How not to do buy and hold investing

[Gail W.]

     This is a story of how to not stay in this business long. I have been investing in residential real estate for just three years and I have one property where I have done it all wrong. I am writing this as a warning to new investors, and to point out how easy it is to make these mistakes.

     In one of my properties in a very small town where I have lived for 40 years I made the decision to rent to the daughter of a man who has been a friend for almost all of 40 years. She was struggling with a divorce and needed a place back in her hometown. I have known her since she was a child and felt obligated to help. She keeps the place very nice and takes care of most of the maintenance herself, (I did have to go fix the furnace once.) She has been there for 15 months at this point. One time around 6 months in she was late on rent. I sent her a text and she paid right away. November comes and no rent, so I text her. No response so I call, no answer. Things got busy and I just figured she would catch up to me. December no rent, so I sent a letter giving her 5 days to pay. This put us close to Christmas so I let it go. On December 30 I sent a pay or quit notice. All along I was sure if I just called her Dad he would take care of this, but I reasoned this was between me and her. After hearing nothing I finally sent an eviction notice, certified mail return receipt requested. Before I got the receipt back her Father was at my door, he had a check in his hand and was cussing me out as he delivered it, because I had not called him. After trying to explain my thinking, and failing, I invited him to hit the road.

     At each step I knew I was not following my own policies, but I was rationalizing. Here is a list:                                              1. I rented to a friends daughter with no background check because I felt sorry for her.

     2. I didn't send a late notice the first time she was late, and in November, to keep things on a professional footing.

     3. I let things slide thinking she would do the right thing.

     4. All along the way I did not treat this as a business relationship, or set expectations of what I needed from her.