February 2015 Dinner with Damon

Last week Wednesday (2/25) was my dinner with Damon. I’d been eating very healthy for that entire week and was tempted to call the dinner off, but I decided to keep the appointment and simply choose healthier foods from the Chinese buffet. Although I had a few wings here and there, I did pretty good overall with white rice, potatoes, and some pineapples/mangos for dessert.

I immediately asked him about the Vacancy Bank property he’s in the process of buying, and he said he hadn’t signed the contract yet. He didn’t have a good reason for it, so I told him to sign it the minute he gets home or these dinners are over (he signed it). We then talked about my search for a property, and I told him that I’m still looking. He once again brought up his slight objection to focusing only on the really good areas, and reminded me of the advantages of buying cheap properties in not-so-great areas. He brought up the story of a landlord here in Smalltown who has properties in a bad area. They’re all on one street, but he always has 100% occupancy. How does he do it? He rents out to immigrants. These immigrants end up being fantastic tenants and he gets stable rents from them every month. And whenever there’s a vacancy, he never has to advertise because the immigrants always have someone who wants the place.

I had to pause and think for a moment because he was right. The way I do business is to rent out only to people that have jobs. In good areas, that’s what I have to do. But in bad areas like the landlord’s or Property X’s, you have to make concessions. That landlord accepts Section 8 and Public Assistance. And he makes good stable money. He doesn’t have to worry about high taxes or big mortgages. And all he has to do is the same thing I do with my Nepalese tenants… treat them well and take care of problems as soon as possible. That made me think. Remember PP4 #1? Well, that’s been sold. Just because I don’t see it as a wise investment doesn’t mean that an investor with more experience in bad areas couldn’t make that place work. I started to wonder whether that was my problem at Property X all along. No immigrants. Yeah, I had the Africans there but they were dirty and worthless. Like all tenants, immigrants have to be vetted, and I don’t think I would take Africans again. But Asians? Sure! Like the Indians (Prospective Tenant #11) that were interested in Property X's downstairs apartment after Tisha left. I'm fairly certain they would have made the appointment had I given a better price, like $600 a month. Yeah, it's $150 less than the rental price. But I'd rather get $600 a month from stable tenants than $750 from problem tenants. That $600 will be on time and they'll stay for years, and bring a much needed stability to a property that hasn't seen stability in years. The $750 will come with bullshit repairs, bullshits excuses, evictions and turnover times.

I told Damon that he gave me much to think about, and we moved on to my dealings with Property X’s then-tenants Tony and Ashlin. He agreed with me that I waited too long to file an eviction on Ashlin, and I should have thrown them out once Tony moved out. That would have saved a lot of headache, and I would have rented it out sooner. We then talked about the Van Sickle family and he said I did the right thing by putting the lease in Chuck and his girlfriend’s names, instead of the mother who has an eviction and wrote bad checks in her past.

Damon mentioned a situation he had when the fire department had to break in the door to his property because a tenant called him talking about how they smelled gas in their apartment (or basement, I can’t remember). He mentioned that he has to now do all these different things to prepare for the fire department should they come again and break the door down, and got pissed off that they can break down doors and cause damage to his property while he has to pay for the damages. I told him that his problem in that situation is the tenant, not the fire department. If a tenant smells a hint of gas in an area they can’t get to, I would much rather they call the landlord than the fire department. The landlord can go in there, see what the issue is, and then decide for himself if the fire department is needed. That seemed to set an “Aha” moment in his mind, as he realizes one of the oldest rules of landlording:

If the relationship between landlord and tenant is good, business should be smooth as a baby's butt.

He remembered that the tenant was a pain in the ass whom he had evicted a few months later, so the rule rang true for his case. And with that, the dinner was concluded.

P.S.: I mentioned the Africans earlier, former tenants of Property X. After calling the cops on me and threatening me during their move-out process, I found it kinda funny when I received this text last weekend:

2/28/2015 9:14pm

Hi, do u have any 2 or 3 bedrooms apts available or house for rent

Unbelievable. The outright nerve! But I wasn’t angry. In fact, I puffed my chest a little bit. I remember writing in my old blog that they would never find a landlord that would treat their Africans asses well, and I guessed right. In fact, here was the exact quote from my old blog, while I was in the middle of a rant:

"Try to find any other landlord in this almost all-white town that would rent to all your black-asses and fix all the problems in the speed that I did"

It’s kinda like when a woman treats a guy poorly, and then comes crawling back after realizing that he was the best thing out there. I smiled a bit and then blocked them from sending future texts. Let ‘em burn…

P.P.S.: One thing I forgot to mention about immigrants... they are an automatic advertisement. They talk to each other about what places their landlords have available, so the landlord that Damon talked about doesn't even need to advertise. Once a tenant leave, their community will know and will want the place. Prospective Tenant #11 asked me if I was an "African guy". There is NO WAY from the sound of my voice that anyone would know that I'm black, much less African. This means that I've gained a good reputation, most likely from my Nepalese tenants. A built in tenant pool of Indian tenants would definitely make me reconsider buying in bad areas.