How Property Investors Unwittingly Waive Their Rights

In all things worth doing, there is a way things ought to work, and a way they actually do work. Real estate is no exception. In theory, if a person wants to make money from real estate, he simply does the required research, then meets with owner after owner until he finds a deal that suits him. At this point, he buys the property, performs whatever repairs are needed and hangs out a shingle.

Ostensibly, if he has done his homework in the first place, it is a desirable property in a desirable location and he has set the rent at a competitive, yet profitable, level. As there is such a depressing number of people who simply refuse to do their homework, thereby ensuring a tremendous amount of incompetence in the world around him, our property owner ought to do well just on principal.

But there are a tremendous number of roadblocks to our property owner's success. These are generally known as...people.

Those beings our property owner is attempting to attract, commonly known as "tenants" or "renters" are, in fact, people. Our property owner has met quite a lot of people throughout his life. He knows that they will try to pay the rent late, and that they will then balk against the late fees. They will try to give him partial rent payments. Some of them may even attempt to forego the rent altogether. And, though our property owner went into this little adventure knowing full well what people are like, when he comes to collect the rent, he is faced with the delinquent tenant's most potent weapon: puppy dog eyes.

In fact, tenants do fall on hard times. Roomates do play the "How Many Kamikazees Will My Half of the Rent Buy?" game. Paychecks are late. Budgets are mismanaged. And children come down with all sorts of inexplicable and unplanned ailments which have to be taken care of immediately, at a rate that Babyface Malone would be ashamed to extort from his worst enemy.

As easy as it may be to get caught up in the lives of tenants, however, the job of the property owner is not to worry about their problems. In fact, if he does allow a tenant to break the rules, that can count against him if he ever needs to take that tenant to court for, say, not being able to pay the rent for five or six months in a row.

In fact, Ken McElroy, author of "The ABCs of Real Estate Investing," lays it all out in his "Rent Collection" chapter. Each time our property owner developed a soft spot for a tenant, he set a precedent. And if he doesn't think they will use that kindness against him in court, he has not been a very conscientious student of human nature.

For the property owner who thinks he may find himself in just such a situation, hiring a property management company, which is comprised of experts in handling just this very type of thing, is one solution. If he is dead-set on managing his own properties, then simply being aware of his rights, and where the dangers lie of unwittingly forfeiting them, may do the trick. At any rate, he should remember that he is in the business of collecting rent, not solving his tenants' problems. ###