They say the best way to progress in life is to learn from your own mistakes. For once, I think “they” might be onto something.
During my rather premature property escapades as a cocky, overconfident young buck I managed to get tangled in a series of elementary blunders that would even make Sarah Beeny shudder, and she’s seen it all. I was so naive back in the day that I may as well permanently walked around with my ass wide open, while touching my toes.
At the time I just shrugged my mistakes off, thinking they were minor errors and the penalty was so marginal that it wasn’t even worth worrying about. I look back now and think to myself ‘WHY’ (’cause that’s easy to do in retrospect)!! Whilst skipping past the feeling of stupidity, I’m definitely pleased to have made those mistakes because I don’t think I would have learned any other way.
Here’s a list of the most significant mistakes I’ve made as a property investor and landlord:
1) Working with idiots
When I purchased my most recent property I nearly had to call the deal off because of an incompetent conveyancing company, which I had appointed to handle all the legal jargon of the purchase. Never in my life have I dealt with such incapable dumb fucks. Seriously, if I ever meet the Director of the company, I would rip out his heart and feed it to him with a nail.
I documented the entire saga with the company on my blog, but they threatened to take me to court for libel (I couldn’t be bothered to fight the case). I had given them such a bad review that it was making them lose custom. Other clients of theirs’ had found my site and also said their services were shit. This particular topic had become the most popular section on my site. Hundreds of their clients flocked to my site and wrote similar comments highlighting their unprofessional, cheap and pitiful services.
I initially chose to use their services because I found them to be the cheapest solution. Ultimately, they ended up costing me an arm and a leg because of the ridiculous amount of time they wasted.
Point being, my mistake was using the “cheapest” solution. I couldn’t even go to their office to complain because they were based 200 miles away from me, so I was forced to engage in regular wars over the phone.
These days, whenever I use a vital service, whether it is a builder, mortgage broker or a conveyancing firm, I make sure they come highly recommended by a trusted source. I also always hunt for reviews online, too. If a company has provided a piss-poor service, you can guarantee it will be online somewhere.
2) DSS tenants
Taking on a DSS tenant was by far the biggest landlord blunder I’ve made to date. Nothing against DSS tenants as individuals, I just have a problem with the entire Social Benefits system. The way things are organised are completely fucked up from my experience.
If anything goes wrong (i.e. your tenant doesn’t pay rent), don’t bother calling the helpline because they won’t do shit about it. Secondly, the benefit cheques are posted every 30 days, and not on a per month basis, which gets fucking confusing after a while because 99.9% of landlords collect rent on a per calendar month basis. Consequently, receiving rent every 30 days is a nightmare if you want to be organised.
I advise NO ONE to take on DSS tenants unless they know how the system works. Problem with DSS tenants is that they can sound extremely appealing due to the guaranteed rent.
Relevant links on this issue:
DSS Tenants And The Council
3) Wasting money on letting agents
I used letting agents for 2 years, not only to find me a tenant, but also to fully manage my properties. What a waste of time and money that was; I may as well have invested in oxygen. The amount of money letting agencies charge cannot be justified when looking at what they actually do. Honestly, they do very little for an extremely extortionate price tag.
These days, in a booming rental market, I just look for the tenants myself, for a fraction of the cost. By advertising online and using the local paper, any decent property will get snapped up almost immediately. A letting agent will charge me £800 just to find me a tenant; a newspaper and online advertising will cost me £50. You do the math.
Relevant links on this issue:
Lack Of Properties On The Letting Market- Time To Cut The Middleman
4) Trusting Letting Agents
Seriously, letting agents and estate agents are all the same, they’re spineless parasites that are only in the game for the paperchase. Don’t be deceived by any sign of comfort or work ethic, because it’s all a unconvincing façade.
I trusted a letting agent to find me a decent tenant that would pay rent on time and take care of my property. I paid £800 for that fucking service, so I expected top draw results. For that much money you expect to get the Giorgio Armani of tenants.
Landlords hand over their cash and put their trust in agents to perform all the necessary credit checks so they can fish out quality tenants. Otherwise, what’s the point of paying £800? I can find a shitty tenant for free if I wanted to.
My letting agent found me a tenant, and he assured me she was a genuine and reliable tenant. I trusted him.
After 2 months of being my tenant, she turned out to be a shitty DSS tenant that committed benefit fraud and developed a mentality that lead her to believe that paying rent was a waste of time.
I ended up evicting the bitch. And I hope she’s burning in hell, while getting ass-raped by Satan’s horns.
As already mentioned in my previous point, I now look for my own tenants privately because the odds of getting a good/bad tenant is the same whichever way you do it.
Relevant links on this issue:
Commonly Used Lies That Letting Agents Love To Feed Potential Tenants
5) Allowing tenants to develop bad habits
The thing with tenants is that they’re like dogs. If you let a dog piss on your carpet, it will continually do so until it’s firmly told not to. The same applies to tenants.
I had this one tenant that kindly fixed a broken gate. The thing is, she never told me the gate was broken; she just fixed it and then billed me for it. She informed me by sending me a letter saying, “The back gate was broken, so I got it fixed for £50, I’ve taken it out of the rent”
Ok, at the time I thought, “Ok, £50 is nothing, so that’s fine”
But later on, she did it again- started underpaying rent to cover the cost of maintenance issues. Don’t get me wrong, she was a really nice lady, and I’m sure everything she did was genuine. However, as a landlord I’m running a business, so I need to make sure that I’m getting things amended for the best price possible. Tenants won’t have the landlord’s best interest at heart when it comes to finances.
Point is, I’m never going to let any of my tenants develop bad habits like that again. I have a firm hand now, so when any of my tenants cross the line, I unleash my pimp hand and POW, right across the chops. I’m the boss.
6) Monitoring finances
Man, for the first year my finances were a royal mess. I didn’t have a clue what my incoming and outgoing costs were. All I was concerned about was getting the monthly rent on time and paying my mortgage. I had no idea how much I was making per year, or even worse, how much the buy-to-let property was costing me.
These days I have an up to date spreadsheet where I record all my finances on a per property basis, as a result I know which way the cash is flowing for each property. On an annual basis I can asses each property- if any property gets me into the red zone, I’ll obviously need to evaluate the property’s fate.
Relevant links on this issue:
Calculating Your Profit And Loss (FREE DOWNLOADABLE SPREADSHEET FOR LANDLORDS)
7) Holding onto receipts
As mentioned, I wasn’t monitoring my cash flow, so it goes without saying that the receipts I managed to accumulate in my pockets immediately got tossed in the bin.
Keeping receipts for everything is imperative, especially when you need to start paying tax. A lot of landlords don’t need to pay tax because after paying the mortgage they’re not making any profit. But that’s still no excuse; I assure you, the taxman could come knocking any day now!
8.) In-house Mortgage Broker
For the sake of ease (and mainly inexperience), I didn’t bother looking around for a good mortgage deal, I just went with the “estate agent’s in-house” mortgage broker. My mentality was, “I don’t know anything about mortgages, so I wouldn’t know the difference between a good one and bad one. Plus, if I just go to any old mortgage broker, he/she would get me the best deal possible. It’s probably easiest just to go with the lender that works for the estate agency I’m buying with”
Going with an in-house broker is literally the biggest mistake, because they don’t get the best deals on the market, and those cowboys often charge for extra shit that you don’t actually need.
I now realize how important getting the right mortgage is; the difference between a good and bad mortgage can be thousands. I make sure I hunt around for the best deal on the market, and I certainly don’t use any broker that is located in the corner of an estate agent.
From what I’m aware of, they have been my biggest mistakes so far. I’m sure I’ll make many more as I delve deeper into the property game. Of course, it’s all part of the learning curve, and learning from my mistakes has been a priceless exercise.
What have your property related mistakes been?