This past summer I had an arrest warrant issued for me over one of my rental properties. At first, I was a little in shock.
I thought I had done quite a few things over the years to simplify my life as a real estate investor, but obviously something was amiss. If I happened to be driving through this small town just West of Philadelphia and got pulled over, they could’ve quickly seen that I had an outstanding warrant and then proceeded to lock me up.
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So, How Did This Happen?
You’re probably starting to wonder what this criminal did. While it really wasn’t me per se, it was my tenant, who at first glance was a good, paying, and clean tenant who really took care of the property — or so I thought. What was I missing?
The warrant ended up being for not cutting the grass. When the township first cited us for this, I contacted my property management team to figure out what was going on, and they started to investigate.
Apparently, the tenant always did cut the grass, and they said it must be the house next door. Meanwhile, the township kept coming by and fining us (or should I say me) on a regular basis, and finally they issued the bench warrant.
Last week, after posting some money with the court, we had our hearing. But before I get into how that went, let’s take a look at what I had done up to this point to simplify things, as well as what I could’ve done differently.
As I was getting older, I realized that I needed to simplify my life for a few reasons. One of the biggest drivers was that if something happened to me, I didn’t want my heirs freaking out about having to deal with all of my properties and everything that goes along with managing them.
Besides transitioning to owning more notes than properties, I also started to think about delegating some tasks.
Bookkeeping was one of those tasks that I had always done. Even before computers, property management software, or Excel spreadsheets, I had my good ole ledger books.
As time went on, I realized that I needed to automate things, such as how I paid my mortgages, so I set up a separate bank account and credit card just for my properties.
But what I did next was the biggest thing that simplified my real estate investing.
I hired a property manager.
At one point, I was a property manager, so delegating this task was very difficult. But after my smaller real estate office was gobbled up by a larger, national firm who had a property management department, I was no longer able to perform this task, so I hired a local and reputable management firm.
It’s one of the best things I’ve ever done, as they not only managed tenants, handled repairs, and, of course, did all the bookkeeping, but they also did many other tasks, like meeting inspectors and contractors, paying my bills for me, and even going to eviction court.
So, last week was my court date, but as you can guess, I didn’t attend. I sent my property manager, and you’ll never believe that this was all over a tiny strip of grass or weeds between a walkway and the next-door neighbor that we didn’t even believe was our property or was worth cutting. Since the tenant also appeared in court, the township inspector was less concerned, as he saw that we did actually care about rectifying the situation, and yes, I’m still a free man, as the bench warrant was dropped.
Own Less and Control More
What could I do more of going forward to prevent such nonsense?
Probably the biggest thing is to shift my position so that I own less but I control more. For example, if that property was owned by a trust or an LLC that was owned and managed by a trust, it would’ve been much harder for them to track me down to issue a warrant to begin with. So, you can guess what I’m working on this week.
For example, if there was a similar grass cutting issue, where I was the meat in the middle of a sandwich lease option, the owner would be the one fined instead of me.
Subject-to deals can work in a similar way. For example, if you took over a property subject to the first mortgage and for some reason you didn’t pay the property taxes, they couldn’t come after you personally or ding your credit. They could only pursue the property.
So, I’m curious to hear from the BiggerPockets nation. What have you been doing to control more (and own less) or to simplify your real estate investing? Have YOU ever had a warrant out for your arrest?
Let me know with a comment!