how do you deal with things outside your scope...

Rehabbing, Fix and Flip, Rental Properties
1

i have seen a lot of folks on REI having extensive knowledge and experience in real-estate investing. last year or so i have religiously followed this site and was able to buy my first rental property.
i spent lotta time to make sure the transaction went thru smoothly, fixed the place up, got the right tenants, etc etc., these were the things i had control over
it felt gr8 when i saw my cashflow on the first month.

but what about the things you do not have control over. how do you manage that. …i am just talking about contingency and exit strategy and not prevention. doesn’t every business have a contingency and exit strategy.

the biggest worry for me is the neighborhood. recently someone got shot on the other side of the town and i just can’t stop thinking about it. what i fear is impact it might have on the property prices, rentals etc etc.
i like to have some sort of contingency and exit strategy if the neighborhood does go south. so what kinda strategies do you have so you can sleep at night not worrying about this.

i am involved in the all the possible neighborhood activities, working with the city mayor etc etc. but those are all preventive strategies.
i wrote down what my contingencies but it never had a good convincing idea…maybe i am a control freak but would love to know how you guys do this with so many rental units in hand.

2

bostonvibe,

You are already in good control, having done a good transaction and getting a good tenant. Pat yourself on your back.

Alright, sometimes it feels good to sit and think about the worst that could happen. Then you’ll know what to do.

So let’s say your building has a fire. You have insurance, and $500K liability insurance too. You call your insurance agent and file a claim.

There is a killing right outside, or even in your unit. Your present tenant may move out (if he’s not already dead). You will clean the unit. You will maybe lower the rent a little and get a new tenant. People have short memories of disasters. Life and death happen.

Your neighborhood starts going to hell with gangs, graffitti, drugs and trash. You sigh, then re-read Property Manager Mike Rossi’s book on how to deal with those kind of tenants and still make money. You become active in cleaning up the neighborhood. You decide to trade your units for some in another area as soon as you can. You visit with your real estate broker on how to do that.

See, that wasn’t so bad was it?
In five years of renting out houses here we have had two deaths in our units, one a suicide by overdose. The police took care of everything. We cleaned, moved the furniture around, re-rented.

We have had to hospitalize a tenant in the psych ward for acute alcohol intoxication and craziness. Just get 'em to ER or call an ambulance.

We have had several break-ins and thefts. We got rid of 1 property, and put monitored alarm systems in several others. We installed better lighting and wire mesh on some back porch door windows.

We had a neighbor’s giant tree fall on a house. We patched the roof and paid several hundred dollars to get the tree cut up and removed. We made rustic lawn furniture out of some of the wood.

Lastly, we had to call the police in for a SWAT action to remove a tenant who beat up his girlfriend. We found her walking down the road and took her to ER. Turned out, the tenant had just been released from Oklahoma State Prison after doing 15 years for manslaughter!

The only constant in life is change. Stuff will happen. Expect it, roll with the punches. Then have a beer, or go to the movies. (I recommend “Pelham 123”–great acting by Travolta and Denzel Washington. THEIR problems will make yours seem small!).

Furnishedowner

3

thanks furnishedowner …
that was really heplful. wow i just didnt know you had to go thru so many things. just wow!

thanks i am relieved now. I guess it is part of life. Also i was being little paranoid about this [first time i guess]. thanks for your comments…

4

The reason we have had a number of incidents is because we have had literally hundreds of tenants through our units in 5 years. Many stayed just 1 or 2 months, so way more turnover than most landlords have.

You will probably be bored with the dull lifestyles of your tenants. Boston has a reputation for being very proper and Bostonian!

Furnishedowner