Investor · Lockport, IL · Member since 2015 · 25 posts · 35 votes
Hi all
Started landlording in 2018 and I have grown to 3 properties since then. I have never evicted anyone, or even terminated a lease, despite a few situations that warranted it.
As you may predict, that is my weakness. I am having issues confronting tenants on issues and putting my foot down, and the thought of handing someone a termination notice gives me an ulcer. I fully realize this is the wrong business for a person with too much compassion. My landlord friend calls it "bleeding heart" syndrome and just shakes his head at me. He's been in the business 30 years and has seen it all. He doesn't bat an eye at evicting people for almost any reason. The way he views people and their issues is quite...desensitized.
I'm looking for any words of wisdom on how to evolve mentally to where I am comfortable doing whats right for my business without losing sleep at night. What do you tell yourself when you are forced to put your bottom line over someone's ability to put a roof over their heads? I imagine its the same for most managers that are tasked with terminating employees. I'm sure they could give me advice as well on how to cope with feeling guilty about this.
I need to learn how to get over this if I am going to be successful. Appreciate your input.
1. Have written rules and procedures for everything. For example, rent is due on the 1st, late fee X on the 5th and notice to vacate on the 8th. Have a clear process and enforce it no matter what the circumstances. Failure to enforce your rules evenly could actually be seen as discriminatory. Letting some follow the rules and others break them is unfair at best.
2. Pretend that you work for your rental company. Your job is to enforce the policies. If your day job had a rule against something, would you just do it anyways? This is where mindset is important. You can even tell tenants, sorry but these are the rules and my partners require me to follow them. That may help so you don't feel like the bad guy. Blame the policy.
3. Stop thinking you are compassionate, because you are not. Your problem is you fear confrontation, which is different than being compassionate. There is nothing compassionate about letting a tenant break the rules and live rent free. People who have trouble managing their lives or finances need consequences, so they learn better behavior. Would you let your child draw all over the wall or sit on their iPad for eight hours a day? They may WANT to do these things, but letting them is irresponsible, NOT compassionate.
4. Separate your business from your personal charity. If you want to help struggling tenants, donate money to rent assistance funds. Donate your time to big brothers or mentoring programs. Being compassionate and helping people is wonderful, but do your good deeds on a personal level separate from your business.
5. Don't listen to the "story" because you don't know if it is true and it is immaterial anyways. Tenants (and people in general) will use emotions to manipulate you. Often it is a lie or a half truth. They may say rent was stolen or their hours at work were cut, but in reality they blew the money. You are not a lie detector and you need to stop trying to figure out who is worthy and who is not. I used to try to figure out who was telling the truth and now I don't care, which is very freeing. Just pay the rent and take care of the property.
6. You can be compassionate to a situation, yet firm in your response. You can show sympathy for their situation and even offer suggestions to help, but still enforce consequences of their actions. "I am sorry to hear your hours were cut. I heard XYZ is hiring part time workers so that may help you. Since rent was late, you will owe a late fee of $XX."
It may be hard to understand, but even eviction can be very helpful to people in the long run. For many people eviction is a "rock bottom" moment in their lives that helps them change their mindset around money management. They learn to control their spending, show up for work, have an emergency fund and pay rent on time. People with money problems are no different than people with drug problems or other addictions. It is not money that solves the problem, it is learning the right behaviors around money. Most tenants who struggle are dealing with their own mindset issues. It could be procrastination, disorganization, depression or any number of issues that get them "stuck" in a bad pattern. Your "compassion" is enabling their bad behavior and this is the key thing you need to understand. Your landlord friend isn't as much "desensitized" as he is "enlightened" to human behavior.
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
4y
@Todd Handriegh Brandon Turner speaks on this issue quite often. Unfortunatly, you've become too connected and emotionally attached to your tenants, as harsh at it sounds, you need to put an end to that. Your situation revolves around the importance of hiring a property manager or third party to take care of issues such as the one you are facing now. I'm all for trying to come to terms and helping tenants when needed, but recognize this can fall into a slippery slope of them taking advantage. I advise hiring someone in your business, similiar to that of your friend who has no issue dealing with this type of confrontation. To fully drive the mental aspect home, think about if you owned a convenience store and a customer stole from you. You would not be compassionate in that situation, and the same applys to being a landlord. When your tenant misses payment or breaks an agrrement stated in the lease, they essentially are stealing from your business wether intentional or not. Hope that makes sense and helps.
You need to have an honest conversation with yourself about why you're doing this. A couple of possible answers are:
1. An additional income stream - in this case, you will need to work on optimizing your profit. You will need to define your process. What is a deal-breaker? Do you serve notice at 1 unauthorized animal? Two? Four? Or when you can smell them outside the front door? When do you serve pay or quit notice? One week late? One month? Do you serve notice immediately if you don't hear from the tenant before the due date, but allow a payment plan if they ask you before the rent is due? You need to figure out the rules, write them down and then follow them.
2. A charity - if you're losing sleep over enforcing simple rules, then this is not the right business for you. You will need to figure out your exit strategy - either sell the properties or donate them to a housing-related charity that is more prepared to provide this type of help.
An obvious takeaway is that you cannot care more about someone's ability to keep a roof over their head than they themselves care.
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
4y
This is your nature you are not likely going to change the core of who you are. This part of the business is not for you, I would hire a PM or a family member or something to separate you from the tenants and let them make the hard calls/decisions that you are not able.
I am not judging you, I am not shaming you. Some people are great at X and some people are great at Y. That is what makes us all unique and different. Accept where your personality helps you in this biz and focus on that end. Hire someone else to handle the part of the biz you are not great at.
This isn't something like "Can I learn to install a light switch" - it is truly changing the core of who you are and how you deal with tenants.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
4y
It sounds like you let things slide, which will result in an unscrupulous tenant acting more a fool. You're more afraid of confrontation than you are of the bottom line.
"You give a mouse a cookie and he'll ask for a glass of milk."
I enjoy managing my own properties but for some landlords, having a decent property manager is a good idea and the way to go. If there's a solid property manager where your rentals are located and they don't let things fall through the cracks as many of them do, I would advise hiring them so they can enforce the rules/law so you're not unhappy.
When a tenant doesn't pay me or isn't following the rules they stress me out. And stress kills. So if a tenant has zero regard for me/the rules they're not worthy of staying.
I value my good tenants and refuse to collect bad tenants.
This is a business. That doesn't mean you don't give a little (eg a tenant has an issue with a pay cheque and asks to pay the rent 2 days late), but don't make it a habit and don't do it repeatedly for the same tenant. People will try to take advantage of situations.
Be firm, but fair and ask yourself if you think the tenant would do the same if the situation was reversed (for most the answer is no). I've had to evict two tenants and both were given a chance and didn't follow through. I quickly followed through and had no problem doing it. It is usually a series a poor choices that get them to that point and it can't become your problem.
Investor · Lockport, IL · Member since 2015 · 25 posts · 35 votes
4y
I am loving all of this advice, it is truly helpful. I am going to collect much of your advice and make sheet out of it so i can give myself a pep talk when I'm getting that stomach churning feeling.
Either I will have to rise to the occasion or I have to hire it out.
I find that its best when I rip the bandaid off and just start the conversation with an email or text that i cant unsend or backpedal on. Its face to face that is more difficult. I find myself trying to be easygoing to avoid ruining the relationship and turning a good tenant bad. I usually spend way too much time strategizing in my head trying to figure out the optimal way to get compliance without ruining the relationship. Its exhausting. I need to be more "automated", and take my personal discretion out of it. Rules should be enforced consistently without me having to battle internally about it.
1. Have written rules and procedures for everything. For example, rent is due on the 1st, late fee X on the 5th and notice to vacate on the 8th. Have a clear process and enforce it no matter what the circumstances. Failure to enforce your rules evenly could actually be seen as discriminatory. Letting some follow the rules and others break them is unfair at best.
2. Pretend that you work for your rental company. Your job is to enforce the policies. If your day job had a rule against something, would you just do it anyways? This is where mindset is important. You can even tell tenants, sorry but these are the rules and my partners require me to follow them. That may help so you don't feel like the bad guy. Blame the policy.
3. Stop thinking you are compassionate, because you are not. Your problem is you fear confrontation, which is different than being compassionate. There is nothing compassionate about letting a tenant break the rules and live rent free. People who have trouble managing their lives or finances need consequences, so they learn better behavior. Would you let your child draw all over the wall or sit on their iPad for eight hours a day? They may WANT to do these things, but letting them is irresponsible, NOT compassionate.
4. Separate your business from your personal charity. If you want to help struggling tenants, donate money to rent assistance funds. Donate your time to big brothers or mentoring programs. Being compassionate and helping people is wonderful, but do your good deeds on a personal level separate from your business.
5. Don't listen to the "story" because you don't know if it is true and it is immaterial anyways. Tenants (and people in general) will use emotions to manipulate you. Often it is a lie or a half truth. They may say rent was stolen or their hours at work were cut, but in reality they blew the money. You are not a lie detector and you need to stop trying to figure out who is worthy and who is not. I used to try to figure out who was telling the truth and now I don't care, which is very freeing. Just pay the rent and take care of the property.
6. You can be compassionate to a situation, yet firm in your response. You can show sympathy for their situation and even offer suggestions to help, but still enforce consequences of their actions. "I am sorry to hear your hours were cut. I heard XYZ is hiring part time workers so that may help you. Since rent was late, you will owe a late fee of $XX."
It may be hard to understand, but even eviction can be very helpful to people in the long run. For many people eviction is a "rock bottom" moment in their lives that helps them change their mindset around money management. They learn to control their spending, show up for work, have an emergency fund and pay rent on time. People with money problems are no different than people with drug problems or other addictions. It is not money that solves the problem, it is learning the right behaviors around money. Most tenants who struggle are dealing with their own mindset issues. It could be procrastination, disorganization, depression or any number of issues that get them "stuck" in a bad pattern. Your "compassion" is enabling their bad behavior and this is the key thing you need to understand. Your landlord friend isn't as much "desensitized" as he is "enlightened" to human behavior.
Investor · NW Indiana · Member since 2015 · 98 posts · 99 votes
4y
Great advice from @Joe Splitrock! I would also ask you to seriously reconsider why you are in Real Estate in the first place, what your goals were initially and if Real Estate is the right avenue for you to achieve your goals. It is obvious that you fear confrontation and that is a big impediment in this business. Even if you outsource landlording to a Property Management company you will sooner or later run into a situation where you need to have some serious conversation with your PM and that will cause your stomach churning for sure. Let's not get into dealing with Contractors.
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
@Todd Handriegh You said it yourself. You don't have a 'relationship' with your tenants...other than a business one. As @Joe Splitrock and @Scott M. said, you need to decide if you're running a business or a charity.
It sounds to me like this is not a good fit for you at all.....hire a PM and just collect your $$ every month. OR sell everything and invest in something else....
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
4y
Hi Ted!
Working in the industry where relationships with all sorts of people is the main aspect is tough for some people. 1st off, I would say, do not beat yourself up for having such a caring personality.
In response to your question though, changing a mental state is difficult. It's the core of you. You cant just change so quickly. It must be a work in progress. I do agree with @Michael Dumler with possibly hiring someone who will be able to do this for you or asking your friend for assistance. Learn from them about how they do it. Maybe you need to find the right words to do it.
Use the facts... Don't use your emotions when telling them why they are being evicted. It's tough, but you can do it!
Mentally, train yourself to think - "They are putting my livelihood. They read and signed the contract. I must protect myself an my business." It is difficult, but in your line of work, long term is what you must think about.
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
What @Jay Thomas said. You owe it to yourself and your family to make money with this business. If you fail because of your attempts to be a 'nice guy', how will that play out? Can you afford to start losing money with your rentals? Because if you continue down the 'I want to be a nice guy' path, you could possibly end up doing exactly that....
Investor · Lockport, IL · Member since 2015 · 25 posts · 35 votes
4y
Thanks again everyone. My landlord friend is a great mentor, he pushes me to get out of my comfort zone especially on these issues. I have made progress. To those that are urging me to throw in the towel, i appreciate your candor, but i dont give up that quickly or easily. Managing ones weaknesses is part of life, and despite my faults i am still extremely profitable. And i could even argue that during the eviction moratorium when my tenants could have stopped paying without recourse, my relationships with them paid off in spades, whereas others that i know that were hardasses got burned. Clearly there is a balance to strike.
I am positive that i came to the right place with this issue.
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
@Todd Handriegh Yes, there is a balance to be struck for sure. All of us that sound like hard-asses have our soft side too..... it is just part of the journey to learn to balance, just like everything in life.....
But when you hear so many people that have so many years of experience all say the same thing, it is good to pay attention (as you are doing :-)
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
4y
@Todd Handriegh you probably won't "get over it." It's who you are, and that's ok. That's where a good professional Property Manager comes in. It is more than worth the $ to have someone else deal with all of this for you. You will ultimately get better rent collection, hopefully better tenants via professional vetting, and if things do go wrong, you don't have to be the one to evict. Save yourself the headache and the heartache and pay someone to manage this part of your business.
Investor · Raleigh, NC · Member since 2019 · 433 posts · 743 votes
4y
The bottom line is your running a business, not a charity. Do you think if you stopped paying your mortgage to the bank they would say, "oh golly, you poor thing. I hear your story and feel you. Stay as long as you like without paying!" Absolutely not! What about when they need a repair done to the property or upgrades? I bet you sure wish you had the rent they were paying you so you could repair that HVAC without a second thought.
It's not having too much compassion, it's just being foolish. You can't walk into a restaurant and just say, "I'm really hungry" and expect them to give you free food. May be tough love, but it's the business.
If you want to invest and want leverage and cash flow, look into options trading with covered calls, cash covered puts and LEAPs.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
4y
@Todd Handriegh if they are paying their rent they are good in my book. I like people to stay as long as possible. Some people aren't neat and tidy and that is ok. If you evict a paying tenant it cost you money and who is to say your next won't be worse.
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
4y
As a person who is nice by nature I understand but you have to realize this is a business. I have been in the game for well over a decade and they all have a story. I have some I´ve been more lenient towards or given a break to one over another, but they have to pay in the end. I have let several go without hitting them with late fees (most landlords would not do that) but if they go past a month of not paying they all know what is coming. If you do not take action or let them know, they will continue to play games and squeeze you for as much as you allow. Again, they all have a story of why they cant pay but that has nothing to do with you. The alternative is you pay their rent which in a sense is providing for them. I have my own family to provide for and my own kids to raise. Providing for others not only takes away from me but also my entire family. If you move up to 10 units eventually you may get 10 stories of why they cant pay you. Try this; if you have a mortgage on your primary and a car note, tell that finance company you cant pay because Uncle Rodger broke his leg and his kids are starving. Try that with all your bills and it will clearly provide you with clarity. It feels great to know there are still great people in this world who have a sense of compassion and caring. I love seeing it but it wont mix well with business and if helping them means hurting you, itś out of sync. You may explore starting a non-profit for philanthropy. Good luck to you in the future and I sincerely how you can create a balance there!
Investor · Lockport, IL · Member since 2015 · 25 posts · 35 votes
4y
I know many of you say that a tiger can't change their stripes but i already feel empowered by you all sharing your perspective and mindset on tenant relationships, and putting things in context. I feel confident that i can adopt these more assertive perspectives with enough practice. Thanks to you all.
Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
4y
Sometimes when one gets kicked in the teeth (so to speak) by tenants in various ways they begin to change their own outlook and treat the rental business as a .....business. Unfortunately then one has to struggle to not get bitter about ALL tenants out there. I often find myself tuning out the sad SOB stories that an applicant will often try to tell me because, quite honestly, I simply don't care what pickle they have managed to get themselves into. It's often the same stories one hears over and over again; debt from divorce, debt from baby daddy's who don't provide for their children, debt from over spending. It ain't my problem.
I find relying on the lease which clearly states the rent, when it is due, the consequences of not paying it on time to be very helpful in keeping things straight in my mind. If everyone I rent to has the same requirements (i.e., a contract they signed) then everyone should follow these requirements or face the consequences.
I know many of you say that a tiger can't change their stripes but i already feel empowered by you all sharing your perspective and mindset on tenant relationships, and putting things in context. I feel confident that i can adopt these more assertive perspectives with enough practice. Thanks to you all.
And it's different as to how they got in the pickle (to me). I would be more lenient, at least for a month or two..... to someone who just got cancer or got hit by a bus.
Here is something for you to ponder: very few people are in a situation they did not is some way choose.
I think what Ted Hendry stated about having written policies and following them is so true. You may even want to show these policies to your tenants at lease signing and say this is what I do no matter what your story or situation may be.
I just want to add a couple thoughts for you to keep in mind. First, most tenants have a friend or family member they could stay with temporarily and chose to have you foot the bill for them instead of being inconvenienced. They are borrowing money from you without your permission instead of family or friends. Of my friend or family don’t have the money to help them? Did they ask if you have the finances to help them? Second, whatever the sob story you are only hearing half of it. Right now, I have a very young couple behind on rent. The sob story is she is pregnant and off work couple weeks right before having the baby and having difficulty making it on one income. The other half of the story is baby’s daddy decided he didn’t like his boss and instead of waiting till girlfriend was working again he decided to quit and so had a brief period of no job and of course wait for new paycheck to start. Keep in mind this is like his 5th job this year.
We have this great thing called a functioning legal system in the USA. Illinois treats eviction as a judicial procedure, as Pennsylvania does. That's great for me. I have never lost sleep evicting someone. That's because I don't do the eviction, I don't have to make that decision. The person who handles a decision of this magnitude wears a black robe and has been carefully vetted for her/his role. The judge/magistrate and the courthouse staff also know exactly what resources are out there for people who are facing eviction, who the tenant might be able to work with, what can be done to make the best out of this bad situation. ALL I DO IS BRING A CONTRACT DISPUTE BEFORE THE COURT.
Here in PA, a district magistrate decides what's best. Sometimes, it is most definitely NOT what's best for me. Sometimes, it is. And that's OK, because that's how something as important as a person's housing security should be treated in a just world.
So you don't need to take the weight of the world on your shoulders, Ted. You're not the boss here, you don't call the shots. The deadbeat tenant who broke their contract with you doesn't have to face you, they have to face a judge. If the judge decides they don't deserve to be evicted, you'll have to abide by that. If the judge determines you're a terrible landlord and have done wrong, trust me, you WILL be put out of business in a hurry, AND IT WILL HURT.
Stop thinking you're a big baddie with all the power in the world because you're a landlord. You ain't. You're never going to be. I never get into any sort of confrontations with tenants unless I am dead sure I am absolutely in the right, and even then, I end up realizing it's almost always the wrong decision.
Speak softly, learn the law, learn your rights, act accordingly, and when people do not act appropriately in turn, have them talk to the big boss. It works. This is a helluva country, Ted. It honestly is.