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My Limitations by Scott Martin

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AUTHOR: Scott Martin on 6/22/2024

I walked into the room and saw Freddie sitting on the exam table with a bloody gauze on top of his bald head. I asked him what happened and he told me that he had been snaking a clogged toilet in a rental apartment. He does maintenance on a lot of rental properties around our area.

All of a sudden the snake backed up on him and hit him on top of his head and caused a V-shaped laceration. While I was cleaning and suturing his wound, he told me that the tenant of the apartment thought it was ok to put crab legs down the toilet.

After I got out of debt in 2012, I was interested in learning more about expanding my portfolio into real estate investing. My goal was to buy rental property with cash. I had very limited experience in this area. 

When I was in my early 20’s in 1980, my parents helped my first wife and I purchase a mobile home in a nice manufactured home community in northern California. We were both in college and working part time. It was 12 feet x 60 feet of paradise complete with green shag carpeting and a screened porch. 

Unfortunately, we got evicted from the “adults only” manufactured home community after our son was born a year later. We rented a three bedroom house nearby and tried renting our mobile home. We had two separate tenants over the next two years. Both ended up trashing our mobile home and missing rent payments.

While on our student budget, we fixed and cleaned up the damage. Fortunately, we did not lose any money when we sold it after the second renter bad experience.

There are numerous web sites that detail the benefits of owning rental property. Some of the benefits include:

  • IRS tax deductions for expenses, improvements, and depreciation
  • Create passive income 
  • Real estate will generally appreciate over time

Over the years, I have had numerous conversations with patients, including Freddie, that either own rental properties or do maintenance on rental properties. Based on my unofficial survey, most patients that I have talked to do not recommend getting into owning and managing rental properties. 

I have heard stories about late rent payments, extended vacancies, as well as significant rental property damage. Renters with pets seem to cause the most damage. I have had several property owners tell me stories of having to remove everything from a rental unit down to the studs due to pet damage. Cat urine seems to be the worst.

Since I am an obsessive-compulsive neat freak, I have had numerous heart-to-heart conversations with myself over the years. As Dirty Harry (played by Clint Eastwood) once said, “Man’s got to know his limitations.” 

I have come to the conclusion that my personality could not handle dealing with difficult tenants. It would be challenging for me to deal with late payments or damage to a property that I have invested my time and money.  

Likewise, I am not interested in owning a second vacation home. Taking care of one home is enough for me. My wife and I like to travel and experience different parts of the world. We don’t want to feel obligated to spend all of our vacation time taking care of a second home. 

Low cost index mutual funds have performed very well over the years and fit my personality. I haven’t had to deal with late night or early morning telephone calls regarding a malfunctioning toilet or water leak. I have also had no worries regarding late rent payments or damage to my investment.

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