Hello, this is Tanya with Envy Property Management. In today’s video, I want to talk about how not to manage your rental property.
There are a lot of DIY landlords out there, I myself used to be one of them. Being your own landlord can be beneficial if you’re doing it as a hobby, but something you must keep in mind is there are a lot of tasks that need to be done on a regular basis if you want to see success in your investment. You also need to make sure that you are keeping up to date with the consistently changing laws and regulations on your property. Even this week we received notice that the CDC has filed an order halting evictions. You need to be willing to educate yourself and willing to learn and adapt to this completely fluid world.
Today I want to give you a little background on myself and my DIY landlord experience. I come from a family of landlords…..grandparents, parents, aunts, uncles, cousins, sisters, all of us have been in the landlord space for generations. It was natural for me when I became an adult to want to start investing in rental properties. When my husband and I got married, we set out to purchase our first property. I’m going to give you a little taste of our first investment property beauty. This is a 1970’s single-wide trailer in southeast Idaho, it was set on about 5 acres of land, we sold off back half of the land to the neighbors, and ended up with about an acre of land. This beautiful property was complete with an addition on the back as well as a wood-burning fireplace….a perfect recipe for landlord litigation. The best part, we lived 2 hours away and the plan was to manage this property ourselves.
The original plan for this property was to tear down the trailer and build a duplex, but the trailer came with some tenants so we held off and waited for the perfect opportunity. The tenants that were living there were also running a daycare out of the home, this was another great opportunity to open ourselves up to landlord litigation. These tenants eventually moved out and left the place completely trashed, we did a little re-model during the vacancy….painted, replaced some appliances, and installed new carpet.
Once the home was somewhat presentable, we placed some new tenants. Being new DIY landlords, we did the cardinal sin and didn’t screen the new tenants, we just let them move in. These new tenants stayed for about 6 months and then quit paying rent, we had to wind up evicting them and going to court to recoup our lost rent. Once these tenants were out of the home we went over to assess the damages, which were again pretty extensive but the best and most memorable part, they left us a big surprise in the backyard…..a nice big marijuana plant. Once we were made aware of that, we had to then call the police and have it legally removed by the drug task force.
After that, we decided maybe it was time to go after that duplex dream, so we gave the trailer away. Someone literally came and hauled it off the property with a truck and we were left with an empty lot. Long story short, we worked with the city a bit to try and build our dream duplex but in the end, someone offered to purchase the property from us and we gave up on our duplex dream and cashed out.
We probably broke even on this real estate deal, but looking back I can see all the areas of how we absolutely should not have managed our investment property.
Here are the top 5 lessons I learned on how not to manage a rental property:
1- Don’t purchase a 1970’s trailer with a wood-burning fireplace (If I remember right, I’m pretty sure we couldn’t even get insurance on it). Do your due diligence and make sure you are purchasing a safe home for people to live in.
2- Don’t be a DIY landlord and try to manage a rental property from 2 hours away.
3- Be careful about allowing tenants to run a business inside the property (especially a daycare).
4- Make sure you thoroughly screen potential new tenants BEFORE they sign a lease and move in.
5- Make sure you are performing regular property evaluations. Had we been doing this, we may have found the marijuana plant growing in the backyard sooner than after the tenants had vacated.
We learned a lot from our experience and used this as an opportunity to educate ourselves and others on how not to manage your rental property. We have created streamlined systems and processes to successfully manage our rentals and all of our owner’s investments as well.
I hope you enjoyed today’s video, thanks for watching and allowing me to be a little vulnerable. If you have any further questions, give us a call and see how we can help you with Management Services on your investment property. Our number is 801-337-4337 or you can also visit our website for more information www.envypm.com. See you next time.