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| Duplex Renovations |
Back to bad landlord mistakes I made.
MISTAKE 1:
I am now busy undoing what I paid for only two years ago. I got a highly experienced guy to renovate this very duplex in my absence. I didn't know the guy but my friend did. So naturally I had my friend hire and manage the guy and the project. A lot of bad decisions were taken (not that I would have made better decisions). This guy knows how to do a great job but decided to do a VERY shady job in the place. The tiling was below mediocre. I had to chase him away with my money and a job half done. I couldn't risk having a lot more work to undo. For two years I had this duplex off the market and used it as a holiday home because we had no time to take care of it and needed the place where it is. So we decided to have a working holiday in it for two weeks to have it properly fixed. That's the reason we live with all this dust and clutter. Yes, we could have gone to live in the hotel, but I don't see any sense in that expense.
The landlord mistake I made is renovating from a distance without a proper brief, contract and plan. That cost me a lot of money and a friendship. No use crying over spilt milk, I have to fold my sleeves and work.
MISTAKE 2:
When getting a tenant for a smaller duplex, I went all emotional when a single mother was desperately in need of the place. She had a decent salary but I ignored her trail of problems. One landlord mentioned how single mothers are a huge pain. I disagreed with her and still do. I think, like the rest of us, single mothers are not the same. But unfortunately for me, this woman was in a serious financial situation. She started having excuses after excuses. Needless to say we agreed to part ways. She left with some of my money. But all I wanted at the time was my apartment back to collect rentals. This was the first ever time that I had someone miss a rental payment in my 11 or so years as a landlord.
The mistake I made was to do a rush job at screening the prospective tenants, after doing a great job of marketing the place. I sometimes forget that this is business and not an emotional venture. This tenant obviously had her priorities crooked. She had a great job and was by no means a charity case. I need to toughen up a bit.
MISTAKE 3:
My property manager has been with me from the beginning. He is OK for me. I have written about him here before. I tend to trust him to take the right decisions. My motto is that "if things break, please fix them immediately. I don't want the tenants to suffer. Don't try to get hold of me when a tenant has no stove." Indeed my property manager does just that, except, he fixed one stove 3 times. The cost of fixing this stove was close to the cost of a new one. Fortunately for me, I managed to find out that the stove broke again before he had a guy fix it. I called him and politely asked him to buy a new stove. Happy tenants stay longer.
The mistake was that I failed to micro manage my manager. It does sound odd but there is nothing passive about property investing. You will always be hands on. But my manager is great in many other ways.
MISTAKE 4:
Similar to the mistake above, I assumed that my manager understood the property laws. I am lucky in that, I decided to do a Masters in Real Estate and have a good understanding of South African property laws in general. This is definitely not necessary for one to be a property investor. I just have an interest in real estate. When stuff that belongs to the body corporate broke, my manager went ahead and fixed them. I have been pointing him to the Sectional Title Act and I must say its been a learning curve for both of us. I realise that most real estate practitioners know zilch about the SA real estate laws. Its horrifying. So a landlord has a responsibility to learn about the laws that govern his investments.
MISTAKE 5:
When I was on to buy property number 3, a charming real estate agent told me all there is to know about the property in question. It didn't hurt that she was a pretty French girl. She was climbing up and down the stairs in an impressive way. Except, most of the details were WRONG. She mentioned 160 square metres when the property was 126. She enticed me with the spot to put a swimming pool when its actually against the Sectional Title Act and the space in question has some servitude conditions. Off course I had an apartment already but knew nothing about the Act and servitude.
What gives me comfort is that I would have bought the place even if I was told the truth. Just DON'T take your estate agent's word. It may be very dangerous. Do your own research.
I can go on and on and on. These are only a few of the landlord mistakes that I made in my property investing journey. I have grown from each of them and forward I move.
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