How to Deal With Tenant Headaches

Today what we are going to talk about is a lot of times I get new investors that are not sure that they want to get involved in investing because they don’t want to deal with all the tenant headaches and problems. And, they don’t know if they want to deal with the late night calls. Basically all the tenants, toilets and turmoil. And what I tell investors is that you have to remember that buying a property, if you’re investing, is a long term goal. And if you are going to be an investor, you want to make sure that your goals fit the purchases you buy. So, if your goal is a 5 year goal, 10 year, 20 year, whatever that timeframe is you want to make sure that your goal fits the acquisitions that you are making. And if you say you want to have 20 houses in ten years, well obviously that means you are going to have to buy two houses a year. And if you want to have “x” percentage of cash flow per month, you want to make sure those numbers would work based on your plan. So you have a plan and a strategy and your strategy will get you to your plan. And I advise every couple years you re-access that plan and make sure are you on track or are you off track. And you re-adjust. Sometimes the market can do certain things like we saw back in 2007 – 2008 and if you were an investor you may be re-adjust your plan and maybe buy more properties, you’re getting a better deal on the acquisitions at that time. So you always want to re-access your plan all the time. And you want to remember that investing is long term. If you don’t like the fact that you are going to deal with the drama but you like the idea of buying real estate then you may want to own land and possibly you can do that route. Maybe some people like to be a silent partner in larger apartment complexes. Other people may want to buy single family homes because they like the return and they like what that would give them, and then if they don’t to deal with it then they partner with someone like a management company and you go that route.

Just remember, whether you own one house or you own fifty houses you own a business. There are a lot of government agencies watching you. The IRS, here in Texas you have the Texas Property Code, you can have Fair Housing and Discrimination Laws. So, you have a lot of people that are making sure that these tenant rights are not being violated. You have profit, you have loss, you have income, you have expenses, you have a lot of accounting and you want to make sure you just don’t buy a property and have a hobby of what you’re going do on the side. So remember that you want to make sure that you look at it like a business. You realize you are going to have expenses and when you have all those expenses you just deal with it. And it’s not good, it’s not bad it just is. It’s like buying a car, you bought a used car and now you’ve turned that used car into a car rental. You are going to have problems possibly arise with that car rental. And it’s not bad it’s just that you are buying a used vehicle and you’re putting somebody to drive that vehicle. And that vehicle is going to need tires, it’s going to need brakes oil changes, you’re going to need to put gas in the car. Same thing with a rental property. You can do everything you can to do your due-diligence, but at the end of the day you’re buying a used property. Someone else is going to be living in that property and they may not treat it the way you would treat it. And that’s fine, that’s the business model that you are in.

So, again you just want to look at, if you are a new investor how do you go about buying properties, how you should look at it. And I always say look at the end goal and see if it’s even right for you. Real estate may just not be what you want to do and that may not be the right vehicle for you to get in to buy investment properties. You may want to get into stocks or some other smart property. But, you want to look at it and say does this fit my plan where my goal is?