Archive for December, 2009
Is it hard to be a Landlord?
If you’re wondering if it is challenging to become a landlord you need to first ask yourself if you’re a good problem solver or not. Don’t get bent out of shape and wrapped around the axle over the small details that come along with the job. You don’t need to concern yourself with all of the knowledge of ordinary handiwork around the property, like fixing toilets or changing locks. Knowing how to perform these routine tasks can save you some money upfront when you are just starting out but try not to let your ignorance of these routine tasks stop you from jumping into the business.
Eventually you want to work your way up to a spot in this industry where you no longer have to worry about repairing the properties yourself. That is what your property manager’s job responsibility will be. He will hire out the contractors needed to do repairs for you if he cannot repair the issue himself. In fact, I would even suggest to you that you try to find properties that cashflow well enough where you don’t even need to waste your own time in the first place when something tears up. Your number one focus in this business should be to find properties that cashflow well and to see to their occupancy after you’ve purchased them.
Everyone starts out small when they become a landlord (and perhaps the person never intended to become a landlord in the first place), but after they’ve had the opportunity to fully grasp the idea of earning money from other people’s efforts without putting forth much work (if any) to reap the benefits, they will eventually want to expand. I know I sure did. I purchased 1 single family home in late 2007, followed by 4 more places in 2008 and now heading into 2010, I currently own 38 rental properties (2009 has been an explosive year of growth for me). This was the year I finally started thinking clearly and decided to hire a property manager. It’s hard to imagine this but, I do less now that I have a property manager with 38 rental properties than when I only had one property back in 2007 that I managed myself.
I have more free time than ever to do the things I enjoy and to focus more on my “real” job. Yes, I still hold a full time job even with the rental property income, but it’s not because I have to, but because well…yes I think I sort of have to. I still have a few years on my military obligation lol. However, if my contract ended with the military today and I was forced into an unemployment situation, I would feel so relieved to know that my rental property income would supplement my family’s needs and we would do just fine.
So do I think it’s hard to become or actually be a landlord?
Definitely not. Other than speaking a couple of times each month with my property manager, Thomas, over the phone about different subjects pertaining to the industry, I must say this is probably one of the easiest jobs to be in. Now I might be singing a different tune if I was the “Do It All Myself” type of landlord. I shudder to think about managing these properties by myself and working full-time. I’m quite sure I wouldn’t have had much time for anything else. I wouldn’t have been able to purchase this many properties if it wasn’t for my property manager in the first place. At best, I probably could have managed 10-15 properties and worked full time like I’m doing now. But once my growth exceeded what I was capable of managing myself I would have been forced to stop buying new properties, and thus would actually be limited on my overall success.
I am almost at another crossroad where I must hire on a helper for my property manager since he is getting spread a little thin and I believe with any new additional house purchases that is just what I will do, but so far he has been managing just fine and I have recieved little complaints suggesting otherwise. Of course, some professional property management companies have a large staff and can meet you at whatever size your business is currently at or where it will be in the future. I am a strong believer in having a third party assist you in your landlording business and I believe if you try to do it all yourself, you will eventually find there are not enough hours in the day.
What’s up with scared or nervous investors?
I’m not sure why this is, but perhaps someone can explain it to me. I can’t go one week without having the following conversation…
Me: Hey Friend. How ya been?
Friend: I’m doing alright, how about yourself?
Me: Great! Just out here piddling around (that’s all I ever seem to do).
Friend: That’s good. So how are the rental properties coming along!?
Me: No complaints, Friend, I just wish I had more of them.
Friend: That’s great! I keep wanting to do something like that. I just can’t get up the courage to get started. How many of them do you own again?
Me: 38
Friend: WHAT!?!? 38??
Me: Yes
Friend: That’s crazy! How do you sleep at night?
Me: Huh? With my eyes closed of course…
Friend: Man. I think I would be a nervous wreck. I bet I could handle one or two but I just don’t know. Can you help me get started if I seriously wanted to get into the rental business?
Me: Sure. It’s easy!
Friend: Ok well. Let me talk it over with the wife and we’ll see about getting together sometime over lunch. Ok?
Me: Ok. Sounds great.
Friend: Well I have to run back to work, nice seeing you.
Me: Nice seeing you (and I go back to piddling around).
This particular conversation has become very popular with me lately. Since most of my friends, family and colleagues know that I am in the rental property business, they like to ask me about it from time to time. They know I got started late in 2007 but when they find out that I now have 38 properties, it’s like they’ve just got the wind knocked out of them. And I can’t blame them for not believing me sometimes, since I have been known to be a jokester all my life. My wife on the other hand is the Honest Abe type, and when she gives her silent nod, signaling “YES he’s telling you the truth” they are genuinely shocked.
I tell them I’m no longer managing the properties myself anymore and that I hired a property manager to take care of the day to day operations (or else I wouldn’t be able to piddle around like I’ve grown accustomed to. I feel like a retired Army Vet sometimes – but one that gets paid to talk about Army life since I am a full time recruiter still). They sometimes try to dive into my finances and feel me out, and so I’ve become crafty at shifting the conversation the other way. I do make a great living as a landlord but that doesn’t mean I want everyone to think I’m Mr. Money Bags Strickland, or else all of the sudden people might expect bigger Christmas gifts from me, or expect that I’ll start picking up the tab at lunch etc. Just because income might go up, doesn’t mean expenses should go up as well. And believe me, I have and always will be a tightwad.
After they get over their disbelief, they always want to know how to get started in the business themselves. Like it’s also been their lifelong goal/dream to own land and lease it out to others. They immediately place me on a pedestal as an expert in the field, and I’m really not by any means. In fact, there are so many more knowledgeable landlords just in my hometown that I meet with and discuss the business with on a regular basis. But in their eyes, I am the all-knowing property management expert and they want to pick my brain apart. I have no problem with this and talking about real estate, money, investing are some of my favorite subjects. But it’s what they do with this information that starts to get under my skin – Nothing!
It boggles my brain how ridiculously easy this business is to get into and to make good money at. I have “educated” many friends, colleagues and family members on the subject but I have yet to see anyone jump in yet. I know it’s only been two years but after some of the success that I’ve been seeing, I figured someone would have enough entrepreneurial spirit inside of them self to take that leap of faith like I did.
I know that there are circumstances that prevent people from being in the position to get started in the landlord business right away, like shaky credit, no principal for a down payment, not knowing which property to buy. These are temporary problems that can be solved sooner or later. There are also other reasons why I believe someone might have a hard time getting started and these problems are not so ‘temporary.’ Someone might have a spouse that won’t allow any type of enterprising dream of escaping the rat race reality. Or even worse, they themselves may no longer have any ambition or childhood faith still left in them to dream big. Whatever it is, it saddens me. I have watched friends, family and colleagues of mine accept an existence that could be so much more but isn’t because they will not take action in order to get to where they belong.
If you’re reading this, hopefully you will not accept just making it through life with the intention of getting to the grave. Find some purpose. Find some meaning. Go out there and make some stinky, sweaty, smelly, filthy cash and break free from the crummy job you’ve found yourself in. Don’t become greedy. Give freely and cheerfully. I know I mentioned I was a tightwad up above but I do believe in giving to the church and your favorite charities. You will find meaning in your life just from being able to help others out, even if not financially. Don’t be afraid to walk up to the ledge. Jump with the intention of making a BIG SPLASH! CANNONBALLLLLLL!!!!!