Owning real estate can be a great source of wealth. It will also be a great source of many problems. You need to be willing to accept that the two go hand-in-hand and that there will be many problems along the way. As the owner, you are the CEO, CFO, property manager and in charge of every area of your business. Even if you delegate certain tasks and obligations onto others, it is still your responsibility and up to you to take care of. As the one that will reap the financial rewards, you need to be willing to take on any problems when they come. Be a proactive problem solver and end complications before they can grow.
If you talk to any experienced landlord, they will often tell you about the horror stories they experience. Some of these are probably a little overblown, but there is plenty of truth in how difficult being a landlord is. Just as soon as you think things are going smoothly, you will be hit with an unexpected bursting water pipe, foundation issue or delinquent rent payment. You may have hired a property manager to take care of these issues, but it is up to you to make sure these don’t blossom into bigger ones. The work your property manager does may not be enough to make sure the job is done right. When issues like this pop up, you need to step in and take care of the problem.
The same is the case when you are involved in a rehab and having work done on the property. Even if you have a general contractor, it is your property and you need to make sure things are going smoothly. Some will get annoyed and upset with the micromanaging, but you stand to lose the most. You don’t necessarily need to be looking over everyone’s shoulder all of the time, but you should have a good idea of what is going on and when. If you are carefree with the property and only check in every now and then you can’t complain that you are over budget or behind schedule. The people you hired may have good intentions, but they don’t carry the same passion for the project as you do. For them, it may just be another job. However, for you, there is real money at stake if they can finish in a certain time frame. If you have to ruffle some feathers to get the job done than that is what is needed from time to time.
Almost every area of the business can be diluted with problems if you let it. Seemingly mundane things like applying for a mortgage or submitting an offer can be potential headaches. If your realtor needs a signature quickly, you need to stop what you are doing and get it for them. If your lender needs an updated lease or some other type of documentation, you need to make this a priority. Instead of sighing and complaining about how your day was altered you should quickly adapt and take care of these. Don’t rely on your accountant or property manager to do them for you. If they don’t send these items in a timely manner you will be the one with the rejected offer or scrambling for a mortgage approval. There is a very fine line between letting the people around you work and doing everything yourself. If you try to handle everything you will eventually get burnt out and have little time for deals. However, if you aren’t on top of everything in your business, you may regret not going the extra mile to make sure things get done the way you want them to.
The investors who handle problems best are the ones who accept they will happen. This doesn’t mean that you are constantly waiting for something to happen but you do realize that it is part of the business. The reality is that things come up regardless of what business you are in. The real estate business is prone for more surprise issues because of the many different people involved in each part of a transaction. This means you have to be on your toes at all times and ready to act. The quicker you can react to problems the better you will be. There will be many instances where there is no perfect resolution but you have to pick the one you like best. If you wait to act you often times only make the problem worse. Get as much information about all of your options as quickly as possible and then act with conviction. Even if it is not the best resolution it is the one you have decided to take.
There will be times when the real estate business can be overwhelming and you will wonder what you are doing. In those times you have to remember how great the feeling is leaving a closing with a profit or opening your mailbox and seeing a rent check. If the investing business were easy anyone would do it. The reality is that not everyone can do it. It takes a certain personality to be a successful investor that even the most knowledgeable investors possess. Your ability to solve problems and handle issues as they come can separate you from everyone else. The problems will come it is up to you as to how you want to approach them.