So you want to be a landlord, grow your existing property holdings or
do a better job with the properties you already own.
"
Landlording is not a spectator sport"
Some Basic
Truths
If you want to sit
back, relax and make a million dollars before the year is over keep
buying those Lotto tickets cause that ain’t happenin’ here.
A lot of people stay up way too late at night, buy an expensive book
or “course” they saw on TV and promptly find themselves
with financial, personal and legal problems.
Don’t: invest
in neighborhoods that you are not comfortable in.
Many years ago a
guy I used to work with called me up. “Tim, are you still in rentals?”
Yes. “Well I was offered this great deal and wanted your opinion.”
He went on to tell me how he received a cash distribution from a profit
sharing account when he changed jobs. Shortly afterwards someone had
offered to sell him six duplexes for $50,000 on the near northside of
Milwaukee.
One paper this deal
rocked. Pure cash flow. All of his investment back within a year. He
would have been a fool to pass it up. Or would he. I told him “Jim,
I’ll tell you what. Go down to the properties tonight after work
and inspect the basements.” He responded by questioning my sanity.
He perceived the area to be too dangerous for him to be in after dark.
“I’ll get killed” he exclaimed. So I asked the next
logical question “Who is going to do your maintenance.”
Why he was, of course. “OK, Jim now you work during the day. Are
you going to leave your tenants without heat from Monday morning to
Saturday or are you going to take a day off work every time something
needs fixed?” Fortunately for him he passed on the deal.
Don’t: invest
without knowing the laws.
I came into the
office Tuesday morning around 7:30 am. The phone rings. My secretary
tells me that the guy on the line had called three times in the twenty
minutes she has been in the office wanting desperately to talk to
me. He wants to sell some rental houses –TODAY.
Seems he went
to a get rich quick seminar a few months prior and picked up three
properties. Well the tenants in one of his five units didn’t
pay the rent for over a month. So the Friday night before he called
me he went over to the property, found not only were they not paying
the rent but they had also broken a few windows.
So Rick examines
the situation. They hadn’t paid and they were destroying the
place. Time for them to leave. He goes in and tells them, as they
hadn’t paid rent they weren’t tenants. “Time to
go” he shouts as he pushes them out to the street. He changes
the lock and as he is finishing putting their trashy furniture out
on the curb the police arrive. He is arrested and spends the weekend
in jail, but only after he is forced to turn the key to the new lock
over to the non-paying scoundrels.
So after he gets
out jail he calls me. He had put twenty percent, $15,000, down on
the properties just three months ago, but if I would just take over
the mortgage they were mine. And could we do it today. Please
August
2001 USA Today article on Real Estate investing
Journal
Article on Rental Ownership and the Milwaukee
Landlord Training Program
|
