The Kangaroo Part 11 – Worry em Out

By

Stu Silver / “Uncle Zally” Zalman Velvel

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 It’s 4:00 AM and I’m too excited to sleep. We bought another mobile home park.

 

I also learned a new technique that I want to share:

 

Johnny C’s  Worry em Out

 

Whenever I learn a new technique from someone, I name it after them. In this case, the author was Johnny C, who has been a landlord for 37 years … that is, until yesterday. Now I’m the landlord of his property, and he is the bank, collecting mortgages from me for the next 20 years.

 

Johnny came to me by accident. A tenant of ours told him we were buying up all of North Ft Myers, which we are not, and Johnny said, “Well, I should call them and ask them to buy my property,” which he did.

 

In our discussions, Johnny refused to name a price for his two mobile home parks and motel. He kept repeating, “The more cash you put down, the lower the price.” I was so busy turning around five parks we already own that I put off seeing Johnny’s property for two weeks.

When I visited his properties, I was pleasantly surprised. While the motel and mobile homes were older, they were in great shape. Johnny took pride in being a landlord and providing excellent affordable rentals. He was also a good, honest man, and made a point of telling me everything that was wrong with what he was selling.

 

However, I kept thinking, he wants all cash …  and that’s not what I want. I want a great price, with owner financing and a reasonable down payment. Jonny refused to name a price, and or terms he would consider, no matter how hard I tried to get him to commit to a starting point. When I was leaving, he told me he bought a dairy farm a few years back, for over a million dollars, with a small down.

 

I promised I would send him an offer the next day and drove off.

 

The next day, I called and said, “Johnny, I don’t have an offer, because what you want and what I want are two different things, and I don’t want to waste your time. You want all cash, and I want a deal like your dairy farm – owner financing with a reasonable down payment.”

 

He then said the magic five words:  “I’ll look at any offer.”

 

So I created an offer that excited me, and the following day, I presented it sitting in the driver’s seat of my pickup truck, with Johnny sitting in the passenger seat. Much to my surprise, Johnny accepted it. The only change was shortening the owner financing from 30 years to 20. He said, “I’m 65, and I want to collect all of my mortgage payments before I die.”

 

The morning before the closing, I had a meeting with Johnny and his manager about the process for smoothly turning over the property, and the tenants, to my company. During our discussion, I learned Johnny rarely did court evictions for non-payment of rent. He said, and I quote, “I just worry ‘em out.”

 

Now, I’ve met landlords that use illegal methods of intimidation when a tenant doesn’t pay. They do things like take off the outside doors for a week-long repair, or turn off the electric and water, or barge in and start moving the tenant’s belongings to the street. These are not actions I recommend, especially if a landlord doesn’t want to be arrested. I was expecting something similar, but Johnny once again surprised me when I asked him to elaborate on the “worry ‘em out” technique. This is what he said:

 

“When the rent is not paid, I go over and knock on the tenant’s door, and ask for it. If they say they don’t have it, I ask when they will. I don’t accept vague answers, like ‘soon’, or ‘next week.’ I don’t leave until they give me a specific day and time they will have it, and it must be close at hand.”

 

“Then I go back and knock on their door on that day and time. If they still don’t have the rent, I tell them, ‘I have bills to pay, and I can’t run my business without paying MY bills. Now when will you have the rent?’ Once again, I don’t leave until they give me a specific day and time they will pay, and it better be soom.”

 

“Then I go back and knock on their door, for the third time. If they still don’t have the rent, I ask them, ‘When are you leaving?’ ” In some cases, I’ll either help them move, or give them moving money, a hundred dollars or so.”

 

Johnny said he rarely has to go back for a fourth time, and his method was cheaper than and faster than a court eviction.

 

He said, “They are either gone, or they pay. They’re worried that I’m never going to give up coming over and knocking on their door, demanding the rent. I just worry ‘em out.”

 

I like Johnny’s method because it is legal, and it uses moral suasion to get someone to do what is right.

 

It’s like using Gandi’s non-violent form of protest, refusing to give up when someone has wronged you, or trampled on your rights. As a landlord, you have the right to get paid for the services you render, just like everyone else. Not paying rent is stealing, and wrong, and everyone should be protected from thieves, even us landlords.

 

So, my fellow landlords, if you don’t get paid your rents, try to “worry ‘em out,” the same way the Government of India got worried by Ghandi.

 

By the way, what Johnny C did is an excellent long term strategy. He held his income property until was time to retire, then sold it and took back financing. He will collect mortgage payments, along with social security, into his later years (and the mortgage was twice what social security was.)  You can do this with your own children, also, if you are so inclined.

 

Cheers, mate!

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