Here’s a dirty secret about being a landlord…it’s hard to make money. This is because as soon as you make a couple nickels to rub together there’s someone trying to tax it, spend it or steal it.
Landlords Get No Respect
Pretty much every one hates landlords. I’m not sure why this is. Certainly no one believes a landlord has the right to make a few bucks in their business. Look for instance at the whole water billing saga. Your tenant doesn’t pay water, you get the bill on your property taxes. As a business owner no one want to subsidize your bad tenants. Yet the utilities themselves are in the business of selling water. They extend credit to bad risk customers and they get burned and that is one of the risks of being in business. However with common agreement they feel free to unload that cost on the landlord even though the landlord has no way to protect themselves.
Landlords Hurting In Ontario
We have more bad debt than we know what to do with. As evictions take longer and longer to process these debts are huge. I have three tenants who owed more than $10,000 this year. That’s a lot of money that could be used to fix apartments and install new windows and pave the parking lot. This problem is getting worse.
It’s Lucrative To Rip Off Landlords
The current eviction process benefits scammers. If you set up a system that benefits people trying to defraud landlords…guess what? You’ll get more people gaming the system because it pays them to do it. In Ontario we collect first and last month’s rent. It should take about a month to evict someone. That way there is no financial benefit to the tenant over the landlord. Currently it can take 4-6 months to evict a tenant. By not showing up in court and getting an extension the non paying tenant can get an easy couple months more free rent. How is this good for our business?
Evictions Are Bad Business
Landlords don’t want to evict tenants. If you look at the work and money we spend to get tenants in the first place it’s easy to understand. We paint, we pay for advertising, we upgrade our apartments all in an effort to get a customer to move in. What possible motivation do we then have for turning around and kicking that person out and starting over again?
Landlords Have A Right To Make Money
Every business has to have some kind of motivation behind it. Landlords get in this business not to subsidize tenants but to provide a service and make some dough. Unfortunately the landlord business is one of the most regulated businesses you can get into. You will not have the right to withdraw service if your customer doesn’t pay. In most cases you will not be able to write a mutually beneficial contract with your tenant. Your tenant will be able to sign that they have no pets and then bring in their pack of Rottweilers. Your tenant will sign a contract that they will mow their lawn, but when the city bills you because the lawn is 20″ high, you won’t be able to do a damn thing about it.
Unless We Start Protecting Landlords We’ll Lose Them
If there is no benefit to being a landlord, landlords will leave the business. They will want nothing to do with a business that costs them time, money and stress. Over and over the municipalities go to landlords for a cash grab. Property Taxes, Fines, Charges for Garbage Removal, Landlord & Tenant Board Fees, Income taxes, HST and on and on. Then at the same time, landlords are being defrauded by predatory tenants but still expected to make all their payments. Lots use their day job money to subsidize the repairs and expenses of the property.
Capital Appreciation Is Over
We’re headed into at the very best a flat real estate market. It makes some sense to people to pay out of their own pocket when they see those increasing house prices. It makes no sense whatsoever in a flat or descending real estate market. We’ll see some of this in years ahead. Any incentive for landlords to remain will be removed. Public sentiment will change about real estate and people will rush to sell their losing “investments”
Mortgage paydown is weak for years. Most people just don’t know that after making your mortgage payments for 5 years in a flat market, you’ll barely make enough to pay your realtor and get your deposit back. That will take all the excitement out of the landlord game.
Landlords Are Small Businesses
Most landlords scrape their dollars and cents together to try to buy a property and get ahead. They do the best they can. They invest in their properties. They pay their taxes and improve the economy. They deserve respect and protection from the government.