Are You Sure You Want to Own Rental Properties?
4 Traits You Need for the Job
Today, all in one single day, I received a letter of non-compliance with county regulations on one rental and a quote for a six figure repair on the other rental, all the while waiting for my plumber to fix the sump pump he’d incorrectly installed last week. It felt like a twelve hour span of difficult conversations, bad news and life throwing rocks at me. The weight of the complete mess had me asking myself “are these properties really worth the hassle?”
The reality of owning homes is that things break down, expire and stop working. As a bonus, if you’re a landlord, you also have to factor in humans that are not you living in the home which comes with its own version of wear and tear. Avoid the illusion that a property will have one predictable problem per year whose associated costs fit within your budget. And depending on the tenants you rent to; buckle up. Owning rentals is not for the faint of heart.
Even still, I believe anyone can thrive in the role if they strengthen four core personality traits. Building or developing these skills will fortify a future owner’s response to challenge, unpredictability, and unforeseen expenses and hopefully save some tears along the way.
Demonstrating Resilience
Recall the story from above when multiple headaches on two properties cropped up in a matter of hours? Situations like this may not occur very often, but when they do, it can feel like the sky is falling. It will test the speed of your problem solving and your mental strength to put your life on pause for whatever issue took center stage. Disappointingly, homes are not attune to any financial pressure you’re already under nor will they patiently wait until your reserves have been replenished.
Your best option is to embrace the unpredictable nature of mechanical or material failure and have a plan in place for when things go awry. That might be a trusted handyperson, a phone number to call or even an inclination to take to Google at lightning speed. Have a backup for when your reserves won’t cut it and keep these details on hand.
Additionally, this plan should include a way in which you want to react to whatever arises. Consider the physical response that may be induced by urgent tenant requests or maintenance calls to prevent overwhelm or excessive worrying when the moment happens. If stress and anxiety typically overtake you, find a way to orient yourself around swift resolutioning and find perspective. A pragmatic approach to challenge while moderating emotional responses can reduce chaos and help you recover more quickly.
Using an Analytical Lens
Sometimes though, a solution is not clear and you’ll need to thoroughly evaluate all options. It may require deep thinking, research and even professional opinions.
As an example, one of my properties has a crack in the foundation. With limited knowledge of foundation repairs, I’ve sought professional advice and bids for repair. Unfortunately, the recommendations have been conflicting and the pricing stretches a wide range. These data points are critical to forming an opinion but I can only collect so much information before I must make an educated decision.
An analytical person would lay out the recommended action items, their associated costs and the insights shared by each professional. Based on all of the information, they’d narrow down the most pressing concerns and attach a price estimate to each. Finally they’ll consider their cash reserve and the income to be generated over the next three years.
This is your cue to get handy with a spreadsheet and a calculator. List every question you need to answer to obtain a clear picture of the situation, start calling for estimates, and plot the financial elements. Use all of this data to shape your decision making and keep emotions out of the equation.
When you answer the question from a place of logic rather than feeling, you minimize risk that results from rash decisions. Down the road, you’ll be more likely to agree with your decision because it wasn’t a byproduct of reactivity but instead had real reasons you can map back to.
Taking Action
Once you’ve analyzed a situation to the point of reaching an answer, you need to take decisive action. Resistance towards acting is a simple trap to fall into and you’ll be punished by analysis paralysis. The emotional toll of being stuck in limbo is crazy-making and will waste time, energy and money. It’s imperative that you always make a decision, even if you don’t like any of your options.
When you act on a decision you’ve made, you build trust with yourself. You validate your belief in your ability to either analyze a situation properly or resolve any consequences of an incorrect decision. Failing to act on your decision will deteriorate your confidence and slow future decisions.
You might as well take a moment right now to accept that you won’t always make the right decision - it will take the pressure off. Luckily, choosing the wrong option will inevitably result in learning which can hold just as much value. The faster you make decisions on your rental, the more you’ll learn. The more you learn, the more you can apply your expertise to buying more homes.
To make decisions in a timely manner, create accountability by scheduling a deadline. Gather as much data as possible but as soon as your deadline arrives, you must make your decision and take action to solidify it. Do not waver; welcome the learning experience.
Willingness to Have Difficult Conversations
As you navigate unforeseen circumstances, you’re bound to call in an expert every once in a while. When any third part is involved, you’ll invariably encounter agreements, statements of work, and a point when a project doesn't go as planned.
It’s inevitable that your expectations will be different than those of the person you’re working with and you’ll have to have a conversation about it. Strong communication is an important skill to have from the get-go but here’s where you’ll put it to the test.
Once again, avoid an emotional reaction to the situation and see the facts as clearly as possible. Consider the way the other person communicates then convey your observation calmly. Now, be willing to listen.
If you avoid the discomfort of conveying your concerns or dissatisfaction with another’s work, you’ll miss the appropriate window to have a problem fixed. Even if the conversation escalates, arriving at a compromise is a better outcome than saying nothing at all.
You have to protect your home and your investment. That may mean telling a contractor that their work is not acceptable or a tenant that they won’t get their security deposit back. The other party may not agree but don’t let the fear of confrontation keep you from taking care of your property.
Embarking on the journey of rental property ownership demands more than just a financial investment—it requires an unwavering commitment to personal growth. As illustrated by the challenges and unforeseen obstacles that punctuate the experience, success in this world hinges upon the development of four indispensable personality traits: resilience, analytical acumen, decisiveness, and a willingness to engage in difficult conversations. By fortifying these pillars of competency, prospective property owners can navigate the turbulence with confidence and perseverance. So, before you leap into the world of rental properties, ask yourself: are you truly prepared to weather the storms and emerge stronger on the other side?
