As a landlord, how do you think of your rental property? If you’re thinking of it as a home rather than an investment, you’re making a mistake.
What does your rental property mean to you? That’s not a trick question at all. It’s a vital question, one that can make the difference between making money and losing money. Let me explain.
You’re a hands-on landlord. You want to oversee what’s going on in your home, from handling repairs to checking on the state of the garden.
“Are the tenants mowing the lawn?” “Are they trimming the shrubs?” “What are they doing in there?”
It’s a mindset we see a lot, and it’s not a viable way to be a landlord.
Here’s a question for you. How do you view your 401K?
How do you think of that? Most likely you don’t think about it at all outside of major fluctuations in the market. You don’t see it because it isn’t tangible. Your money leaves your paycheck into a series of mutual funds where a professional investment manager looks after it for you.
You set it and forget it, all while your investment manager is working on your behalf. You trust your investment manager because they have years of experience in money management – stocks, bonds, and so on. They are the experts.
We want you to think of your rental property exactly the same way as you think of your 401K.
We want you to think about your rental property investment as something that needs expert care and attention from professionals.
At GTL Real Estate, we can provide that expert care and attention in the same manner your investment manager does with your 401K and other investments.
Between our staff, we many decades of combined experience in all aspects of looking after your rental property investment. Because there’s more to it than just checking if your tenants have trimmed the roses.
We look after repairs; we collect rent; we find tenants; we handle evictions; we do everything.
Like with your 401K, having a professional look after your rental property means you can get on with your life, knowing you’re in good hands.
I mean, you don’t feel you need to be hands-on with your 401K, do you?
You know your investment manager has got this on your behalf. You need not be on the phone with him or her all the time, telling them what to do with your money.
In fact, if you were telling your investment manager what to do with your money, your investment portfolio would end up looking bad. Why? Because you’re not a professional mutual funds manager. You need an expert to look after your business for you. That’s what they’re there for.
All it takes is that mindset change to seeing your place as a rental property, an investment. To seeing it the same way as your other investments like your 401K. And to no longer seeing it as your home.
And there lies the rub.
As a new landlord, you may well think of your rental property as a home. It’s understandable.
You might have lived in the place before, for many years. Maybe you raised your family there and created memories. The yard, the rooms, the neighborhood itself all hold sentimental value. And although you’ve left and are living elsewhere, you still own the place and see it as your baby.
It might sound harsh but we recommend you wean yourself away from sentimentalizing your old home. We recommend you think of it as exactly what it now is: A rental property. An investment.
Your rental is an investment like all your other investments and needs the same degree of professional care.
We know it’s easy to think of this house, this apartment, this building as your home with all those memories attached. We know it’s hard to let go. But it’s done its job there and now it’s working for you in other ways to produce the best results.
And without fail, allowing professionals like us to look after your rental, will produce the best results, the same as with your 401K.
Every time a client has gotten involved in trying to manage their home it’s been a disaster for them and they’ve ended up losing money.
Once we had a client for whom we’d looked after eight or nine properties for around seven years.
One of those seven or eight properties was a Section 8 home, with a long-standing tenant living in it.
Now with Section 8 housing, the Department of Housing and Urban Development sets the rent. Our client wasn’t happy about this as the rent set by Section 8 was $50 less than the fair market rent would be in that area.
He called us and asked us to evict the tenant so he could re-rent the property to someone else at the fair market rent.
For the sake of $50 a month, we recommended against this.
We told him there would most likely be repair bills, not to mention a period of vacancy where no tenant is living in the house. It wouldn’t be worth kicking his current tenants out for the difference of $50 a month.
We told him if he kicked this tenant out, with their guaranteed Section 8 rent coming in, he’d end up thousands of dollars out of pocket.
It didn’t matter what we said though. Our client wanted to go his own way and instructed us to evict the tenant.
We served notice on the tenant and sure enough; we were right. The tenant was angry about losing his home and took that anger out on the property before he left.
We were looking at around $5,000 worth of repairs needed done to the home.
There was also the cost of receiving zero rent during the period of repair – around two or three weeks. Plus, what he owed us to find a new tenant for him.
The client ended up out by around $7,000 or $8,000 all because he wanted an extra $50 per month for the property. It would take him between 140 and 160 months at least to recoup that money. That’s over a decade.
The moral of the story here is to listen to the professionals.
We told the client that this was not the best thing to do but he felt he knew best and ended up losing money.
He was no different to the guy who thinks he knows better than his investment manager and tells them what to do with his stocks and bonds.
It doesn’t matter if you’re working with us or with another company. Please let us rental property managers do our jobs. We have years of experience and whatever we advise will always be in your best interest of you and your rental property.
For more info on what we can do for you as a property owner, and how we can help you turn your old home into an investment, please contact us at firstname.lastname@example.org and we’ll be happy to talk to you.
Until next time.