are off track, you create goals to get back on track. In this manner, you are motivated to continue as the why is fresh.
Find out which areas you like as mentioned. Read "Free to Focus" by Michael Hyatt. If you work in areas that you enjoy and are good at, the increased productivity more than pays for delegating or hiring others in the roles you do not enjoy and are not good at.
It can help to learn the varying roles in real estate, but it isn't always necessary. Go back to your goals, if it helps your 90 goal, 1 year plan, 5 year vision, continue. If it doesn't, modify and review at that the next 90 day mark.
It sounds like you don’t have a full time job, tons of cash, are very young, and paid off rentals. Plus family that can give advice and help. That’s the least stressful situation I’ve ever heard of honestly.
I was married, kid on the way, gutting my first house 100% myself, starting a business, and working 60 hour weeks at a W2 job with a big smile on my face for the opportunities of this great country at 23.
My advice would be the opposite of above and you need to stop complaining, suck it up, and work harder. If you mentally can’t do this or don’t want to make money and have big life maybe best to sell everything and get a simple job like cutting grass or something. The value of compounding capital of a 23 year old is pretty much infinite. It doesn’t sound like you appreciate that. Time, money, effort can mean a whole different world. You already have the two most difficult of these things.
I’ll stop being a dad now.
REI just isn't for everyone, and if 3 properties are stressing you out then adding 8-12 units will only add to that stress exponentially. You should sit down and really think about whether or not you're willing to put in the hours to make it work, if you should sell and purchase properties that cash flow with a property manager or if you should sell and just reinvest in the stock market. There's nothing wrong with going in any of these directions.
From my experience the 4+ unit buildings are much more demanding than single-family homes and duplexes, I suppose unless the 8-12 unit buildings you're looking at are new. I manage our 27 units by myself, have a full-time job, am full-time in grad school and have plenty of time to spend with my wife and 9 month-old. It can be done, but you either need to fully commit yourself with the understanding that it's going to be difficult and create efficiencies to make things easier or recognize that you should go a different route. The big thing for you is you have time on your side, only being 23. If you can handle the stress in the short term and get the properties stabilized it will benefit you in the long run. But in this specific situation it does sound like the cash flow is too tight and maybe the properties just don't make sense as rentals.
If you do decide to continue self-managing, your lease is your most powerful tool in creating efficiencies. For example, you shouldn't be receiving calls about clogged drains, you shouldn't be cutting the grass or doing snow removal, you shouldn't be physically collecting rent. These items, and much more, should all be addressed in your lease as tenant responsibilities (varies by market), and I'd even include the name/number for your plumber in the event a clogged drain exceeds the tenant's ability to clear so they can schedule directly. Additionally, you need to be proactive with the property's condition or you will find yourself in a never-ending cycle of "minor" repairs which each take up 30 minutes to an hour at a time. I've found that the constant small repair items are a huge drain and the cause a lot of stress. If you can get ahead of it you will save a ton of time and headaches.
@Jayden Hamilton if your overwhelmed with 3 units, buying a bigger multi will just bring more stress and headaches. More people in 1 building causes more dynamics to deal with. Im also finding tenants nowadays are way more disrespectful, have less morals and don't treat property's like they should. However, as a landlord, property manager, contractor, counsler, leasing agent, and all the rest, that comes along with it, I feel your pain. I currently have 23 units, (only 12 are multi's) and rest sf and I do everything myself other than the taxes. I also work a full time job of 50 hours a week. Thankfully I have a great wife that supports my adventures, but I am looking for a property manager right now as I just have to give up something and that is my thing to give up. I'm getting tired. Hang in there and keep on keeping on!!
Just being honest man, REI isn't for you. 3 rental properties with 100k in reserves in the bank doesn't scream stress.