I put a premium on making things happen and getting things done. If I compare a bunch of B+ deal that I can actually get done vs. an A+ deal that doesn’t close guess which one I prefer?

This is a philosophy that I’ve learned over time, and one that doesn’t really jive too well with my background as an Army officer and my academic training as an engineer – two disciplines where finding the right solution is pretty darn important. So this is something that I have to work at.

This extends to the way that I deal with people. Real estate is a people business. Yeah there’s financing, and strategies and technical know-how, but at the end of the day it’s all about you and the person sitting across the table from you – whether she’s a contractor, a Realtor, or a buyer.

So I’m rarely thinking about cutting the best deal I can. I focus on cutting a good deal; one that I’m satisfied with, which gives me a good return and one which builds the relationship. A good relationship today will yield more good deals tomorrow.

Loyalty is important to me, and that is a value I try to communicate through my actions. Case in point - when I have a maintenance issue that I have to deal with here’s what I like to do: I call the contractor and tell him to head over to 123 Elm Street and take care of it, then send me the bill. No bid. Just fix it.

Now I certainly can’t always do this because many contractors are evil and dishonest (sorry if I offend anyone, but this is a statement of fact.) But I can do this with one particular contractor that I work with on a regular basis. I trust him, he trusts me, and we have a symbiotic relationship – this is a relationship that I value like gold. I know he’s not going to rip me off because he knows I’ll be coming back – he values the repeat business. And he knows I will treat him fairly, because he knows that our arrangement helps me manage my life – I value the ease and convenience. We both value the relationship and we both take care of it. Honesty. Trust. Case closed.

Reciprocal, symbiotic relationships don’t grow on trees and they don’t happen overnight. I always think of those hippos on the Discover Channel with the little birds perched in their wide open mouths. A real win-win deal: the hippo gets clean gums and the little bird gets an easy, risk-free meal of leeches and whatever else hippos end up getting stuck between their teeth. Kind of a disgusting analogy, when you really think about it.  Anyway, what you don’t want is to realize that you’re more like one of those whale sharks that has a bunch of blood sucking remoras attached to his underside; the remoras get a free meal and free transportation to boot, but the whale shark gets jack.

So relationships are something you have to keep reevaluating; make sure you're getting what you think you're getting. 

You might notice our new look.  Some of it is eyewash (oooh....new layout!) but you'll also find some new functionality, especially in the blog.  Our previous layout was based on a forum platform but now we've come into compliance with the rest of the blogging universe and made it easier to comment. 

Another new feature is our preferred vendor page.  One benefit of the proliferation of blogs dedicated to real estate services is that we can get acquainted with service providers around the country.  Interestingly, we don't run into too many who focus on real estate investors - but when we run across a professional who shows some insight we'll put 'em on this list.  So check it out, and let me know if there's someone that you work with that makes your life as an investor easier. 

Yesterday’s the Wall Street Journal ran a first page above-the-fold article on tenant/landlord litigation over mold, which reminded me of an experience I had last year. 

I got a call from a tenant who lives in a single family patio home complaining of discoloration on the ceiling of the home’s second bathroom.  I went over to take a look and was fairly surprised at what I found – the ceiling which was bone white when I rented the property to the family a little more than a year ago had turned into a kaleidoscope of dark moldy colors. 

If you’re a Houston landlord then this isn’t something you want to see.  For the uninitiated: mold is big business around these parts.  Houston is basically a big paved over swamp.  Hot summers.  Lots of rain.  A good environment for both mold, mold remediation firms and for personal injury lawyers.  This has been a particularly hot issue in Texas since a jury awarded $32.1 million (later reduced) to a family whose home was infested with mold. 

So I called AMC Engineering & Environmental Services to come and take a look at the place.  The set up some equipment, took some air samples, charged me what seemed at the time to be an annoying amount of money, and eventually produced a clean bill of health for the property; the quantity of airborne particles in the bathroom being “less than the overall quantity of fungal structures identified in the outside ambient air.”
The report went on to state that there is no “absolute criteria” regarding mold and that the recommendations of the report were based on “standard environmental microbiological and industrial hygiene practices.”

Which brings us back to the Wall Street Journal report (note: the WSJ article is available online, but only to subscribers).  The science of mold is a pretty fuzzy one (sorry, couldn’t resist at least one pun) and the references frequently quoted in suits are a maze of conflicts of interest.  One frequently cited paper from the American College of Occupational and Environmental Medicine which was written by a group of experts who paid experts for the defense side in mold litigation. 

The punchline (for me, anyway):  You know this.  And your tenant probably knows too.  My wife is a physician and I’ve learned one interesting fact over the past few years: it’s not the bad doctors who get sued, it’s the obnoxious ones.  I don’t have the data to back it up, but I suspect that the same applies to landlords.  If you tenant brings up a health related issue then look into it.  If need be do an evaluation and show them the all-clear certificate.  It’s a good investment. 

The last in my series on avoiding investor burnout...

Principle 4:  Don’t take shortcuts with repairs

Trying to save a few dollars on every repair is a short-sighted strategy.  Your tenants will take note of how you treat the property and they’ll act accordingly; why should they respect your house when you don’t?  A well cared for property is more likely to appreciate and in the end will cost you less to maintain and cause less trouble.   There’s not economic value in delaying a repair – you’re going to have to do it eventually, and if you wait not only will the problem have gotten worse (and, possibly, more expensive) but  you will also have alienated your client: the tenant. 

Principle 5:  Know when to say “when”

Sure you’re trying to build your empire, but don’t overextend yourself with too many properties or projects.  Most real estate investors have jobs to support their day-to-day lifestyle and invest in real-estate on the side as a long-term wealth building strategy.  Assuming that you fit into this category (that you’re not a full time investor) it’s wise to make a deliberate decision as to how much you can take on in terms of workload and financial risk.  Don’t cross that line.   

You can do it

A well maintained property w/ a good tenant should not be a burden on your life.  On an average month the only effort that is required of me is to take the rental checks out of my mailbox and deposit them into my bank account.  But the key to maintaining this balance is being diligent in all of the steps along the way.