This week in long distance real estate investing we learned a few things. We learned that if people think you have big money they will try to get it out of you. We learned that tenants will try to make you pay for things they are responsible for maintaining. We learned the necessity of mentor-ship and that its very hard to get people to do work after you give them money.
I almost quit
Every week in long distance real estate investing is a learning experience. At one point in time I even thought about calling it quits. Sometimes when you deal with low income individuals you deal with helpless individuals. These are people who throw their hands up at life’s problems instead of bowling through them. For some reason these tenants think its our job to maintain THEIR home and its their job to live there and send a few bucks for rent. NO. That isn’t how this works. This is a mutual gig.
Before you get offended let me give you an example. We had a tenant who had ants in her basement. She called and told us that there were ants and that if she bought spray to handle the ants that she would want to be reimbursed for the spray. Landlords have a basic responsibility to keep their space free of insects. That is not the responsibility of the other. We ultimately paid $140 to have the bug company come out and spray the basement and the house. This was part of the $200 a month that we budget for these items and please believer there is an issue per month.
The upside to this story is that happy tenants pay rent early. This tenant usually pays rent on the last day of the grace period. This month she got it in early. There is a give and take on the landlord front where tenants give if they feel as though they aren’t being taken advantage of. Tenants don’t tell you this but if they know or suspect that you are the owner they begin to resent you. They are scraping by to barely make ends meet only to give it to someone else. I believe this is in part what drives the continuous calls regarding repairs and fake issues. Which brings me to my next issue, don’t act like a baller.
Don’t let people think you are a baller
One downside of investing long distance is EVERYTHING and I mean EVERYTHING costs money. If we weren’t operating at such wide margins it might not make sense to invest from a distance. It costs money to have someone host an open house, it costs money to have someone view a property, it costs money to have someone inspect after we have the property rehabbed. Things that would be free if we were closest cost us $100 a pop.
The solution to this is to not let people think you have the money to pay them. It can be tempting to walk around like big bad landlord. It can be tempting to talk as if you are this huge fund with unlimited resources. Even if I feel like we are that, I have to make it known that we don’t have it like that bro. If not, they will quote you things that start at $500. These folks must think they are surgeons for the prices they want to charge for labor. This guy wanted to charge me $200 to clean out some gutters. Some gutters bro?
What I do now is I give them the price I am willing to pay. I don’t request bids. This might seem backwards but if you don’t they will get attached to their number. Don’t let them. A lot of times these folks don’t even do the work, they sub contract it to another dude and then skim off the top. Investing out of state can leave you open to getting hustled. Which leads me to the last and final lesson of the week. You don’t have to fix everything.
You don’t have to fix everything
Tenants who grow to resent you send you long lists of demands for things they want repaired. If its not a health or safety issue, don’t worry about it. They will call you a slum lord, they will call you a jerk, they will tell you what you are supposed to do, ignore them.
Landlords are supposed to ensure that the house is safe and habitable. There can’t be rain coming through the roof, the furnace should work, etc. But for some reason these tenants have an issue every month. It was getting so bad that I was wondering if it was even profitable to do it. The key to keeping it profitable is knowing when to stick to your guns and tell them what you aren’t going to do. They might feel entitled to it for free but again, is it health and safety related? Everything else is cosmetic.
A lot of people think that as a long distance investor you have to do everything by yourself but what I did was I found a mentor. I give this guy a call on the way to work, explain to him what is going on and he usually has helpful advice on how to navigate the world of investing and how to navigate the world of investing in that market. You need good people. Get good people and they will lead you the way that you need to go.
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Be great and invest well!