Here’s a great way to test your relationship: Buy a couple of lemon properties, and one with high maintenance tenants. For added enjoyment, throw in a property manager charged with manslaughter, court-ordered repairs and a tenant that stops paying rent and then fights the eviction. Handle all of those issues while one partner is in school full-time and the other one is in a brand new job.
We did. And our relationship nearly failed the test.
Investing together as a couple has tremendous rewards but sometimes the challenges can feel insurmountable. If you want to gain the support of your spouse, or maybe even their partnership and cooperation, our story and the lessons we’ve learned, just might help you.
When my (now) husband Dave Peniuk and I first began investing together in 2001, we had been dating for about 18 months. We treated all of our early investments like a joint venture. Each deal was a different transaction with a different agreement we signed. Not every deal we did was together because we didn’t always agree on what deals to do. We operated together when we agreed and separately when we didn’t.
That worked for a year or so, and then things got rocky.
There was a lot going on in our relationship, and it was already under a lot of strain when one of our properties became a nightmare to manage. In a new purchase, we had inherited a blunt and demanding tenant. She was constantly fighting with the new basement-unit tenants, leaving me multiple voicemails each day, and finally escalating the situation to the point where the police were called twice in one week.
On top of that, a couple of Dave’s investments turned out to be major lemons. Dave found himself in court defending fire code violations and dealing with a property manager charged with manslaughter.
It was too much for us to handle as a couple at the time and we broke up for almost a full year. When we did get back together we were drowning in debt, vacancies and renovations. We were fighting to keep our head above water and fix our mistakes. It was a tough time for us as a couple and as real estate investors. But, we eventually got through it, and rebuilt our real estate business to the point where it was strong enough that we could become full time investors together. Now, with some systems and rules in place, we’re able to actively manage and grow our portfolio each month and stay happily married.
Here are seven of our biggest lessons learned, with our tips for gaining the support of your spouse and working together as investors:
Tip 1: Share a vision
Lack of spousal support holds a lot of people back. They try to convince their spouse to allow them to invest in real estate or to join them but the fact is this: You can’t convince your spouse to do anything. What you can do is create a shared vision of what you want your life to look like. With that vision firmly in place, you can then figure out how to get there together.
Most people dream of a day when both parents can be there to pick up the kids from school or when you can take advantage of a last minute vacation deal without counting vacation days or asking permission from your boss. Few other investment opportunities out there can give you the kind of cash flow, wealth creation and freedom that real estate can give you. So if you start with creating a shared vision you just might find you come to the same conclusion: it’s time to invest in real estate!
Tip 2: Never – and I do mean never – criticize
Criticism is poisonous. We all make mistakes. We all have bad days. But for some reason husbands and wives can say the meanest things to each other on those bad days. And when you invest together there are going to be tough days.
When your spouse makes a mistake they will feel bad enough. You won’t have to say much at all but if you must say something keep it positive and not personal. For example, instead of saying something like: "What a stupid thing to have the painters come in after the carpet cleaners. Now we'll probably have to get the carpets cleaned a second time!" you'll say something like: "I think next time the carpet cleaners should come after the painters just in case the painters spill any paint on the carpet."
Tip 3: Learn how to let out steam without fighting
You can find yourself getting into heated conversations without even realizing it. It happens to us all the time when we’re frustrated over a bank decision, a mistake made by a contractor or a difficult tenant. Instead of getting into a fight we have little things we say to let the other person know it’s getting heated without confronting them. For example, you could say to your spouse in a friendly tone, ‘OK, sergeant – want me to do 20 push ups too?’ or ‘Yes, Chicken Little, I know the sky is falling’.
For us, usually just a simple hand placed on the other persons arm can distill escalating emotions. It just makes us pause and think about what we’re saying. Usually a pause is all you need to take a breath and calm down to the point of having a constructive conversation instead of a fight.
We also use mantras or mottos to push through the tough days and encourage each other. Last year we borrowed the words from fitness guru Tony Horton’s workout program and would say “Keep pressing play” which was just a reminder to each other that we’re doing the right things we just have to keep doing them. We also will use “Remember – options give you power!” whenever one of us feels lazy and doesn’t want to call that extra drywall company or carpet cleaner for another quote.
Finding a motto you can share is pretty powerful. It reminds each other of the shared vision and keeps from feeling like either person is nagging.
Tip 4: Make each other feel important
It's so easy to take people for granted, and for some reason it's even easier when you are married to each other. One of the easiest ways to keep your relationship strong as partners and as spouses is to appreciate each other and make each other feel important. One of the best things Dave said to me recently was that I was his “unfair advantage” since I make it easier for him to find JV partners because of all the writing I do for publications. That made me feel important (and appreciated!). I try to always let him know that he's important to me and to our business but I know there is always room for more.
I’m sure you’ve heard it said that ‘you don’t know what you’ve got until it’s gone’. Don’t let it get to that – recognize and acknowledge all you’ve got in your partner while it’s here and then it’s more likely to stay!
Tip 5: Use your differences to make you stronger
When I walk into a property I know within two minutes if it’s one I want to own or not. There’s still due diligence required to ensure it’s a good deal but I won’t buy anything I don’t get a good feeling about.
That said, we could never sit across from a private lender, JV partner or our mortgage broker and say “It’s going to be a great deal because Julie says it ‘feels good’.” That’s where Dave comes in. He’s got the details covered. He makes sure dozens of potential scenarios are accounted for and that we haven’t missed a surprise expense or some other issue with the financial aspect of the home.
The early mistakes we made were either without joint consensus or during a moment when we both were in a highly emotional state. Today we’re pretty consistent in the amount of money we make from our deals and that’s because we use our dramatically different approaches to our advantage.
Tip 6: You win together and you lose together
We coached a couple a few months ago that had a poorly performing property manager. We helped them let go of their property manager and take over management of their property themselves. The biggest issue we faced in helping them was their own issues as a couple. They didn’t have established roles and responsibilities, and worse, it seemed like it was a contest regarding who was doing more work and, therefore, who should do more. We became mediators more than coaches because they were fighting about who should clean, who should show the house to tenants and who was booking the carpet cleaning. The thing they weren’t realizing is: you lose together or you win together - there is no inbetween.
For us, we have general roles and responsibilities so we can operate smoothly. Dave is responsible for finding financing and joint venture partners. He is the primary contact for our property managers and tenants. He also generally works with our lawyer and accountant. I work on the marketing and if renovation work needs to be done I coordinate it. Most other things (finding deals, structuring deals, negotiations) we do together.
These roles are not written in stone though. I pitch in when Dave needs me and he pitches in when I need him. We are not competing against each other. We’re going for a team win. Your perspective as an investing couple will change for the better if you take that approach.
Tip 7: Draw the line and don’t cross it
Sometimes I don’t even want to hear Dave talk. I know that sounds awful but when we don’t turn off the real estate talk – even just for an hour or two a night – I get overwhelmed and exhausted. It’s so easy to get excited about a deal or to want to troubleshoot a problem into the night, but in reality that’s not a healthy way to live. You’ll wake up feeling tired and, instead of looking forward to being with each other as husband and wife, you’ll feel like speaking to each other is work.
We are pretty extreme examples because we run two real estate businesses from our home – one investment business and one education-based business – so it can be all real estate all the time at our house. And we really love what we do so it’s easy to spend a lot of time talking about it. But we find we’re happier together and more effective if we draw lines like:
- No real-estate talk after 8pm
- Phones off at meal times unless there’s something important going on that has to be dealt with immediately
- No real estate talk with friends unless they start and keep the conversation going on real estate
- Designate real estate-free days
Real estate investing is not always easy and it definitely can add stress to a relationship when something goes wrong (and something will go wrong, that’s just how it is). At a minimum you’ll need the support of your spouse to get through the tough times, and at best you’ll have the partnership. And, if you’re up for a challenge, the rewards of investing together are pretty incredible. With these tips hopefully it will be easier to gain the support of your spouse, find a way to work together and collectively create your freedom-filled future.
Julie Broad is an active residential real estate investor who loves to help others transform their financial future with real estate. Visit: www.revnyou.com
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