The battle cry of every caring parent

When we managed student rental properties, this was an all too common response to any situation where the student had not kept to the agreement, and parents stepped in to 'help'.  It usually goes something like this:

"Please don’t treat my children like they’re stupid children, except when it’s my poor child who doesn’t know any better, because despite the fact I also work in the industry (or at least, in something vaguely related, close enough that I know enough jargon to hopefully scare you into submission) and I have first hand opportunity to teach them how the world works, but I didn't take it.  I chose instead to manipulate and misconstrue every rule in the book to have exemptions made for my child and teach them that personal responsibility and accountability apply to everyone but them.  So while you’re not allowed to discriminate against them because they’re a stupid, sorry, student, you MUST make exceptions for them because they’re a student, and most importantly, my child.  I will fight you to Kingdom Come if you dare try to get them to act like an adult and take responsibility for themselves.  Even though technically they are an adult and entered into a contract as an adult.  But they didn't know what they were signing because they didn't run it past me first, and if they had I would have told them to sign it anyway and we'd deal with the consequences afterwards, like I am doing right now in haranguing you until you find it easier to give in than continue to fend me off.  I can't believe you actually asked me to butt-out, which although you did that professionally and with some delicacy, it offended my parental sensibilities, as this is my child we are talking about, my precious child, and they are special and different from everyone else's.  And anyway you are being unfair and picking on unfortunates who cannot defend themselves (not that I've given them a chance to, don't worry Dear, I'll handle this), and you are exploiting them and their vulnerabilities, and we'll sort this whole matter out later anyway, when I've talked to my lawyer, when we return from our family Canadian ski holiday."

Yes, this really happens.  So many times it was a cliche.

I can count on one finger of one hand the number of times a parent said to us 'Yep, fair enough, my child didn't do what they agreed to do, and this is the consequence.  Please carry on teaching them about life, contracts and moral obligations, well done and thank you'.

I loved that parent.  The 'kid' took their parents advice and did as they were asked.  It all ended well, and I believe the world was a better place for it.

As for the others?  All special snowflakes melt down at some point, right?  I wasn't there for their particular Spring, thankfully.

What makes resilience? Can it be learned?

When I think of my own attributes, resilience is probably my most treasured.  It is what gets me back up when I've suffered a setback.  I don't consider it an option to slink away and put my tail between my legs, instead, I get on with things, but with more knowledge than before.  It's my grit, my core, and the very key to my success in every aspect of my life.

Resilience is a tough thing to learn.  But I believe it is a learn-able skill, and I certainly didn't always have it as strongly as I do now.  These are the things I think build resilience:

Resilience can come from mental preparation - even just knowing what could potentially go wrong can help buffer against things going wrong, surprise can be a nasty emotion.  Looking only at what you hope will go right leaves you vulnerable to shock and rebound decision-making.  Not good.

Resilience can come from being financially prepared - a realistic budget for vacancies, maintenance, willful damage, and improvements goes a long way to being able to weather bad tenancy moments or Murphy's Law moments.  You don't need to have cash, but you need to know where you can get it when things go wrong without digging an impossibly big hole.

Resilience can come from having support, a network of people who understand what you are going through, and have been in a similar place themselves, and got through it rather than gave up.  It pays to hang out with the successful group, rather than those who ended up where you don't want to.  I recommend your local Property Investors' Association for this peer group.

Resilience can come from not being too hard on yourself - mistakes are an education, it's not the end of the world.  If something doesn't work right now, there is still time on your side to make it better, or try again with a different strategy.  If other people look to be more successful, it's because you are only looking at them in this moment, not at the time they stumbled.  Everyone stumbles from time to time, it's how you pick yourself up that matters to your long term success.

Resilience comes from having a good insurance policy to cover your risks.  Don't believe "it won't happen to me"; that's what people who lose everything think.  Insurance is the best waste of money ever.  If you don't need it, fantastic.  If you do need to claim, fantastic!  It's great you have cover.  The only insurance policy not to have is the one for the things you won't regret losing.  It isn't an optional outgoing.

Resilience comes from having experts do things for you that need expertise.  While we all live in houses, we don't know all aspects of the laws around this, and a sometimes innocent mistake can have serious ramifications.  If you don't know what these are, then you don't know enough to do this yourself.

Resilience comes from having a plan, and sticking to it.  It has a clear beginning (acquisition and or growth), middle (development and/or improvement), and end phase (maturity and/or disposal), and rules for what to do when things happen.  Those rules are not to be broken under any circumstances.  They take into account 'what if we break up' and 'what if we win lotto' and 'what if we are a lot more successful at this than we expect to be' and 'what if we are not'.  It is essentially a space shuttle launch manual.  Clear protocols and a systematic program to work though without deviance will lead to a successful launch.  There are clear triggers for change, and an understanding of the need to pause before pressing the big red button to ask yourself "is the right thing to do?".  Of course you can change as technology changes or your knowledge improves, but you don't change on a whim or out of fear.

Resilience comes from recognizing fear for what it is - False Expectations Appearing Real.  Fear makes bad decisions because those decisions are based on bad data.  Being able to identify your concerns and check the facts on them one at a time can help overcome fear.  If you find you are thinking 'but I still don't like it' then check what assumptions you are still making.  This is different from following your gut instinct - if you trust your gut, you'll know how fear feels, and how it differs from instinct or intuition.

Resilience comes from knowing your comfort with risk, and not dangling too far outside your comfort zone.  By all means challenge yourself, but not by jumping off a cliff if you are scared of standing on a chair.  Small increments of challenge will bring your A-game, too much will be a disaster.  Don't gamble what you are not prepared to lose, it doesn't make for sensible decisions - see insurance again for more on this.

Resilience comes from remembering that 'I've survived every single day of my life so far, and I will continue to survive every day until my end'.  Giving up isn't an option yet.

Resilience comes from knowing you are loved and supported by family and friends and colleagues.  If you aren't loved and supported, something needs to change.  It's easier to change yourself than them, so start there.  Invest time in people who nurture you, avoid those who poison.

Resilience comes from knowing you did your best, and if you had your time over, you wouldn't regret any of your actions.  Regret isn't helpful, learning from mistakes is.  Behaving ethically, honestly, genuinely is the best way to be at peace with yourself and your choices, and allow you to accept the outcomes.  If there is something after this existence, you wont be worried about how you might be judged.  (As an aside:  I prefer to think this existence is heaven, and we need to behave ethically to be allowed to continue living in paradise, otherwise it becomes your own private hell.  Food for thought).

Resilience comes from knowing I have the power to make change - I am influential on my world, and I can make things happen, or prevent them happening, if I take appropriate actions.  It's motivation to do what must be done.

Resilience comes from freedom - I am not oppressed, silenced, controlled, or discriminated against, unless I allow myself to be.  I allow myself to be free, and I allow others to be free, they can do, think, and feel whatever they want to.

There are probably a lot more things that build resilience - feel free to comment with what you feel makes you resilient to what life brings.  You are welcome to disagree with my comments too.

Most Kiwi's invest in property like this.

I was at a meeting with MBIE today, and they were asking questions about how many landlords quit the industry before really getting to grips with their responsibilities as landlords.

My impression is 'most of them'.

Lots of Kiwi's do-it-themselves when it comes to managing their own property.  They own their own homes, and they've been tenants, so how hard can it be?  It is only a matter of time before they find out.  It was very enlightening to us that many don't realise how emotional this is for property investors.  When you are buying property for the purpose of your future security, your retirement nest egg, something that stops you from thinking cat food is one of the main pensioner food groups, you get really rattled when things go wrong, and that disaster jeopardizes that security you are working towards.

The vast majority of Kiwi property investors own one investment property in addition to their own home.  A few own two or three investment properties.  Only a small number of property investors own more than that.

So this blog is for the 'one or two' investors.  The newbies, or the cautious.

I get it.  I know what you feel when everything seems to go wrong.  The tenant left owing rent, damaging the property, and taking your stuff.  They left rubbish and long lawns, and a cat with a litter of kittens behind them to compensate you though, so that's something, right?  And you are too scared to go to Tribunal to set matters right, because in the heat of things you lost your cool and said or did something you really regret, and you worry it will count against you.

So you start setting things to right, and you tidy it up again, and borrow more money from the bank to fix things, and spend your weekends and evenings sorting it out.  You plot what you'll do if you bump into the tenant at the local swimming hole, when no one is around to see... no one would know, would they?  But you stop yourself, this isn't TV-land, that isn't OK.  You continue your work to tidy up the property, feeling jaded about humanity.  And while you do so, your mind is dwelling on 'what will I do if the next tenant is as bad as the last one?' and you don't know if you or your relationship with your nearest and dearest can take it again.  So you think 'That's it, I've had enough, I'm selling'.

You put it on the market, the agent says 'you'll need to tidy it up more to get a good price' so you spend weeks of your personal time doing just that, but it doesn't make a difference to the offers you get.  You haven't been advertising it for rent, because the thought of that leaves you cold, and anyway, you'll be selling it soon, right?  The weeks of marketing it drag on, with you visiting frequently to mow the lawn, dust, work on just one more thing that might make all the difference to a buyer.  You desperately want a good offer, because all you can think about is your mortgage payments going out, and no income from this property coming in to help cover it.

If you are steadfast, you stick it out for months.  Then, in a fit of desperation, you take the next offer, which while on the low side, will at least let you break even financially, if not emotionally, and it certainly doesn't cover the hours you've spent working on the property.  But you take it because at least you are finally free of the burden of holding this wretched rental property.

If your spouse isn't constantly asking you, you are asking yourself 'what was I thinking?  Why did I think owning a rental property was a good idea in the first place?  I can't do this.  I'm certainly never going to do that again.  Couldn't afford to anyway even if I wanted to, as prices seem to have jumped the instant my place settled'.

You decide that property investment isn't for you.  You'll invest in the sharemarket, once you know how to do that, once you get a hot tip, and once your kids are out of school, out of university, married, the grandchildren are secure, oh, and what's just happened?  You hit retirement age without any assets, without any investments, and with plenty of regrets.  Your grocery list consists of 'tea, bread, baked beans, cat food, milk', and you don't even have a cat.

Pretty grim eh?  That is the reality for the vast majority of people who buy investment property.  They get one without knowing what they don't know, they don't pay for good advice from experts, they change their strategy when something goes wrong, and they lose out, often with a large amount of emotional fallout with their loved ones.  So much for 'lucky, greedy, wealthy landlords'.  They don't exist really.

So what separates the average property investors with a successful one?

Yes, there may be some luck involved, but mostly luck you get is what you make by being prepared.  Would we say a kid who scores top of their class is lucky, or paid attention and did their homework?  Of course we'd praise their work.  It's the same with successful investors.  They educate themselves, they get experts to help, they have a sensible strategy, and they have resilience.

Education should be pretty easy, there are plenty of resources out there freely or cheaply available, as well as plenty of people willing to put a high price on education.  Don't run the risk of thinking you are smarter than Jack and you have a way that no ones thought of before that will make you a killing.  More likely than not it has been thought of, is illegal, and might even kill someone.  Your outsiders perspective is most likely ignorance.  Get the insiders perspective, and follow their wise words closely.  Once you've become the master, then you can forge new paths. Not before.