If you’re a landlord, you have an immediate problem – tenants think you’re rich.
For most landlords, nothing could be further from the truth. The misconception, however, is easy to understand. To begin with, you own a house that you don’t even live in. That must mean you’re rich. Next, the tenant gives you money every month and you do nothing for it except go to the bank to deposit it.
A controversial article I wrote, 50 Tenant Excuses: I can’t pay my rent because.., has gotten a majority of my blog comments since 2013! Most of the comments are from landlords, but some are from very frustrated tenants and, without more information, I understand why they are frustrated.
I’d like to help clear up some of that tenant confusion and frustration here.
Some things that tenants need to understand:
1. The money you give to your landlord is not necessarily income for the landlord. They use this money to pay for the mortgage, interest, taxes, insurance and homeowners dues for the property you live in.
2. Beyond all those expenses, landlords add a small amount to your monthly rent that they save to help cover the cost of repairs on that property.
3. Most landlords lose money on their rental properties for the first 10-15 years that they own it because the amount they receive from you is not enough to cover all of the expenses to own the property. Some maintenance items are less expensive like a new water heater, but having to replace a roof or heating and air system can easily eat up 2-3 year’s worth of profits that we have been saving.
4. Landlords don’t raise rent to be mean; they raise rent to cover the rising costs of owning the property. Almost every year property taxes go up, insurance goes up, homeowners dues go up. There’s a lot of cost to owning and maintaining the property you live in.
5. Most landlords are providing you with a property worth tens of thousands of dollars and are charging you only a very small amount each month to live there.
6. Landlords trust you with one of the largest investments we will ever make and hope that you will honor our property and care for it as you live there. You want us to repair damage as it occurs and we want you to take care of it so that it remains in good condition. It is definitely a two way street where we both work together to make sure each of us is taken care of.
Owning a house is very expensive which is why most tenants rent rather than own. But there is really no reason for a tenant to understand why it is not pure profit for the landlord as tenants haven’t experienced being a landlord. I hope this article clears up some of the confusion.
What can you add to the conversation?