What tips the scale on your Griefometer?
I heard this term for the first time last week and liked it enough to bring it to you. If I’m a little obscure, the Grief to Revenue ratio refers to the concept of a person, product, deal, business or whatever that causes you more grief and aggravation than it is worth in revenue. To you, anyway.
For example, the whole hassle of tenants and toilets is too much grief for some. No big deal for others.
For me, grief to revenue ratio on rental properties is low enough that it’s worth it to me to have the income. If those same units were a 12 hour drive, I would not feel the same way. But take that same 12 hour drive, apply it to a commercial office building, and my ratio flips around again. It’s worth it to me.
I’ve also spent enough years fine tuning my system so that I have reduced the grief and increased the revenue in rental properties. Here are some suggestions:
First, don’t do things that you hate. If you hate to clean or paint, then don’t be the one who does the apartment turnover and cleanup in your buildings.
Second, improve your tenant screening system. There are tips all over the web for how to find the best tenants.
Third, learn from your mistakes. If you leap at an offer from an applicant to pay a years worth of rent in cash in advance, you might learn something from that when it all plays out. You might learn that having a drug dealer tenant will clear out the rest of your apartments in a hurry. So improve your Griefometer antenna by paying attention and thinking it through. If it sounds to good to be true, it probably is. Unfortunately.
Fourth, set up either a property manager or a maintenance man. My personal preference is to manage the tenant showings and screenings myself, since nothing is more important than good tenants. I pay for a regular part time maintenance guy, even if he sits on his tookus half the time. It’s worth it to me, and the tenants are taken care of. He also does trash removal, grass and snow, so most of the time he has something to do. And I don’t get the calls. ????
Look for additional income streams. For example, can you rent out garages separately for storage? Add a coin-op washer/dryer? Rent out washer/dryer hookups? Add a bedroom to a unit for increased revenue? Log the timber from a rural property? You get the idea.
Consider investing in commercial properties. While the risks are WAY higher, the revenue frequently is higher also. Lower grief, too. Ask me how I know.
So what tips your griefometer?
- Is it sitting on the phone on a short sale for the 12th time waiting to speak to the loss mitigator?
- Is it trying to deal with sellers in denial?
- Is it dealing with contractors?
- Having your end buyers get buyer’s remorse the day before closing?