Tenants Should Learn to Appreciate Landlords
We have been landlords in Alameda since 2003 when my husband and I bought a multi-unit Victorian. He was in the construction business, and I was just starting a new career after being travel agent for 30 years.
As most investors know you do not start out having a positive cash flow (rents collected did not cover our bills) but count on the fact that rents will rise over time as will the value of the property. Neither of us worked jobs where we received a pension so this purchase was our retirement plan. My husband has since retired due to a disability and we count on the rental income that we receive.
We read the commentaries in the Alameda Sun (“Renters Weigh In, Feb. 11 and 18). I don’t believe the writers have ever owned property or at least not one that is 100 years old. They argue that 5 percent increases are too high when they have no idea what it costs to maintain an old building. The first thing we did was replace the brick foundation as we did not feel that it was safe housing people in a building that could collapse in an earthquake. That bill was $80,000.
We replaced all the windows ($17,000) so that the units would stay warm and added a garden patio in the backyard with a table and chairs and a lounge chair so that the tenants could enjoy the space. It had previously been a dirt lot.
Since we purchased the building we have bought seven refrigerators, six stoves, four water heaters, three garbage disposals, four furnaces and a washer and dryer. We also replaced all the carpeting and installed wood floors in the units. As we bought most of the appliances in 2003 we anticipate having to repurchase them shortly along with the water heaters as they only have a 10-year-life expectancy. We still have two furnaces to go.
This doesn’t count the costs of getting a vacant unit ready for a new tenant. This year we are hoping to replace the roof ($21,000) and paint the building ($15,000). We still haven’t saved up that money in the 13 years that we have owned the building so it will come out of our savings.
When we hear that when we rent a unit we must have been happy with the return, it is laughable. The market sets the rent and in the years from 2003-2010 the market was flat and there were no rent increases, as a tenant could move out and find another place as there were plenty. In 2011 we actually lowered all our rents as we wanted to keep our tenants rather than have them leave. It wasn’t until 2013 when rents began to rise.
Meanwhile our property taxes have gone up every year and tenants are able to increase them when they weigh in on city and school issues. It takes us three months of rent just to pay the property taxes. Water has gone up 22 percent due to the drought, garbage bills increased 8 percent and Pacific Gas and Electric just got a 7 percent raise in its rates. We still owe a substantial amount on our mortgage.
We are not complaining as we signed up for this, but we really believe that most tenants don’t understand the costs associated with being a landlord, never mind the 2 a.m. call when a toilet overflows. The small landlords in town are just like us. We have tried to create a building where people want to live. We have tenants who have been with us for years.
When we found out one was battling cancer and was not able to work, we lowered her rent 20 percent so that she could stay. We did not increase her rent back to its original amount until she was recovered three years later.
So tenants, next time you see your landlord maybe you will appreciate the sacrifices that they made for you to have a nice place to live.