The Biggest Mistake Property Managers Make

The news was shocking. Barney, a normally responsible Doberman guard dog at a British children’s museum, had gone berserk and attacked Elvis’s priceless Steiff Teddy Bear, Mabel. Mabel, first stitched together in 1909, was a feature in a special toy exhibit at the Wookey Hole Caves Museum, which sounds more like the sort of place antique bears probably should steer clear of.

The news was shocking. Barney, a normally responsible Doberman guard dog at a British children’s museum, had gone berserk and attacked Elvis’s priceless Steiff Teddy Bear, Mabel. Mabel, first stitched together in 1909, was a feature in a special toy exhibit at the Wookey Hole Caves Museum, which sounds more like the sort of place antique bears probably should steer clear of.

Mabel was torn to bits with stuffing and fluffy pieces strewn thereabouts. When notified, her present owner, Benjamin Slade, was not happy. Neither were Elvis’ myriad of faithful fans, I’d wager.

As real estate investors and managers we are constantly having to tackle the wanton destruction of properties that we hold near and dear. This is the painful aspect of property ownership that kicks us where we really hurt. In our purses. You can talk about insurance all day long, but there are some things money can’t replace. Right?

Wrong. Listen. I’m going to talk tough here. Real estate can not be compared to an irreplaceable stuffed animal that once belonged to the man who won the planet’s hearts by singing "I Want to be Your Teddy Bear."

If we’re too sentimental or easily distracted we shouldn’t be in this business in the first place. Perhaps instead, we need to get into antiques and start collecting delicate artifacts which can be kept under lock and key; preferably away from dogs like Barney.

Dare I say it? This is at the heart of the main reason why many multitudes don’t invest in real estate, which is the investment that has historically made more Americans rich than anything else. You can’t go ballistic just because the kitchen floor gets scraped or the walls get scratched. There are too many stories of landlords who got out of the business because they had only one bad experience. Draw up a list of the Fortune 500 companies and consider what would have happened if their founders had taken the same route.

Smart landlords and property managers have systems in place to make those careless tenants pay for their irresponsible acts. You can either collect the money up front in a deposit or add more on to the rents. There are several good ways this can be done and our favorite method is explained in more detail in the course Create and Manage a Real Estate Empire in Your Spare Time . But it’s enough to say here there are tried and true measures you can take that actually work. You don’t have to wring your hands in frustration like the amateurs.

There are too many who will let one bad tenant keep them from the big bucks. My Dad, Charles Stevens, author of Create and Manage a Real Estate Empire in Your Spare Time tells the story of one collie dog that ended up costing him tens of thousands of dollars. Let me add it would be safe to say that Lassie look- alike has probably cost our family an inheritance well in the six figures. Does that sound too preposterous?

Here’s what happened. My Dad owned a duplex in a fairly nice section of Nashville. In fact, years ago, a newly married, Al Gore had someone call for him to see about renting it out while he was working at the local newspaper, The Tennessean. We didn’t get him as a tenant, but we ended up with a clone of the famous collie and her irresponsible owner. That dog literally tore up one of the doors, chewing it to smithereens. (Contrary to folklore, collies can be big chewers).

Instead of sending the bad tenant and his not so perfectly mannered pooch packing, Dad sold the duplex. "They’re too much trouble", was his excuse. Big mistake. That duplex would now be worth ten times what he paid for it back in the 60’s. Since it’s located in a prime area it will always be a good piece of property, whether the market cycle is going up, down or sideways.

That was the only time Dad made that mistake. Never again did he sell a property because the tenants were driving him crazy. He quickly learned how to move them out fast and effectively with a minimal of damage. Still, it has made us obsess over the years exactly what the replacement cost would have been for that door. Probably not much.

Here’s my point. If you’re going to put a price tag on your properties don’t leave out the long zeros. Think about your real goals; the ones that will take you to independence and financial freedom. Learn how to view your properties with the sharp eye of a financier, not from the delicate vision of a museum curator.

As Jeffrey Taylor, better known as Mr. , stated a few years ago, "Even if it burns down, there isn’t anything you can do about it at the moment. Call the fire department."