Landlords are rich: fact or fiction?

My husband and I own rental property. Each time one of our flats comes up for rent, we show the unit to a horde of people and never cease to be amazed at their expectations and criticisms.

We aren’t slum lords…we have three units on a spacious property with a shared pool. There is parking behind a security gate. We pay the electricity, water, and trash for all three units. When we bought the property we spent 10% of our original 800K+ purchase price upgrading and renovating the property, including new carpeting and paint.

We have a mortgage on the property and, because in this country there is no such thing as a fixed rate mortgage, each time the prime rate goes up, so does our payment. The electricity rates were just increased by 34% and our mortgage payment went up five times in the last 12 months. We raise rents only when a lease is being renewed and our lease allows us to raise it up to 10%. Despite the increases in our mortgage repayments and the increase in the cost of electricity, when our last tenant signed his lease renewal, we raised his rent only 2.5%: our economy is shrinking, he’s a good tenant, and we don’t want to lose him.

Why would we do that? Well, an empty flat generates no income and we depend on the income from the rents to pay the mortgage. The two larger flats must be generating income in order to keep us from digging into our own pockets to make the payments. Good tenants are harder to find than bad tenants…and bad tenants cost us a lot of money in repairs, lost rent while a flat is being repaired, and even legal fees. We are motivated to keep a good tenant who pays his rent on time and keeps his flat and garden in good order, so we made his rent increase minimal so he doesn’t feel like he can’t afford to stay on.

Do people honestly believe that, because we own a rental property, we are rolling in money? And even if we were, why should our affluence mean a renter can destroy the flat or demand the outrageous? Surely the guy who owns the local luxury car dealership has a few coins to rub together…does that mean he should lower the prices on his cars for you or me? So why do people seem to think that because the landlord drives a Mercedes, he has plenty of money and it’s ok to trash the place because, after all, he can afford to fix it?

We had to evict a tenant last week for harassing and intimidating the tenant of another flat. He had been in the unit for four months and when we took possession on Tuesday, I reeled from the shock of the condition of the place. What part of “no smoking in the flat” did he not understand? The flat reeked of stale cigarette smoke…and rotting garbage. Yup, the kitchen floor was littered with trash and a black bag emitted the unmistakeable stench of decay. We had the handyman in to do an assessment and the quote we received covered a full month’s rental…seems they somehow managed to put four cracks in the toilet and replacing that will eat up half the deposit alone. In fact, the damages came to 25% more than the deposit will cover…and he was only in there four months!

A previous tenant was upset with us because we would not dance to her tune…how dare we not build her a garage for her BMW (at a cost equal to a full year’s rent)? How dare we expect her to pay her rent on time? How dare we expect her to refrain from smoking, to water the garden, and abide by other terms of her lease? She quit paying her rent, using the money instead to pay for her new rental and lied to us saying her clients hadn’t paid her. When she moved out, she left the flat in shambles, having caused damage more than double the amount of her deposit. Five months of litigation later, she finally paid up (when the Sheriff came a-knocking with papers to seize that BMW and sell it at auction to satisfy her debt), but in that five month period we had to liquidate some investments to come up with the cash to do the repairs and pay the lawyers. Yes, we recovered the legal fees and were reimbursed for the repairs, but our investments…and their returns…were forever diminished.

I am far from an elitist…I’ve been damned poor in my life, which is what motivates me to be as kind to my tenants as business considerations will allow. Good tenants get treated with special care…we want to keep them and it is worth it to us be flexible in dealing with them in order to keep them. But there are people whose expectations are just ridiculous:

One prospective tenant gave us a hard luck story hoping to get us to reduce the rent for her. “Would you consider reducing the rent?” she asked, naming a figure fully 25% below the asking price. “Sure,” my husband said. “Just as soon as the bank reduces my mortgage by that much.” Unspoken by either my husband or me was the concern that, if things in her life were as tough as all that, is she a good risk with regard to us receiving our rent each month?

Another asked that, if she rented both the two bedroom unit and the little studio cottage on the grounds, would we give her a discount on the rents? Her proposed discount would give her the cottage for nearly free…and remember, we pay the full utilities on all the units! She seemed quite unhappy that we wouldn’t go for her plan.

There were the people who said they would consider renting the big flat but only if we would put security fencing around the pool. Sorry, the flat has a fence all the way around it and if you cannot mind your child and keep him inside an already fenced yard, what makes you think a security fence…and my cost, no less…will keep him out of the pool?

Mostly, however, we get people who want something for nothing. They think the rent is too high without bothering to calculate in the amount of money they would have to pay for electricity. They think that they don’t need to take care of the unit or the garden because we have the money to pay for fixing it after they leave. Even if we do have that kind of money, why does it make it OK to damage the property? And what about those screams of indignation when they hear their deposit is being nicked for pay for it?

If you are one of those people who thinks your landlord is a bottomless pit of money, give some thought to the idea that, if you are late with your rent, he might be late paying the mortgage payment on the property that you live in…and enough of those could see his mortgage foreclosed! Is your landlord slow to fix something? Well, he could be the lazy sod you think he is…and then again, maybe he has to wait for payday to be able to buy the materials to fix the thing that you broke.

But he drives a Mercedes, you wail…his wife wears fine jewellery…they live in an expensive neighbourhood! So what? What does that have to do with your obligation to pay your rent on time, abide by your rental agreement, and maintain your unit? Landlording is a business, it is not a social connection or a charity. If you don’t uphold your end of the bargain, you can make it difficult…even impossible…for your landlord to hold up his.

To expect a person to spend hundreds of thousands of dollars on a property and then allow you to live there for next to nothing is simply not reasonable. Your landlord most likely has a mortgage on the property you live in and he needs your rent in order to pay it. If you think your landlord is a rich, greedy old SOB who can afford to wait for your rent until you feel like paying it, or who can afford to fix the things you so carelessly damage, you’re probably wrong. He has a budget and cashflow considerations, just like you do, and depends on your rent money to make sure the mortgage on your home is paid each month.