Author Topic: Next Steps in Realestate  (Read 3354 times)

lilgroundhog

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Next Steps in Realestate
« on: September 24, 2017, 03:04:52 PM »
When I started looking into real estate about 2 1/2 years ago I was skittish about getting into being a landlord, not from a financial perspective, but I had never been a home owner and often feel like I can barely take care of myself, so how am I supposed to take care of someone else's home.

I moved my first tenants into a townhouse about 6 months ago.  I'm finding I'm really not cut out to handle the day to day phone calls of dealing with tenants. The thought of managing even 6 or 8 units is a bit scary, especially while I'm still working my normal W-2 job customer service job.  It's just too much of dealing with people and what at times seems like petty problems.

I don't want to just hire a property manager because my margin is too small and often there is a more optimized way to handle issues.

I've learned enough that I don't want to totally bail and say I'm never doing real estate again, though at times in the last month or so I've really wanted to.  What I think I want it to come up with a creative, non-traditional, way to play the game where I don't have to answer the tenants on a daily basis.  I'm posting this here instead of bigger pockets, because while I like bigger pockets, so many of them are out to make as much as they can.  I want consider using real estate to cover my expenses but I'm not looking to earn just as much as I possibly can, especially at the expense of life.

Does anybody have any suggestions on where I should consider looking into?

Thanks :-)

Goldielocks

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Re: Next Steps in Realestate
« Reply #1 on: September 24, 2017, 03:23:03 PM »
How many calls a week or a month are you handling?   Are they all related to reasonable issues because the townhouse is 20 years old and has not been renovated, so things are often failing, or ....?   If I know what is causing the issues, I can better suggest a solution to "the day to day phone calls and dealing with tenants".


We had a half duplex and very high maintenance tenants for many reasons.  But, DH figured he made $50 per hour to deal with them (the property manager cost), and did not mind being called away on short notice at dinner time that much.


Michael in ABQ

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Re: Next Steps in Realestate
« Reply #2 on: September 24, 2017, 03:46:31 PM »
I've been renting for over a decade now. In a typical month I might communicate with my landlord once, usually less. Our current house has a local landlord that has been excellent but there have been some maintenance issues. Washer and dryer both had to be replaced in the first year, big problem with the plumbing where they almost had to redo the entire house (luckily the interior pipes were fine but the pipe from the meter into the house leaked multiple times).

If you have tenants calling you multiple times per week for stupid shit then you probably need to find new tenants. If they're calling because of legitimate maintenance issues that are not being fixed in a timely manner than obviously you need to fix them so they don't keep bugging you. If you're six months in to a one year lease I'm not sure what you can do other than refer them to the lease and let them know that you will only be responding to actual problems.

lilgroundhog

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Re: Next Steps in Realestate
« Reply #3 on: September 24, 2017, 03:51:59 PM »
Honestly in the over 6 months I've had tenants, I've had very few issues with the property or tenants.  The issue is actually me and on the couple of occasions that the tenants wants to treat something like an emergency when it's not and I'm tired enough I'm having issues dealing.  What I'm looking for is another way to stay in real estate, as passively as possible, but without needing to be the one fielding the issues from the tenants. 

My first thought is to find a business parter who can deal with tenants while I work on finding funding and acquisitions.  I can also be involved in the office behind the scenes.  But at some point I'm going to want to call say enough is enough and scale back.

Michael in ABQ

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Re: Next Steps in Realestate
« Reply #4 on: September 24, 2017, 09:20:30 PM »
Honestly in the over 6 months I've had tenants, I've had very few issues with the property or tenants.  The issue is actually me and on the couple of occasions that the tenants wants to treat something like an emergency when it's not and I'm tired enough I'm having issues dealing.  What I'm looking for is another way to stay in real estate, as passively as possible, but without needing to be the one fielding the issues from the tenants. 

My first thought is to find a business parter who can deal with tenants while I work on finding funding and acquisitions.  I can also be involved in the office behind the scenes.  But at some point I'm going to want to call say enough is enough and scale back.

You could probably hire an answering service to field the calls and then they send you an email. With a minimal volume you could probably find a solution that's pretty cheap. Any property management company is probably going to charge about 10% of the gross income to manage a small property like that.

waltworks

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Re: Next Steps in Realestate
« Reply #5 on: September 24, 2017, 09:24:48 PM »
If involving a property manager is not possible because your "margin is too small" then the bottom line is that you bought a place that wasn't a good deal.

If you hate dealing with tenants and worrying about the property, then self-managing is probably a bad idea for a variety of reasons.

Sell the place and get your life/sanity back. You will lose money doing this. Consider it payment for an important lesson in RE investing.

-W

msheldon

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Re: Next Steps in Realestate
« Reply #6 on: September 24, 2017, 09:40:16 PM »
If you want to minimize your interactions with tenants, and the traditional way of doing that by hiring a property manager is too expensive for your real estate (right now-- that may change in a few years as rents slowly rise), then an idea from the 4 Hour Work Week comes to mind: put a system in place that minimizes your input. Get a landlord phone number that your tenants use to contact you for emergencies. Never answer it, but quickly listen to voice mail and respond appropriately. To minimize the number of voice mails, your recorded message should remind your tenants that voice mail is for emergency issues only and the proper way to contact you for non emergency issues is via email. Back this up in the lease: emergency calls for non emergency issues receive a $50 surcharge as extra rent, and clearly list what entails emergency issues (consider: anything that requires 3 or fewer days for landlords to fix, and anything involving emergency personnel like Police/fire/etc). This will funnel just about all of your interactions into email which may be and easier communication medium for you. If you need more time to comfortably reply to emails, set up an auto reply to set expectations appropriately. (Like you only read email on Tuesday mornings, so please be patient if the email is sent when you don't have email access. Set up some excuse to give you more time to reply.)

If what you really want is a NO hassle investment: put your money into index funds and skip landlording entirely. Use a Vanguard Lifestyle fund or Target Date Retirement fund and you won't even have to worry about balancing your asset allocation. Set up auto investments from your paycheck and never think about it again.

Good luck!

Cwadda

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Re: Next Steps in Realestate
« Reply #7 on: September 25, 2017, 07:31:28 AM »
A few posters have said they deal with maybe a few calls a month.  I'm in the same boat, I very rarely get calls or complaints.  In the past 2 months, I've gotten one request for a major bathroom renovation, which I granted (and did myself yesterday).

How much work are you doing on the place before renting?

Fishindude

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Re: Next Steps in Realestate
« Reply #8 on: September 25, 2017, 08:35:41 AM »
Consider a commercial property for your next investment and do a triple net lease where the tenant takes care of everything. 

MommyCake

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Re: Next Steps in Realestate
« Reply #9 on: September 25, 2017, 09:34:48 AM »
Well my opinion may not be popular, but I'm gonna state it anyway.  I think you may just have "bad" (annoying) tenants.  It sounds like you might think the tenants are calling you for minor things.  I've read on this forum several times lately of renters complaining about leases that state something along the lines of "Any repairs under $50 are the tenants' responsibility".  This is a tactic busy landlords use, not to be "cheap" as some people may think, but to reduce the phone calls and complaints for minor things like batteries in smoke detectors, light bulbs, etc.  If this is not already in your lease, you can still nicely let your tenants know their issues are not emergencies. Health and safety concerns, like heating, always require an immediate response.  But most things, you can wait and handle when you can.  For example, recently someone called on a Thursday because their dryer wasn't working.  I did not have to drop everything and run over there.  But by Sunday night, they had a working dryer and they were happy.  One time with a particularly needy tenant, I sent her a certified letter telling her that all non-emergencies issues should be sent in an email, and I would respond within one business day.  For emergencies only was she to call my cell phone.  There really shouldn't be day to day phone contact; most tenants months go by and I don't hear from them.  Don't let this experience sway you away from real estate.  This may sound harsh or cold, but the reality is, if you switch to a property manager, your tenants will not get immediate service anyway.  They will probably have a number to leave a voicemail or an email address to report issues, and they will be tended to when the company gets to it.  Think of yourself as a business, and not your tenants' friend that they should call at 10pm to say the grout on the tile is starting to look discolored. 

Cwadda

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Re: Next Steps in Realestate
« Reply #10 on: September 25, 2017, 10:46:06 AM »
Consider a commercial property for your next investment and do a triple net lease where the tenant takes care of everything.

I would not recommend this for the OP.  Clearly, he/she said they weren't interested in dealing with large-scale operations. Commercial real estate is by no means small. It has completely different financing structures, requires a lot more capital, and has 60 page leases.  It's certainly not less complex than residential.

tralfamadorian

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Re: Next Steps in Realestate
« Reply #11 on: September 25, 2017, 11:44:46 AM »
It sounds like the tenants are training you- not the other way around.  I tell my tenants that I don't have good cell phone reception in my house (true), so to text or email if they need anything. Also that I don't check my phone after 5, so if there's an emergency please call 911.
 
On average, I hear from my tenants several times in the first couple of months, then maybe once every two or three months after that.  I don't talk to my tenants on the phone unless it's a true blue emergency. 

lilgroundhog

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Re: Next Steps in Realestate
« Reply #12 on: September 25, 2017, 07:52:02 PM »
I have a really good support network on asking questions about tenant issues and my tenants are not needing.  Many landlords would actually really like them as tenants because they don't bug me for every little thing like a lot of tenants do. Nothing they have asked for is really unreasonable.  In that respect I'm actually really happy with the property and tenants.

My issue is really that I'm an introvert with limited patience when it comes to deal with people and I am a service professional for my day job.  Conversely I'm really passionate about providing a high level of service both to my tenants and at work.  As work zaps so much of my social energy I feel at times I just don't have the energy to provide the level of service I want to my tenants after a long day at the office.  What I'm looking for is a creative way to stay in real estate, maintain my desire level of customer service (if needed), but not have to provide the customer service myself.   I'm not scared of complexity nor saying I would never want to be involved in a larger operation, but my goal isn't to make just as much money as I can, especially if I'm going to end up a slave to the business.

I will admit commercial has crossed my mind, but I'm not sure I know where to get started.  Helping to build a slightly bigger operation and then selling out my portion does have a certain appeal.  I have also thought as I eventually earn capital either getting into notes or funding syndication deals, but at the moment the main resource I have is my hustle.  I feel in a lot of ways I just don't know enough to figure out my options.

tralfamadorian

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Re: Next Steps in Realestate
« Reply #13 on: September 25, 2017, 07:59:51 PM »
What I'm looking for is a creative way to stay in real estate, maintain my desire level of customer service (if needed), but not have to provide the customer service myself.   

Hiring an employee sounds like it may be a good option. 

Cwadda

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Re: Next Steps in Realestate
« Reply #14 on: September 26, 2017, 07:25:21 AM »
What I'm looking for is a creative way to stay in real estate, maintain my desire level of customer service (if needed), but not have to provide the customer service myself.   

Hiring an employee sounds like it may be a good option.

Quote
If involving a property manager is not possible because your "margin is too small" then the bottom line is that you bought a place that wasn't a good deal.

Kroaler

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Re: Next Steps in Realestate
« Reply #15 on: September 26, 2017, 09:55:24 AM »
Read reply 6 and reply 5.  I agree with them the most. 

I believe you may have invested too much in the property for the rent you are receiving and I also believe your being too accommodating to your tenants.   

I currently DO NOT have tenants so take my thoughts with a grain of salt.  . . .

I'd like to steer you to this blog.  He is a member here and has lots of great tips to make landlord life easier.

http://www.nononsenselandlord.com

« Last Edit: September 26, 2017, 10:00:03 AM by Kroaler »

tralfamadorian

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Re: Next Steps in Realestate
« Reply #16 on: September 26, 2017, 03:27:57 PM »
Hiring an employee sounds like it may be a good option.

Quote
If involving a property manager is not possible because your "margin is too small" then the bottom line is that you bought a place that wasn't a good deal.

Actually, I was taking the comment about not being able to afford a property manager into account.  If I hired a SAHP to do what I do for my rentals at $15/hr, it would be at a stretch $30/mo per property.  Much less expensive than property management, no? 

waltworks

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Re: Next Steps in Realestate
« Reply #17 on: September 26, 2017, 05:42:17 PM »
I'm going to go out on a limb here and say that hiring a random person at $15 to do property management is probably not going to end well. If you want to do it yourself, awesome. Have at it. That's what I've always done, and I don't mind it. But if you *don't* want to do it, and you want it done right (ie, in such a way that your HUGE investment is taken care of, good tenants are found, you don't get sued for not taking care of something you're legally obligated to, etc) then you should hire someone who actually manages property as their job. And it will not cost $30/mo.

Good property managers can keep your place occupied, have workers on staff who will fix stuff for cheap or at least know the best plumber to call, will deal with evicting tenants if needed, do thorough walkthroughs when you change tenants, etc, etc.

TANSTAAFL, folks. If random $15/hour SAHPs were awesome property managers there would be no such thing as the property management industry.

-W

Goldielocks

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Re: Next Steps in Realestate
« Reply #18 on: September 26, 2017, 07:23:51 PM »
I'm going to go out on a limb here and say that hiring a random person at $15 to do property management is probably not going to end well.

-W

!!!!

DH felt he was fairly paid for $50 per hour (excluding travel time) to do this work personally.  A more realistic low figure would be $40 per hour.  That was in an area when the effective minimum wage was $7-8/hr  (e..g, no one would work for less than that for ANY job..)

It needs people skills, maintenance skills, etc... if not you just have a call forwarding service, really.  now THAT you can get for $15/hr.

tralfamadorian

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Re: Next Steps in Realestate
« Reply #19 on: September 26, 2017, 08:13:12 PM »
Wow!  Guess some folks don't like my idea.

No, of course I don't mean to hand over the reins for everything to some random person that you just hired nor did I say that they should be your property management.

But it seems like the OP is stressing out over the small stuff. The type of employee I'm suggesting is the tenants' first point of contact- the person that sifts between the tenant wants (explains to tenants that wants=/needs), minor repairs (sends to handyman with a cc for OP) and the important stuff that OP actually needs to know about.  Not filling units or taking applications, neither of which OP mentions as stress points.  You know, the type of person that the property management companies hire for $12/hr to do the exact same thing.  Call it a personal assistant if the label is important.

waltworks

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Re: Next Steps in Realestate
« Reply #20 on: September 26, 2017, 09:38:34 PM »
Look, let's cut to the chase here. OP most likely bought a terrible investment property and is probably losing money (even if month to month they're making a few bucks right now) once you account for some maintenance/capex costs. They have zero cushion to hire a property manager, but get really stressed out doing the job themselves.

This is A DISASTER. As yet, it doesn't sound like it's been a *financial* disaster but the writing is on the wall. And it's clearly a quality of life disaster already.

There is no clever hire-the-neighbor solution here that will save the "investment" or the OP's sanity other than selling the property. Full stop. Get rid of it as soon as possible and either 1) invest in something else, or 2) figure out how to buy properties that cash flow so you can hire a manager and enjoy your life.

-W

Cwadda

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Re: Next Steps in Realestate
« Reply #21 on: September 27, 2017, 08:49:28 AM »
Look, let's cut to the chase here. OP most likely bought a terrible investment property and is probably losing money (even if month to month they're making a few bucks right now) once you account for some maintenance/capex costs. They have zero cushion to hire a property manager, but get really stressed out doing the job themselves.

This is A DISASTER. As yet, it doesn't sound like it's been a *financial* disaster but the writing is on the wall. And it's clearly a quality of life disaster already.

There is no clever hire-the-neighbor solution here that will save the "investment" or the OP's sanity other than selling the property. Full stop. Get rid of it as soon as possible and either 1) invest in something else, or 2) figure out how to buy properties that cash flow so you can hire a manager and enjoy your life.

-W

Agreed. Waltworks posts gold around the RE forums on a regular basis.

toganet

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Re: Next Steps in Realestate
« Reply #22 on: September 27, 2017, 09:14:42 AM »
I have a really good support network on asking questions about tenant issues and my tenants are not needing.  Many landlords would actually really like them as tenants because they don't bug me for every little thing like a lot of tenants do. Nothing they have asked for is really unreasonable.  In that respect I'm actually really happy with the property and tenants.

My issue is really that I'm an introvert with limited patience when it comes to deal with people and I am a service professional for my day job.  Conversely I'm really passionate about providing a high level of service both to my tenants and at work.  As work zaps so much of my social energy I feel at times I just don't have the energy to provide the level of service I want to my tenants after a long day at the office.  What I'm looking for is a creative way to stay in real estate, maintain my desire level of customer service (if needed), but not have to provide the customer service myself.   I'm not scared of complexity nor saying I would never want to be involved in a larger operation, but my goal isn't to make just as much money as I can, especially if I'm going to end up a slave to the business.

I will admit commercial has crossed my mind, but I'm not sure I know where to get started.  Helping to build a slightly bigger operation and then selling out my portion does have a certain appeal.  I have also thought as I eventually earn capital either getting into notes or funding syndication deals, but at the moment the main resource I have is my hustle.  I feel in a lot of ways I just don't know enough to figure out my options.

I'm going to suggest something that might sound odd, but that I think you should consider. 

Maybe the issue isn't about landlording, but rather your day job.  If customer service saps all of your social energy, perhaps it is not the best job for you.  I suspect you may feel the impact of that energy drain in other areas of your life, as well.

Might it be possible for you to make a change in your day job to something more suited to your introversion?  If that's possible, you may find that the customer service skills you've built make it easier to be a landlord, and that pursuing that as a path toward FIRE becomes more realistic.