Home Is Where the Heart Is

A little over a year ago my bride and I purchased 4 properties through a turnkey real estate company in Birmingham, AL. We purchased sight unseen, relying solely on photos, spreadsheets, google searches, and the company’s sales pitch. I was so hungry to get a deal and had done very little research on my own. I had one referral, which come to find out later was receiving a referral fee from the turnkey company, and I had not even talked to the property management company that would be managing the properties before buying.

The picture above is from one of the rental properties where the previous tenant decided to literally make it her home. As real estate investors we tend to focus solely on the numbers (cash flow, return on investment, cap rate, vacancy rate, etc), which is absolutely a requirement, but we often lose sight of the fact that we are providing a home for someone to live in; a place that they call home.

“Home is where the heart is.” – Piny the Elder

**But here’s the catch – not everyone’s heart is in the right place.**

Not all people treat their home the same. Not all people have the same living standards. Not all people take care of their belongings. Not all people are considerate of others. Not all people make the effort to leave a place in the same condition that it was received. Not all people put others’ first.

I recently received a bill for almost $5,000 in repairs needed to make this house livable again. The previous tenant completely destroyed the place, and the property management company made zero effort to ensure the property was being maintained. It completely wiped out my positive cash flow for the year.

I don’t write this as a sob story; I write this because it was a HUGE wake-up call for me. I was one of those investors that was so focused on the rental income that I didn’t put any thought behind the quality of tenant and the quality of property management.

Lesson learned: screen your tenants thoroughly. And if a property management company does it for you, ensure they know what your expectations are and what criteria you want them to uphold. Screen your property management company and talk to them on a regular basis. You have to manage your property management company! If you don’t, your investment will suffer.

If you own rental property and haven’t read Brandon Turner’s book – The Book on Managing Rental Properties, you absolutely should. It’s a must read!

He says he will never again rent to these 7-character types:

Entitled Tim

Dirty Dan

Lazy Laura

Dave the Dealer

Steve the Stoner

Larry the Lawyer

Dramatic Darla

You have to read the book to understand the background on these individuals, but these characters will more than likely ruin your investment. You really DO want to know where your tenant’s heart is before you provide them a home. Choose wisely!

Written by Stuart Grazier