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Your First Rental Property

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It’s not uncommon that your first rental property is your worst rental property.Lessons learned from your first rental property

After all, it’s where you cut your teeth and learned from your mistakes.

Sometimes you learned you picked the wrong area, or perhaps the wrong type of property, or maybe it was where you evicted your first tenant out of.

Whatever you learned, that first rental property is what can make or break you.

You see often the first one is what discourages investors and landlords from carrying on. they learned that “all tenants are bad”, “you can’t make money in Real Estate” or simply that “landlording is too hard”.

On the other hand for many rental property investors, that first rental property is a stepping stone to a second, third and even more properties.

So what’s the difference?

How You Deal With The Experiences Learned In Your First Rental Property Is Key

It’s simply how you deal with it. At your first sign of problems is it fight or flight? Is it learn to do it right or get out while the going’s good?

How you react from the challenges you run into, what you take away from those challenges and how you correct them can make all the difference in succeeding or quitting before the race has really begun.

Like anything, being a landlord comes with a learning curve, you can’t be expected to now it all your first day. You need to go in eyes wide open, learn from any problems that come up and adapt so you avoid similar problems in the future.

Think of it as perspective.

With the right perspective you understand it may not necessarily be easy at first, but it does get easier. And hopefully with the resources on this site or that I share on our Facebook page (if you haven’t liked us yet on FaceBook, what’s holding you back? find me here, https://www.facebook.com/TheEducatedLandlord/ ) you’ll be learning even faster what it takes to be an Educated Landlord!

I see many landlords who simply give up when they face the adversity of a bad tenant or a rental property challenge, don’t be that landlord. Be the successful one who fights through the adversity.

Maybe You Should Quit?

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If you’ve never read the book “The Dip” by Seth Godin*, it might be worth checking out.

Seth talks about the dip you sink into before you gain the momentum to succeed. Sort of along the line of it’s darkest before the dawn.

What it boils down to, is that so many people get to the brink of success and then it gets tough, or it gets boring or they get overwhelmed. So they quit.

Now sometimes it makes sense. That dip may be huge and quitting might be the right solution.

But far too often the issue I see with landlords is they quit at the dumbest time.

They just finished evicting a bad tenant or they just dealt with an expensive repair and now they throw their hands in the air saying it’s not worth it and they quit.

Maybe You Should Quit Landlording, Or Maybe Not

Sorry, but that’s dumb and here’s why. You’ve just evicted a tenant which can be one of the worst issues you deal with.

Now you have a better understanding of the process so it’s easier next time and you’ll act quicker to avoid any additional pain. You’re aware of what a pain an eviction can be so you are apt to be much more diligent screening going forward to avoid it.

If you’ve just spent a ton of money repairing a roof or replacing a furnace you now have many years of not having to deal with that expense again.

You’ve just gone through a dip and coming up on the other side it’s going to be much better, much less expensive and easier.

Bottom line, getting through the hard times makes future challenges easier so rather than quit, ask yourself how getting through the lows can help you! If the hard times sound too scary, well maybe you should just quit now…

*the link to Amazon is an affiliate link. If you purchase the book after clicking the link I get a very small commission so you are aware. If you buy it thanks and I’m positive it will help you, if you’re offended I might make a commission for recommending something I believe is helpful, maybe you need to move on as I really won’t be able to help you.

You Will Fail As A Landlord

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It will happen at some point.

Turn failure around as a landlord so you succeed

It might be something small, it might be something big, but you will fail at some point as a landlord and sorry it’s not an option.

It’s what you do with that failure though that will separate you from the landlords that simply quit after there first bad situation.

As many of you are aware, I have one website that teaches landlords (and tenants) about the eviction process where I’m located (www.AlbertaEviction.com for those that are interested). I have thousands of visitors each month and many of them are landlords who have just gone through their first eviction.

And often they are so disappointed with having to evict a tenant for the first time they are telling me they will be selling their property and it simply baffles me.

What the hell were they thinking and what lesson are they learning? They failed to have the proper tenants in place either through a mistake on their part, or bad fortune and they are taking their ball and going home? Not only did they fail, but they failed to learn and that’s far more depressing.

We all fail.

It’s how we learned to crawl, it’s how we learned to walk, it’s how we learned to run and it’s how we learn to grow. If we quit every time we failed we’d all still be sitting around on the floor in diapers never taking a chance to learn to crawl, walk or run.

Yet here are people who have invested typically their hard earned money into property and becoming a landlord and turn tail once it gets hard. These people are destined to continue failing as they won’t learn from their failures and use it to improve.

The few landlords that I do get to talk to I try to break it down for them.

They’ve just gone through one of the worst problems a landlord faces, the eviction process. They’ve gone through it and they now understand the process which does three things.

First it educates them (yes I am a big proponent of landlord education surprise right?), second it makes them highly aware they don’t want to do this again and leads to better screening, more diligence about their property and a renewed interest in treating their property like a business and third it shows them what they need to do if it ever happens again which takes a ton of fear, uncertainty and doubt (also known as F.U.D) away from being a landlord.

Now that you’ve gone through this and are better educated and informed, is it really the best time to walk away? That is an even bigger failure than going through an eviction.

Learn From Your Failures

Failures are lessons we need to learn from and adapt so we don’t repeat them.

And the more painful the failure the more we should learn to avoid repeating them!

Whether it’s evicting a problem tenant, discovering your property is illegal and is getting shut down, discovering your lease is inadequate or a million other instances or problems that can pop up in the life of a landlord these are all lessons we need to learn from rather than accept as failures.

I’ve failed more than most, but that’s simply by sheer volume, the important part is I try to learn from each failure and not repeat it.

I’ve learned about partners the hard way, I’ve learned about mortgages the hard way, I’ve learned about bad tenants the hard way, I’ve learned what needs to be done when tenants die in your property, what happens when sewer pipes collapse at your property and so much more.

Some of the problems were out of my control, some could have been avoided I learned after the fact, but I learned from all of these examples and a multitude more. Many of these lessons I now try to share through these articles and posts so you too can avoid them.

So it’s your choice, you can fail and quit, or you can embrace failure as an opportunity to improve, to rebuild and to come out better than ever. Just make the right choice!

 

I’m Just Your Typical Landlord Hypocrite

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This is probably where I need to say, do what the landlord says, not what he does!

I have to confess, I’m breaking my own rules. Now I guess in the big picture that’s not a huge issue, but when it comes to a tenant owing me a ton of money and me suddenly finding myself sucked into the Eviction Spiral, it gets a bit serious.

After all, I’m supposed to be the expert, yet I’m making the same mistake I tell you not too and I guess I better tell the entire tale. So let me take you down the garden path….

Landlord story, down the garden path with a tenant

 

This actually dates all the way back to December with one of my weekly rental tenants. He’s a very clean neat individual, but a) he doesn’t speak very much english and b) he owes me money.

As we zip back a few months to the beginning of December as typically happens to many of my rooming house tenants they vacate around mid month and head back to where their families are located. It’s typical as many of the construction projects close down early before Christmas and many of the workers get to enjoy a two or three week break and trades folks are who I cater too.

So this is something I tend to see every year, then in January they start coming back, rooms fill up and it’s business as usual. Now my nice clean non-english speaking fellow named Michel had no one to go home to. No family around, nothing, so he intended to stay at my property over the break. the only issue being, he had no income coming in to pay for the room. (This is where the hypocrite part comes into play!)

As I weigh my options I have a few things to consider a) he’s a good guy, b) he’s been good about paying in his past history and c) I have a bunch of vacancies anyway and if I kick him out or he leaves I still won’t be collecting rent for that room and I don’t know what the next guy will be like and how many weeks before there could be a next guy.

So I did the easy thing, I let him stay.

Fast Forward to January

calendarI just happen to live in an oil based economy region so as January rolls around many of the projects have moved to a hold status due to the uncertainty of oil prices and the viability of some of these projects going forward if oil stays low.

Instead of starting work at the beginning of January, it turns into mid January, then late January and finally the beginning of February before he finally lands a job. the good news is, he gets paid a lot per hour, so it own’t take too long to get caught up. (Now I don’t want you to read anything into this, but I’m talking about getting caught up in February and here it is March when I’m writing this…)

Anyway, according to my rules, I should have cut bait and recast already. instead I go with my gut and give him more time. This is the part where YOU need to do what I say and not what I’m currently doing with this guy.

Now Fast Forward to Late February

Now we’re in the last week of February and I get a text update from him (he uses French to English conversion to send me texts, sometimes it is very very confusing). This set of texts though is quite clear. He will have $2,000 for me on Saturday the 28th (yes, I let a weekly tenant rack up an outstanding balance of over $2,000, please find me a wall to bang my head on).

As you can imagine I’m pretty upbeat when I go to meet him Saturday, at least at first.

You see, he lost his bank card and couldn’t withdraw the money.

Is it time to panic yet?

Of course he can’t tell me this due to the lack of conversational English between us, but he has notes that someone obviously wrote out for him in English. So now I’m stuck in a tight spot. It’s the Eviction Spiral I referred to originally.

If I kick him out, I take a huge loss, so I have to take a stand.

His notes tell me he will go to the bank after work Monday get the cash and get a new card and will have the money for me Tuesday night. Experience tells me this is the perfect getaway for him.

If he has $2,000 that is enough for him to get into a new rental place, with the 1st being the next day, it’s an optimum time for him to skip out.

But I follow the hypocritical emotional road and lay down the line, Either I get paid Tuesday or he GETS OUT!!

Even in our lack of a mutual language I am quite sure I got my point across, now I play the waiting game.

My question for you, what would you have done?  Let me know your thoughts in the comments below and I’ll add an update Wednesday about what happened!

Update Friday

Just to make this worse, I’ve extended to tomorrow. The tenant paid $200 to buy a few more days, but tomorrow is the cutoff. I meant to update Wednesday, but it’s been one of those weeks that will likely be extending out for the entire month!

Poof, It’s Magic!

Yes, I’ve had another tenant disappear…

I was at the property Monday to get some work and cleaning done there (I rented a steam cleaner for the day, so I was bouncing from property to property to get the most bang for my rental dollar) and my tenant’s room was wide open, all his items were gone, the room was quite clean, his keys were on the dresser and he was gone.

Bottom line, I’m out a bunch of money, my faith in humanity is eaten away a bit more and in the end I can still sleep at night. I tried to help, deep down I knew it probably wasn’t going to work out for me, but as part of my nature I really do want to help people (hence this site!), just along the way I may have to take a little damage.

The hypocritical lesson to pass along is if things are really tight, you can’t take this chance. You need to clamp down immediately. I could probably rationalize some of the loss as I would have had a vacant room for multiple weeks anyway, but it’s still a loss. If you have more losses than wins, you eventually lose and in Real Estate, you lose big when you lose.