How much experience as a landlord do you need for credibility?

Question

Okay, I'm writing this post, because I just read a blog article on the BiggerPockets blog about turnkeys working from an investment perspective.  The problem is that the author has been investing for less than a year.   It strike me as absolutely insane to be claiming to write from a position of authority when you've been landlording for less than a year.   I mean, at that point you haven't even had a turnover, let alone multiple turnovers.  (Caveat, this not intended to be a bash on turnkeys.)

I repeatedly see this, people with 1-3 years of experience landlording claiming to have it all down.   But anyone can make money as a landlord the first few years, particularly when one starts with a shiny new rehab.  The vast majority of these people with 1-3 years experience on some SFRs have not in any way shape or form experienced the long term realities of landlording or capital expenditures.   (It's the, "You don't know what you don't know" principle.)  My experience is that it takes about 5-7 years before the shiny new rehab starts to wear off and you get to experience the real "fun" of long term buy and hold.

I've been landlording for about 8 years, and I feel like I have some basis too speak from a position of authority  (at least with regard to SFRs in my area), but even then I'm hesitant to be too cocky because the longer I do this, the more I learn.  I'm certain there are people who've been doing this 10 or 20 years (e.g. Brian Burke, Ben Leybovich, Brandon Turner) who know far more than me.

I should qualify that I don't think this is an absolute rule.  There are, of course, exceptions to any rule.

I guess at the end of the day, I'm curious to hear what others think.  At what point do you have enough experience as a landlord that you can speak with credibility about the business?

Ben Leybovich · Answer

This is a very dangerous time to be a real estate investor. It's an absolute amateur hour, which in and of itself doesn't bother me. We are at a stage in the cycle when this should indeed be happening.

I am, however, bothered by the notion that the amateur hour in the marketplace is mirrored by the same on BP blog. On the forums - 99% of advice is bad. I'm fine with that. This is an open forum, and bad advice defines any forum. It's not BP's job to pass judgement on every single post. Not that this would even be practical or indeed possible...

But the blog, in my understanding, is the one place that should be held to a higher standard. The blog should be there to give people much needed perspective, and with that -  a moment of pause. Perspective is function of time... That BP now allows amateurs with 1-3 years of experience to dish out "advice" on the BP blog is troubling indeed...

I happen to know Indy well enough. I know the housing being discussed in the article. I know the tenant class. What a disaster...

In short, everyone is entitled to an opinion. But, at some point logic has to enter the equation in that we must understand that Time is the central element of what we do. The black and white images get color over time. I would think that BP blog is the one place on BP which should be reserved for folks with time in the trenches - time is what makes for good advice!

Steve Vaughan · Answer

I guess the beauty of owning TK property is you can use the term landlord very loosely.  Yes, you own the property.  But you are only as good as the folks that rehabbed it and the folks that manage it.  DIY long-term landlords in the trenches everyday who know their people, know their property and have heard every excuse in the book probably feel like you do. Most of those types of articles are designed to help beginners I suppose. I don't read many of them, personally.  If they give a new person a tip or two - great.

People are funny.  One success story of someone's first property generated dozens and dozens of responses and stayed on trending discussions for days.  It was a TK many states away they maybe saw once or twice.  The next day the failure and crookedness of another TK co did the same.  Let the TKer's dabble in landlording like it's a hobby or something. I certainly wouldn't consider them an authority on landlording, or much of anything else.

I'd rather buy a mutual fund or other security than a TK. At least with securities the manager can't forget to shut off the water in the winter and your investment won't be flooded.

Adam Bartomeo · Answer

I think that there are a few points of view.

When I was going to university for business I made it a point to ask every business professor if they had experience in what they were teaching and what their field of study was. NOT one had any experience in business and one had a degree in engineering. But, they understood the concepts and could teach the concepts.

Every watch happy Gilmore? Tons of experience but he sucked.

Joe torre?Failed baseball player but great coach. Einstein? Inexperienced genius.

I was a manager by the time I was 18 and the push back I got from the older guys was amazing. Once they understood that I knew what I was talking about they allowed me to lead them.

I am not familiar with the article but I disagree with with lots of people that are more experienced then me. I worked for more experienced managers that were less then intelligent. If the article was accurate then take it for what it is worth, a chance to look into the validity of the article.

Scott Weaner · Answer

Adam Bartomeo I hope I fail as a landlord like Joe Torre "failed" as a ballplayer. 297 lifetime average, 17 year career!

Kevin Lantowsky · Answer

@John Chapman,  I understand your point and I agree that it does take some combination of time and volume to speak authoritatively.  This would be on just about anything in Real Estate, not just Turn Key.  Without some cycle of tenants, capital improvements, and maintenance the blogger is speaking of Theory and I feel should not be looked to as a "credible expert", but could still have valid points, ideas, or opinions.

Like a lot of things, blog posts need to be sifted through to find the gems that will assist each of us to move forward.

Ben Leybovich · Answer

Haha - figure of speech, Steve. But, the message holds...unfortunately. Doesn't matter, though. The concern is with the blog.

Matthew Paul · Answer

After owning rentals over 25 years , what I have learned is there is always more to learn . When I think I heard it all ,I havent .  When I ask myself what else could go wrong ?  Something does .

Michael Boyer · Answer

John,

It may depend some on scale, so a few years running a 100 units may be enough  of a landlord boot camp to offer some good insights, but I generally agree with your sentiment and time frame for the average small scale landlord.

One aspect that strikes me is the window of opportunity.. having thought some about this... There may be a limited time to offer informed commentary on landlording.

For example, it is hard to have  the capital or interest when too young and challenging to have the interest, energy and currency to comment when too old....

When I hit ten years of active, hands on landlording, I had all types of tenants, several types of properties and transactions, then I began to share, knowing in another ten years or so I might not have the energy to comment or even  be on the way out (be it selling, owner financing, or farming out management).

But there are lots of exceptions, of course, and about anyone with some experience can have good insights on a given topic as I have seen on BP.

John Chapman · Answer

Adam Bartomeo I agree that experience is not absolutely determinative or a substitute for competence, and I hope that is not what I was conveying in my original post.  I can think of many instances in my life when more "experienced" people knew less than me or had less expertise.  But that was generally due to a lack of competence on those people's parts.  In my original post, I guess I was assuming a sort of average core of competence for most people.  That is, I was talking about the point at which  the average person has enough experience to talk about landlording such that others can rely on his advice (or at least take it seriously).

There are many, many areas of life where you can accelerate your education and expertise. Someone who flips houses, for example, can flip a bunch of them real fast, learn a ton, and (if they don't go bust) come out with a ton of experience that makes them an expert.  Or, if they're really smart, they can tap into someone with a ton of experience.

If you're doing buy and hold by yourself, however, it takes most people years before they have a full appreciation for the business.  (Again, there's always exceptions to the rule, for example, highly intelligent, motivated people who tap the experience of others.)

As I write this, I'm thinking I was maybe less than artful in my original post in how I articulated the question.  At bottom, I was frustrated by a newbie investor with less than year's worth of data claiming that his experience shows that turnkey investing can be successful.   Maybe it's more a question of how much data do you need before you can claim success on a long term buy and hold.

How much experience as a landlord do you need for credibility?

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