The 5 things I wish I knew before becoming a Landlord...

what's up you guys it's Graham here so let's break down some misconceptions and discuss some of the things I wish I would have known before becoming a landlord and with this you get the advantage of learning from my mistakes and starting off much further ahead than I did because I had to figure out a lot of the stuff on my own as they went along and that costs you money so watching this video will actually be the opposite of that it'll hopefully keep your money that is if you watch this video all the way through to the very end and you make sure to hit the like button and you make sure you're subscribed and you make sure to share this video with five friends otherwise you get seven years of bad luck just kidding no I do feel it's important to clarify here that the purpose of this video isn't so much to dissuade people who are considering renting out their properties and becoming a landlord because in my opinion there are some amazing aspects to becoming a landlord that greatly outweigh any of the negatives instead I do videos like this simply just to give you a healthy dose of reality so you don't go into it and get chewed up and spit out like I did with that one tenant I ended up victim so with that these are the five things I wish I would have known when I first started and the first one is that I wish I would have treated it more like a business than as a hobby now when I first started actually investing in real estate I was 21 years old I had just bought my first property I was in the middle of renovating it while also being in the process of buying to more nearby now at this point I have been working as a real estate agent for three and a half going on almost four years and even though I've done a lot of rentals for other people I had never done a lease for myself and as I learned firsthand doing something for yourself versus doing something for somebody else it could be two entirely different experiences doing something for somebody else can often be like driving a car forward you turn the wheel right and the car goes right you turn the wheel left and the car goes left you pretty much just know what you want to do and you instinctually just do it but doing it for yourself is almost like driving a car backwards where what you think should work might just actually have the opposite effect with some other complications also thrown into the mix and all of a sudden there could be a very blurred line between running it like a business or running it instead like a hobby and I very much ran it in the very beginning like a hobby what am I for instance I didn't enforce late fees if the tenant were to pay late they would pay late without any repercussion because basically I wanted to be that cool landlord that everyone just loved if they ended up bringing dogs into the property that were not on the lease agreement whatever I'm cool with it because again I'm that cool easygoing landlord that everyone just likes and also I'm not gonna lie I felt a bit insecure being a 21 year old landlord renting out their house to like grown-ass adults I'd have people in their 40s paying me rent and I'm some like 21 year old kid so I almost thought like Who am I to tell these people who are double my age what they can and cannot do but I mean that was my biggest downfall by not enforcing the contract it really just undermines my abilities as a landlord and it showed the tenant that they can break the contract and get away with it without repercussion because I wouldn't really enforce anything this in turn made my life a living hell when I actually had to go and evict a tenant that one tenant cost me a year's worth of profit on that property a year's worth of stress trash the property not to mention all of the eviction fees and the hassle and just everything else that went along in that that is something I could have entirely avoided how to treated it more like a business than as a hobby from the very beginning and that is the perfect lead and then to my second point and that is to simply keep things professional and also stick with the contract admittedly in the beginning I really treated the contract more like a rough guide as long as you just approximately followed it that's okay no no no no no do not ever do that it's your responsibility to follow this contract word for word if there's an $85 late fee that's due on the fifth if the rent is not paid you need to enforce that late fee if they haven't paid rent at the fifth of the month or whatever day you set that rent is officially late you need to serve them with a three day notice to pay or quit immediately if they violate or break their lease agreement at any time during the tenancy you need to give them notice immediately to correct that violation the contract is written for a reason there should be no misinterpretation whatsoever of what signed and agreed upon and what the expectations are from each person in the contract this clarifies everyone's expectation of what you need to do from not only the landlord but also the tenant and when the contract is written it's very simple all the parties must abide by it now given that it's also important that you have your own boundaries between yourself and the tenant with the exception of one scenario where I ended up renting at a house to a close friend keeping things professional between you and your tenant makes it much easier to make business minded decisions first because as I mentioned this is a business and with my tenants I'm professional but I still keep a little bit of my distance if something comes up we address it from the perspective of the contract there should never be any feelings thrown into the mix and everything should be at the expectation that nothing is taken personally when rented to a friend the line gets blurred and it becomes much more difficult to distinguish between the business and the friendship for example if you have to raise the rents are you simply just a friend or are you just following the market rates if you end up charging your friend a late fee because they didn't pay on time now are you not only a friend but you're also greedy or if there's a violation on the lease agreement and it's not corrected are you really going to evict a friend and be that guy that evicts a friend and ruins a friendship because of money so there's a very fine distinction there when this needs to be run like a business I would say 95% of situations renting to friends or family just already complicates a delicate situation to begin with so you've got to make it very clear stick with the contract keep it professional and also treat it like a business now the third thing that I wish I would have known is that I would need to be on call 24/7 now I do want to make this very clear there is a difference between being on call 24/7 and being on call 24/7 my experience of being on call 24/7 is pretty tame if there's ever an emergency that comes up I pretty much always have my phone on me and can handle it if I need to but how often does this actually happen where something goes wrong breaks there's an emergency at some weird odd hour then I have to drop everything and attend to it honestly maybe like three times in the last six years in this situations worth something weird come up at an odd hour it was probably just about a month ago Sunday night maybe you're on 9 p.m. I this sprinkler valve that broke and it shot water everywhere in the yard I stopped doing what I was doing I spent maybe 10 minutes calling up the plumber and the next morning it was fixed another event happened a few years ago it was the day after Christmas 7:00 a.m. where the water heater just stopped working again that was another scenario where I spent maybe 10 20 minutes on the phone found someone to come out and the problem was fixed the reality is that most situations that come up even though I'm technically on call 24/7 just really aren't that urgent and you could attend to them when you have the time for instance the garbage disposal stopped working or maybe the dishwasher is draining slowly or maybe it was a windy day outside and some of the shingles came off the roof and that's going these are often a lot of little minor things that are sent over email that you can handle when you have the time but it is important that you are available 24/7 just in case something comes up that needs to be attended to immediately usually these things are leaks leaks I would say are the number one thing that you need to address as soon as it comes up and not wait but from my experience usually these are few and far between and doesn't really happen that often now the fourth thing I wish I would have known and this is super important for anybody that is even thinking about becoming a landlord is this anything that can possibly break will break and this is something I really just never understood both of my parents were renters and they have taken amazing care of every single place they've lived at they've treated it like it's their own so I just naturally assumed well if my parents are like this other people must be like this as well and everyone cares about their rental proc no uh-uh that is totally wrong as a landlord you run into the brutal reality that many tenants simply don't give a about where they live or how delicate something is they don't care about those $8,000 floors that you just installed for them they don't care about that $400 microwave you put in brand-new before they moved in they don't care about that amazing Glassdoor that you just put in because it looks awesome guess what if it can possibly break they will magically find some way to break it you know it's weird but a lot of this stuff is just you would think it's just common sense like when is it ever a good idea to put tinfoil down the garbage disposal how is it ever a good idea to put plastic down the garbage disposal and turn it on and break it or like your kids shouldn't be playing baseball right in front of the glass door you know not to flush tampons and hand towelettes down the toilet especially when you're on a septic system right my favorite one you know you shouldn't swing a door open where the handle goes right into the drywall I I don't get it like you knew not to microwave a metal spoon in a bowl in the microwave for five minutes think this is like third grade level stuff so the lesson here is just like you need to baby-proof a house you will need to rent or proof a house this means that you need to make everything as indestructible as you can this means putting a doorstop or on every door so they don't swing it open into the drywall glass doors are always a very bad idea make sure to also use very durable countertops and high trafficked laminates so that way it doesn't wear out sooner than needed also the bathroom ceiling fan or vent should always turn on automatically anytime they turn on the light because this means that if they don't do that they're gonna take a shower Moisture is gonna build up in the bathroom and guess what that's going to create mold and guess whose problem mat is going to be it's gonna come out of your pocket and if something is likely to break make sure not to spend too much money on it but also spend money on something that is less likely to break just buy good quality durable not high-end breakable this is going to prevent you from buying new things and fixing them after every tenant simply because the tenant doesn't take good care of them now the fifth thing and probably one of the biggest learning experiences of them all is simply learning how to deal with people now owning property can often be as simple as just sitting back and collecting rent every month and there are plenty of months out there where I just simply sit back and collect that rent but on a bigger picture you need to learn how to effectively communicate to say no to stand your ground to enforce the contract but still make the other person feel heard it's also like you need to double almost like a therapist where you sometimes just need to hear the other person out and sometimes making that little friendly small talk really makes a huge difference and just hearing out the other person and seeing their perspective this is something I feel is really more of just like a good life skill to have in addition to working really well as a landlord you really need to learn how to effectively communicate to someone else without coming off as insensitive or not caring the other person always needs to be heard and their thoughts validated before you can say what you want to say and for me this is one of the hardest parts to get across because in many aspects I very much like to avoid all the small talk all the BS simply stick with the contract this is what it is this is the expectations let's just stick with this avoid everything else but life doesn't really always work like that especially when you're dealing with people and you're dealing with thoughts and emotions and perspectives and egos and everything else that feeds into that just like anything else people skills are tremendously important and will make a huge difference in any business that you're in now I'd highly recommend right after this video that you read or listen to the book how to win friends and influence people if you don't have the money to buy it no worries just type it in on youtube and the entire audio book is uploaded already for free I recommend listening to that once then coming back to it a few weeks later and listening to it again so with that said those are the five things I wish I would have known before I became a landlord if you guys enjoy videos like this make sure to do me the favor and just hit the like button it really does make a difference I say this every video because it does actually make a huge difference to the channel really shows me that you guys enjoy the videos so go ahead if you haven't just hit the like button also if you've watched it all the way through and haven't subscribed make sure to smash that subscribe button and also smash that notification bell so YouTube notifies you anytime I post a video also feel free to add me on snapchat and Instagram I post it pretty much daily so if you want to be a part of it there feel free to add me there I also have a private Facebook group in the description for anybody that's interested in real estate investing wholesaling agent real estate ding just anything real estate add yourself to that group we're approaching 7,000 members now in this Facebook group it's an amazing community everyone loves it it's a great group everyone's super supportive add yourself to that thank you again for watching and until next time

Channel: Graham Stephan

Views: 368,499

Rating: 4.951417 out of 5

Keywords: real estate investing, real estate 101, real estate investing for beginners, real estate investing strategy, real estate 2018, real estate investing with no money, how to be a landlord, real estate investing 101, how to make money in real estate, real estate agent, real estate agent day in the life, how to invest in real estate, how to invest in real estate at a young age, passive income strategies, passive income online, passive income real estate, passive income ideas

Id: Ag-6CUoj7Ec

Length: 13min 34sec (814 seconds)

Published: Wed Aug 08 2018