Sweat Equity … Literally

So we’re expecting temperatures in the mid- to high 90s here in Indy this week, with heat indices up to 112.  And of course, that lovely mid-summer midwest humidity, with dewpoints in the 70s, will create sauna-like conditions.  Ick.

But I have an empty house that needs a total redo.  Melissa moved out last week.  She did a good job of clearing everything out but the whole house (four bedrooms) needs to be painted, the carpet needs shampooing, and the kitchen and bathrooms need to be scrubbed.  So bring in the crew!  Um . . . that would be me.  When I saw this forecast on the news tonight I was less than thrilled because this rental has no central air.  Hmmm . . . the owner must be too damn cheap?  (LOL)

  My middle-income rentals have AC but I haven’t spent the extra $$ to have it installed in my other properties.  I allow my tenants to use window units.

So with this extreme heat, it’s going to be a long week for me, although I’m enlisting the help of a couple friends who will help paint for a few hours.  I’ll be taking my trusty oscillating fan which will move the hot air around a bit, and Carrie will bring her Ipod and speakers with some great tunes to help pass the time.  My “M.O.” has always been to do all I can on my own, to save money.  Paying someone else to do what I can do myself just doesn’t make sense.  (The paint job alone.would probably cost $1000 or more.)

If you own rentals and also have a full-time job, you’ll have time constraints and won’t be able to do much of your own work at your properties.  You’ll need to hire out some — or most — of the work and maybe get a property manager as well.  But if you buy smart (i.e. cheap) you’ll still make a good return on your investment.

But the more sweat equity you can put in, the better.  Every dollar I don’t pay out to someone else is a dollar that stays in my greedy little hands, and I like that.  So I’m putting a positive twist on this week’s work . . . I’m calling it my accelerated weight loss program.  Barb’s Boot Camp.  Wanna sign up?

Onward and upward!   🙂

Finding the Right Balance Between Friend and Foe

Early on in my investing career, someone gave me an excellent piece of advice.  He was helping me rehab a 100-year old duplex that was sturdy but pretty rough inside.  This was the second duplex Joel had helped me turn into comfortable living quarters.  One day as we worked he asked me if my tenants knew that I’m the owner of these properties.  I told him yes.  He eyed my 105-lb. frame and said,

“You know, if I were you, I’d keep that to myself.  You’re a 5-ft. tall female, and you never know what desperate people can do when they’re backed into a corner.  When they’re behind in their rent and you’re evicting them…..wouldn’t it be better if they thought you were just the property manager?”

I blew him off at first, but acquiesced after thinking about it later.  Regardless of sex, it behooves you to play the role of  “middle-man” with your tenants.  You’re the go-between for them and the owner.  Many tenants automatically view the owner as the “wealthy land baron” who is out to rape them financially.  And yes, there ARE some slumlords out there who give the rest of us a bad name!  So, it’s best to keep your ownership a secret.  And if you have your properties in an LLC or other type of corporation, there’s no way your tenants can find out otherwise.

If you treat them with fairness and respect, your tenants will see you as someone who has their best interest at heart….someone who will go to bat for them with the “wealthy land baron” owner.  For example:

  • Paul, a lazy tenant whose girl friend worked two jobs after he got laid off, was seriously behind in his rent.  He didn’t have time to look  for work, because he was too busy drinking beer, playing video games and surfing porn sites on the computer. When I asked him about getting some work to help with the rent, he said, “I can’t work.  I have attention definite disorder.”  (What?)  He asked for more time and I told him I’d talk to “the owner” about it.  The owner said no, but at least I asked on his behalf.  He wasn’t furious with me.
  • Anika called at 9:30 one night to ask if she could paint her bathroom black.  I told her I’d call the owner and get back with her.  The owner said absolutely not, of course, but I told her to go ahead and buy black curtains, black rugs, a black shower curtain and black towels to create the ambiance she was looking for.
  • Tammy wanted to get a cat.  She’d been an excellent tenant for two years, and she’d had problems with mice.  I told her I’d talk to the owner and let her know.  Now, I don’t normally allow pets, but Tammy was a very clean person.  Her car and her house were spotless.  So in her case, I bent the rules.  I allowed the cat, after declawing, and haven’t regretted the decision.

In certain situations like the one above, telling your tenant you’ll talk to the owner gives you valuable time to reflect on their request.  Sometimes your snap decision isn’t always your best one, and telling them you’ll get back to them gives you the opportunity to consider various options.  Many times, I’ve come up with much better solutions during that time when I was talking things over with the owner!

In fifteen years, I’ve only felt physically threatened once as the property manager, and I think the person was mentally unbalanced and probably threatened lots of people in a variety of situations.  I wasn’t special.

I’ve never regretted the decision to keep my ownership private.  The camaraderie  between my tenants and me contributes to a good working relationship.  I’m careful not to let it drift into a friendship thing….there’s a fine line you mustn’t cross.  I care about my tenants and enjoy being their ally when I can.  And when they do bad stuff and the **** hits the fan and they need to leave, it’s the damn owner’s fault!