Rental Properties: Not For The Faint Of Heart

Rental Properties: Not For The Faint Of HeartNote: This post was written in 2012 by the previous owner of this blog.

I own 2 rental properties and there are days when I just want to get rid of them. Don’t get me wrong, they make great investments if you have tenants and if you don’t hear from your tenants. Unfortunately, there have been several occasions when I did not have a tenant and I heard from them too often about problems.

I’ve dealt with everything from the 2AM call that the water heater burst and is leaking to the 5AM wake up call that a pipe burst and the basement is flooded. There have been several other issues, such as a broken furnace, roof leak, etc.

If you’re thinking about owning rental properties, here are some practical things to consider over and above the usual advice:

Have a realtor find you tenants

I’ve always had success using Craigslist, but lately, the Craigslist advertisements have gotten me nowhere. Realtors have access to many more renters through the MLS system. Will it cost you money? Sure, but it’s worth the headache of not having to schedule appointments to show the property.

Have a good reliable contractor to do handy work

This can be a valuable investment because they’ll give you a good deal if they know you’ll call them for all your issues. You can find a good local one on Yelp.

Get a PO Box and Google Voice Number

You never want your tenants to know where you live or your actual cell phone number. It’s better if they call your voicemail number and you can check it daily on your free time. About the address, if there are bitter feelings afterward, you don’t want them knocking on your door and exacting revenge if you kick them out.

Have a back-up contact if you’re not available

I took a 5 hour flight from Philly to San Francisco only to land and find out that my tenants have been trying to contact me because they’re heater broke. Needless to say, giving them a second person to contact in the event of a real emergency is important.

Don’t be friends with your tenants but treat them nice

You need to be tough at times. It’s hard being tough to your friends. So remember that tenants are tenants, not friends. On the other hand, you also don’t want them to trash the place or call you for every minor repair. There’s a good balance that can be reached by being nice, but not being too personal.

Are there any other practical tips I missed?

About The Author

Edwin is a marketer, social media influencer and head writer here at I Am 1 Percent. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.


11 Comments

  1. Drew @ Epicfinances.com

    I see people far too often talk about rentals as if it is “passive income” — but I am COMPLETELY skeptical to whether it is worth the hassle.

    Reply
    1. iam1percent

      Drew, it is certainly a hassle and requires one’s activity. Certainly not passive by any stretch of the imagination. However, if you’re in a position to hire a property manager and your rent covers the mortgage, insurance, prop tax and more, it may be worth considering.

      Reply
  2. Nick

    I hadn’t thought of #3 before, but that’s a great point. I have a 3-family brownstone in Boston w/ a buddy of mine who does most of the tenant chasing, so I’m not on the front lines. I’m more of the cash flow if we need it guy.

    I’d add to be quick to address tenant needs and demand equal timeliness with rental payments. It’s a business. Be nice but be firm. We learned this when a $3500 per month apartment was late, then very late, then stopped paying completely and then only 5 of the 6 tenants got out. It stretched over two rental periods, so we were killed for two years. (Student housing, so if it’s not rented by September you’re screwed).

    Also, raise the rent every year, even if by only a few dollars each month. A few bucks won’t make them move, but waiting 4 years and then wanting to raise it a few hundred to keep up with market and rising costs of ownership will have them move out faster than you can imagine.

    Reply
    1. iam1percent

      Good points..I haven’t done a good job of raising rents every year..but you make a valid argument.

      Reply
  3. so

    Get a property manager for no more than 6%, put escalator clauses into the leases, and if your tenants are going to move out, offer them a finder’s fee for a new tenant.

    All these help make it a more passive investment.

    Reply
    1. iam1percent

      Good points, though 6% of the rental income will eat into my profits. I may consider it and build it into the calculations of my next rental property. Its probably worth not having the headache.

      Reply
  4. Josh @ Live Well Simply

    Good advice. Especially the part about being nice, but not friends. Otherwise things get weird when you have to be tough with your tenants 🙂

    Reply
    1. iam1percent

      Exactly. I learned the hard way with my first tenant where I felt bad dinging them on a few things when they left so I returned their full security deposit.

      Reply
  5. Dollar D @ The Dollar Disciple

    This is great advice. I hadn’t thought about the google voice number but we do have a PO Box. We should also setup an alternate contact but so far there have been no emergency repairs.

    Reply
  6. Six

    We have a California and, so far at least, and at the risk of offending Mr. Murphy, it hasn’t been too bad so far. We decided to take the hit and hire a property mamagement company. They screen the applicants, including a financial background, collect the rent and contract with a local business to do repairs. We also hired a mom and pop gardner to take care of the lawns. We don’t have any contact with the tenants and the only thing we see from the management company is a financial statement as well as a statement on any repairs made as well as getting a bill from the gardner. The management company charges 10 percent of the rent and the gardner is running $70 a month.

    I figure we’re about breaking even at the current rent which is about what the market will allow. When the market bounces back, and I am absolutely confident it will, we’ll be in a position to realize a small income as well as having the mortgage being paid by someone else.

    So far so good.

    Reply
    1. iam1percent

      In hindsight, I wish I built a prop management fee into my rental calcuations, but doing it now would put me in the red. I like the idea of not having to worry about the phone call. Any future rentals would take a prop management company into consideration.

      Reply

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