Being a housing provider always has it's little annoyances. Some of them are bigger than others. But if you want to get involved in rental housing, there are some things that you'll have to face on your journey to building your own real estate portfolio. Many people get into this business and think that all it involves is signing a generic lease and collecting the rent. If you're hiring management, it can be like that, however, most people self manage due to the expense of management. If you're going to self-manage, then owning an income property is more complicated than "set it up and forget it!" An income property is a housing business. We say it all the time here at RHAWA, "Rental housing is a business; treat it like a business." Once you've changed your perspective, things become much easier. But there are some pitfalls to watch out for and RHAWA has done it's best to try and solve them for you!
Here are 3 things you'll have to deal with as a housing provider.
Our members love their tenants, but most housing providers all have a horror story about the tenant from hell. Rental housing is a people business and that means dealing with people in whatever form they come in. Regardless of price point and location, people have different ideas about how to behave and a nightmare tenant can turn your life upside down. What's even worse, is that it can be very expensive. Damage in a rental property can add up quickly. Some tenants, once the place is destroyed just don't care. You can have a tenant move-out and end up with thousands in damage, far beyond the security deposit. However, on the flip side, a great tenant can be there for you when a pipe bursts and can make being a housing provider a real joy! It's always hard to tell, who you might end up with. A well-written criteria can help, but it is often the luck of the draw. If you're having tenant problems, email our Resource Desk and get some best practice advice. A solution may be easier than you think!
Repairs can be annoying because they range from simple fixes to things like major roofing, gutters, and landscaping. And then there's the expense! Small repairs can be easily covered (especially with a good team around you) but bigger repairs can be painful and even if it's something really big and you get insurance help, that help can be a long time coming. The reality is that repairs are an on-going problem that has to be addressed. Things will break and wear out. Fixtures in rentals don't usually last as long as they do in private homes. We've never been able to figure out why that is but it is the way of things. The best thing to do is plan for your repairs. Use our helpful tool, Replacement and Life Expectancy Worksheet to help keep track of what may need repair!
3. Good Help
Do you know what one of our top threads is on our CONNECT member forum? Recommendations for vendors. People ask for everything from basic handy-man sort of work to plumbers and other help. The simple fact is that good help is incredibly hard to find and having bad help can cost you time and money. Even the simplest of jobs can end up costing thousands more than planned and sometimes you don't even get what you're paying for in the first place! Managing contractors, plumbers, and others can be difficult but it's best to be very straightforward with what you want. Do some research to see what a good rate for the work is and always start with the RHAWA Vendor Directory.
If you're willing to navigate these difficulties, then you can have a successful real estate investment business and be a great housing provider. Like any business, there will be really great days and difficult days, but if the cash flow stays flowing and the value of the property remains in good shape, then it's all worth it.