When I first started buying real estate, I made a conscious decision to avoid rentals because I had no interest in owning. Like you, I’ve heard all the nightmare tenant horror stories, late-night plumbing problems, lead paint issues, and evictions. I wasn’t interested in spending a lot of time and effort evaluating tenants, dealing with vacancies and repairs, and going to court.
In fact, the first book I bought on real estate was Lonnie Scruggs’ Deals On Wheels, a brilliant treatment of mobile home investing, and a more dedicated “anti-landlord” than Lonnie has ever been born. The entire concept of mobile home buying and selling, developed by Lonnie, evolved as a response to his “tired homeowner” syndrome.
After reading Lonnie’s book and others like it, my mind was more determined than ever: I would never buy a rental property. I would never have a tenant. I would NEVER, EVER be a landlord.
My how times change. Based on the knowledge I’ve accumulated over the past few years as a real estate investor and conversations with hundreds of experienced investors, I now know that it’s not what you do, but how you do it, that determines the level of frustration you experience. with ANY type of investment, rental or otherwise.
In short, it is the position you choose.
Choose a position of strength
You can be an owner if you want. I choose to be an investor.
Owners do many things that investors don’t unless they choose to. Let’s compare:
Owners put up “For Rent” signs, place advertisements in newspapers, and organize open houses and exhibits. Landlords deal face to face with tenants, screen them and do background checks. Landlords tell tenants they are approved (or not), explain the rules to tenants, and sign leases with them. Owners collect deposits and rent.
Investors hire professional property managers.
The owners answer the phone calls of the tenants when there are problems, no matter what time it is. Landlords tell tenants their rent is late, assess late fees, and enforce the rules. Homeowners apologize to neighbors for unruly tenants, mow the lawn, and shovel snow. Owners fix leaky appliances and bathrooms.
Investors hire professional property managers.
The owners apologize to the tenants for the problems, fill the vacancies, and inform the tenants that they will not get their deposit back due to the damage caused. Landlords evict tenants and go to court with them. The owners do many, many other things that I don’t want to do.
What about investors? Let’s see.
Investors hire a professional property manager to take care of all the things that homeowners do themselves. Which is easier, more cost-effective, and a more efficient use of your limited time? If he answered, “Hire a professional property manager,” he’s right!
A quality property manager is worth every dollar you pay them. They will make sure that your units are rented to the right tenants, that the property is well-cared for, and that the tenants are happy. They will fill vacancies and answer trouble calls. They will deal with repairs and evictions. They will handle bookkeeping, rent collection, and assessment of late fees. They will form a buffer between you and the headaches of managing a rental property. They are experts in all these things, and much more.
You will receive a check at the end of each month.
Get the image?
It seems so simple, right? Why do some investors, including me, take so long to see the difference?
Change the way you see yourself
It’s all in how you see yourself. When you see yourself as a landlord, you don’t recognize that your time is better spent doing what puts money in your bank account—finding and purchasing properties that meet your investment criteria. Unless you’re a plumber by trade, professional property manager, or landscaper, wouldn’t your time be better spent doing what you’ve learned to do so well: investing in real estate?
Does that mean if property management is something you love to do, something you aspire to, you shouldn’t be doing it? Of course, no. If you’re passionate about managing your own properties and like the idea of ownership (with all that that entails), go for it. I’m not trying to change what you love, I want you to see that you have a choice.
Maybe you are like me. I had to teach myself to think differently about who I am to think like an investor, not a landlord. When you start to think like an investor, you start to approach real estate as a business rather than a hobby. You realize that you don’t have to do everything yourself to save money. You come to understand that doing everything yourself will probably cost you money, maybe a ton of money.
To repeat, the two keys are:
1. Learn to see yourself as an investor.
2. Learn to think like an investor.
Are your strengths really in the areas of real estate that I mentioned above? If so, fine. Keep doing what you’re doing. But if, as I imagine, you’re better prepared to find deals and get them to the closing table, then hire a professional to manage the properties you decide to keep and rent. Play to your strengths – you’ll multiply your time and your business will grow like a thoroughbred racehorse bolting out the gate.
Now go make more offers!