Pain in the Ass (PITA)

What’s PITA?

“Pain in the Ass” things you have to do as an active investor or direct owner in real estate. Another term for this is “Friction costs” which are all the intangible items you have to do as an investor to keep an investment going. This is not to be confused with the Cheapo list I had when I was living off ramen noodles.

I’ll just be a Passive Investor to avoid PITA!

Not so fast. Being a Passive Investor requires money. $200K+ at the very least. Most people start out learning the ropes and then going Passive once their experience and net worth hit a certain critical mass (or they have a kid or something).

The List

  • Figuring out how much I owe for this Alabama Business Privilege tax for $148 dollars – “Please review page 4 of the instructions, and column 2 for Deductions. If you qualify for any of the deductions, please let me know which ones. I don’t believe you qualify for the ones on line 9, 10 and 11, but not sure about line 12 if you invested in any low-income projects.”
  • Call the power company only to find out it’s the gas company you need… from the county over. 40-minutes on hold and three restarts on the phone-tree later you find out that you can only send a check in the mail. The post office is closed and who the heck uses checks anymore.
  • Annoying calls from wholesalers –
  • Trying to figure out how much your tenants owe you when they are late all the time.
  • Dealing with sending these letters out to those who just throw it away just to saw compliant to the law as a landlord.
  • Words from a friend in about Birmingham…
    • Thought we should let you know that Center Point township has recently become a challenging city to own real estate for cashflow.  Recently they passed an ordinance that a rental property has to be inspected every time a tenant turns over (in an effort to increase city revenue).  During the inspection period, they will find obscure things to site as needing repair/replacement prior to renting out the property to a new tenant (example a hard-wired smoke alarm as opposed to a battery operated and an electric stove instead of a gas).  We ended up spending close to $14K after the last tenant turnover and we are now looking at options of removing it from our portfolio.  We received before pictures from the Property Management company after their walkthrough, and they mentioned a couple of low ticket items in their inspection to repair (nothing we were concerned about at the time).  They did warn us in advance that the city has been extremely picky and $8-$10K repair/replacement requirements from Center Point have become the standard recently.
  • Trying to make nice to the county clerk because people are littering in the yard from the adjacent bus stop
  • Paying a $50 late bill for late taxes filled for Alabama…
  • Changing the deductible on your insurance for your property to $2500 because your lender is requiring you to do so. Only to find out that one of your other properties did not even have coverage because your insurance agent did not put through the order. I guess you should have followed that up… But that is their job.
  • Picking the color on the flooring when I’m going to sell the property soon after.
  • Too many tax returns for each state
  • Email me at [email protected] and I’ll add it here… it will make you feel better!

 

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