I hear all these terrible things about investing in rental property and most of them have to do with tenants. So I thought it was important to digress from the technical aspects of owning and operating single family rental homes in the Dallas, Fort Worth, Denton area and address this tenant phobia head on.
So, here are the oh so popular myths:
1. Tenant’s call about running toilets in the middle of the night!
First of all, I am still waiting for this call. Secondly, let’s think about this call: Someone is calling you to tell you that there’s something possibly wrong with your own property. They are taking the initiative to call you in the middle of the night! What if it was your vacation home and your neighbor noticed a water leak? Would you not want them to call you before there was too much damage? So, why does the fact that you have a tenant – a paying customer – calling you is such a bad thing?
Another way to look at this is – what if your boss wants you to get something done asap? He or she may require you to work till late at night or over the weekend. If you are a salaried employee, you may not even get paid overtime, still you do it anyway. But, you dread fixing your own income producing asset?
Well, the difference is that – they broke it! How many people do you know who actively break toilets in the middle of the night? What’s more likely is that the toilet is old and you did not install a new one as a part of the rehab. Learn how to do a full rehab before you rent the property here.
2. Tenants will trash the property!
What if you are a tenant? Will you trash someone else’s property? Are you not more careful with a rental car even though you have insurance? There was a Seinfeld episode where Jerry tells the car rental agent: “Yeah, you better give me the insurance, because I am gonna beat the hell out of this car.” The reason it’s funny is because people don’t do that. They don’t beat up the car on purpose. It is, for some strange reason, natural to be more careful with someone else’s property than your own. May be it’s the embarrassment that you will feel if something happened to it. This whole idea of I will be careful with someone else’s property but they will trash mine is a severe ‘better than thou’ attitude. Lose it.
3. They won’t pay and I’ll have to drive around collecting rent!
First of all, you drive around paying people all day. Picking up a check or two on the way shouldn’t be that bad – should it? But seriously, you don’t do that. You don’t drive around collecting rent. Tenants mail you a check at your business P.O box or pay online. Most tenants will setup automatic online payments from their bank account. It’s all about tenant selection and finding the qualified people to give possession of your property. The more careful you are before you put them in, the less trouble you will have. People don’t change just because they rented your house. They are and will continue to be who they were. Sure, circumstances change but good people will handle those changes in the best manner possible.
4. Tenants are only looking for a way to sue people!
Do the right thing. Treat them as paying customers and not as someone who deserves a lesser life. Communicate clearly and with respect. I am no attorney but I have always felt that these are the best defenses one can setup. If you read the post on creating your team, I do talk about your attorney as a part of your team. But also look at why I say you need one. I do not mention defending yourself or for evicting your tenants but for preparing deeds and reviewing paperwork for the most part. But they will also correctly advice you what kind of liability protection you need. Yes, innocent people do get sued. Ours is a rights based society and if someone feels that their rights are violated, they have that avenue. Unscrupulous lawyers can incite such feelings as well. Bottom-line to me is, know what is right and do it. Then, defend with dignity if the need arises. That’s all.
Tenants are paying customers. Your rent check is probably their biggest line item every month. Over a lease period they are paying you a sum that can perhaps buy a new car. It is your job to provide them with the best product that’s safe, up-to-date, clean and all functional. Once you have created such a product it is your job to market it with defined expectations, execute a thorough selection process and communicate with clarity.
So drop the negativity and get excited about the rental business. You are providing someone a home. A place that they can come back to after a grueling day at work to spend time with the people they love. It’s one of the oldest businesses there is.