I was cruising around the BiggerPockets Forums today and I stumbled upon a thread started by Karen M. titled "Tell Me What You Hate About Landlording."
I thought it was a fascinating discussion – to see what some people consider the worst or best parts about Landlording. After all, we landlords tend to get into this "real estate investing is awesome!" mentality (bloggers, like me, are most guilty of that!) and love to talk about the good stuff... and often times the hard stuff gets ignored because no one likes a complainer.
Well... I'm going to do some complaining!
It's my hope that this post can serve dual purposes:
a.) Help others get a realistic vision of what landlording may look like and
b.) Hopefully generate some incredible discussion in the comments.
Let me preface this article with this: I already know about 20 people are going to put a comment below that says "this is why I use property management." I agree – many of these problems (not all, but some of them) would not affect me if I had a property management. However, any honest real estate investor who uses property management could easily come up with a list of their own of 12 things they hate about investing in real estate. Arguing property management vs. self management is a topic for another day. The fact is: I am a landlord.
Finally, if you are reading this, I would LOVE if you do me a favor and comment at the bottom of this post, offering me (and everyone else reading) some advice to help overcome some of these issues. Also, let me know what you hate the most about Landlording. I look forward to seeing what you have to say!
Without further suspense, I give you: 10 things that I absolutely HATE about landlording.
1.) Never Truly Taking a Break
Although I set specific office hours, don't answer the phone in the evenings or weekends, hire others to do most of the labor... I still never get a true break. Even if I get a physical break, my mind never stops working on the landlording business. I still carry the stress and the knowledge that things might be going wrong right now. Last January I took a cruise through the Caribbean. No cell phone, no computer, nothing. However, I still thought of, planned, schemed, read, and discussed real estate investing on the trip.
Sometimes... it would be nice to simply ignore it all.
2.) Being Lied To
"I mailed the check last week!"
"I don't have a dog – you must have just seen my nephew in the window."
"I called twice this week and no one answered, so I just let the roof leak destroy the property."
Ugh. I hate lying tenants... but I can't seem to escape it. Even when I've caught them in their lie... they continue to lie to try and cover up the previous lie. It's a never-ending battle!
3.) Dealing with Contractors
This is just the worst. Trying to find reputable contractors that don't demand my first-born child is ... tough. However, even more than just the money, it's the dependability. Even the expensive contractors fail to show up when they are suppose to, fail to bill the correct amount, fail to answer their phone when there is truly an emergency. Sometimes I feel like I go through contractors more often than I change my socks.
4.) Water Leaks
I've had four major water leaks in the past six months, each causing several thousand dollars worth of repairs. The fact is, water is a battle that every real estate investor will face with any property they buy, but it's especially bad for landlords with older properties. Whether it's a roof leak or a plumbing leak, water is the enemy. For those of you battling the same thing, be sure to check out Darren Sager's great article, "The 4 Things to Check When Water-Proofing Your Potential Investment Property."
5.) Watching Slow Motion Train Wrecks
As a landlord, I get a pretty good idea of how someone is living, how they act, and what their past looks like (from my in-depth tenant screening process.) Sometimes it's tough to watch and not be able to do anything about it. I think of it as a "slow motion train wreck." I can see drugs tearing their life apart, selfishness tearing their kids apart, uncleanliness tearing their health apart. All I can do is kick them out... I can't really get involved in their personal lives. I want to sit them down and make them read every one of these books. I want to teach them how to clean, how to raise their kids, how to respect their neighbors. But I can't – I'm just the landlord, not their Dad. All I can do is watch the slow motion train wreck and try to avoid getting hit.
Oh... the bane of my existence. I would estimate my wife and I spend 20 hours a month on insurance alone. There is always a policy being canceled, changed, renewed, increased, or added for no real apparent reason. Recently we've doubled the fun by all the changing laws and policies regarding flood insurance. Properties that have been free of the need for flood insurance suddenly now need it. Other policies are requiring us to obtain an "elevation certificate" – for $600 – just to keep the current flood insurance we already have. My wife spends more time talking with our insurance agent than her own mother these days... and it's not getting any better.
7.) Being the Bad Guy
Sometimes I just get tired of being "the bad guy" in every situation. For example, on Sunday we had a small water leak (yep, again) in a top floor unit from a drip in a water supply line in the attic. We sent a contractor over immediately to fix it. The tenant called today, livid, to chew us out for the leak. To them, it's as if I climbed into their attic and cut the water line just to be a jerk.
The more properties you accumulate, the more paperwork it takes to manage and control them. From closing documents, insurance documents, mortgage documents, tenant files, leases, applications, and taxes – the paperwork can really pile up. Even the most organized landlords out there still have to deal with mountains of paperwork and office work just to own those properties. For example, one of the cities I own rental property in now requires I fill out a new business license for every property in that town, every year. Yes, it's only 10 minutes here, 10 minutes there... but it adds up.
I often times think of landlording as babysitting. When you let a tenant do whatever they want, they will quickly become their own worst enemy and destroy the property, turning it into the town dump. As a result, we have to consistently monitor the tenants to make sure they are "behaving." For example, in the past week, we've had to send letters or call tenants about:
Throwing garbage over their apartment decks
Piling trash bags on their apartment decks
Parking on the lawn rather than in the parking lot
Not throwing garbage in the woods because the dumpster is too far away
And a lot more that I'm not even aware of because my wife is amazing at trying to shelter me from it all!
Sometimes I just want them to treat the property the way I treat my own house. However, I know that's not going to happen anytime soon.
Trying to refinance rental properties is a pain. I'm working through two right now ... and it seems every day there is a new form that they need me to fill out, a new document they need me to fetch for them, a new law that they need to work around. I understand the need for the laws and the rules and the rigidity... but sometimes it just drives me crazy.
11.) The Aftermath of an Eviction
To be honest, I don't actually mind evictions that much. We screen tenants well so it's not a big concern (click here to check out my screening process) and when we have had to do an eviction, it's usually pretty quick and painless once my lawyer takes over. However... it's the aftermath that I hate. The junk they leave behind, the filth on the floors, walls, ceilings... everywhere.
Finally, let's talk about CapEx. CapEx, or a capital expenditure, is a non-regular expense that needs to be replaced only once in a while, such as replacing the roof, replacing the furnace, replacing the driveway or parking lot, replacing all the windows, etc. Let's be honest... our properties are falling apart every minute of every day. Every year the plumbing gets older, the roof shingles get a little thinner, the asphalt a little more cracked. This stuff may seem like it's not a big deal, but the fact is: there is ALWAYS something new to fix and replace on a property. There is no "done." This is why it's so important to budget for CapEx when analyzing a rental property, and why we make it an important part of the BiggerPockets Rental Property Calculator. Ignoring CapEx is a quick way to lose your expected cash flow.
I know this post sounded like I'm whining because... well, I am. However, I still love being a landlord because of all the great things it can do. Perhaps that will be my next article!
This article 12 Things I HATE About Landlording originally published on The Bigger Pockets Blog and is Copyright 2014 BiggerPockets, Inc.