I got out of the so called rat race and into real estate about 12 years ago. My decision to venture into real estate had, in part, been based on a dream — a dream of being able to just sit back and do whatever I wanted to while the rent checks rolled in.
Deep down, though, I knew that my venture into real estate would be a bit more challenging, and it has been. In fact, some parts of this business are downright loathsome. Of course, the gurus out there did not tell me about those aspects of the business. They just shared the parts about collecting rent checks. So, you newbies out there with stars in your eyes, please take note that there are some negative aspects to this business. I guess that is true about any business, but the key is to find ways (and the strength) to overcome them.
So what is so bad about being a landlord?
The Phone Calls
When you become a landlord, your phone begins to ring. Sometimes that can be good; other times it can be bad. Good or bad, there comes a time when you’ll be ready to throw your phone in the river because it never seems to stop ringing. Prospective tenants call looking to rent an apartment. Current tenants call to tell you something is broken, that they will be late with their rent or to complain about something else. There is always someone calling.
And the more you grow, the more your phone rings.
Eventually, you have to do something to stop it, but you still need to communicate. Texting is a wonderful solution, as is an answering service. Even hiring an assistant becomes a real possibility. Sure, you still have to take some calls, but managing them becomes key if you are going to continue to be successful.
The Attitudes You Deal With
It is amazing what non-real estate people think about what I do. I can’t count the number of times when I tell folks that I am a landlord, and they instantly reply, “Oh you’re a slumlord.” I never really expected this when I got into the business, and I am still shocked by this attitude today. I could get angry and give some snide reply, but I have found that being nice, explaining what I do and even telling tenant horror stories usually wins the day.
Being the Lone Wolf
Being a small landlord generally means being out on your own. No longer can you hang around the water cooler and gripe with your co-workers. Griping seems like a simple thing, but being able to gripe with like-minded people is important. It is a sort of therapy. It releases tension and steam.
One way to combat this is by joining a local real estate group group or real estate club. Doing this was one of the best things I ever did. It is great to have a network of understanding friends to talk to when you have a particularly bad day.
Sort of like being called a slumlord, many people have a complete misunderstanding of what it is I do. They seem to think that being a landlord is just about collecting rent. And while that is part of it, they do not understand the efforts I have made and the business I have developed to be able to collect that rent.
I have to find decent properties to buy. I have to find other people’s money to buy them. I have to rehab and maintain those properties. I have to find, screen, and deal with the tenants. I have to keep the government off my back, along with a whole host of other daily activities that take a lot of time and effort. I would like to see others try to do this job. A kind word and a bit of education go a long way here.
The paperwork that comes with this job is overwhelming. There are leases, move-in forms, move-out forms, work orders, receipts, invoices, checks, W-9s, 1099s, 1040s, 1065s, deeds, mortgages, notes, envelopes, stamps, etc., etc. Be warned, newbies, the paperwork can quickly bury you. The problem is, it all must be done to run your business properly. At first, you will likely to be able to handle most of this yourself. But as you grow, you will need help. Do not neglect to spend the money for this help; otherwise, you will become a paper-pusher rather than a landlord and investor.
Everyone Thinks I’m Rich
People tend to hear the word “landlord” and instinctively think of money — and that I have lots of it. While I may have a bit of equity here and there and rents checks coming in, much of that goes right back out. Because…
Everyone Tries to Get Into My Pocket
Tenants want breaks on their rent. Contractors inflate their prices, and the tax man is always around and coming up with something new. Every day someone is trying to dig deeper in my pockets, and one of the toughest parts of this job is keeping folks’ hands out of it.
The Constant Negotiation
Everybody always wants to negotiate. Applicants want to negotiate my rental criteria. Tenants want to negotiate the rules. Property owners want to negotiate prices. Being a landlord is being in a state of constant negotiation. This is one of the major changes of leaving the 9 to 5 world. And I do not think it will ever stop until I get out of the business. Stand firm and learn how to do it. If you can’t, you are in for a rough time.
The Bad Tenants
This is perhaps the worst part of the business. Even after 12 years and lots of lessons learned, a bad tenant still comes along every once in a while. Usually something happens in their lives, and they turn bad. They lose a job or fall off the wagon, something neither they or the landlord saw coming, but they take it out in part on you and your property. They stop paying rent, force an eviction and perhaps destroy your property. This is perhaps the worst of the landlording business. And nothing I have learned so far is completely effective at eliminating them.
If nine things are all I can think of, life can’t really be all that bad. And, in fact, it is not. I certainly do not wish I had never gotten into real estate, and I do not think I could ever go back to the 9 to 5 world again. So if you want to make the jump into landlording, by all means, do so. Just go in with your eyes open, and understand that not everything is wine and roses.
Thanks for listening. I feel better now.
Landlords: What do YOU hate most about the business?
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