What is your biggest fear as a Landlord?

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What is your biggest fear as a Landlord?

Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Are you afraid Tenants will trash your rental?

Tenant won't pay rent?

The economy will turn and your rentals will sit vacant?

You've over-extended yourself financially and the next problem will wipe you out?

What keeps you up at night? More importantly, what are you doing right now to mitigate that risk and prevent it from sinking the ship?

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Drew Ramasco

Rental Property Investor · Ocala, FL · Member since 2018 · 48 posts · 35 votes

Are you afraid Tenants will trash your rental? Not really, drywall and paint is cheap. Windows not so much (knock on wood)

Tenant won't pay rent? Not anymore, been doing way better due diligence over the last 5 years and require auto-pay

The economy will turn and your rentals will sit vacant? No, my margins are good and even in the 2008 crash I was getting great cash flow.

You've over-extended yourself financially and the next problem will wipe you out? Yes I think that sometimes, but reality sets in and those negative thoughts disappear.

What keeps you up at night? More importantly, what are you doing right now to mitigate that risk and prevent it from sinking the ship? Never achieving TRUE financial freedom! I believe in this dream called "real estate investing" and even though I do everything I can to set myself up financially I feel like I'll never actually get there.

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Account Closed
Member since 2020 · 26 posts · 20 votes
6y
Not being able to get possession and evicting tenants for breaching the contract.
10 Reply
Nick C.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
6y
Good question! Ambulance chasing attorneys and Florida adopting some of the Landlord Tenant laws of places like California.
3 Reply
Drew Ramasco
Rental Property Investor · Ocala, FL · Member since 2018 · 48 posts · 35 votes
6y
Are you afraid Tenants will trash your rental? Not really, drywall and paint is cheap. Windows not so much (knock on wood)

Tenant won't pay rent? Not anymore, been doing way better due diligence over the last 5 years and require auto-pay

The economy will turn and your rentals will sit vacant? No, my margins are good and even in the 2008 crash I was getting great cash flow.

You've over-extended yourself financially and the next problem will wipe you out? Yes I think that sometimes, but reality sets in and those negative thoughts disappear.

What keeps you up at night? More importantly, what are you doing right now to mitigate that risk and prevent it from sinking the ship? Never achieving TRUE financial freedom! I believe in this dream called "real estate investing" and even though I do everything I can to set myself up financially I feel like I'll never actually get there.
13 Reply
Joe P.
Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
6y
Originally posted by @Nathan Gesner:
Are you afraid Tenants will trash your rental?
Tenant won't pay rent?
The economy will turn and your rentals will sit vacant?
You've over-extended yourself financially and the next problem will wipe you out?
What keeps you up at night? More importantly, what are you doing right now to mitigate that risk and prevent it from sinking the ship?

Yes. :D

3 Reply
Karl B.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
6y
Whether warranted or not, probably getting sued.
5 Reply
Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
What keeps me up at night... do I continue to hold my properties (all cash flow well) or sell and redeploy my capital (LOTS of equity tied up in these properties).
The other items I am not concerned as much about because we do smart renovations to make our properties better than the area, so we demand more rent and have our pick of tenants at those rents.
4 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
6y
The items that itch at the back of my mind like a mental sliver can all be classified under the heading "What If.....".
It's ironic how I wouldn't waste any $ on pull-tabs because a 1-in-28 odd's seems idiotic to shoot for but a 1-in-100/200/500 "what if" is something that bugs at me as a real potential and concern.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Originally posted by @Karl B.:
Whether warranted or not, probably getting sued.

I manage 360 rentals. Been in the business 11 years. Never been sued once.
I've posted several times over the years, asking BP members if they've ever personally been sued. Hundreds of responses, only a few that were actually sued. Most of them won, a few lost very little.
The risk of being sued and losing is dramatically exaggerated. The best way to avoid being sued? Know and obey the law, treat your tenants honestly and fairly, document everything. Even in a place like California or New York, the risk is pretty low for good Landlords that run an honest business and document everything.

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Karl B.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
6y
Originally posted by @Nathan Gesner:
Originally posted by @Karl B.:
Whether warranted or not, probably getting sued.

I manage 360 rentals. Been in the business 11 years. Never been sued once.
I've posted several times over the years, asking BP members if they've ever personally been sued. Hundreds of responses, only a few that were actually sued. Most of them won, a few lost very little.
The risk of being sued and losing is dramatically exaggerated. The best way to avoid being sued? Know and obey the law, treat your tenants honestly and fairly, document everything. Even in a place like California or New York, the risk is pretty low for good Landlords that run an honest business and document everything.

Hello. We own real estate and have been sued by bogus claims. We won the suits but lawyer fees are still a pain.
As far as residential goes, it happens. I know landlords it happens to. As far as BP goes, I know Matt Faircloth stated in a video that someone claimed they fell down (or something to that effect) in one of his properties and it was a complete nonsense suit. I don't believe he lost but it's still a reality.

2 Reply
Craig Jeppesen
Rental Property Investor · Chubbuck, ID · Member since 2018 · 532 posts · 466 votes
6y
Laws continuing to shift more in favor on tenants is really my only concern. I do sometimes think about how more automation over the next several years will affect tenants employability and ability to pay. I also sometimes wonder just if on a nationwide scale str properties became illegal and a new wave of inventory for both sales and traditional rentals would affect rents and home prices.
4 Reply
Jaleel Phillips
MD · Member since 2019 · 63 posts · 71 votes
6y
Tenants not paying and trashing the space before they leave.
3 Reply
Connie Chan
Investor · Member since 2017 · 239 posts · 149 votes
6y
@Nathan G. My biggest fear is that I forgot to make a payment to insurance! I had a recent incident in one of my rentals recently and had my insurance not been up to date I would have been out six figures. Landlords out there make sure your policies are giving you enough coverage and also that your policy is up to date!
8 Reply
Will Triplett
San Luis Obispo, CA · Member since 2017 · 40 posts · 14 votes
6y
Getting tangled up in a mess like this. It is happening in North Carolina, but I'm in California so it could probably be worse for me: https://www.biggerpockets.com/...
5 Reply
Charlotte Dunford
Investor · Johns Creek, GA · Member since 2017 · 463 posts · 488 votes
6y
With property due diligence, all of these issues can be avoided. However, my biggest concern is when I first take over a property with tenants already in there that weren't screened by me. Those are usually the troublesome ones. Eviction takes time and money but here's the thing - Do not fear it as it's all part of real estate. Deal with it as quickly as you can and move on, focus on your growth and don't let these things get the best of you. Focus all your energy on developing your "core technology" whether that's sourcing deals, operations, negotiations, etc.
5 Reply
Linda S.
Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Nathan Gesner,
My big fear is FIRE, if someone dies or gets injured on my property, i hate lawyers with a passion.... we combat this fear with adding a ridiculous amount of smoke detectors, carbon monoxide detectors, not 1, but 2 fire extinguishers, and safety ladders for 2-story houses... just spent $1K on extra supplies last month! Not messing around!
I also have a fear of someone doing/making meth in one of my houses, I combat that with aggressive screening/regular house checks/etc. because if someone does that, your house goes on a list and you have to tell people about it!
Having anxiety/stress should be a basic pre-qualification for investors!
7 Reply
Wesley W.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
6y
As others have said, the not-so-slow creep of ridiculously one-sided L/T laws. I focus on C-class, and this is the main reason I have stopped buying in NY.
0 Reply
Llewelyn A.
Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes
6y
It seems to me that the current Housing laws are trending towards one thing, shrinking the working class and destroying the achievements of the entrepreneurial small Real Estate Investor.

The reality is that the middle class pays for the subsidies of the poor without getting much of a break. Either their property tax or income tax or both go up because someone has to pay for it.

In GENERAL (note, this is not ALL), Government programs like housing projects seem to have subsidized housing for people FOR LIFE. In other words, they created a trap where people either can't or won't leave.

The working class who pays Taxes have never been asked if they agree that their tax money should be used to subsidize someone forever. Is there a time limit for someone who is being subsidized? The apparent answer is NO time limit. Would anyone vote to subsidize a particular lucky family forever while the waiting list for a new subsidized apt is decades? Stockholm's waiting list is 50 years PLUS! How crazy is that?

This then creates a cycle where Government Programs like Housing Projects have vast amounts of people who remain there for generations (or more), never being forced to do better for themselves or not given the proper access to the things they need to help themselves out of Tax Payer funded assistance, making room for the younger families that need the apt that is subsidized.

I'm sure most (if not all) the Middle Class Tax payers would say that they did not sign up for people to be on Government support forever AND that new families have to wait decades.

Knowing that this mindset has increased, it will eventually get to a point where subsidized people will have no where to go but are protected in a way that you cannot then build more housing (mainly because they cannot be forced to move to a different location so that new higher density housing can be built), therefore the only solution........

UNIVERSAL RENT CONTROL.

In other words.... my free market rentals will lose it's value completely and I will be forced to become a low paid Property Manager, managing tenants who are protected and subsidized forever.

Either that... or go bankrupt.

It's actually a very real and devious deception because if you ask a tenant would they like to lock in their rents now and forever, without much thought to any future new families that may need it, the vast majority would say yes.

I don't even know how to get out of this trap. I'm planning my exit strategy when the current Housing Market peaks for my Market Rate apts.
9 Reply
Jacob Pereira
Real Estate Agent · Austin, TX · Member since 2014 · 636 posts · 486 votes
6y
@Nathan G. Spiders. 'nuff said
4 Reply
Zachary Beach
Specialist · Los Angeles, CA · Member since 2018 · 291 posts · 231 votes
6y
@Nathan G.
The government!
Basically the other factors I feel I can mitigate.
The government being
Increased taxes. Property taxes, STR taxes, not being able to right things like interest or depreciation off.
Change in regulations
Bad evection laws.
Government collapse no one to enforce property ownership
Property confiscation
Requirement for crazy high insurance.
I can’t make an exhausted list of ways the government could mess up land lords.
Many of the things are unlikely and I don’t worry about it to much but everything I have listed has happened to some land lord in some government at some point.
3 Reply
Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
I used to fear the "professional tenant". Someone moving in, never paying a dime of rent and trashing the place. I don't fear it so much now that I take precautions to prevent this:

1. I only accept cash or cashiers check for security deposit and first months rent, prior to handing over keys.

2. Full screening, including credit report. I pay special attention to addresses and check addresses on drivers license.

I rejected one applicant who ended up on the local news a year later after stories of them moving in, never paying rent and trashing multiple landlords houses in town. Just the idea they were in my house asking to rent it, freaks me out. In every case the landlord ran no credit report and accepted a personal check that bounced.

As @Linda S. mentioned, fires are another fear. I have had four fires over the years, so that fear is well founded. We have fire extinguishers and are careful with smoke detectors.
9 Reply
Account Closed
Contractor · Eureka, CA · Member since 2015 · 100 posts · 64 votes
6y
@Linda S. I definitely second fire. Certainly before the loss or damage of my assets I care about the people inside, that is my top priority. I also have an abundance of detectors of both types, and I hardwired them so no lapses from forgetting to change batteries.
And probably earthquakes too.. mine are all where I live in California and are old houses on post and pier. Earthquake insurance is separate and prohibitively expensive and almost no one has it. Also besides the total loss of the structure to a quake I worry about the normal 1 or 2 a year big enough to knock things over and hurt people.
3 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
I'm with @Linda S. @Joe Splitrock and @Account Closed

Fire.

The local requirements to get a C of A are pretty standardized across the greater city: third-party electrical inspection, carbon monoxide detectors on every floor, smoke detectors in every room, GFCI outlets in bathrooms and kitchens, shielded external outlets, fire extinguisher in the kitchen. But the properties we operate are old and not in the best shape. As much as I work for and for the best, I can't control a determined rat gnawing on electrical insulation in the walls or some kind of crazy water infiltration causing a short somewhere.

What I can control, I do. One of the reasons low C-class tenants are what they are is that they are almost always ignorant and terrified of the mysteries of alternating current. It's nothing to them to pile highly flammable clothing around an outlet with a plug in it that gets yanked on often. They will routinely stack their Amazon boxes up high next to the furnaces and boilers. With all the extra stuff they always have in the basements and the generally nasty conditions of their kitchens, anything could happen. When I do my formal and informal quarterly inspections, I am always looking for situations where something could catch on fire too easily.

It hasn't happened yet, but I'm certain it will. Just a probability game, and I've been very lucky so far.
4 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
My fear is I will be stuck as a landlord in my older age painting walls chasing tenants for rent, hammer clean and hang things back up after these idiots destroy my stuff . What a horrific existence that would be ! Fortunately I’m finding new ways to create passive wealth now to avoid such tedious work in the future .
2 Reply
Nathan GesnerBusiness Member
Moderator
OP
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Fires aren't something I fear, but I'm definitely more conscious of them. I had one fire in my first nine years as a property manager. I've had five in the last year!
I think any free-spirited entrepreneur fears government regulation and the ever-growing sense of entitlement among our populace. But that's happening throughout the advanced world and nothing we can do to escape it.
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Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
6y
Early on I had much more fear of all the things you mention. Not so much any more. Good screening and diversification of assets helps remove the risk.

Having units in Los Angeles, there is always going to be demand. When (not if) the tech bubble pops, I'm sure the demand for higher end units will go down, but those are likely going to be the tech bros moving out of the westside where it is $3500 a month and moving to the valleys where it is $2000 a month.

My biggest fear revolves around the government and the massive amount of idiot voters we have in this state. We already got statewide rent control and a prohibition on no fault evictions (AKA not renewing your lease). Some places have non-vacancy decontrol regulations. Some cities impose crazy fees on rentals. There is a big push to repeal Prop 13 for everything, but especially for commercial and rental units, which could have the affect of lowering property values and increasing taxes to owners. It's only a matter of time before the government forces us to install solar and remove gas from our existing properties.

I can see a first come first serve requirement being enacted. A tiered tax structure where you pay very high taxes on rent collected above an allowable amount. And worst of all, a government agency that assigns renters to your unit. The city will vette the tenant and if they qualify, they will be assigned to your unit. You will have no say.

While I do believe that a large number of liberals here are getting fed up with the failures and things will start to swing back toward sanity, it may take a long time. For now, mitigating the risk is investing elsewhere. Looking into rental in states that are not 100% anti-landlord. Looking into quasi-RE ventures, like senior centers/communities and care facilities that the government is least likely to mess with. And just flat out putting money completely outside RE.
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