Dumb Mistakes Rental Property Investors Make
Often times we make things harder on ourselves than they should be. This is no different in rental property investing when you do the mistakes listed below.
Dumb Mistakes Rental Property Investors Make
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Forgetting that Rental Property Investing is a Business
For your rental property to be profitable you need to make sure that your rent is being collected and the property is maintained.
The easiest way to do this is hire property management. They handle the business side of it for you and the main thing you need to do is make sure they are doing their job.
This doesn’t mean you can sit back on autopilot, but it does mean your are more of a supervisor than a day to day manager. The property management needs to held accountable for their work. Shaking a hand and expecting rent checks to roll in with no communication there after is fantasy land.
More importantly, if you are self managing then you need to definitely remember that this is a business. By interacting with your tenants you will form some type of relationship with them, but you must remember that this is`your business.
There will be tough decisions to make and some of them will make your feel heartless. To be honest, I still struggle with this as I am too nice for my own good at times.
Bottom line though, if someone is not paying their rent for many months it doesn’t matter how bad their story is, they are not your family and it is not your problem. There is a reason an eviction process exists and it is for people not paying their rent, among other things.
Sounds harsh even saying it, but if you are not willing to proceed within your full legal rights as a landlord than you are doing your business a disservice. This isn’t to say you shouldn’t work with people at all, especially someone that has been a model tenant in the past, but be careful giving a leash as it can blow up in your face real fast.
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Banking on Appreciation
If we have monthly income coming in at a solid rate of return than the burden of what the market will do is off our minds. If you are relying on appreciation as part of the return you expect to get on a property you mind as well buy stocks and gamble in the market.
Appreciation is not an investment play, it is a speculation play.
I traded the stock market full-time for more than five years – if I want to speculate I will go there.
Rental properties are my favorite investment because they create steady and predictable wealth over time.
In Conclusion…
You must be willing to take the actions that will unfortunately feel uncomfortable and sadly come up in the business of real estate from time to time in order to have long-term success.
Additionally, let the principal paydown and monthly cash flow of rental properties build your wealth. Appreciation is like a performance bonus, you may or may not get it depending on how the market did.
Published by ScaredyCatGuide
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So, where does, giving some guy at the property flipping meetup $20k on a handshake, fall on the spectrum of dumb mistakes? (of course he was one of the speakers)
Don't even get me started on this. I'm actually the speaker at a real estate event this Wednesday and I literally am going to tell people get education, but for a few hundred bucks. Of course I have a book and video course for $49 they can buy ;-)
Seriously though, I feel for people who sign up for this shit. That is down payment money on a property.
I know a guy that is suing one of these seminar companies now for his $25k.
I've always thought the same. If you spend your time building a good team then those 10k courses could be better invested in the property or kept in an account to weather bad times if needed.
Exactly!
He could of renovated a whole house with that money!
Agree with your points. Would be smarter targeting an undesireable type of house that can easily be improved to gain more potential profit as well. Such as Buying houses with no garage or carport and adding a carport to increase rent by $30 a month. That would be a 100% return on your investment per year if the carport is around $360.
Very true! I remember believing a guys story and feeling bad but ultimately had to evict him with just the hope of getting something owed back but not only did I never get the money owed but I also put money back in the property for some large repairs they left behind!
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It sucks that we can't give people the benefit of the doubt. Just leads to stress and regret.
In other words rental property investing not for the faint-hearted .
I guess this will surely help them to learn from their mistake
@scaredycatguide you should hire me, I'm a heartless monster, especially when it comes to people not paying their rent, I would throw their asses off as soon as they didn't pay for 1 day ahah
But now for real. Have you ever checked Samuel Leeds on youtube? He seems to be some sort of propriety investor, I really enjoy watching his videos, you should check them out and maybe think about doing something similar on the blockchain! I know I would love to watch them!
What do you think about those businesses that u invest a certain amount of money and they buy, rent and do the maintenance on the houses for a certain %? Also, what do u think about REITs?
Excellent advice