Newbie Landlord Fears?

Question

Hi BP! Quick and easy question for all the new or soon to be new landlords out there.

What's your biggest fear of becoming a landlord?

I am here in Chicago and have had pretty good luck so far with decent tenants, however, I've had some very annoying maintenance issues. One main issue being the frig water line leaking and no one saying anything till I happened to go in the basement and see the waterfall coming from the first level - ruined my new hardwood floors :-(

Wondering if peoples fears and issues change much from different cities like New York, Dallas, Los Angeles, Orlando, Seattle, Kanas City, Etc.

Carolyn Fuller · Answer

My biggest fear was dealing with perpetually unhappy tenants so I went in the opposite direction toward the high end fully furnished extended stay market. We had been landlords for many years providing way-below market rate rents. Our tenants needed the low rent but then felt trapped because they could not afford to move out. They took those frustrations out on us. It was miserable. So 25 years ago, we got out of the landlord business. 15 years later, when my husband suggested we create an apartment on the first floor of our home, I thought he was crazy. The only way I was willing to do it is if every lease had a specific end date. We now have two extended stay fully furnished rentals, decked out with the finest furnishings and twice a month cleaning services. We charge well above market rate rents. Our tenants love us, leave us rave reviews and even give us presents at the end of their stays. We do require a security deposit on the rental with the most costly furnishings. We understand that if the damage is caused by something outside the control of the tenant, we have to foot the bill but that is all factored into the rent we charge.

Adianice C. · Answer

@Jonathan KlemmWelcome! Firstly... No bueno to have hardwood floors if you're renting it out.. unfortunately apartments need to be rental proofed lol .. I do vinyl plank flooring.. and basics.. the water was leaking from which line? I'm guess you're managing the property? .. sounds like water line check needs to be done.. To answer your question fully.. I don't love being a landlord when these things happen.. but I certainly love the monthly cashflow I get.. even after extra expenses ... And I learn from my mistakes to make sure I don't repeat them.. I personally say no to nice hardwood floors..

Scott Wolf · Answer

I actually decided based on response time, professionalism, and client testimonials. I reached out to 6 PM's in the area, and only 1 was really responsive(I guess the other 5 didn't like money.) They had a proper website, great follow-up and everything could be automated for me (direct deposit)After that, I got 3 client testimonials, and all were rave reviews and I was sold. I'm sure the PM I chose has had clients that were dissatisfied, and obviously doesn't use them as referrals, but just knowing that there were satisfied clients, I was good to go.

Theresa Harris · Answer

@Jonathan Klemm I don't have fridges with water lines, but can you put a stop on the wall similar to a door stop that prevents the fridge from being pushed back too far?

Scott Wolf · Answer

Yea, it was definitely mind-boggling to me. I guess people don't like making money. I had no desire to do the management myself, and based on these first four months, it's been money well spent.

Scott Wolf · Answer

What doesn't a newbie worry about??? Picking the right property, unpaid rent, evictions, rental unit damage, etc.But for me, my number 1(outside of property choice) was choosing and managing my property managers. I knew I didn't want to deal with the tenants, but knew that I would still need to interact with my PM's. I'm only 3 months in on my first managed property, but so far, so good.

Jonathan Klemm · Answer

Account Closed - Do you know of any research companies that provide similar data for regular rental properties?

Jonathan Klemm · Answer

@Taylor Roeling - Definitely takes money to make money and need to spend it to make it as well!Account Closed - That's an awesome idea because that is exactly what we did. We put a little wedge behind the frig and made sure the line couldn't be damaged again.

Account Closed · Answer

@Jonathan KlemmSTR / Smith Travel Research, The Highland Group, Phocuswright are all market research companies that focus on hospitality and extended stay travel. AirDNA and All the rooms are on-line data collection companies that also follow residential hospitality trends.Demand - Depends :) I always like to talk about "Portfolio Diversification." I like to make money but more than that I like to prevent losing money. Also, there is the "PPD" factor - or Pain Per Dollar. How hard do you want to work for your money? Some markets have year round nightly demand, however in some markets having 3-4 monthly reservations that give the property an 85% annual occupancy could be a lot less work, a lot less wear on the property and at the end of the year could be more profitable if you know how to connect with the right business traveler.

Account Closed · Answer

Last week I attendedthe Serviced Apartment Summit in New York and both STR / Smith Travel Research and All the Rooms presented their findings on higher end extended stay lodging options. Their research found there is strong and growing demand for these monthly housing lodging solutions. Thanks for sharing your rental success.