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Author Topic: My rentals are making me crazy  (Read 28899 times)

Offline John_in_NC

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My rentals are making me crazy
« on: February 11, 2010, 07:28:55 pm »
And it's only been three years. I am a meaner, bitter person in a short amount of time. I drink a lot more too now. Ditto for my wife, who handles the Hispanic speaking tenants. And I'm starting to ask myself if it is worth it or not. I find myself doing things that are not as financially motivated as they are revengeful against the looser tenants. It's not that all of them are bad, but at any given time at least one of them is giving me an unnecessary grief.

Am I making money? Yes. Do I have a net worth more than I would have imagined three years ago, well I bought right so yes. Is this really worth continuing?? I am starting to think not. I actually have some bites on a couple of them that are not on the market yet.

Somebody try to give me some sanity here. Should I dump cash flowing rentals because I am not as thick skinned as I thought? Or is this a phase every low income landlord goes through?

Or I could sell and have a good chunk of change to play the RE game a little differently? What would be the right angle during this economic time?

Offline phlemboy

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Re: My rentals are making me crazy
« Reply #1 on: February 11, 2010, 07:42:47 pm »
I'm willing to guess that you have plenty of bad tenants.. which is to be expected with low income rentals.. These people are poor for a good reason.. Not all of them are bad but generally the "fleas come with the dog". Perhaps you can sell the properties and upgrade to a higher cl*** of rental/renters.. Then you can take better look at your screening process and see how you can improve.. If you don't have Propertymanager's book yet, GET IT.. It's packed with tons of useful information. This is certainly not worth the stress you're putting yourself under.. You're bound to "snap"... Get ahead of this now..
« Last Edit: February 11, 2010, 07:45:04 pm by phlemboy »
"Fat drunk and stupid is no way to go through life son." --Dean Wermer

Offline propertymanager

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Re: My rentals are making me crazy
« Reply #2 on: February 11, 2010, 09:16:34 pm »
John,

Everyone is different, so whether you should continue or not is a question that only YOU can answer.  However, I'll give you my observations as I am into my 7th year of business. 

I got into this business primarily because I wanted to set up some sort of retirement that I could count on (if anything can be counted on in the current environment).   To that end, I have been very successful.  I don't know of any other business I could have started that would have allowed me to build such a net worth in as short a period of time (and I have owned many businesses over the years).  My other goal was to be able to work a lot fewer hours than I had in the past.  I didn't want to be working 40 hour weeks forever.  To that end, I have also been quite successful, as I typically work 12-16 hours a week, and yet still have a nice monthly income from the cash flow and management/maintenance fees that I earn.

As for the negatives you mentioned - yet, tenants are a pain in the **s.  There's no doubt that I am quite cynical.  Going from being a normal middle/upper middle class person to being a landlord is a big shock.  As a "normal" middle/upper middle class person, where the majority of people you deal with are honest, hard working people - it's quite a shock to find out that 1/3 of our population is nothing but dishonest, lazy scum that will lie, cheat, and steal if given half a chance!  Unfortunately, that's the reality of our failing country and although ignorance is bliss, it's also quite enlightening to understand what the bottom 1/3 of our citizens are like.  This shock can't help but have an effect on any normal person and certainly can cause stress.

My experience is that this stress gets much better as time passes.  I have gotten to the point where I can easily separate the tenant's problems from my problems.  For example, I took most of today off, except for about 1/2 hour late this afternoon when I needed to go pick my wife up anyway (we've had a bunch of ice and snow and my wife doesn't like to drive on ice).  I like to backpack in the snow, so I decided to go to a nearby state park and hike this afternoon.  As I was packing up at about noon, a tenant called to report that she was locked out of her house.  My thought - too bad for her!!!  I told her that I was busy until about 4:30 and that I would be happy to meet her then to let her in.  I went backpacking as planned and met the tenant at 4:30, just before I picked my wife up.  If I'd been doing something else, I would have felt just as comfortable telling the tenant to call a locksmith.  Since I was going in town, I also scheduled an appointment to show a rental to an applicant at 4:40.  I met my wife on time at 5pm and that half-hour was my work day.  To me, being able to do what I want (for the most part) is very much worth dealing with the scumbags!!!!!!!  How many other people could get up on a week day and decide to go backpacking?  Not many!

Another thing I have done that has helped is to only do month-to-month leases.  In fact, I tell all the tenants (including Section 8) when they apply that I only do month-to-month so that I can kick them out if I don't like them!   

Finally, as I said, I've owned many businesses, including one where I had 50 employees.  I can tell you with absolutely certainty, that I'd much rather have a couple hundred tenants than 50 employees!  EMPLOYEES SUCK!  The point is that EVERY business has stress in one way or the other.  In my opinion, dealing with a few bad tenants is less stress than that of most other businesses.



   
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Offline allagash

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Re: My rentals are making me crazy
« Reply #3 on: February 12, 2010, 12:48:24 am »
John,

sounds like that DC snowstorm did you some good....

the Willard is a nice place for a drink....(used to work around the corner for Bowne).

look at it this way....you're in the Driver's seat....literally and figuratively.

as a pilot....navigate what's best for you and your wife.

-Mike




Offline tatertot

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Re: My rentals are making me crazy
« Reply #4 on: February 12, 2010, 12:56:53 am »
There are other things that you can do in real estate to make money. If you really can't stand the tenants, go into a different area of real estate.

My tenants are pretty decent people, because I screen like a rabid maniac.  I will confess, however, that I hate having vacancies because I have to be polite and take applications from so many sorry lying losers.

The truth is that I think most tenants are moderately decent people, but most tenants stay where they are. Only the deadbeats and losers keep getting kicked out, so they are all homeless on a yearly basis, making a lot of them seeking housing at any given time. They are the largest percentage of applicants, but they are not the largest percentage of renters.

I screen hard and I give my tenants notice to move out if they give me any grief. That cuts down on the stress of being a landlord.

For years, I tried to make the jump into commercial, and right now I am sure glad I never made it.  The commercial guys are really hurting in my town, with small businesses going bankrupt and vacant store fronts begging for tenants with no luck.

Offline fdjake

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Re: My rentals are making me crazy
« Reply #5 on: February 12, 2010, 05:22:02 am »
Your BUSINESS is TELLING you something......

The QUESTION is.........WILL YOU LISTEN?????

Propertymanager has what I consider to be the best mental outlook anyone can have in the residential rental business....

He consistantly mentions that he works just 12-16 hours/week....I believe him 100%.....What Mike is going is actually very smart.....He has to deal with idiots constantly....BUT....Mentally he REMINDS himself he ONLY works 12 hours/ week!!  It's a great strategy.  When you look at it like that......

IT'S   M A N A G A B L E!!!!!   

BUT.....unlike YOU...That's all Mike does!!!  BIG DIFFERENCE!

The PROBLEM you have is you're working a LOT more than Mike and the STRESS is starting to get to you.....Flying for a living can be a VERY stressful job, add in the losers you deal with for your rental business, the long distance phone calls from your wife about the latest DOPE....
And honestly.....I'm surprised you lasted THIS LONG!!   And here's what you need to come to terms with....

THE BULLSH*T is NEVER GOING TO END!!!!

So...............You have a few CHOICES here...

One you SELL your rentals like I did YEARS ago and just BUY & SELL homes....The market we are currently in is THE BEST I have ever seen for this.....INVESTORS are CRAWLING all over the place, they HATE dealing with the BANKS on FORECLOSURES so what I do is MARKET to OLDER people (with LOTS of EQUITY) buy their old run down homes and put them on the MLS for 30 days....Highest/best offer....I put in the AD that the property is NOT BANK OWNED.....NO BANKS INVOLVED.....Bring your HIGHEST/BEST offer by 3/11/2010 at 5pm and WE'RE SELLING IT!!

Have YET to see ONE of these properties sell for ASKING..ALL OVER ASKING with MULTIPLE offers...I UNDER PRICE all of them, it creates a sense of URGENCY on the buyers side..... I just CLEAN then out (using a banks clean out contractor) and sell them AS IS....

In few cases where the homes were is excellent condition....I've been the bank for the buyer.....I require a FAT down payment....Which surprisingly people have no problem producing now that their allowed to raid their retirement accounts for home purchases....and from that point "I" become the bank....NO PHONE CALLS, NO TAXES, NO MAINTANANCE, NO PROBLEMS.....

My flipping profits allow me to bankroll a few select properties that return HUGE numbers with almost NO EFFORT on my part. 

I dealt with low lifes for years in this business......WHY DO THAT TO YOURSELF???   I made PEANUTS doing it......BUYING & SELLING houses has put HUNDREDS of THOUSANDS in my POCKET already in 2010.
I LOVE THE BUSINESS......You're in and out.....YOU RUN the show.....and even the marketing is a blast because it's so creative.  NO BANDIT SIGNS, NO REALTORS FINDING ME DEALS.....I use PEOPLE....PEOPLE that come into contact with OLD PEOPLE......They send me a lead.....If I buy that house????  They get $5000!!!

Want to see a MOTIVATED HUMAN BEING?????

Put $5000 in CASH in their hand because they gave you a PHONE NUMBER and you'll see the worlds most MOTIVATED HOME FINDER EVER!!!!  If I can make $80K on a house they found me.....Why not give them $5K????   I've had these people burst into TEARS when I counted that money out to them....

And make sure you ALWAYS count that money out to them.....It's like a HUGE GAME......The hundreds just keep coming....

OH.......and be SURE to do it in front of their FAMILY!!!!   If there's 6 of them there.....YOU JUST RECRUITED 6 MORE SETS OF EYEBALLS!!!!
I usually call and ask if I can come over on a SUNDAY around 2pm....There's almost always an AUDIENCE!!!

Want different results????

DO SOMETHING DIFFERENT!!!

« Last Edit: February 12, 2010, 05:39:45 am by fdjake »

Offline rookieNYC

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Re: My rentals are making me crazy
« Reply #6 on: February 12, 2010, 06:11:05 am »
John,
Do as we spoke about..Better than chasing those tenants around..



« Last Edit: February 15, 2010, 12:55:50 pm by rookieNYC »

Offline John_in_NC

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Re: My rentals are making me crazy
« Reply #7 on: February 12, 2010, 06:00:09 pm »
Wow a lot of great info from some smart people here.

FDJake, I am leaning on doing something similar to what you do right now. I think this is my most likely next step. The only concern I have at the moment, is that according to the public transfer records, it is VERY rare I see somebody in my county at around 50% to market value. Most of them have been REO's in bad shape and I bought a handful of those as rentals. I think realistically I could buy one or two of these a year and make some money, but I can't imagine doing the volume you are speaking of. I can count on one had transfers in my county that have made me jealous. These are public record transfers I am speaking of, not just mls sells. Maybe raleigh is too good of a market for this approach? Only one way to find out. Thanks again for the advice. I would love to try and build a block commercial four unit building like you have in the past. If I can find a lot reasonable enough, I think that would work here in Raleigh. Finding one of these under 100K will be a real challenge though. Would you mess with an underdeveloped lot that needs to be cleared? Or maybe buy a residential zoned in an area that is begging to be rezoned? This is something very outside my past experience, and that alone will be a huge challenge.


Rookie, I'm not sure that I would have enough capital to lend to do it with the "loan to own" business. How much money realistically to start a business like this would I need? I like the passive style you have, I'm just not sure that I could do this yet?
 

Allagash (mike) I don't know DC too well and rarely overnight there. The snowstorm was a freak incident and I was confined to crystal city. About the only time I go to DC is to attend a tea party, and with the sarah palin incident, I'm not too sure I want to be associated with that party anymore. But i will be sure to check out the willard. Where is it?
We hung out at KING STREET BLUES and Bailey's last weekend, only becuase they were the only places crazy enough to open that we could walk to. I'm in Charlotte right now and it is snowing again. I think it's following me.

Tatertot, if I screen any harder, my vacancy rate will soar.

Phelmboy, I really wish I could rent to a higher class. Maybe college kids. I understand them MUCH better than my current tenants. Unfortunately, the margin is not there for me. Real estate near NC state carries a premium even now, a premium the rents do not hold up to.

I hate to sound negative with everyone, but before i change paths, I have to look at worse case scenarios. I really like Petes way (fdjakes) but I'm afraid I won't be able to unload them, and god forbid I have to rent a nice flip. That would be a nightmare.



« Last Edit: February 12, 2010, 06:11:01 pm by John_in_NC »

Offline John_in_NC

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Re: My rentals are making me crazy
« Reply #8 on: February 12, 2010, 06:31:00 pm »
And Propertymanager,

I just don't think I can handle it much longer.In the past month, we have had to file two evictions, one moved out just before the lockout, the other actually paid all the court costs so we canceled it, or better put , postponed the eviction until next months excuses start to pile on. Also, we might be getting sued. We didn't follow state laws as closely as we should have, and thought the apartment appeared abandoned,  and it looked like it was, she came back for something and realized we threw out all the trash. She didn't pay rent and changed her number, so I made a judgment call. Turns out she was "gonna pay rent this month" even thought she moved out(yeah right), and we threw away a lot of "priceless belongings" along with some expensive medicine THAT SHE SAYS her mom needs to survive. Drama Drama, now we are getting voicemails from a legal firm.

I could go on about the good tenants that had their window broken out a few days ago and are moving becuase they feel unsafe, and that their family members rent another apartment int hat same building that will probably follow. I could go on about the deadbeat in another apartment that refused to pay last months rent and told me to keep the deposit so he didn't "get screwed" by damages. He was nice enough to give me permission to "do what you got to do" because he already knows evictions take 30 days anyways.  I could tell you about the drug dealers I evicted back in october whose cars left behind I crushed as scrap that are making death threats via text messages now that they are out of jail, I could tell you about the roach infestion at our own house because I didn't go directly to the dump that day with the broken stove, the social worker who calls us at dawn to make threats, the city of raleigh trying to charge me with deadbeats unpaid waterbills, the city of raleigh "striking" me because a past tenant was finally convicted of stolen property that was on my property when discovered, but you've been there done that. How do you keep going? It's to the point where it's more of a game of cat and mouse, instead of making money. And i'm getting sick of it. And yes, I blame our federal government the most. These deadbeats SHOULD BE HOMELESS, they SHOULD BE STARVING on the streets, They SHOULD have to choose between working for a living and dieing. Sorry but the world isn't a perfect utopia, and idiots should be punished.
« Last Edit: February 12, 2010, 06:41:45 pm by John_in_NC »

Offline rookieNYC

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Re: My rentals are making me crazy
« Reply #9 on: February 12, 2010, 07:19:51 pm »
John NC,
..Worth a read...
« Last Edit: February 15, 2010, 01:01:38 pm by rookieNYC »

Offline propertymanager

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Re: My rentals are making me crazy
« Reply #10 on: February 13, 2010, 08:11:34 pm »
John,

I agree with the others - it's not worth getting all stressed out.  Being a landlord isn't for everyone.  You've got to be a genuine horse's **S and have skin certified to be 1 inch thick to thrive in this business.  I am and I do!  As FDJake said, in addition to the rentals - you've also got a full-time job.  That's a lot on your plate.  I don't have all that.

Quote
How do you keep going?
 

I only work 12-16 hours a week!  So, my reward for dealing with the scum is that I work 16 hours a week and get 152 hours off!!!

Quote
And yes, I blame our federal government the most. These deadbeats SHOULD BE HOMELESS, they SHOULD BE STARVING on the streets, They SHOULD have to choose between working for a living and dieing. Sorry but the world isn't a perfect utopia, and idiots should be punished.

This scum is going to be punished - punished more than they can imagine and it's going to be happening very soon.  With unfunded liabilities of more than 100 TRILLION DOLLARS and deficits of more than $1 Trillion dollars per year as far as the eye can see, the game is up.  When the economy collapses, all the entitlements will stop and I would expect that these people will pay a TREMENDOUS PRICE!  The most pampered and selfish generation in history is about to learn the mother of all lessons!
www.1MinuteToRentalPropertyRichs.com 
This No-Hype, No-Nonsense Book is a step by step course in making money and building wealth with rental properties!  Everything from buying properties at a discount to dealing with terrible tenants.  Now In Paperback!

Offline justin0419

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Re: My rentals are making me crazy
« Reply #11 on: February 13, 2010, 11:59:23 pm »
John,
As our business is growing, we're seeing a few more tenant problems but nothing like you have.  I definitely feel you WRT having a full time job and doing this too.  It's very busy...more so than most people realize.  I hope to one day work very few hours like Mike is, but for now this is definitely an extra job.  Sounds like we've both been doing this for about the same amount of time.  I hope you're able to figure out what works best for you and your family.
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Offline REIER

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Re: My rentals are making me crazy
« Reply #12 on: February 14, 2010, 02:04:13 pm »
John,

I was somewhat in the same situation you where in but the only difference is, I didn't have to deal with the kind of stupidity you are dealing with. Sounds like you have properties in the warzone or borderline.

Personaly, I'd get rid of them the money is just not worth it UNLESS there is some major upside on those properties that made it worth holding on to. Things like..

- Is the neighborhood going to improving to the point of you attracting a higher quality of tenant? Is it convenient to get to major employers?

-Is the town going thru some sort of rehabilitation where there is growth of businesses and jobs?

- Do you see homeowners buying homes, improving them and living in the immediate area?

If the answer is no to all those questions, I'd dump them because you'll have more of the same issues in the future.

Now, just because you get a higher quality tenenat dosen't mean you won't have to deal with dumb people. The issues never go away, they just don't get as bad as what you're dealing with. From my experience the better tenants are the ones who consider your place their home and not just a rental. If they consider it "their home" they will be more careful (not always) and will stay longer not bugging you as much becasue they want to live there and not piss you off. Most of the calls will be about major things breaking such as water heaters, boilers etc. So make sure the place has newer mechanicals.

I am down to 1 rental and I can deal with it because it has all the upsides I just mentioned above. If I HAVE to hold anymore, it needs to have some major upside that will make it well worth it for me to put up with BS. Otherwise, flipping is my deal.

Also, I'm going to be venturing into owner financing just like fdjake and rookie talk about.

Offline fdjake

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Re: My rentals are making me crazy
« Reply #13 on: February 14, 2010, 03:14:06 pm »
John,

Give me some more info on your situation and maybe I can shed some light on what I do so you can then decide if it would be worth your while to try my methods.

The first question is.....

HOW MUCH ARE YOU ACTUALLY MAKING PER YEAR with your rentals TOTAL NET.....Make sure you back out the mortgage payments, taxes, insurance, maintenance, ect....

WHAT DO YOU PUT IN YOUR POCKET AT THE END OF A TYPICAL YEAR and HOW MANY UNITS DO YOU MANAGE???

The reason I ask is simple....

You may be 100% correct in your market assessment, and you CAN'T do VOLUME in your area....BUT........Volume is MEANINGLESS.....PROFIT is all that matters...If you run the numbers you may find that doing just 2 rehab/flips per year makes you MORE MONEY with 1/100th of the aggrevation.  YOU are in total control of the process...From the buying end, to the rehab, to the marketing and sale......If you don't want to deal with some idiot.....YOU DON'T!!!  I've had real jerks show up to my open houses and run their mouths about this or that....I listen to it for about 5 minutes then say....."Listen, I'll make this easy for you.....This house isn't for you.  You need a $500,000 CUSTOM BUILT HOME!  This is a $250,000 REHABBED HOME....So go down to the local bank and see if they'll lend you about $500,000...Then BUILD WHAT YOU WANT!  BYE, BYE...Thanks for coming!"  (then the door slams on their way out of MY HOUSE!)  I LOVE DOING THAT!!

Until we know what you put in your pocket from your rentals it's all just speculation.  And until YOU KNOW what alternatives are out there based on what other people are doing....You won't really know.



« Last Edit: February 14, 2010, 03:25:08 pm by fdjake »

Offline John_in_NC

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Re: My rentals are making me crazy
« Reply #14 on: February 14, 2010, 09:03:01 pm »
Jake, I'm still working on my income/expense reports from 2009. When I'm done I will give you those numbers. I can tell you that my gross rents are 7200 and my payments are 3200 per month. 2200 dollars in mortgage payments and 1100 in lot rent for the mobile homes. Expenses are all over the place each month. I was getting around 8000K a month gross but rent's have had to come down here from the downturn. Oh and I have 14 units now.

What I put in my pocket isn't that much. I'm really leaning towards trying to flip a home or two, but I am very skeptical on finding a real steal that would sell after rehab.






 




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