We make mistakes -it is a fact of life. Whether its in business, personal, or day-to-day investing decisions. The truth is mistakes are a given if one is actually taking action in directions to achieve success. Whether it be screening a potential resident or selecting that new property to rehab-to-retail odds are some mistakes will be made along the way. The key is that we acknowledge our mistakes as soon as recognized, study them to identify the issues, and adapt in making more informed and educated decisions going forward.
One motto from my life lessons has always been to say..,
“Leave your greed & ego at home and put your gratitude in your pocket every morning before heading out the door…”
You see as humans, we all have flaws, skeletons, and experiences that shape our lives. Back in my old commercial credit days, one of my most memorable lessons is discussing the folder holding all the information on a corporation that I had extended unsecured credit to and experienced a loss. I wouldn’t hide it in files drawers, I would open it up and review all the information with fresh eyes and try to identify the issues that I had overlooked -so as never to repeat it again.
The goal? -to be of right mind where I am open to all idea’s, thoughts, and signs that a situation presents to me.
In my early years of landlording when I was undergoing rapid expansion (or what was rapid to me -so it doesn’t matter if it means a duplex to you or the purchase of a 100 unit apartment complex) I would take a small complex and typically turnover 60-90% of the rental units during the first 30-60 days with improvements to the property to create forced appreciation via increases to market based rents. Even though I may have financially planned correctly to handle the swings in cash-flow due to a property rehabilitation, I would create self imposed pressure to re-rent units and/or keep unqualified existing residents during the transition period.
The result was that a few unqualified residents would end up residing in my rentals –guess what that means!?!
It means that I would end up chasing rents because I felt like I needed too.
If you read my article “Sometimes You Have to Shrink to Grow with Rentals“, you’ll note that I was hit with a double-whammy of going through a rehab growth phase while going against the grain of the Federal Governments model of ‘anyone that fogs a mirror gets a mortgage’ policy. For me it meant double-digit vacancy rates! Nothing will put a landlord out of business faster than double digit vacancy rates -with one exception! A pile of non-paying property deteriorating residents; otherwise, known as deadbeats.
So nothing creates change like pain…. after spending a few Friday nights of rushing from work to fight rush hour and go door knocking from 6-8pm collecting rents on a Friday evening with people not answering the door and/or not being there after committing to paying then, I would realize -“What the Heck was I doing!?!
Good God.., here I was chasing rents on Friday evenings chasing deadbeats. Was this the dream I had in my mind when I thought about “creating wealth with rentals?”
So when I had endured enough pain to create change I started dealing with the deadbeats. NO PAY…, NO STAY!!!
Mail the freakin’ rent right! -I’d collect if I had a believable resident. Otherwise, I created standard procedures with an absolute of being that if payment in full is not received by the 15th of the month eviction paperwork is filed. Best program I ever created. Residents you want do not get eviction papers. Perhaps re-read that if your going “ohhh…, but…., and making up other non-sense excuses. Nowhere in my rental plan is an outline to chase rents continuously (even if it means I’m always collecting large proportionate amount of late fees). The Ideal was and still is a passive investment.
Do I beat myself up about my mistakes? Certainly not. Do I remember them so as not to repeat them? Certainly do… The more I talk about things the more likely I’m going to do them (such as correct mistakes, meeting goals, etc., etc.) In the process of sharing, others will learn and prosper from your mistakes too. Isn’t that the goal? Absolutely.
So go out there… no excuses -just do. Go slow, but do…