The Refrigerator Story It was 5:30am on an extremely hot day. Margorie, who lives in a ground floor apartment with no air conditioning, got up to go to work only to discover that her refrigerator stop working sometime in the middle of the night. Being very upset about this, she immediately called the landlord, only [...]
The Refrigerator Story
It was 5:30am on an extremely hot day. Margorie, who lives in a ground floor apartment with no air conditioning, got up to go to work only to discover that her refrigerator stop working sometime in the middle of the night. Being very upset about this, she immediately called the landlord, only to get the landlord’s voicemail.
Later that morning, the landlord checked his voicemail and contacted an appliance repair company (where he bought the refrigerator) to go out that day to repair the refrigerator. The appliance repair company wasn’t able to get to the apartment to repair the refrigerator until later that afternoon. They repaired what they thought was wrong and tested everything. They also gave Margorie their telephone number in case there were any other problems.
All seemed to be OK.
The next morning, the refrigerator was not working properly again and Margorie called the appliance repair company. They proceeded to tell her what she should try to see if it would fix the problem. It didn’t not work. Now Margorie was very upset and called the landlord and demanded that the refrigerator be replaced NOW! In the meantime, the appliance repair company was already making arrangements to replace the refrigerator later that day because the refrigerator was still under warranty. It was replaced that afternoon. Later that day, Margorie called the landlord and said that she though that he should pay for all the food (she claimed over $200.00 worth) because the refrigerator went out and it wasn’t her fault and somebody has to pay!
The point of this story is that things in life don’t always go smoothly and it is not always somebody else’s fault. I am always amazed at how many times I hear from people who are looking for somebody else to be responsible for the things that happen in their lives. I, as a landlord, pointed this out to Margorie. She didn’t like what I said, but I told her that the landlord is NOT responsible. The landlord did everything to solve the problem and replace the refrigerator. If she was worried about food being spoiled, she should have bought some cheap coolers and bags of ice for a few bucks and prevented the food from spoiling.
It takes having a system and running your real estate investment business like you should run any business. OK, so what does that mean? It means, you should have a set of rule and procedures set up to address every situation that you think will most probably happen. As an example, you know (or should [...]
It takes having a system and running your real estate investment business like you should run any business.
OK, so what does that mean? It means, you should have a set of rule and procedures set up to address every situation that you think will most probably happen.
As an example, you know (or should know) that there will be some residents who don’t pay their rent on time. You MUST have a procedure set up of exactly what needs to be done and when. This is a matter of having pre-made decisions as to how long you are going to wait before you ask to resident to move and if they don’t respond….Start the eviction process.
You need to set procedures, with timelines, for everything you can think of. If you do this, it will save you money, reduce your headaches and make your life a lot easier.
Who’s smarter? 1.) A landlord who collects the rent and uses all the money to pay all expenses and blows the rest of it or….. 2.) A landlord who understands that things might go wrong and it’s better to save any extra money for those possible events. You know the answer, it’s obvious…it’s number 2. [...]
Who’s smarter?
1.) A landlord who collects the rent and uses all the money to pay all expenses and blows the rest of it or…..
2.) A landlord who understands that things might go wrong and it’s better to save any extra money for those possible events.
You know the answer, it’s obvious…it’s number 2.
Any landlord who spends all the excess money and doesn’t save for the unforseeable
and unexpected things that WILL POP UP is, in my opinion…..
STUPID!
Why?
Because the unexpected WILL happen and in most cases it is at the worst times.
So be smart and be perpared for it and then your won’t get into financial trouble.
Being smart means save your money and build a reserve fund for unexpected expenses.
In fact, should you be doing this on a personal level anyway?
Remember this old saying “Expect The Best, But Plan For The Worst”
That’s the smart way to be a landlord and Real Estate investor!
As a landlord, you will run into situations when your tenants for some reason or another can’t pay you the rent when it is due. When this happens you have two choices: 1.) Give them more time or… 2.) Ask or force them legally (eviction process) to move out. Let’s look at these two options [...]
As a landlord, you will run into situations when your tenants for some reason or another can’t pay you the rent when it is due.
When this happens you have two choices:
1.) Give them more time or…
2.) Ask or force them legally (eviction process) to move out.
Let’s look at these two options in more detail.
If you choose to give them more time, you should be very specific on a future pay date and then, no matter what, stick to that date. Things happen in people’s lives that cause them not to have the money and sometimes you may feel sorry for that person and you want to help them out. That’s OK, but I would suggest to you that you don’t let it go very long. The more they get behind the harder it is for them to every get caught up and the probability is that they never will and you will eventually lose more by giving them more time. So what I saying is be very careful of this choice.
The second choice is for you to talk to them about the reality of there situation. They can’t afford to live in your rental property and they should most likely be living in a less expensive place. This can be hard because a lot of people don’t want to face that truth.
Here comes the hard part. You need to be ready to make these decisions in advance and have a set of rules that you follow and then follow them. Take the emotions out the equations and operate it like a business. If you sell any other product and the customer didn’t pay, what would you do? You would give them more products, would you?
Letting them continue to live there without collecting the rent is like a business give away their products without getting paid. Any business that operates like that will be out of business!
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