5 Lessons I Learned from Being a Bad Landlord

Note: this is part two of my saga detail­ing my expe­ri­ence as a real estate investor. For part one, click here. Part one was all about the sale process. 

I thought I was going to be amaz­ing at real estate. How hard could it be? I had intel­li­gent friends going gang­busters with their rental prop­er­ties. Any and all advice I need­ed was a mes­sage away. Any­time I need­ed to call some­one and cry while hid­ing in the clos­et of my giant new house, I had some­one to call and talk me off the metaphor­i­cal ledge.

Turns out, I am not suit­ed to be a land­lord in the tra­di­tion­al sense. Read on for the 5 main lessons I learned and whether or not I’ll get back into real estate in the future.

Lesson 1: I got emotionally invested in the property

After my first for­ay into real estate didn’t work out, I was even more eager to get in on the game. I found a high­ly rec­om­mend­ed real­tor, he sent me some list­ings, and we were off! The first house didn’t tick­le my fan­cy.

The sec­ond house, though, was beau­ti­ful. There was Actu­al Archi­tec­tur­al Fea­tures on the out­side of the house, and the front porch was huge. Per­fect for enjoy­ing a sum­mer evening watch­ing the kids play as I have a nice iced tea. The floors were orig­i­nal 100 year old quar­ter sawn oak floors. The stair­case was intact and very invit­ing and grand. The base­boards! They were at least 12″ thick.

Let me tell you — NONE OF THIS SHOULD MATTER when look­ing for a rental prop­er­ty. Actu­al­ly it’s prob­a­bly bet­ter your rental prop­er­ty not have all of these, because they are expen­sive af to repair and or replace. When it comes to rental prop­er­ty, look for some­thing that’s easy to repair and sim­ple. Buy a box. Do not buy a Neo-Geor­gian Revival style house no mat­ter how beau­ti­ful as a rental prop­er­ty.

Lesson 2: I underestimated the cost of repairs

I’m not an idiot. The house clear­ly need­ed some repairs. The gut­ters were steel (aka OLD) and rust­ing out. I nego­ti­at­ed for the mon­ey to replace the gut­ters and thought I did real­ly well.

I did not.

I under­es­ti­mat­ed the rest of the repairs so much. I thought it would be a few thou­sand dol­lars to paint the exte­ri­or of the house and was absolute­ly gob­s­macked when I got a esti­mate for $15,000.

Find a friend to rec­om­mend a con­trac­tor who will do a walk through of a poten­tial prop­er­ty with you and point out poten­tial prob­lem areas. I thought an inspec­tor and their report would be enough. It wasn’t.

Obvi­ous­ly, you’re not going to know every­thing about the prop­er­ty from what you can see with a casu­al walk around but the more infor­ma­tion you have, the bet­ter. They would’ve been able to give me bet­ter num­bers so I could’ve known that I was look­ing at $25,000 worth of repairs to the exte­ri­or.

The after pho­to of repair

Lesson 3: I didn’t get a referral for contractors

I mean, I did but I thor­ough­ly ignored what they had to say and decid­ed I could find some­one else to do it cheap­er.

THIS WASTERRIBLE IDEA.

This is how I end­ed up hir­ing that lady from Craigslist (I KNOW I’M ASHAMED NOW) who didn’t sign a con­tract, didn’t do the work I want­ed, and of the work she did do it was crap qual­i­ty. I wast­ed $6,000 on that project, which then cost me $5,000 more since she ruined my big front porch. I should’ve spent the $15k on the good con­trac­tor for the house instead of $11k on a project which need­ed to be most­ly redone. Sigh.

Don’t hire peo­ple off Craigslist kids.

Being cheap is great in nor­mal life. Go to Aldi. Get stuff off freecy­cle or the buy noth­ing group.

DO NOT CHEAP OUT ON CONTRACTORS. The expen­sive ones are worth it.

Lesson 4: I didn’t do any background or credit checks on potential tenants.

I can­not stress enough how impor­tant this is. If you do the work upfront by check­ing the applicant’s back­ground, you will save your­self a lot of time, ener­gy and stress down the road.

I find run­ning back­ground checks on peo­ple stress­ful. I don’t know why but it feels inva­sive.

This is not a good mind­set for a land­lord to have. Seri­ous­ly. It’s an inte­gral part of being a land­lord. I end­ed up with a ten­ant that aban­doned the lease not even a third of the way through because of this. And he was heck­ing late on rent.

And hon­est­ly, I was afraid of what would come back. I didn’t want to see evic­tions and arrest his­to­ries. I didn’t want to have to tell peo­ple no. I hate telling peo­ple no. This is not a good trait for a land­lord to have. I didn’t want to have even longer vacan­cies as I wait­ed for qual­i­ty ten­ants.

Because, let me tell you, I would’ve been wait­ing for a while.

Lesson 5: I bought in a not so great part of town.

When I bought the prop­er­ty, I did my due dili­gence. The super sketch part of town had even bet­ter num­bers than my prop­er­ty, but I didn’t look over there because every­one knows it’s bad.

My prop­er­ty was just to the right of the mid­dle dark blob

Instead, I went to a part of town that I thought was fine. I was wrong. It was not fine. Now, I describe that area as “not the ghet­to, but the hood”. There were a lot of poor peo­ple liv­ing around me. There’s noth­ing wrong with peo­ple hang­ing out on their porch­es in the sum­mer because it’s hot and they can’t afford cen­tral air. Or even to buy and run a win­dow unit. How­ev­er, peo­ple who haven’t expe­ri­enced that life, who take cen­tral AC for grant­ed, get weird­ed out by that and don’t want to move to the area.

I thought the neigh­bor­hood was ok. My car fit in well as a 2005 Pon­ti­ac Vibe. My boyfriend’s late mod­el VW? Eas­i­ly one of the nicest cars in the sur­round­ing streets. The neigh­bor­hood was not great. There were reports of shoot­ings mere blocks away, and I even had to deal with the police once when a dri­ve by shoot­ing hap­pened to the house direct­ly behind me. My cam­eras caught every­thing in HD. The cops were impressed. I was not.

So, it’s no won­der I had trou­ble attract­ing qual­i­ty ten­ants in the first place. I thought I’d be ok as I was close to a chi­ro­prac­tic col­lege and a hos­pi­tal, but peo­ple didn’t want to live there, just work there.

My advice would be to buy the cheap­est, crap­pi­est house on the block in the best part of town and fix it up. Do not do what I did and buy the nicest house in a bad part of town. Good ten­ants won’t want to live there and you’ll have all sorts of oth­er stres­sors from the envi­ron­ment.

Future Real Estate Plans

I real­ize how for­tu­nate I am to have escaped the sit­u­a­tion with mon­ey in my pock­et and my cred­it intact. Peo­ple called my land­lord­ing abil­i­ties “a joke” and said I made a ton of rook­ie mis­takes. While mean, they’re not wrong. It hurts, but I am not a good land­lord.

So, if I do get into real estate again in the future, I will do some­thing that involves invest­ing mon­ey with peo­ple who know what they’re doing and can get a good return. Like Carl is doing with his mobile home park deals, or Joel did with his fix-and-flip deal.

I won’t get back into tra­di­tion­al land­lord­ing, but I can be con­vinced to do oth­er invest­ment oppor­tu­ni­ties with­in the realm of real estate.

If you want to get into rental prop­er­ties, I strong­ly encour­age you to do so! It can be a great use of mon­ey when done prop­er­ly. Aka don’t do what I did.

Con­ve­nient­ly, my friend Chad Car­son just launched a free 7 day course in how to get start­ed in real estate(aff link). I wish this course had been around when I was get­ting into real estate as then I wouldn’t have made so many egre­gious errors from the begin­ning. He has helped me out tremen­dous­ly the last few months in nav­i­gat­ing the chal­lenges thrown out by The Din­gle House, so I can’t rec­om­mend this course enough. Hur­ry, though! It’s only open through the 18th!

Thanks for read­ing! Do you want to get into real estate? Have you had any issues like I did? Sound off in the com­ments below!

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