I really buy into the whole building wealth through real estate philosophy, but I am not sure I have the personality to be a landlord. I worry about everything, the biggest being liability and being sued for some reason. I tend to think the worst, thus cause myself to second guess most of my decisions. Any advice for getting through this mental roadblock when it comes to real estate investing? Should I give up on the whole rental house thing? Go flipping or notes route?
I worked my entire professional life as a software engineer and I stuck with it even though it wasn't my passion because the job paid well and let me be part-time from home and because I was too risk averse. Now for the first time, I love my job-- I love being a landlord. The risk of being sued is always present (even as a home owner) but it can be mitigated by insurance, planning, and defensible business practices.
When you own your own business, you find out what you really value because you get to decide how you spend your time and money.
I truly enjoy building financial security for my family while providing GREAT service to a market where even average service is hard to find. The fact that we actually respect our tenants sets us apart from many others operating in the affordable housing space.
Your values rather than personality will play a bigger role in determining whether self managing properties is a good fit for you. Being a landlord isn't the right path for everyone and as others have pointed out, there are lots of ways to make money in real estate. But if self-managing buy-and-holds is the right path for you then don't let your fears stop you from realizing a dream. You might want to google risk and cognitive errors-- most people really suck at assessing risk.
@Scott H. Have you considered buying a long-term in a 55 plus area? I have multiple properties in 55 plus with very good long-term tenants. Not all want to own and they tend to be solid, reliable and stay for years!
The tenants tend to be easy on the property with minimal wear and tear.
if your not able to throw a pregnant mother out on the street on Christmas Eve night then don’t be a landlord . Timidity is not a great trait for landlords to have
Hi Scott, I can see by the responses you've posted that you are definitely interested in owning properties. I think that it will be a lot less scary when you actually started investing and owning more properties, you're 55+ home will probably represent more of what you'll actually see. You will also have attorneys available and lessons to learn if sued. Good luck!
@Jill F.hey Jill..I appreciate your vigor...I finished my first rental and looking for more so reading your enthusiasm makes me fee better about my goals...thanks
if your not able to throw a pregnant mother out on the street on Christmas Eve night then don’t be a landlord . Timidity is not a great trait for landlords to have
Dennis, your posts never fail to crack me up. Here's the thing that really surprised me about evictions...by time I file for eviction, I CAN'T WAIT to get rid of that tenant. I know that I have made every effort to work with this person and they are simply not willing to be reasonable. Whatever day it is just GTFO. I agree entirely that timidity is a trait that would make self-managing difficult if not impossible. A penchant for plain, direct communication has been a huge asset for me in this business.
Originally posted by @Darren Cusanelli: @Jill F.hey Jill..I appreciate your vigor...I finished my first rental and looking for more so reading your enthusiasm makes me fee better about my goals...thanks
Awww, I'm glad Darren. I suck at marketing and people rarely find my style 'inspirational' so I especially appreciate your kind words. I wish I hadn't waited until my mid fifties to get started-- better late than never ;). My kids are enjoying my crazy landlording stories after which I always remind them that someday all this will be yours. bahahaha
Something I can say I didn’t understand initially is that Managing the property is the easy part ,it’s managing the tenants that is tough .landlording can be a difficult business and is not passive . The worse the neighborhood the less passive it is but the higher the returns . If your the timid nervous or shy type I’d consider a good PM in your case . Keep in mind There’s plenty of other ways to invest in real estate
I waited too...I'm 52..so I get what you mean...o only have my one rental so far and already dealing with issues...but I stay positive and focused...figure I have 15 years to build this up
My wife and I were forced into being landlords because our condo in 2012 was severely underwater. I wasn't psyched about it either, trust me.
8 Years later, I've expanded (wished I'd found the BP community in 2012 and had many more by now) and love the buy & hold multi family properties. Our most recent purchase is a 3 family in a C neighborhood. We renovated all three units and now get B class tenants as the inside and grounds are much nicer than the surrounding areas. Not to say we haven't experienced our share of drama, but as long as your tenants pay the rent, you can steer clear of their issues.
I use the landlord forms that come with the Pro membership...they're state-specific and legally vetted. We also have spectacular liability insurance in the event someone wants to sue us but we also require tenants to have their own with us on the policy so we know it's coming due.
As long as you're aware of your local tenant/landlord laws and follow them, you should feel confident you're on a good path. I can say jumping into buy and hold real estate was one of the best decisions I've ever made.
I would consider you very fortunate @Scott H. - I believe the majority of landlords do not have the self awareness to realize that they may not be cut out for this. It is not a weakness unless you try and become a landlord.
There are plenty of investors who make a lot of money by developing a team of support- namely a property manager that they trust.
I was very nervous about becoming a landlord, like most, but was so determined to take that first step and buy my first rental property. And it's not been nearly as bad as I thought it would be! :) I'm very glad I took the leap! I've had good relationships with my tenants. (I even give them movie tickets at Christmas.)
Having a nicer property helped, and screening carefully for good tenants has helped me avoid other problems. Also, my state (Utah) has a Good Landlord Program with landlording classes offered by the Utah Apartment Association, including a booklet that is filled with info specific to my state. I would recommend looking for a similar program in your area. Good luck!
P.S. Try to find a mentor/experienced landlord in your city who would be willing to answer your questions from time to time (but be willing to do something in return for them, so it's not a one-sided relationship).
I'd advise passive investment until you can get comfortable. Otherwise get a partner and allow them to be the sweat equity partner and they do the management part and you do the finding of the deals.
Insurance is the best solution to protecting yourself. Buy in an LLC and get higher liability coverage to protect yourself and place an umbrella policy over your cars and house.
If you can analyze a deal and find ones that can cashflow jump in. If you dont like it you can hire Property Manager or sale.
Dont let fear stop you. Regret will be the next step down the line if you dont overcome fear.
I would ask yourself why do you want to be a landlord in the first place. What would happen in my life if I don't pursue this, what if I do? Is the work needed related to this area worth the reward? If you don't have clear answers to some of these I would consider contemplating on what it is you would actually enjoy doing.
@Scott H. Take a lot of time to read and soak up information of self-property management. Build systems to make you successful. Definitely master you states/city housing landlord-tenant laws.
You could always partner with a property management company if it comes down to it!
Happy Investing
How bad do you want your current situation to change? Mental road blocks are usually easier to push through when the alternative is much worse than what's blocking you.
Do not let your fears control you. I have insurance and also a Umbrella policy for added protection for over a million dollars for a few hundred dollars a year. I feel very confident that I get great leagal advice from legal shield for only $29 a month, I can ask all the questions I need. The smartest people are lawyers it’s great to have them on your team for a small amount of money. We are all held back by our fears at different levels you are not alone in that area. Push through it and listen to bigger pockets
Do not let your fears control you. I have insurance and also a Umbrella policy for added protection for over a million dollars for a few hundred dollars a year. I feel very confident that I get great leagal advice from legal shield for only $29 a month, I can ask all the questions I need. The smartest people are lawyers it’s great to have them on your team for a small amount of money. We are all held back by our fears at different levels you are not alone in that area. Push through it and listen to bigger pockets
@Scott H. If you are going to constantly worry about being sued then being a landlord just doesn't fit your temperment. Which is fine and it is actually good you know that about yourself going into what kind of strategy to choose.
There are a lot of different paths investors take, none of this stuff is worth losing sleep over. Find something that fits your risk tolerance and a great place to start researching is here on the forums, the BP blog, the books they have published, etc..
@Scott H.
Read through every comment so far and wow there are a LOT of smart people on here.
I agree with all of them, with one caveat. Give it a shot. You literally don’t know until you try. You might find that you love it! But if not, it’s not too costly to back out and either sell the home or hire a property manager and focus on non-hold strategies from here on out.
I’m in a similar position walking into my first multi-family house hack (close in a week) and I’m similarly frightened. But I mitigate those fears by reminding myself that there are some really bad and stupid landlords out there and if they can do it why can’t I? I also surround myself with other brilliant investors/landlords both from BP and from my own circle so I can draw on their rich experience. Most of the situations you’ll run into you’ll discover other landlords have already paved the way through to various solutions and BP is a gold mine of advice for every situation that could come up.
My 2 cents is give it a shot. Play the game before deciding you don’t like it. But be honest with yourself and if you’re not cut out for it, don’t force it and move on to the next RE investing opportunity!
Good luck!