Lessons Learned

Author note: I first wrote this post last year, before really starting the Flip Fail blog. I'm now taking the ideology from this post and transforming it into the subject of the entire blog: Flip Fail. 

____

One of the first things I read on BP that has always stuck with me is when someone said that everything that happens to you is your own fault. If I find a great deal, it's because I've set myself up to find one, and if I lose money or my tenants stop paying rent, or I'm not profitable my first year, well, that's my fault too.

As a first time landlord, I've made a handful of mistakes that have added up and lead to the eviction I'm going through right now. I'm going to try to identify as many failure points as possible so that I learn from this experience, and do better next time.

Issue 1: Applicant Screening. 

I thought I knew what I was doing when I screened these applicants- I made sure their income was over 3x the rental amount, and I did a background check. They had OK credit but more than enough income so I felt comfortable. 

My mistake: This was the couple's first time renting a place together, they were moving out of their parents houses. They had no rental history. I thought it would be nice to provide them their first place to live- I let emotion drive a business decision.

Remedy for next time: Rent to tenants with a verifiable, stable rental history.

Issue 2: Rent collection method

In the lease I identify two ways the tenant can pay rent- 1. Mail me a check 2. Use the online service provided by dwolla.com. 

My mistake: Allowing the tenants to pay via check in the mail. This introduces too many variables- every month lead to a discussion with the tenants about what a postmark date is and how I knew what date they mailed the rent, no matter what day they told me it was in the mailbox. While I was still waiting for the check in Mid-September, they told me "we sent it to the wrong zipcode and it was sent back to us". Allowing tenants to pay this way gives too many opportunities for excuses.

Remedy for next time: Require tenants to pay via erentpayment.com as recommended to me by other members of BP. The night of lease signing I'll provide a computer/tablet and require them to register before I hand over the keys.

This is not it, there are plenty of other "lessons learned". I'll be documenting them over the next few days.