My Father and Both grand parents were realtors and Landlords. I grew up immersed in real estate, dinner talk was easements, right of ways, surveys, evictions, Etc. Etc. For many years I avoided real estate. I had several businesses, worked at some really good w-2 jobs and 10 years ago I decided to try my hand at being a Landlord, while still working my w-2 job. Real estate was not new to me, and I've had some pretty good success both buying and selling, and buy and hold.
So jump to today. I have no bad debt, and work 2 jobs (70 hrs. a week) to save money to invest. I buy 1-2 properties a year, mostly duplexes. Life is good Right? Then how did I fall into this one?
While getting my taxes ready for my CPA, I notice one duplex had not only fallen short of its projection for 2015, it was below its 2014 figures. Curious I checked out the year ending statement and discovered one of the units had gone vacant in May and re rented in late June or July. The new tenant failed to put the gas and electric in his name. The landlord revert left them in my name. Both the PM, and the bookkeeper (she pays the bills) for the PM failed to notice. Total loss is $540 dollars. If you are only getting $100 dollars a month CF.(lucky I do better than that) That's 5+ months right out of your pocket.
The real error here was me because I too failed to notice. I get one check, and a monthly statement for each of 5 rental units from this same PM. company. I never looked closely at the Statements, just filed them and cashed the check. SHAME on all of us, But DOUBLE SHAME on me!! Its MY rental and MY money. Its now 6 months later and having just discovered this goof up I will need to make a decision as to weather or not I can collect the back utilities or not, or just bite the bullet, take the loss now and make him put the utilities in his name immediately.
I know I have some options here, but the reason I'm writing this isn't to discuss them, but to bring to light a point. Every day I see people on here focusing on the 2% rule, the 50% rule, the good tenant, the bad tenant, this problem, or that problem. Many people on BP want to wholesale or some other real estate related job while also investing, or they are focused on learning everything they can about RE, what to buy when to buy or where to buy. It made me think about how I missed the utility thing. I was focused on buying new properties, 2 Jobs, and everything else under the sun. I was not watching my rental's income. POOR management on MY part.
IMO the lesson here is pretty big. You first and foremost must manage and oversee your investments. Its no different than owning your own business, in fact it is your business. Just the same as a restaurant, or car wash. You have to be aware of, and watch everything about every door you have. It is as important to be on top of your rental after you have bought it, as it is to knowing a bunch of rules, good locations, or how to correctly analyze a property before you buy it.
Its my idea a newbie should study as hard if not harder at how he is going to manage a property as he does at the metrics that go into buying that property. After all he is going to spend way more time trying to make it pay than he did buying it. Every property is a winner and every property is looser. ( sorry Kenny) The difference is the management. If the property is purchased right its easier to make it a winner, and the rewards are greater but make no mistake it STILL can fail as well. The question then becomes can you afford the mistakes of learning to manage your properties??
Just my .02
RR
