What scares most people about investing in Hawaiian homes is the perceived risk of an investment venture. Real estate investment is, of course, incredibly lucrative for many individuals. However, while being a good investor involves knowledge and strategy, there is also a matter of chance involved. Poor tenants, unanticipated repairs, market fluctuations—all of these factors can make or break whether you make a profit as an investor. Though you can try to anticipate likely setbacks, there are always unpredictable curveballs.
As Craft Realty continues investing in Hawaiian homes and growing our small business, we are coming to learn that there are a few aspects of real estate investing that are actually relatively predictable. Namely, we are coming to find that there are certain types of tenants you can expect to deal with in your career as an investor.
In previous weeks, we have examined the importance of screening your tenants and creating a foolproof lease. But the fact of the matter is: if you are going to become a landlord, you are bound to encounter at least one of these four types of tenants. Being mentally prepared for and equipped with the skills to communicate with them will be the key to your success.
Nothing is worse than having a perfectionist for a tenant (except for, maybe, as a boss). Perfectionists find disturbing anything that doesn’t live up to their highest standards. They are likely to issue constant complaints about seemingly trivial things, like minor scratches on floors and walls or other aesthetic displeasures. These individuals want superb efficiency, not just functionality. They want luxury, not just comfort. And they will likely feel unsatisfied no matter what.
It is often hard to pinpoint a perfectionist during the screening process. Though perfectionists are often rigid and demanding, they might disguise these qualities in your initial encounters. It is therefore a good idea to ask them directly whether or not they would consider themselves laid back. To ensure that you don’t end up with an endless list of frivolous complaints, be sure to disclose everything you can about your property before you close on your lease. If they issue a lot of complaints early on, you may be dealing with a perfectionist.
If you are renting Hawaiian homes close to UH property, you may run into the coddled child. The coddled child is typically of (or slightly above) college age. It is not uncommon for the coddled child to view the home or sign the lease with their parents in tow. Parental advisory is not an inherently bad thing. However, if the parents are making all of the decisions and doing all of the negotiation for their child, the child likely lacks the mature capacity to make independent decisions, be responsible, and generally live a functional adult life. These individuals are not inherently flawed or problematic, but their lack in life experience tends to render them difficult tenants.
When faced with the coddled child, think critically about whether or not to accept him or her as a tenant. If the parents are fully funding the rent and their child appears reliable, you might want to consider him or her. However, if you are dealing with a silent, wide-eyed, and/or detached prospective tenant with a mother for a mouthpiece, run in the other direction.
We’re all acquainted with excusers in our personal lives. These are the people we know that are absolutely incapable of accepting fault or blame. Oftentimes these individuals are actually incredibly cunning and charismatic, which makes them all the more convincing. Excusers will tell tall tales of why they simply had to act harmfully when accused of wrongdoing. They will blame accidents and mishaps on external factors instead of on their own mistakes or shortcomings.
In screening your tenants, be on the lookout for the excuser. Oftentimes these individuals will tell you long stories to arrive at points in a roundabout way. They will rarely answer a question directly. For example: if you inquire as to an individual’s criminal history and they proceed to relay a complicated scenario in a drawn-out fashion instead of answering the question with a yes or no, you are likely dealing with an excuser. Steer clear of these individuals if you can. They will be the ones that damage your Hawaiian homes or engage in conflict and then deflect the blame onto others, dodging the fiscal and social repercussions of their actions.
Like the perfectionist, an easily distracted tenant can be difficult to identify. In seeking to determine whether you are dealing with one, you want to ask about job history. Are they constantly in an out of a job? Do they change companies frequently? If your prospective tenant has changed jobs three times in the past year, they probably either lack a sense of commitment or fail to properly manage their time and belongings. If your prospective tenant misses appointments or showings, then you are most definitely dealing with the easily distracted.
Easily distracted tenants may be agreeable and low-maintenance. However, they’ll cause you a lot of grief if they continually fail to make their rental payments. Furthermore, they could cause long-term damage in neglecting the care of your Hawaiian homes. Asking for references is your safest bet in determining whether this is the type of individual you are dealing with.