how bad can it get? Let me show you!

Question

Do you think it's appropriate to place a tenant whose primary source of income is from new memberships of a multi-level marketing company?  What if the tenant destroys the air conditioner, let's say with a hammer, and then demands that a new one be installed at someone else's expense. Is that fair?

Is it reasonable to cost $300 to change an electrical breaker, that I could do myself for $25?

Is it reasonable to spend $200 on lawyer fees trying to fight a tax bill you never asked to fight?

Seriously, this is an absolute joke.

If you have to invest in real estate (and at this point I would advise anyone not to) buy a house in a cul-de-sac in a subdivision in a good area with good people. Don't try to be fancy or smart or clever and try to take advantage of a minor imbalance between risk and reward.  Buy quality.

Stay away from all those neighborhoods that are not a B plus rating.  there is a risk associated with bad neighborhoods that cannot be quantified on an excel spreadsheet.

Steve Vaughan · Answer

Sounds like a crummy PM in a less than B area isn't the way to go.

I self managed until I got tired. Then values became too high and cap rates and ROE too low not to sell most. OK to grab a chair.
But I wouldn't be so down on RE itself. I'm looking at other things mostly now but RE will always be what got me off the wheel long ago.

Screen better, get a better PM and or self-manage.

Joel Case · Answer

Hey Pat, sorry you had a bad experience, and I am glad that you have found a release for your emotions, but we might be getting a bit spammy.

Mohammed Rahman · Answer

Hey @Patrick Britton - guessing you're speaking from experience? In that case sorry for how bad it's been for you.

Although what you've mentioned is valid, I respectfully disagree. Real estate, like any business, has it's ups & downs... as well as risky strategies vs. stable. The more risk you take, the higher the return you're entitled to if it goes right.

However, not everything will always go right. It could also be that your appetite for investing isn't paired well with real estate - you may want to consider REITs or even online platforms like Fundrise.

Mike Dymski · Answer

I have been a real estate investor for 15+ years and precise resident screening, excessive lawyer fees, and high maintenance costs have been insignificant to success.  That day to day stuff adds up but what really matters is buying right, location (organic appreciation), and adding value.

Karl B. · Answer

There are plenty of us on BP who self-manage in C-Class areas and do very well.

The problem isn't buying C-class - the problem is garbage property managers who look out for #1 and bleed owners dry.

Paul De Luca · Answer

If you invest long enough you're going to make mistakes sometimes. But making mistakes isn't a good reason to stop trying when you know the long term gains are worth it.

Blake B. · Answer

I respect your position. You have a more traditional outlook on ownership and management of residential/MF investments.

In my case, I have built separate businesses in the financial education/credit improvement world and to me, I have an obligation to at least create the space for a tenant who wants to pursue and obtain better financial footing to do so. In the long run, I believe it is a part of my purpose to positively affect humanity in this regard, above and beyond providing a safe and clean living space.

how bad can it get? Let me show you!

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