Profit By Being A Good Tenant
You know what I love about our recent paid vacation? Beside the privilege of receiving 3 paid cheques while hiking the Great Wall of China, our ever jolly landlady awarded us a rent freeze for being troublefree tenants. Who knew being good citizens could be so profitable?
This shouldn’t come as a surprise for us though. Between my wife and I, we collectively rented 4 separate suites in different occasions, and never had to bear any rent increases! In fact, one landlord even tried to persuade my wife to remain by offering a rent decrease. Perhaps he’s a nut, but more likely a brilliant business man. Having been a landlord myself for 3 years, I can attest that keeping a dependable tenant is much more nourishing to your bottom line than having to endure lost revenues, advertisement fees, lose of personal time, and not to mention the risk of inviting a professional tenant-from-hell to ruin your retirement plan.
Having said that, I can understand that freezing the rent can be a double-edged sword. Keeping a good tenant protects your cash stream, but over time, the investment loses its edge from eroding purchasing power and opportunities lost. To the best of my knowledge, any missed increases can’t be carried forward to future years. In BC, landlords can hike their rents by 4%, max. By forgoing the raise this year, the landlord cannot no longer “catch up” by double-boosting the rent next year. The conclusion? It pays to be good tenants. We’ll save an equivelant of $1,000 pre-tax income, and this saving is repeatable as long as we remain with this landlord.
Great article. You must be a great tenant. I have been reading into property management recently. The cost of evicting a bad tenant is quite high. Loss in revenue is one thing, if a landlord has to force an eviction after final notice is served, police will need to be involved (in BC at least). Not only that, you can only use police-appointed movers in the process, and that’s usually not a small bill. Not to mention there is cost in finding new tenants. Therefore, by keeping good tenants like you, your landlord heightens his chance of getting a positive net return by the time he sells the apartment. And by paying rent on time, you help him meet his financial obligations and keep his resources available for exploring other investment opportunities. It’s a win-win strategy. It’s the same in business, discounts are often offered for prompt payments. This aids receivable management and decreases the chance of bad debt. And customers, given a choice, will likely pay your bills first.
I don’t think the rent-decrease offer is a good strategy though as it doesn’t invite more profit (you can only rent one apartment from him). He must really like you guys!