I Couldn’t Stand This About Multi-Family Real Estate Investing…..
There is so much to like about Multi-Family Real Estate Investing
Multi-family real estate investing is an exceptional opportunity for the average Joe or Jane to build wealth, generational wealth at that! No other investment offers the tax advantages and ‘subtle’ wealth building opportunites real estate does. The one caveat… Dealing with the general public, which I admit, is a valid reason to thoroughly weigh your decision.
The ‘general public’ has evolved over the years and now has a growing sense of entitlement. This makes business dealings with them, all the more…..Shall we say complicated. But for those of us with alligator skin, or the ability to adapt our skeleton coverings, the opportunities abound.
A great rental market
I owned this 4-plex for 9 years in St. Louis, Missouri. St. Louis has a strong, vibrant rental market with good support from numerous universities, large hospitals, and manufacturing employers. The tenants were a mix of blue collar workers, students, and seniors living on a fixed budget. They were generally good, honest folk and 1 of them was a tenant for the entire 9 years I owned the property. In fact, she still lives there; –shout out to Carol–
The tenants were reasonably prompt with rent payments, but I won’t lie, there were a number of instances where I heard “Sorry I can’t pay you this week, maybe next”. Frustrating, but, it’s part of the business, I knew that going into this, and luckily, I figured it into my vacancy rate. As a result, I knew there was going to be some rent hustle involved, as there always is. I was ready, track shoes in hand! But, this complicates the matter when you’re committed to a $1600 monthly mortgage payment.
Gossip! The Grape Vine effect-My Major Complaint
You do one project for a tenant, the others want it done too. You let the late fee slide for one, the others know all about it. My Dream…..If you could have a multi-family with the income from numerous tenants without having the tenants, man would that be ideal. But, back to reality,
I know that’s impossible and likely bad from me to suggest, but dealing with multiple personalities really put my psychology degree to good use.
Case in point, I had some water damage to the front wall of one of my units. So, once the tenant moved out, I decided to tear all the plaster off and expose the nice brick, behind it. The next tenant loved it, subsequently 3 more asked for the same thing.
Another time, I had to call a tenant to tell them not to have their company park in the limited parking lot space. I reminded them it was to be reserved for tenants only. Their response was “well Randy’s friend was parked there over night the last couple weekends”. Ugh, it’s like dealing with children.
In a nutshell there’s much more than just collecting rent checks when you’re the landlord of a multi-unit property. There is a simple, yet costly solution which is to have someone manage it for you.
But, cashflow be damned!
Now, I’ve tried that too, and it lead to its own set of issues, not the least of which turned out to be, managing the management company.
So, the most important lesson I learned from investing in multi family properties and all properties for that matter, is you have to treat it as a business. Be fair, but be firm! Treat everyone the same. Make objective decisions based on the bottom line, not on who may get offended. Don’t be a friend, be a business, after all, this is business. If you want a friend get a dog, they will always love you, tenants will almost always take advantage of you, if given the opportunity, I promise!
This is a hard lesson and even harder to stay consistent with, but it’s crucial to your rental property investment survival.
Slick Photo compliments of: