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Why DSTs Are Better Than LLCs Hint—Taxes

“A wise man learns from his mistakes. A genius learns from the mistakes of others.” —Unknown

Real estate investment courses are a dime a dozen. If you’ve even thought about becoming a landlord, you’ve already been flooded with ads for them. However, the best education you could give yourself is from the school of hard knocks—or even better, from observing those who “are enrolled.”

The best part? This type of education is FREE. Just go hang out at your local courthouse.

Every prospective or new landlord should consider sitting in on some cases to be required training. Take a field trip to landlord and tenant court in your property’s jurisdiction. If you’re serious about investing and stick with it long enough, you’ll end up here eventually.

Make sure that your own case is not the first time you’re learning the ropes.

Related: My Botched First Eviction (Or Why You NEED to Study Landlord-Tenant Laws)

The Benefits of Observing Landlords & Tenants in Court

Benefit #1: Learn from the mistakes of others.

By observing other landlords and tenants in court, you will begin to see what (and who) to look out for in brilliant, technicolor, 20/20 hindsight. While you are watching other people have a very bad day, you can sit back comfortably, taking notes.

The majority of cases will be landlords suing their tenants for unpaid rent and heading down the road to eviction. What might these tenants have looked like on an application?

You will see tenants not show up; you will see tenants plead for charity. You will see landlords hurt their own cases, and you will likely encounter the notorious professional tenant (as some call them).

The professional tenant is very savvy about the legal system and pushes their rights to the limit of the law (and beyond), making your life as difficult as humanly possible. They suck the life out of your investment. They prey upon your goodwill.

They are your worst nightmare as a landlord, and the courthouse is their happy place. They know exactly what to say (and not say) in order to take advantage of every loophole at your expense.

They’ve brought their paperwork and are making puppy dog eyes at the judge. Is this landlord about to get creamed? Better to spot someone else’s professional tenant there in their natural habitat before encountering your own out in the wild.

You will also see landlords trying to recover money for damage to their property. What can you learn from them about deposit amounts and related policies? You might see various other types of cases, too, such as tenants skipping out on their lease early, tenants counter-suing for wrongful eviction, landlords sued for maintenance issues, etc.

All of these types of cases are offering nuggets of wisdom to you, the observer. This is the absolute cheapest way for you to learn these lessons.

Related: Alternative Dispute Resolution: Avoiding Eviction Court

Benefit #2: Demystify the process.

There really is no substitute for acclimating yourself to the landlord and tenant court process than going yourself and seeing firsthand. Your local government website will give you some boilerplate guidelines, but they will not tell you which judges seem particularly sympathetic to tenants and which are not.

A website won’t explain to you the other faces and personalities in the courthouse you will deal with. Online, you’re not going to grasp how things in court generally work.

Meanwhile, the dreaded professional tenant probably knows all these things very well. Make sure you do also—before your own case.

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You also need to know how things work in your particular area. Every real estate market is different. Laws and regulations vary from state to state—and even city to city. A major problem in one area will be unheard of in another, so be sure you are observing court in EVERY area you own property.

This way, when the time does come for your case, you’ll know where to go, where to park, where to check in, and what courtroom to go to. You will show up on time, quietly focusing on winning your case.

In real estate investing, there are plenty of horror stories that do not end up in court. I hope that you start off your real estate career with consistent tenant screening practices. I hope you have nothing but nice, quiet tenants who pay every month in full, like clockwork.

I hope you never have to hear about their personal drama. I hope you can remember from the start that your investments are not a charity vehicle, and I hope your tenants understand this, as well.

However, chances are that even with the very best practices in place, you WILL end up needing the court system at one time or another. It’s never pleasant to find yourself in that position, but you will dread it less and sleep better at night if you do yourself the favor of familiarizing yourself with court.

You might also do yourself the double favor of learning how to avoid it as much as possible to begin with.

What do you think about this advice? Have you ever ended up in landlord-tenant court? Tell us your story. 

Leave a comment below!


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