subject: The Common Ailment That Is Costing You Money Learn What Causes It And How To Cure It [print this page] People are afraid of lots of things: spiders, heights, even roller coasters. For some people, these fears interfere with their lives so much that doctors assign medical names to their conditions big long tongue-twisters like arachnophobia, acrophobia, and veloxrotaphobia. Theres even a name for people for are terrified of getting a phobia phobophobia.
Ive never known anyone who had any of those fears. But I certainly have seen fear get in the way in peoples lives. Happens all the time, in all sorts of ways. But in real estate investing, Id say the most common fear is tenantphobia.
Thats right the fear of tenants is one of the biggest obstacles I see in my students, week after week and year after year. People are sure that as soon as they buy a cash flow property, their tenants are going to start bleeding them dry not paying the rent, tearing up their place, making a general nuisance of themselves. Everyone knows someone who knows someone whose brothers wifes cousin had a rental property and had the tenants from hell. Too many headaches, they say. Too much hassle.
Too bad for them. Because people with tenantphobia will never be successful in real estate investing. Theyll let their irrational fears keep them from achieving financial independence. Theyll let the naysayers get to them, listening to the negative messages that have been programmed into their heads since childhood: Dont take risks, stay within these lines, keep your head down and youll be fine. Dont even think about stepping out of the box.
If youve got a touch of tenantphobia yourself, dont feel bad. Just about everyone does when theyre getting started. But Ive got just the thing for what ails you.
Heres the truth: Fear feeds on a lack of experience and understanding. Most of the time, the people spreading these tenant-from-hell stories have never been property owners themselves. And if they were, they clearly made some big mistakes to find themselves in such a pickle with their tenants.
On the other hand, fear tends to dissipate as you learn the facts. And as a man who has made millions off of rental properties for over 20 years, I feel qualified to cure you of your tenantphobia once and for all.
Will some tenants cause problems? Sure they will. Will you have some who wont pay the rent? Yeah, probably. Will some of them break things in your properties? Of course. Id be lying if I told you that there was any way to prevent these problems 100% of the time.
However, there are ways to ensure that these things are the exception rather than the rule. Ive written other pieces about the basics of tenant management how to screen troublemakers out ahead of time, and how to get rid of troublemakers after theyve signed the lease. Like everything else, youll get better at that the more you do it.
But every so often a rotten apple will get through. Dont take it personally it happens. The key is to anticipate it and be prepared.
Think about it when Sam Walton was running his first Wal-Mart, do you think anyone ever shoplifted from him? Do you think any of his employees ever stole something? Do you think any punk kids ever broke one of his windows or stuffed up one of his toilets?
Of course they did. But when they happened, Sam didnt throw up his hands and say, thats it, its too much hassle to deal with theft and vandalism, Im closing up shop. He didnt take it personally. No -- he did his best to prevent those things, and then accepted a certain amount of loss as a cost of doing business and still made a ton of money.
Its the same in real estate. You do your best to prevent tenant problems, but when they do occur youre prepared to respond to them quickly and you can absorb the loss. I recommended setting aside 5% of your monthly cash flow in reserve to cover these kinds of things. Just work it into your budget from the beginning. When it happens and if youre doing things right on the front end, it should be rare youre covered. A bad apple once in a while wont knock you off course.
Dont let fear keep you from realizing your dreams. Educate yourself, talk with people who really have experience, and most importantly, get out there and try it yourself. Before you know it, youll be cured of your tenantphobia and on your way to financial independence.
