how bad can it get? Let me show you!
Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes
how bad can it get? Let me show you!
Most Popular Reply
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
3yQuote from @Patrick Britton:
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.
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.
11 Replies
- There are "professional" tenants across all populations - races, professions, income levels. I, and many people, have made plenty of money while controlling risk in C neighborhoods.
Owning property is not risk-free.
Your story is a good warning, reminder, but the advice is suspect. I appreciate the frustration and desire to "help" people avoid problems, but none of what you describe would preclude me from buying real estate. The long-term results are too great. - Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes3y
Quote from @Patrick Britton:
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.
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.
- Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes3y
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.
- Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes3y
Quote from @Patrick Britton:
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.
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.
In the world of commerce, it pays to be savvy and not only know your rights but have the ability to enforce them without the representation and expense of someone inadequately being a mouthpiece for you.
That said, with great risk comes great reward. RE is an evergreen way of building wealth, be it in a class D neighborhood or otherwise.
I believe in this new age, it is incumbent for landlords to step their level of service up and be a positive force in the community. For example, I point my tenants in the right direction as it pertains to improving their credit profile/scores, and in the direction of personal financial knowledge...the idea is for them to advance into ownership if they want, and beyond - not sucking them dry year after year with crappy, run-of-the-mill landlord/tenant relationships.
- Investor · NW Indiana · Member since 2015 · 103 posts · 99 votes3ySorry, but I respectfully disagree on the tenant education part. I do more then enough by making sure that my tenants have highly satisfying living conditions backed up by excellent customer service (I manage my properties). It's not my job, or a moral obligation, to educate them on improving their credit profile/ scores and their overall financial knowledge. Financial education takes time and most importantly - willingness of the student to learn and get engaged in it. It's not my place to put myself on that pedestal.
If they come to me and ask me how I've accomplish what I have - I would tell them my story in general, of course. But you should always keep in mind - your tenants are not your friends or family. - 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Aleksandar Popivoda:
Sorry, but I respectfully disagree on the tenant education part. I do more then enough by making sure that my tenants have highly satisfying living conditions backed up by excellent customer service (I manage my properties). It's not my job, or a moral obligation, to educate them on improving their credit profile/ scores and their overall financial knowledge. Financial education takes time and most importantly - willingness of the student to learn and get engaged in it. It's not my place to put myself on that pedestal.
If they come to me and ask me how I've accomplish what I have - I would tell them my story in general, of course. But you should always keep in mind - your tenants are not your friends or family.
best thing in that regard you can do is introduce them to NACA thats what they do. - Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes3y
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.
Quote from @Aleksandar Popivoda:
Sorry, but I respectfully disagree on the tenant education part. I do more then enough by making sure that my tenants have highly satisfying living conditions backed up by excellent customer service (I manage my properties). It's not my job, or a moral obligation, to educate them on improving their credit profile/ scores and their overall financial knowledge. Financial education takes time and most importantly - willingness of the student to learn and get engaged in it. It's not my place to put myself on that pedestal.
If they come to me and ask me how I've accomplish what I have - I would tell them my story in general, of course. But you should always keep in mind - your tenants are not your friends or family.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.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.