The Hidden Risk In Rentals Comes From Decision Density Most Investors Ignore | Ep 122

James: So I have three stories that I wanna share, and I was trying to figure out a way to like pull 'em all together so that we have a theme. And I think I figured it out. We're talking about decision density because the issue isn't necessarily how hard the decisions are. Mm-hmm. But it's just how many there are that happen when you are managing rentals, which, uh, I, part of my goal.

Is for you, the listener, to go Yeah. I don't wanna manage my own stuff. Like I wanna, I wanna have someone else manage it, so I effectively become that passive investor. Yeah. And just get that walkaway of money.

Jessi: Sure.

James: Or wake up money or whatever it's called. Yeah. And so I'm gonna share three stories today.

Mm-hmm. On the Furlo Capital Real Estate Podcast where we dive into the inac intricacies of passive real estate investing. And our mission is to equip people to invest wisely in both property and people so that together we can build wealth while improving housing. I'm James, and this is my wife Jessi.

Jessi: I feel like, um. Yes. Being a landlord or like, you know, managing tenants has a bunch of decision density, also parenting. Oh man. Like

James: comes fast and furious.

Jessi: Oh, my word from the in senior kid can talk. It's like, why? How can I have, how about this? Gosh, this is

James: too much. When we just get situations, like today, we three printed this little, uh, this little dude for our son and, and he was trying to put together and he was super frustrated, which he kept guessing, do these pieces go together?

And these are not Legos where it's like, oh, just pull it apart and try again. Right? No. It's like every time he did, I was like, why are you doing this? Getting out the, like the little butter knife to try to take it apart. Mm-hmm. Just stop, man. Just read the instructions. They exist. It's okay. It was super funny, but like partway through, he's like, he's just yelling.

And as a parent you're like, okay, what do I, what do I do here? What do I do? Which we were going to do this. We're like, okay, decision time. Do we just be like,

Jessi: you got this,

James: or you do, we help him luck. And then ultimately it was like, did you eat lunch? Which the answer was no. Is there

Jessi: something else playing into

James: this?

Oh, he's hangry. That's what's going on. And so we were then like, all right, like he's making a sandwich. And then we're, we're like, do you want help with this? Like, yeah, I do. I'm like, all right. Okay. And so like all these decisions just in that little microcosm Oh, thing. Yeah. Constant. Yeah. Which ultimately you and I ended up making it and he was like, great, love it.

And was playing with his friends and. Like, cool, whatever. We

Jessi: had fun. I had fun.

James: It was great. I like, yeah. I wanna print another one. Different colors. Let's do some battles.

Jessi: Life size,

James: dude. No, not life size. There's so much. That's so much. PLA

Jessi: plus. Then it's like, what are you gonna do with that thing? I don't,

James: it'll be right.

We knew that for stuff. Put it right here. Yeah. It's our be, it's our avatar. It's dummy on the shelf. Yeah. It's called a dummy Dummy. 13 dummy on a shelf. I dunno why it's dummy on a shelf. That's the thing. Apparently there's like a cupid on a shelf. And a bunny on a shelf. I've seen Trump on a shelf. Trump on a shelf like that is like, that's the thing now.

The thing

Jessi: on a shelf.

James: Yeah, the thing on a shelf. Mm-hmm. It's whatever.

Jessi: Yeah.

James: Okay. That doesn't happen.

Jessi: Do they all do like nefarious things?

James: Well, so like the har the, uh, the Cupid one, like, you'll have like heart tracks.

Jessi: Aw.

James: Where it was like,

Jessi: like what did you do today?

James: What was it doing on the floor?

Jessi: Maybe it does a loving things though.

You do not know because they all on the shelf like does naughty things.

James: Sure. But it's like watching out for you too. Isn't it like Santa's?

Jessi: Well, I mean, yeah, it's like

James: Masos secret, spy

Jessi: Asian. Sure. He's like there and making sure you're doing good things, but he definitely does not do good things.

James: Oh, okay.

I don't know, I think it's stupid.

Jessi: Well, some elf I guess, anyways.

James: Okay.

Jessi: Wow.

James: So, um,

Jessi: talking about decision fatigue. Wow,

James: thank you. Decision density, but fatigue is a good one. Yeah. So that's what you get from

Jessi: decision density.

James: Yeah. So I wanna share some stories just 'cause I don't know, man. I think there's, stories

Jessi: are good.

James: Oh, I love stories. And so I got three of 'em of these are recent things that have happened in, okay. Recent in our property management business, recent all. And so again, for all of my passive investors, you don't have to deal with this. Lucky you, but hey, who doesn't love a great story? Um, is this the order I'm trying.

I'm second guessing my, yeah. All right, we'll do this order. Can we

Jessi: go from like worst to best or like.

James: Um,

Jessi: hardest to easy. I don't

James: know. So the first one I don't think has to do is not my problem. The second one is definitely not my problem, but I think I own the third one for like, we messed up.

Jessi: Oh,

James: so I gotta admit that on off camera.

So if you're ready to hear me say like, yeah, we screwed up. Um, it's

Jessi: alright.

James: Just hold on. How does

Jessi: that happen?

James: It does happen. So, uh, the first one is called the belligerent tenant. Oh yeah. So this is what decision inden decision density looks like under emotional pressure. Huh? Okay. So here's what happened.

We had a property that we took over mm-hmm. And we inherited a tenant. Mm-hmm. And the takeover wasn't as clean as it would've liked to have been.

Jessi: Mm.

James: Uh, just part of it was the old property manager did a couple things to make our life hard. Yeah. Like, for example, when they, uh, when they shut down the system, they, uh, they just sent everyone a, we're terminating the lease notice.

Yeah. And everyone's like. What's happening? Yeah. We're like, I don't know. We didn't do it. So there was some confusion around there. Well, anyways, this guy, he apparently had some con definite confusion 'cause he, he paid his rent to the wrong place a couple of times.

Jessi: Oh boy.

James: And, and so he paid it to the old ones who then had to send it to us.

And there was just delays and it's just confusing. Yep. He got, he got very frustrated and ended up leaving. Um, a pretty, like a pretty aggressive voicemail. Um, and it was kind of weird too. He was like, you guys aren't responsive. You're not getting back to us. Which I went back and I, I looked at the timing.

I was like, okay, like. We weren't picking up the phone instantly and we weren't necessarily calling back in like 10 minutes, but like within a couple of hours we were responding back to him and it seemed pretty reasonable. Sure. Um, he had another one, he had a noise complaint, which we were like, okay, got it.

Like, gotta follow up and learn about it. Mm-hmm. And that was the other one is you could tell he'd actually been frustrated with the previous one and we kind of inherited his frustration. Yes.

Jessi: Yep.

James: You know, and again, we didn't walk in and kick out the noisy neighbor right away.

Jessi: Right.

James: Who, like,

Jessi: yeah, you're

James: already on his bad side.

Kids going into it like, oh. So it was just,

Jessi: we weren't trying to

James: be, it was just hard. I, um, I had a, so because of this whole rent confusion thing mm-hmm. Ended up with two checks from, for him, it's probably the way to say it. Okay. Yes. Uh, for the last month, one that he sent, the one that was forwarded to us.

'cause I guess there was some confusion about like when he, when we told him. I went to the wrong place, or somehow he was informed about it. I don't exactly know how. Yeah, like he was like, I'll just send you another check. And I was like, okay, okay. I just wanna double check some things with you. Anyways, I got on the phone with him to talk about it and he just was instantly just like, oh my gosh, you called me.

Of course you would call me 'cause you care about your payment. You don't actually care about me. And I am, I'm actually saying it calmer than heated like he was. Pretty much yelling at me from the gate.

Jessi: Yeah.

James: And he was like, you need to hang up. And, and, uh, I ignored that. Uh, I was like, Hey,

Jessi: no.

James: Um. I understand.

So I have these two checks. I'm just trying to figure out like, do you want me to avoid it or not? Or like, 'cause yeah, these are both

Jessi: one of

James: these, the way that they're written, it's not like a handwritten check where I'm just like void it and done. Like, these are clearly already been withdrawn. I just, I just have questions mm-hmm.

About how you want me to handle this. Mm-hmm. And, and he just like. Could not even engage in that particular conversation. He was like, this is such a mess. Like, you guys should be doing this. And I was like, I am. Uh,

Jessi: you're like, I'm,

James: I'm trying to understand and make it right. I'm sorry. I'm really trying to do this for you so I don't just deposit both of 'em.

And, and you have an overdraft, like, yeah, I'm trying to help you out, man. I really am. Yeah. And uh, and he just like, you wanted nothing to do with it. Uh, he. He then moved on to yelling at us for our late fee policy.

Jessi: Oh boy.

James: He was like, you guys are charging a late fee, like day one. I was like, um, no, that's not how that works.

And, but, but I, but, but I hedged a little bit. Like, I'm like, I'm pretty certain that's not it. And like, you know, I had his account actually pulled up and I went to the settings and went, yeah, no. Like, I don't, that's not how that works. He goes, whatever. You're just trying to scam me. Like, oh boy, you guys, like, I'm not some young college kid that you could just take advantage of and scam money out of.

You're not gonna get that from me. He's like, so nice try. But like, not today. I was like, okay,

Jessi: what do you even do with that? I don't, I would not know how to respond

James: at all. That's, that's decision in the moment, right? That's the decision. Destiny, you're like, okay. Which again, I kind of, I had a hunch what I was gonna walk into was this because there

Jessi: was confusion.

You knew some of

James: the background of his other stuff.

Jessi: Yeah.

James: Yeah. Um. Yeah, but I've had, I've had other times where, I mean, I had a tenant once he, this was probably a few years ago now. Uh, he left a voicemail and it was, it was a weird, like, I don't remember the exact situation of it, but he essentially was like.

We started talking about like he let the voicemail talking about his thing and just over the course of this, like it was like a three minute voicemail. Oh gosh. He just worked himself up into a froth. Oh my gosh. To the point where like he was yelling and cursing at me at the end of this voicemail, snakes.

I was like, what in the world? Like I didn't feel like, like, yeah, like what? I didn't deserve this. It wasn't, thank goodness. Yeah. It was very strange. It was just, they was like, and bye, you know, hangs up. I was like, okay. Got it. Um, on that was one I think I, I think I called him back and I ended up leaving him a voicemail.

On that one, I was just like, Hey, got your message. Um, sounds like you're a little upset. I'm sorry. Like, how do we like, and he actually, we talked on the phone, he was super apologetic. I was like, oh my gosh, I'm so sorry. I'm feel like I'm embarrassed. Sorry I lost. He's like, I didn't deserve that. You know, I had other stuff going on, which I'm like, yeah, that's usually the situation.

I get it. And so I was like, maybe that'll happen. I'll get on the phone and he'll be like, oh, James is a cool guy. Um, I'll have that. For the third story, I'll, I'll, I'll share some of that. And so, um, yeah, no, he was just super upset and finally he got to a point where he was like, he was like, I hit you. You are the worst.

Hang up, sir. And he was like, please hang up. And I was like, uh, okay. I'll follow up on a text message. Have a good day, you know, and I hung up, which that was the other like, like I could hear him breathing or moving or stuff and I was like, if I don't hang up, will he not hang up? Like, how is this working?

Yeah, it was very, was very strange. Was like a power play or something. Very strange situation. And I definitely had that thought of like, man, like how do I, is there this, is there a move here of like, Hey, it doesn't sound like this place is a great fit for you anymore, right?

Jessi: Like, just not

James: happy. So just kind of a weird situation.

So, um. So, yeah. So the question, right? Do you push back

Jessi: mm-hmm.

James: And be like, dude, this is not how our system's set up. We've actually been replying at a pretty reasonable rate. I feel like you're attributing the previous manager's experience on us. Yeah. Like,

Jessi: you just defend

James: and like, yeah, yeah. Here's what we're doing

Jessi: moving forward.

James: Or do you deescalate and I try to de the deescalation path.

Jessi: Sure.

James: Um, let's see, did I, where do I have this? Okay. Yeah. Um. Yeah. Do I, um, I guess that's like, those are the main, I don't know, I broke 'em up into three questions, but that's essentially it. Um, the big question is like, do you enforce the rules or do you try to preserve the relationship mm-hmm.

Um, in those kind of situations. Yeah. So again, um, I chose deescalation mm-hmm. Plus ownership. And, and I did that with, uh, on the, you know, I tried to do it on the phone, which didn't gimme much of a chance. Then I followed up on the text message, and then the text message. It was essentially like, it was a couple parts, which was like.

Hey, uh, like I still had this check problem. You didn't quite answer what I was looking for, right. On how to do this. I, this is, this is what I'm going to do. This seems the most conservative. Mm-hmm. It's not gonna ping your account twice option, but I'm also, you know, so I was like, I'm doing that. Mm-hmm. I did look into the, uh, you know, the, the late fee thing.

Here's the settings. Mm-hmm. Here's the change I'm making on your account specific. I think going forward, so this doesn't ever happen, blah, blah, blah. Mm-hmm. And then I took the I, I took down the path of went. Hey, and I'm sorry that you're super frustrated by the communication that it's not our intent.

And I went, I went full ownership. I was like, yeah, this is our bad. Like we need to do better as an organization. I own this. And you know, me leading the team and I'm sorry you feel frustrated. Mm-hmm. And like, and I'm not looking like It's okay. Yeah. For you to be upset. Like, I'm okay with it. So anyways,

Jessi: what, did he ever respond?

James: No, not yet.

Jessi: Oh.

James: Um, which is fine.

Jessi: I mean, my head goes to like a love and logic type of response too, where it's like.

James: Yeah, let me hear this.

Jessi: You know, empathy first, it's like, man, I hear you. That's so hard. Like, I totally understand how frustrating this is. And then it's like setting clear boundaries of what you are willing to Mm.

James: Okay.

Jessi: To do. 'cause you, you can't really control what he's willing to do.

James: Yeah.

Jessi: You know, but you're like, Hey, I hear that you're upset. Like, I'm willing to, you know, accept this such and such a payment as long as you tell me which one to cash. Otherwise, I think we need to part ways or whatever it is, you know?

James: Yeah.

Jessi: Which is like, I get that that might not be the boundary, but it might be something similar.

James: What what I've decided is, um, if he becomes belligerent towards any of my employees Mm. Either verbally or physically.

Jessi: Right.

James: I'm like, yeah, we're like done instantly pulling the rip cord.

Jessi: Sure.

James: I think, I think there's something else going on there too.

Yeah. Just from a, um, from a, mm-hmm. I don't know, like a how he processes life standpoint.

Jessi: Ah, yeah.

James: I don't, I don't necessarily like learning disability, I don't think. Mm-hmm. But like, there's something there.

Jessi: Yeah.

James: That I, I just can't quite, um, I think maybe,

Jessi: yeah.

James: But again, I mean, so it's hard to tell sometimes if I'm concerned about safety, I'm like, yeah.

Like, you need to find a new place. Yeah. And he's been there long enough that I can't just be like, you know what, three day notice we're calling it good. Mm-hmm. So, um. Yeah, it's definitely, it's a weird situation. Um, yeah.

Jessi: Hmm.

James: So my one liner takeaway here is sometimes the best decision is swallowing your pride and calming the situation.

Okay. So that was the route that I went on that one.

Jessi: Well, and it's not actually resolved yet.

James: I know, right?

Jessi: So it's

James: like, I mean, wow. Yeah. I have a, here's my, here's my hunch on what I think is going to happen. Mm-hmm. It's gonna go one of two ways. Uh, well, one of three ways I guess. Um, and I'll tell you which one I think is gonna happen.

There's the no status. He just continues to, he, he pays his rent on time, but continues to be frustrated. Mm-hmm. And there's nothing we can do to fix it. But he stays there. Yeah. 'cause why not?

Jessi: Yeah.

James: Um, that's probably the most likely one that'll happen. And I'll just be like, yeah. Whatever. Mm-hmm. Is what it is.

And we'll just. He'll avoid us. And for

Jessi: this particular check thing, you just choose one.

James: Well, he's paid up for the month. That's my thing. I was like, the second check would actually go towards April then or whatever the next month.

Jessi: So you could avoid both And he wouldn't be

James: No, no, no, no. I definitely had to cash one of them and one of 'em was a cashier's check, so it's already gone out of his account.

So I felt great about that one.

Jessi: Right.

James: That But the other one was sent to the other property manager and then to us. So in theory, that one was already deposited. 'cause they don't just 'cause they de, 'cause it's written to the other. Property manager Uhhuh. And so they deposited and then just cut a new check to us.

Jessi: Yeah. Okay.

James: So it came from their account. It's, but if he canceled that first check,

Jessi: so essentially it seems like he paid twice, which puts him a month ahead

James: if that's what happened. And that's what I tried to get out of him. And he was like, no, no, I canceled the check. I was like, okay.

Jessi: Which one? Which one?

James: That was where I,

Jessi: maybe you called the, the previous

James: one. Well, I ended up taking pictures of both of 'em too and sent that to him. Sure. Like maybe this all was like, 'cause one of 'em like is from this other company. Right. Which I know is from the previous property manager. Sure. He is like, I don't, yeah.

Anyways, it's confusing, huh? There's legitimate confusion there. One, I think he just stays there, pays his rent and just continues to not be happy. Yeah. With us. And there's like, and we just never, that's the sta of the relationship. It's what it's Sure. I think, uh, least likely one to happen. Is he looks for a new place mm-hmm.

And is like, oh, I'm just out.

Jessi: Yeah.

James: You know, whatever. Um, and, you know, I'm just, he self-selects out.

Jessi: Mm-hmm.

James: I still don't see that happening. I think because he also thinks like every single landlord and property manager is horrible. So like, sure. Why would I move somewhere else? Yeah. Why would I

Jessi: move somewhere else?

James: I, that's my, I just, I get that sense from him.

Jessi: Sure.

James: The third option, which I don't want that one, but the chance of it happening are pretty low. I think I put that in second place. Mm. Is we eventually do just win 'em up. We win 'em over time. Yeah. Where it's like, okay. You are not horrible.

Jessi: Yeah.

James: Like, you're fine.

You're, you've made it, you made it up to me. Mm-hmm. Whatever. It sounds like you're reasonable.

Jessi: Sure.

James: I, that's my, like, that's the one I want. I've had it where people walk in where they're like, I hate all landlords. Yeah.

Jessi: You're

James: the worst. And I, I'm pretty quickly be able to be like, no, I'm different and mm-hmm.

You know, and when I'm over and this one I, no.

Jessi: Yeah. I don't know,

James: which, I'll admit I was also not the first one to interact with him. Yeah. So that's part of my team. And which again, like who would've like.

Jessi: Yeah,

James: you're blindsided with that kind of thing. Yeah. You don't like, oh, you don't expect that?

Jessi: Yep.

James: And again, like, what are you supposed to do?

We're like, dude, you're sending money to the wrong place. And we sent, he's like, we never communicated. I'm like, dude, that is not true. We sent you a physical mail, we texted you, you, and we called everybody and if we couldn't get you on the phone, we left you a voicemail like. We have all of it. Yeah. We have a

Jessi: record of

James: all of these communications.

We definitely told you. Because at one time he was like, well, what's your address? We're like, no problem. Here. It's again, which you have already received multiple times, but whatever.

Jessi: Yeah.

James: Um, which that's why I'm almost like, ah, I dunno, this is on us, but it's okay.

Jessi: It's right. You the best you can.

James: Alright.

You don't like this story. This will be your favorite of the, um, just so you know. So this one, um. This is decision density in the, nothing seems wrong, but something is clearly wrong. Um, category.

Jessi: Oh, I've totally been there.

James: So we have this property, it's a bunch of shared rooms and we have a shared, it's a stackable washer dryer that everyone, um, uses.

Yeah. And we recently swapped it out. Okay. Because the old one was just, it was all, and it wasn't great and it needed to be done. So we brought in, we got a new used one.

Jessi: Okay.

James: But it worked and it was fine. And we tested and it was all great. And then all of a sudden they were like, this thing's not draining.

Like it's broken again. And I, you know, and that's all that I know. Mm-hmm. Like, geez, I don't dunno where to start from this. And so the question is like, okay, do you call Roto-Rooter because is that the problem? Yeah. Or do you call the appliance people? Is that the problem? You're like, I don't know. Sure.

But they were saying like, but the unit itself wasn't draining. Mm-hmm. It wasn't that the drain was plugged. It was just the The washing machine. Yeah. The pump

Jessi: wasn't pumping

James: out. Again, it's like washers on the bottom, dryer on the top, that kind of situation. And so I was like, I don't know. So we ended up, uh, so there's your decision right there.

Who do you call first?

Jessi: Mm-hmm.

James: Right? Who would you call first? I'm curious.

Jessi: Well, if it were me, which it is, I know I'd go there and start tinkering with it first.

James: All right.

Jessi: I'd use my own time. 'cause I'm like, what is the actual problem? Because I'm not gonna waste a call on rotor rooter if it's not a drain problem.

Like, or the appliance guy, if it's not an appliance

James: problem. Okay. Let's pretend that you don't necessarily have time. Or are you gonna hire someone else to go and do that?

Jessi: I guess I'd start with the, I guess I'd start with the appliance guy.

James: Mm.

Jessi: Because what you're describing, 'cause you, you can test that as a, as a tenant, you can be like, dude, is it the drain or is it the machine?

Like, can I like pour water down this? And it goes, because if it does, like if you pour water down the drain pipe and it's like overflowing, you're like, oh, well, duh.

James: Yeah.

Jessi: The pipe is

James: smart idea.

Jessi: It's flogged

James: except for the fact that like. To get to the drain is not easy because of the unit, which by the way is full of water.

Jessi: Right. So it's super heavy.

James: So

Jessi: yeah, I don't know, but

James: I hear you. Yes. We ended up calling the appliance people as well. That was the decision that we made.

Jessi: That's probably what I do.

James: And, um, wanna find out what it was?

Jessi: Um, probably a setting on the washer machine.

James: Nope, Nope. There was a sock in the drain line.

So here's what happens. So, wow. It's a, you know, it's a, it's the, it's the washing machine, not a side loading, a top loading where you fill it up with clothes. Yep. And then it's got the little basket thing that moves. Yeah. It fills up with water. You know, it's bins. It's great. Yeah, yeah, yeah, yeah. We're like, yeah, James, we know.

So. My hunch is that you overfill the thing with clothes. 'cause you only wanna do one load.

Jessi: Yeah.

James: And fills up with water. You have a little sock that's floating around the top and it goes in between where the The

Jessi: basket

James: where the basket is and the outside part.

Jessi: Yeah.

James: And then when it starts to do it and starts to drain the sock into the little drain hole at the end of the appliance stops draining.

Jessi: Wonderful.

James: So new decision time now what do you do?

Jessi: You get the sock out

James: well, duh. Okay. Problem solved. What? Like

Jessi: how do you keep it from happening again?

James: Yeah.

Jessi: Oh my gosh. Uh, okay. What I would do is be like, Hey, we figured out I'd communicate that to tenant.

James: Yeah, yeah.

Jessi: Hey, we figured out what the problem was.

Turns out it was a sock, got kind of stuck. Here's what we're thinking. Like if it happens again. You know, we'll just split the cost of calling the appliance guy to come remove the, remove the sock. Or like, you guys can totally manage this problem by not over filling. Here's about the amount you should put in there.

James: Yeah, yeah. We, um, no, that's good. Uh, we definitely, I, we were like. I wanna have a lighthearted tone on this one.

Jessi: Yeah,

James: which is kinda how you started it. Hey, great news.

Jessi: We got the sock out.

James: We figured out the problem. Bad news is you're gonna have to do more than one load in the future. And I have thought about like, does it make sense to get like a Sharpie and to actually kill a line on the inside, like,

Jessi: mark still here, this is the line, Uhhuh,

James: or something like that.

'cause yeah, like no, they totally, like dude shared

Jessi: laundry is, oh gosh, is a big I, I remember like the college days of either gonna laundromats or having shared laundry facilities and it's just like. Oh my word, the, the. Variety of different styles of how people do laundry. It's, that's so true's like mixing colors, mixing types of fabric, like packing the machine full versus just having a little bit in there.

Oh yeah. It's all over the board.

James: Yep. Yep.

Jessi: And, and the whole like, well if I leave my laundry in there, I'm like, I need to, someone else needs to do there. It's like, are they allowed to take it out? Mm-hmm. Just pop it in the dryer for me. Or should they not touch it at all?

James: So one of the things we haven't done, oh, my word, and I think I want to do this, is put up a sign on there that's like, Hey, laundry etiquette, essentially, because it's clearly not, uh, just obvious

Jessi: or, yeah, well, it's not, and everybody kind of views it a little bit differently.

So it's like, if you have, if you could have some shared etiquette rules, which that's something I remember there, there were things like that at our dorms, you know?

James: Yeah. Which, which again, limited utility, but.

Jessi: Sure.

James: I know we have other issues. What was the one? We had someone call us again, shared space, shared kitchens.

Someone called us and was like, Hey, there's dirty dishes in the sink. We're like, do them cool, man. Like thanks for the heads up.

Whatcha gonna do about it?

Jessi: What did they think you were gonna do?

James: They thought we were gonna go do the dishes, I

Jessi: guess. Are you kidding me?

James: Which we do regularly clean. We have cleaners do their weekly

Jessi: Sure. Like, like common spaces,

James: but Yeah. Yeah, like dirty dishes. Like do them. I don't, I don't know. Or

Jessi: go talk to your roommates,

James: which again, that was, but yeah, I've, yeah.

And we've had that kind of stuff where I'm like, I don't,

Jessi: that's a, that's for real,

James: dude. I get it. Kind of

Jessi: man.

James: So

Jessi: socking the drain hole

James: dude. Right? I know. Classic. It's so, so awesome. Yeah. It wasn't whatever. Yeah. Uh, so one line for this one is, most money in real estate isn't lost in big disasters. It's lost in small recurring inefficiencies.

Jessi: Yeah. I

James: like that one. Or it's just Yeah. If you had the time and the know-how you could go look at it yourself. Sure. But that's not always the case. Yeah. And you're just like, we had another one where it was a, just a closet went off the rail. Oh. Like can you fix it? Like, so I have a maintenance guy. I actually didn't charge for it 'cause it was like, you know, it was like, like a 20 minute fix.

Right? I'm like, dude, whatever. It's perfect

Jessi: on the

James: track. I'll delete that. I'll eat your cost for that day. Um, yeah. But he was like, yeah, it was super easy. It's like, I don't know. I had one too where it was like, that's the thing, the electricity went out somewhere. And they're like, yeah, I was running the microwave and the popcorn maker, you know, like multiple things.

I'm like, well, yeah, buying

Jessi: Fuse

James: the electricity's out now. And yeah. And at the time I was, I was pretty new at the game. This was pretty early on because I was like, yeah, I'll come over and look at it. And I was like, did you check the, the fuse and or the, the circuit breaker uhhuh? They're like, what's that?

It's like, ah. So I walked over, click all turned on. They're like, oh, that was easy. Like, okay, I've now learned. Have you checked that? And if they're like, what are you talking about? I'm like, okay, it's a gray box. You over and open up. There's gonna be one that's in a different direction on all the others.

You gonna go all the way off and then on. Yeah. I've, I've, I've actually saved trips from that. Like, oh, cool. I'm like, now the question is why did that happen? Yeah. Why did it

Jessi: pop? 'cause it's gonna do

James: it again. Like, what were you doing? It can do

Jessi: the same thing again.

James: Usually it's like, there's the microwave and vacuuming.

Yeah. Like those two. Yeah. I don't, I'm like, yeah, don't do that. It's how electricity works. It's awesome. Uh, it's classic.

Jessi: I I love it. There's, there's a certain amount of like just people, education, growing up. Education. Yeah. Totally. Like it depends on. What tenant, what stage of life your tenant's kind of coming from or

James: Yeah.

Yeah.

Jessi: What they need to learn or,

James: I find that like for the apartments you often get the younger folks. Yeah. And yeah, they're totally like, I don't, I have no idea about any of

Jessi: this. Yeah. You have no idea how to, how to do

James: this. Yeah, yeah. Oh no, it's good. Alright. Here's the story I don't wanna share. 'cause we, this is totally, we totally screwed this one up.

It's

Jessi: okay. We all make mistakes

James: that happens. So this is decision density where assumptions compound. Oh, assumptions

Jessi: are bad.

James: Oh yeah. It got us.

Jessi: Yep.

James: So. We had, we had a duplex mm-hmm. That we had just, we had just flipped over, turned like we're talking new paint.

Jessi: Mm-hmm.

James: Fixtures, carpet, like we just bunch fixed a bunch of stuff.

Jessi: Yeah.

James: And then we were starting to work on the other side mm-hmm. As well. But each room we were renting, I went out

Jessi: Yeah.

James: Have someone apply. She looked good, but was just slow to respond, just in general. And I was going back through the, through the message list, and it was like she just was slow. Mm-hmm.

And to the point where it was like. Even waited like three weeks. Wow. At one point in time between like, Hey, we got your application.

Jessi: Yeah.

James: Are you interested? Like, where you at? And just nothing. So we just move on. Like, we're like, fine, whatever. Like, and so we did and uh, and so we found someone else who was awesome.

Ready to move in. Ready to go. Yeah. So we moved them in. Oh. Or we'd already signed with them and whatever. Sure. Well, again, she came back to us and was like, well, I'm not, like, I'm still interested. You know, one of those like. Our message from three weeks ago, Uhhuh. But we were like, well, we actually, like, we actually just finished this other side, like,

Jessi: yeah,

James: would you be interested in that?

And um, and she said, yes, or I think how, how it actually worked was like, we're getting, we're almost done with this side.

Jessi: Mm.

James: We had keys to like, so these other people hadn't moved in yet, or hadn't, like we hadn't, like it was still in process or whatever. Yeah. I'm trying to remember exactly how it worked, but she took a tour.

Of it. Mm-hmm. But she took a tour the first side. Okay. Not the second side.

Jessi: Yep.

James: So anyways, we told her no, and I'm sorry, I'm kind of butchering it a little bit, but anyways, I'm trying to get my timeline right. Mm-hmm. She expressed interest, she took a tour and even then the tour was a little weird, where like she was like, I'm here now.

We're like, you need to schedule it. We're not just there all the time. Mm-hmm. So it was like, that already was kind of a little weird. Hmm. Anyway, she took the tour of that one side and we said, yeah, we're fixing up the other side. It's not done yet, but whatever. Time passed, we ended up renting it out to someone else mm-hmm.

Who was actually responsive. Mm-hmm. And then she came back kinda outta the blue, like, Hey, I'm still interested. We're like, oh, well we had the other side.

Jessi: Yeah. This one's rents

James: now let's

Jessi: go. Yeah.

James: And um, so she was like, awesome. Filled all the paperwork, did all the stuff. She paid her first month's rent.

Mm-hmm. And the deposit showed up to hand her the keys and she went, w these keys are to the wrong unit. I'm supposed to be on that first side, not the second side. We were like, uh, what do you mean? Like,

Jessi: yeah, what'd you miss here?

James: We talked about this for the record, she never actually walked into the second one.

She only took a tour of that first one.

Jessi: Right.

James: And so we were like, dunno what to do here. And so she was like, well, let me, let me look at it at least. We're like, great. Okay. So she took a tour, she was like, let me think about it. Great. I guess you've already paid, I guess, like Sure.

Jessi: Mm-hmm.

James: And so. It took like three days to get back to us.

Hmm. Which I felt like, felt like a long time.

Jessi: Yeah.

James: To me. Um, but I was kind of like, just kind of paid her rent, like whatever, and

Jessi: Sure.

James: Um, and ultimately she was like, well, I liked the other side better.

Jessi: Mm-hmm.

James: Like, understand that first set of people haven't actually moved in yet. Maybe we could do a little swapsies.

And so she was like, yeah, I'd like to find out about that. So we contacted the other people. The other people, which they were like, yeah, sure. I don't care. They're mirror images of each other, like, and we did all the same finishes. Like it's the same. Okay. It's just mirror image. Technically one of 'em is closer to the, I'm gonna say main road.

Mm-hmm. But it's like, it's a small town main road. Yeah. And the backyards are a slightly different configuration, but inside it's, it's the same.

Jessi: Yeah.

James: Just a mere image. And, um, we were back and we're like, Hey, good news. Like they're willing to swap. She was like, actually, no. I'm like, I don't wanna rent from you

Jessi: at all.

Oh, my word.

James: And, and there was a whole thing about her doing the payment online through our portal. She was like, how do I know that this is legitimate? And like, it's not real and not a scam. So like there was, there was some slight red flags in retrospect. Sure. To, but we were like. I don't know, like, here's all the information.

Go to the website. You can read about it. Like

Jessi: mm-hmm.

James: It's legitimate.

Jessi: Yeah.

James: And, and so she ultimately did pay online and, and we were like, cool, whatever. And um, and then it just, like, it quickly escalated from there where she was like, and so I'm not moving in and I want all my money back plus the screening fee.

Plus she goes, plus put a stop payment on my bank. Which I was like, well, that was a waste of your time because it already went through. Um, but she's like, so I want all of that paid back. And, um, to which our initial reaction was, well, well, like you totally signed the rental agreement Yeah. For this. Like, it clearly had the correct address on it and you paid like, I'm willing to, instead of this being your 30 days notice, say, Hey, I'll give it to you today.

And we just prorate it for the nine days It took you to actually decide.

Jessi: Mm-hmm.

James: Um, 'cause that was the ultimate, like all the back and forth, that's how long it took.

Jessi: Yeah.

James: And, um, to which she was just like. No, I want nothing to do with it. I was like, this is, this is horrible. And like you guys are trying to scam me outta money.

I was like, I am. I don't think so.

Jessi: Wow.

James: So I went back and one of the things that we do is we record every conversation. We and we, which it, you know, says it or whatever. Yeah. Uh, we also, um, you know, we have a track of the text messages and the emails, so you have

Jessi: a timeline of

James: all of the communications.

And so I was able to go, go back and like, and I spent some considerate amount of time. Like, okay, like what actually happened. Obviously I don't have the in-person conversations that happened while there, uh, but you know, I had the rest of it and I was going through it and there was very clearly there was that, there was that gap of like.

She said was interested. We asked nothing. The three weeks passed, she then wrote back and said, Hey, I'm still interested. Is it available? And what we wrote is, yes, there is an availability still at this property.

Jessi: Interesting.

James: Yeah.

Jessi: Okay. Okay.

James: And

Jessi: not as clear as it could be.

James: And we never actually clarified that it was the other side.

Jessi: Yeah.

James: We didn't. That was us. We screwed up that part. We did not communicate that clearly. Yeah,

Jessi: that one line.

James: Yeah.

Jessi: Which could be interpreted a couple different ways.

James: It was factually true, but yeah. And she never, like we had verbally talked, I'm verbally talked about it during that first tour, but I don't think like how it is.

Yeah. She's looking

Jessi: at multiple places

James: in one ear, out the other,

Jessi: whatever. Sure.

James: Yeah. And the paperwork was technically right, but I mean, you know, like how closely are you paying attention to the addresses on things? You know, you're like,

Jessi: especially a

James: duplex, it's like, I don't, it's you see your name and you're like, cool.

Yeah. Whatever. Like you're, yeah.

Jessi: Right.

James: And so, so I get where her perspective was. And, um, so decision time. What do you do?

Jessi: Um,

honestly, I think I reach out to her and say, Hey, I went back through, we, we did not clearly communicate which unit was which. It got confusing. We apologize. I think I'd give her her money back and be like, we're not gonna mess with pro rating and all the garbage. Like, just, I get it.

James: Would you refund everything including the screening fee?

Which by the way, we don't collect.

Jessi: I don't, I don't

James: think so. And that bank, her stop payment fee, which again, we'll say waste of money 'cause it'd already gone through, but whatever.

Jessi: Um,

James: so you technically go in a hole a little bit.

Jessi: Right? I think that I, I probably wouldn't. Probably to show good, you know, whatever kindness.

James: Yeah.

Jessi: I'd probably refund the stop payment, even though it was like, I already went through, this is your bad, whatever. But I probably wouldn't on the screening fee. 'cause it's like you would ask that of everybody and she applied. That's pre like,

James: yeah. Mm-hmm. Mm-hmm.

Jessi: I don't know.

James: Yeah.

Jessi: Like after that point.

She decides that she doesn't want it anymore, which I guess she could argue like, well, I thought I was getting this other one and I decided I didn't want it. 'cause it wasn't this other one that it got confusing.

James: Yeah.

Jessi: If she put up a stink, I'd probably be like, fine. Just I'm paying it all back to you.

You're right. This was confusing. I apologize.

James: Yeah.

Jessi: And I'd move on.

James: Yeah. Um, yeah, that was ultimately what I did. I said, Hey, okay, I looked at this, it wasn't as clear as it could be.

Jessi: Sure.

James: That's how I. That is how I said it.

Jessi: Yeah.

James: And, uh, yeah, and ultimately was like, yep, I refund everything, all the expenses.

And I just, I personally ate the, the, yeah. Whatever was 60 bucks or something, cost for it, which I was like, yeah, whatever I can, I can afford that. That's fine. Well, and it's

Jessi: like, it's not like you don't have other tenants who would be applying for it and moving forward and, you know, if it was sitting vacant, vacant for a long time and then this happened, like that would be frustrating.

Yeah. But

James: No, that's true.

Jessi: It's like you, you're able to say, I get it. That was confusing. I messed that one up. Didn't make it clear as possible, but okay. Bye. Now I have another tenant like, let's make this more clear.

James: Yes. That was actually all part of the other frustration is we did have multiple people apply.

Yeah. Said she was first in line 'cause. 'cause it was. She, like, she timed it just right when that one had finally finished. And so we're like, all right, we're gonna start.

Jessi: Yeah. We'll

move

James: forward with that

Jessi: one.

James: One. Yeah. And so we told people no. 'cause she was moving into it and Yeah. Yeah. No, it was, uh, it was a thing.

Jessi: It's kind of frustrating.

James: Um, but no, you're right. That was, uh, at least that's, that's how I ultimately handled it. And, and, and on that particular case, I did a phone call.

Jessi: Mm.

James: And then followed up with an email. Just like, do, here's all the things we're doing. Yeah. Here's what it's at. I, again, took that extreme ownership mm-hmm.

Stance of like, yeah, no, this is our fault.

Jessi: Mm-hmm.

James: I'll, I'll own it.

Jessi: Yeah.

James: To which he eventually replied back was like, Hey, this is great. Like, you handled it really well. Yeah. Good job. And she's like, thank you for being understanding and whatever. And, um, which is, which is what I hope happens with that first story.

Maybe, I don't know. We'll see.

Jessi: And then she was like, because of this, actually, I do wanna rent from you.

James: Yes, I do. You're like, oh my

Jessi: gosh. Oh my gosh. What do you decide then?

James: Oh man.

Jessi: After all of that, I'm so intrigued.

James: Dang.

Jessi: Let's say she did that.

James: No, I don't think she would.

Jessi: Well, let's say she did and she was like, wow, I wasn't expecting you like. To refund this and be so kind about it. Like,

James: no, in retrospect, like she's super high maintenance. Like, no, I think, I think honestly what I would say at that point is like, I totally understand, but we've already moved on to someone else.

Jessi: Yeah.

James: In my mind. I think, I think

Jessi: I would do,

James: yeah. Like appreciate that. But I don't know. That's a, that's a weird one. That's a weird one. That chance are pretty low that happening. But

Jessi: I, you know, honestly, I, with, this is like a side tangent, but with the new AI tools and like being able to record phone conversations, I am like.

I'm almost at the point where I'm, where I'm wanting to do that because I don't remember, like, unless I'm taking notes Yeah. While I'm talking with someone on the phone. Like, 'cause I'll interview volunteers all the time. They're interested in serving, so I, yeah, I get on the phone with them, I get to know 'em.

You know, I ask questions, which you should do, which I should do, but I don't remember. Unless I'm like, like, oh, like, you know, taking notes for myself. So I remember the context of like, okay, here's when we called, here's what we said. Here's where they're from, here's what they're interested in. You are like, all the things.

And I, I could have a form I guess, that I'm like filling out and they eventually do a paper form that answers many of the same things.

James: Yeah.

Jessi: Um, but man, I'm just, 'cause all you gotta do is just close. Right. This conversation's being recorded.

James: Yeah. Well, Oregon's one party state, so you don't even have to do that.

But, um,

Jessi: so all of my conversations could be recorded and

James: potentially You don't know it. I

Jessi: don't know. It,

James: it is, it is a possibility. Uh, but yeah, anyways. Seems weird. That was, um, yeah, that was that situation. Kind of crazy.

Jessi: Mm.

James: Uh. So, um, I had a thought and I totally lost it 'cause I was listening to you, but, uh, but yeah, no, I was gonna say, oh, I remember now.

I was gonna do, I do a hybrid where I take notes on the important stuff.

Jessi: Sure.

James: Like these are the big items. The big things, yeah. And then I have that transcript as a backup.

Jessi: You can go back

James: in case I want to go back and look at it. So anyways, that's how, that's how we handle it now. And then I get situations like this where I'm like, oh

Jessi: man.

Yeah. Like, what did we say? I'm really glad say

James: that we, that we have that now.

Jessi: Yeah.

James: Um, but yeah, so. Uh, those are my stories. And, um, my one line takeaway on that one, if it's important, it needs to be impossible to misunderstand. Mm. Which in this case it's, were you renting, which,

Jessi: yeah.

James: Yes. And in retrospect, we should have also said like, Hey, let's get you into that unit.

Yeah. To actually look at it. Sure. Not just tell you it's a mirror image and have you go, that's fine.

Yeah. '

Jessi: cause at that point she, she probably would've connected

James: like, wait, this isn't the same one. Or

Jessi: at

James: least listen, like, no, I'm good. I don't need to look at it. But. We didn't do that.

Jessi: Yeah.

James: Um, so none of these were big problems.

There were no lawsuits, they weren't disasters, there were no massive capital expenses. Mm-hmm. Um, but every single one of them required a series of small decisions that were made in real time with incomplete information, and that is decision density. And so over time I've realized that my job isn't just a necessarily manage properties.

Mm-hmm. It's to make those good decisions consistently. And when it's unclear, especially when it's unclear or emotional or inconvenient, and it's not perfect. I totally get that, but we try to, you know, be consistent mm-hmm. In, um, how we're doing things. So when you're thinking about your next investment, don't just look at the deal.

You wanna look at the decision making that has to happen behind it and ask like, who can I have on my team who I think is good at making those. Mm-hmm.

I'm,

James: yeah. Being consistent on 'em. Mm-hmm. So you go. Those are my takeaways from my three stories. That's

Jessi: good.

James: I love

Jessi: story

James: time, and if you are interested in us in particular, you can check us out at furlo.com, learn all about us, how we manage, and how we sponsor bigger deals as well.

So with that, thanks for listening. Have a great day.

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