The Tired Landlord & The Case for Passive Investing

Being a landlord can sometimes feel like a never-ending saga of unexpected surprises and overwhelming issues. From overflowing toilets to unwelcome pests, the trials of managing rental properties can quickly turn a passive income dream into a full-time job. Let’s dive into a tale that perfectly encapsulates the chaos landlords often face, and why passively investing in real estate syndications, like those offered by Endurus Capital, is a far superior alternative.

A Landlord’s Nightmare: The Flooded Basement

Picture this: It's a typical day when you receive a call from your tenants.

“Hey Mr. Dexheimer, our basement is flooded, can you come by to check it out?”

So, of course, I drive into Minneapolis to see what is going on with the basement. The odd part is that it hadn’t rained in weeks and besides that, the basement had never previously flooded. I walk in, go into the basement, and see about 3 inches of standing water. As I walk around, I see somethings floating around and begin to understand what may be going on. I yell upstairs, “Can you please flush the toilet?” As the toilet flushes, I see water rushing out of a cleanout pipe and into the basement. I am standing in poop water! The floating things and poop floating around – nasty!

These tenants have been allowing this to go for 2 weeks before calling me. For the next several days human feces is getting removed from the basement!

The Toll on Landlords

This story is not an isolated incident. Landlords frequently deal with:

• Toilets and Plumbing Issues: Plumbing problems, like the one described, are all too common. Fixing leaks, unclogging drains, and addressing sewage backups can be both unpleasant and expensive. Then of course there’s appliances, leaky roofs, furnace and AC issues, mold, and much more!
• Trash and Tenant Negligence: Tenants may not always take care of the property as you would. From garbage piled up to unreported damages, landlords often have to step in and clean up the mess.
• Termites and Pest Control: Dealing with pests like termites can be a constant battle. Regular inspections and treatments are necessary to prevent property damage, adding another layer of responsibility and cost.
• Tenant Management: Beyond property maintenance, landlords must also manage tenant relationships, ensuring rent is paid on time and handling disputes or complaints.

Hiring a property manager may seem like a great solution and while it certainly can help alleviate some issues, you still have to deal with plenty of things that arise.

The Time and Liability Trap

Beyond the practical challenges, being a landlord can severely limit your time freedom. Many landlords find themselves constantly on call, dealing with emergencies, scheduling maintenance, and addressing tenant concerns. This leaves little time for family, friends, or personal hobbies. Instead of enjoying your free time, you are trapped in a demanding and often stressful role.

Moreover, landlords are often exposed to significant liabilities. Property ownership comes with inherent risks, such as tenant injuries on the property, which can lead to costly legal battles and financial loss. This exposure can be mitigated through limited liability structures, but it still requires diligent management and oversight.

The Costs Pile Up

Reality comes to fruition when a sewer line is clogged, only to find out that you need to dig up the yard and replace the entire sewer line for $12,000. That kills 2-3 years of cash flow, but that’s not the end. 3 years later, the roof needs to be replaced for $8,000 and 2 years after that the refrigerator, stove and water heater go out. When the refrigerator goes out the tenant is mad and decides to stop paying rent, so you need to evict them and spend $4,000 between legal fees and renovations, all while losing out on 2 months of rent. Trust me this happens – ask me how I know!

Why Real Estate Syndications Are Better

Given these challenges, it's no wonder that many landlords find themselves exhausted and stressed. This is where real estate syndications come into play, offering a more passive investment approach.

• Professional Management: Real estate syndications are managed by experienced professionals who handle all aspects of property management and asset management. This means no more late-night calls or emergency repairs. You have not decision making needs ever!
• Diversification: Investing in syndications allows you to diversify your portfolio across multiple properties, property types, and locations, reducing risk.
• Steady Income: Syndications often provide consistent returns without the hassle of direct property ownership.
• Time Freedom: With professionals running the properties, you regain your time and can focus on other pursuits or simply enjoy a stress-free investment.
• Tax benefits: The same tax benefits are available as with direct ownership, however, with syndication they are often greater. Large assets can take advantage of cost segregation, allowing for accelerated depreciation.

Passive Investing

At Endurus Capital, we specialize in real estate syndications that provide investors with the benefits of real estate ownership without the headaches. Our team carefully selects and manages properties in order to achieve optimal returns.

While being a landlord can sometimes feel like an endless series of unexpected challenges, real estate syndications offer a much more passive alternative that allows you the benefits of property ownership without the headaches.