Confession: As a Landlord, I regularly feel scared. Wow. It feels better to write that down. Is that normal? Is that acceptable?
I feel the answer is “Yes” to both of those questions, although with a caveat for the second question. Here’s why…
Is it normal for Landlords to worry?
A big fat capital YES. There’s 1001 different reasons why Landlords might worry / feel scared.
After all, we own an expensive asset (a property). That means we have more to lose.
As I’ve argued before, owning an investment property should be thought of as running a business. You need to adopt that mindset, and run an investment property like a business to ensure you optimise the financial performance of your business (property).
However that comes at a cost. A property business has rent to collect, bills to pay, risks to manage, clients (tenants) and other stakeholders (lenders, suppliers etc) to keep happy.
Each of those tasks brings risk. Which quite rightly brings worry (and the feeling of being scared). That is perfectly normal. Don’t shy away from that. You run a business. Things can go wrong. It would be worrying if you didn’t worry about it! It’s a natural human emotion.
But how much worry is acceptable?
Here’s my caveat (gosh I loved that word). Whilst feeling scared is perfectly normal when you own an investment property, there’s a limit to how much worry you should have.
You can’t spend your whole life worrying. That’s like growing the perfect fruit tree and then watching it every day and night in case a leaf falls out of place.
Instead you need to adopt this mindset:
1) Put in place processes to reduce the worry associated with property risks – here’s a few examples:
– Reference prospector tenants
– Have a process for collecting rent on a certain day by Direct Debit
– Maintain a cash buffet to cover unexpected costs
– Carry out detailed financial due diligence using a range of tools / metrics on any decisions (new investments, refurb, restructures etc)
– Regularly check the property and fix repairs quickly
– Have a list of contacts saved in an accessible place
– Have good Landlord insurance
– Set up financial controls and checks to ensure cash inflows / outflows are analysed
There are so many more I could list, but you get the point.
If you implement the above suggestions, along with many others future blog posts will cover, you can sleep easy (easier at least) at night knowing you have done everything possible to reduce risks associated with your property. That fruit tree will still be there in the morning.
But…
2) Even with the best processes in place, you need to accept that things will always go wrong at some point. That’s unavoidable. There’s no point worrying over something outside of your control or that you can’t predict. That part is not healthy or acceptable worry.
So to conclude, if you find yourself scared, ask yourself: Have I put in place processes to manage this risk?
– If yes, then don’t worry. You’ve done everything you can. Go to sleep.
– If no, you are right to worry. And see the worry as good because you can use this to focus your attention on an area which requires improvement. Then you can stop worrying once it’s fixed.
As a Landlord, do you worry? What keeps you up at night? What’s the best way to mitigate this? Let me know!