As a real estate investor, what is the most painful or frustrating component of your business?
Should read: 'what ‘was’ the most painful…"
Not having a series of systems, measures, and protocols to create and maintain a smooth operation.
What protocols are necessary regarding the following management challenges?
What to do when tenant does not pay on time.
What to do if the tenant’s deposit won’t cover the cost of repairs.
What to do if repairs are not caused by tenant negligence.
How to determine between negligence and normal wear and tear.
What must happen before eviction proceedings are initiated.
How to manage difficult personalities in a professional and profitable manner.
What to do if tenant is repeatedly disturbing the peace, short of calling the police.
How to fill out applications so that you get honest, reliable, verifiable information.
How to determine if the asking rents are below, above, or at market value.
And the list goes on.
So, not having a routine in place to cover everything involved with real estate …marketing, pitching offers, follow up, negotiations, …???
Javipa, very good advice.
I call this failing to “Plan your work…and Work your Plan.”
Oftern say “Lack of preparation on your part does not create an emergency on mine.”
The most painful and frustrating for me is the feeling of failure :banghead
This is great feedback, thank you.
Now that you have more of this knowledge and experience, what part of this do you dread most and why? I.e. filing papers to evict a tenant, taking pictures and uploading them, advertising for potential buyers etc.
I know what you mean! This can be a tough one.
No, all those things are now routinely handled by my trained managers.
I guess the only dread I have is if my managers didn’t follow my procedures and cost me money.
Frankly, this can happen from time to time. And so I’ve got a protocol to follow even when ‘that’ happens.
Today, it’s rare for me to be caught with my pants down, as it were. I don’t really have any legitimate ‘dreads.’
For those that have too many ‘dreads,’ it may be that they’re in the wrong business; or failed to educate themselves on better practices; or just don’t like working with people.
Real estate investing/managing is a people business for starters, if it’s not a marketing and sales business. We’re always marketing and selling ‘something’ in our businesses, whether it’s ourselves, or our properties, or both.
I think the people that have the worst problems in this business are the ones that treat their ‘businesses’ like hobbies; and/or treat their customers unprofessionally (like children they can abuse).
You can spot the abusers. They’re in court all the time with evictions.
If you want to check to see if your landlord is an incompetent nightmare, just check the court records for evictions, and sift for the name of your landlord.
Count the number of cases he’s filed. It makes no difference what the judgment was. Evictions are the result of poor management.
It is assumed that tenants are selfish, advantage-taking, landlord-hating, consumers.
So, it’s a matter of recognizing that as fact, and overcoming it with competent, professional management.
There’s all sorts of reasons for incompetent management:
- Becoming too personal with the tenant.
There’s friendly, and then there’s becoming “friends.” The “becoming friends” things will kill you.
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Failure to require that the tenant have something to lose if/when the tenant is tempted to screw us out of rent/deposits, or whatever.
-
Immediately short-cutting to legal action, instead of negotiating a settlement.
All of which is only necessary when either No. 1 or No. 2 are factors.
It’s amazing how the ‘once-a-friend’ tenant changes into the devil incarnate when the friendship doesn’t pay off as expected.
Meantime, regardless if we’ve violated principles 1 and 2, if the tenant can’t pay, and he’s got nothing to lose for not paying, then we need to provide something for him to lose for failing to act.
Offering a tenant moving money usually works, especially if the offer is framed against ‘not’ accepting the moving money.
Meantime, the renter thinks he’s won, but in reality, we’ve mitigated our own management incompetence, by enticing a deadbeat out of our property without going to court …and subsequently damaging our own professional reputations with evictions cases to back it up.
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The first apartment I ever rented was owned and personally managed by one of these knuckleheads.
Their policies and decisions were inconsistent and would change on a dime; their conduct unprofessional; they wanted to be “friends;” and I wasn’t willing to recognize these as red flags…despite my family’s years of experience managing property and people.
Hey, being friends with the landlord seemed like a smart idea…!
However, this all turned into a nightmare for me, because anything that went wrong (because of the landlord’s unwillingness to do anything but shoot from the hip), turned into something personal.
In this case, if I had bothered to check the county recorders office for this guy’s name, after my first unprofessional experience with him, but before I moved into his building, I would have discovered over FIFTY lawsuits filed over the previous seven years.
That’s a little more than 1 lawsuit filed every two months, for seven years straight…!
You can imagine what a sucker I felt like when I discovered this little detail.
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[quote author=Aveya link=topic=54671.msg268091#msg268091 date=1384095684]
So true! Even managing groups of people at work (beyond managing tenants), these same rules apply. So many managers try to buddy up to the employees or lord their power over them, and each is detrimental to the overall success.
Thanks for sharing your thoughts. :biggrin
What frustrates me most is losing bids to uneducated (at the very least) buyers. I’ve followed several of the properties I’ve bid on and lost in the past few years and I still can’t figure how any of them made any money. One of the worst examples was a brand new shell (outer walls, windows, roof, floor and studs only) of a townhouse that had been torn down and built after a fire. It still lacked any plumbing, electric, HVAC, or interior of any kind other than studs. It was sold for $135K in a townhouse development where “move in condition” townhomes were readily available for $189K. I estimated at least $30K of just materials, not including labor, to get it habitable. It took almost 2 years after the sale for the property to be finished and sold for $199K to current owners when complete. I don’t see how the investor could have made any money since I know he hired out all the labor. I still believe in the rule of thumb for REI, “You make your money when you buy”.
What has been frustrating me recently is finding good service partners. I tried a printing company recently to do my mailings. The project took 6 weeks instead of 2. I had to constantly follow up with the printer. Every time they were supposed to send me something, they never sent it on time. I would call and it would have “just got done”. I must have the world’s best timing.
Next, I have been working with an SEO firm on my PPC campaign for my site. The results have been disastrous and expensive. The idea behind hiring the firm was to get experts to do the job so I would not have to become an expert myself. Well, I still had to do tons of research and work on my site, and then tell the SEO firm what keywords to use and what copy to put in the ads. It was a grand waste of thousands of dollars.
Good help truly is hard to find.