Lessons From the Rental World

For close to six years my husband and I have been adding rental properties to our portfolio. We aren’t afraid of some sweat equity and have an ability to do most “handiwork.” (For the record he’s handy and I’m the painter and trash hauler.) Being in real estate I take on the job of finding new tenants, collecting rent and hiring out the work that we are unable to do. For the most part we have had good results but as with anything it isn’t all rainbows and sunshine and like I’ve always said about many aspects of life, “if it was easy, everyone would do it.”

I’m not going to lie- I can be a pushover. Need to be a few days late on paying rent? No problem. Your lawn is so out of control that your push mower won’t tackle it? I’ll send someone over- just this once or maybe twice. Couldn’t take that last load of trash when you moved? I got it- I actually bought a truck that still smells of stale cigarettes and strawberry air freshener cans after 3 bottles of Febreze to handle this type of thing. For the most part people are appreciative and it is rarely that anything becomes a problem- until it does.

This year one of my New Year’s Resolutions was to start running the rental business more like a business than a hobby. This meant that I had to treat myself as if I was my own employee. Would I tolerate my employee allowing people to be chronically late with rent? Let them use- “but they are really sweet” as a reason to not collect money for someone that “forgot” to get their utilities switched over for 6 weeks? No! But I found myself allowing that constantly.

The first test came pretty quickly when a tenant informed me they would be late on rent the day it was due. I answered with a “No problem” like always but this time added that they would need to go ahead and add the late fee to their payment. Miraculously the rent was on time. Another time when doing a routine drive-by I noticed garbage piling up outside. The solution: an increase in rent to offset the garbage service I started paying for since that had been an ongoing problem. I was feeling pretty proud of myself for these little wins. I was constantly singing Patti LaBelle’s “New Attitude” which if you ever listen to it will instantly make you want to change all aspects of your life and buy a new dress and a new hat.

I had a tenant that had been with me for over a year that was super nice but always late with his payment. I moved his due date to make it easier for him to be on time. I accepted late payments without penalty and turned a blind eye to the trash piling up beside the house. It wasn’t until April 6 when I hadn’t yet received March rent and couldn’t get a response from him that I decided to do something about it. I sent a certified letter that day with his 30-day eviction. I knew it had to be done but felt guilty. April 10 he signed for the notice making his final move-out date May 10. That didn’t happen. Could I give him the weekend? Sure. No change. No utilities No more patience. I filed a judgement to have him removed May 15. For over 10 days he evaded the officer until finally we were about to get a June 1 court date which gave him until June 10 to vacate. We entered the house that day and my heart sank into the crawl space. The house had been wrecked. There were at least two fist sized holes in EVERY wall, the picture window had been busted, the bathroom door and a few light fixtures were missing as was all of the paneling and floor trim. A bathroom window had been pushed in and broken and unbelievably he had at one time decided to make a pass-thru window/bar between the dining and living rooms. To no one’s shock and amazement this project had not been completed.

In all there is approximately $5,000 damage to a house I was renting to him for $550.00 per month. This doesn’t include the $1998.00 he owes in back rent. We have another court date to determine damages and a payment plan. This has unfortunately become a very expensive lesson in running a rental business or any business with your heart.

To insure this doesn’t happen again I have been forced to make a few changes: I have educated myself on the landlord/tenant laws in my area so I know exactly when I can start to enforce eviction, I have reviewed my leases to make sure that I have a recourse for when things start to go bad and I have made sure to stick to my guns when it comes to guidelines that the lease sets out. Additionally, I have implemented a monthly Profit and Loss statement until waiting until the end of the year so I can remind myself of why it is important to collect rent on time and minimize the need for large repairs. In doing these small things I am protecting my investment and reducing the most stressful aspects of the business so that it can grow. It has been a very expensive lesson and as Patti (we are obviously on a first name basis) says, “I never knew I had such a lesson to learn.”

Maryville Homes Property Kat

(865) 245-0111

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