,The short story of a landlord morning!
It was 6 am on Thursday morning. James opened his eyes. It was his habit to time his brain to wake up at any desired time.
The first thought came into his mind was the lease signing appointment at 9 a.m. with the yet-to-become tenant. A smile came onto his face. One of the 3 units of his multi-unit property was vacant since last 2 months. At last, he got the tenant, Ms. Adams, for that 1 bedroom apartment. He felt energetic by the thought of collecting an incoming rent amount! After all, that’s the most important activity of his landlord business.
The tenant screening process for Ms. Adams went well, except for the 2 things. Her credit rating was average (James would have liked the best!). And she did not have the last month security deposit. As per the Residential Tenancy Act in Ontario, the landlord can request and accept last month rent as the security deposit.
She was a single woman in her early 50s. She had a full-time job and was with the same employer for more than 20 years. James spoke to her previous landlady. who gave an A+ rating for Ms.Adams as her tenant. The landlady also confirmed Ms. Adams was never late in paying the rent, was occupying her basement apartment for 6 years and kept the place in a very good condition. These were all good qualities. From the experience, James knew, Ms. Adams has the potential to become a long-term tenant. He also thought Ms.Adams could be a low-maintenance tenant, as she was an elderly and mature woman.
Ms. Adams said she had to help her terminally sick sister a year ago, incurring some credit cards debt. That was the reason for her low credit rating. Because the previous landlady had an emergency, she asked Ms.Adams to vacate the place at a short friendly notice. This fact was confirmed by the previous landlady. That was the reason why she was not able to save up the last month’s deposit, she said.
The gut feeling of James, the landlord of 12 doors(12 rental units in 5 properties) with 15 years of experience, was telling him to compromise with the 2 negative points. But he was a bit bothered about the refusal of Ms.Adams to show any proof of credit cards debt. James tried to pursue her to show any other proof, without success.
After much deliberation in his mind, he resolved to rely on his gut feeling! He decided to go ahead by approving Ms. Adams application of tenancy. The most important thing about the rental application for James was stable employment. James developed a positive gut feeling because of in-person meeting and the conversation with the previous landlady.
However, being smart as he was, he would not be satisfied if he can’t logically balance these 2 deficiencies with some kind of gain. He has learnt to search and try for the gain at every possible opportunity. James was a decent human being and would not try to take unreasonable advantage of his tenants. Albeit he’d always say to himself that he is doing business, not the charity!
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He carefully negotiated 2 conditions against the 2 deficiencies. After some discussion, James figured out Ms.Adams was fond of gardening. He had Ms.Adams agreed to maintain the front yard as one of the conditions of the lease without any compensation. And He had Ms. Adams agreed to pay last month deposit in 6 installments of $150 per month. Her monthly rent was $900.
James was proud of what he accomplished by negotiating this lease. Was it a huge achievement? After all, it was just another tenant and another lease. Yet he knew and acknowledged the fact that the landlording is a journey of numerous smaller steps taken one at a time, keeping the focus on the ultimate goal. His ultimate goal was to become a millionaire at the age of 45 and take a retirement!
Looking forward to the signing of the lease, James started his drive to his rental property sharp at 7 a.m!.
— End of the Story —
The Most Important takeaways from this story
There are many things to learn from this story. In the larger context, the 2 most important learnings are as follows.
- The Landlording is an art of self-learning and experience. The landlords deal with real humans every day. There will be many instances where you would face a tricky situation as the one James came across with the 2 deficiencies in the application of the prospective tenant. You’d have to use your gut feeling if the human factor is involved. This would come from the practice and experience. Going by the books would not always help.
- The landlording is the business of numerous small achievements. James had Ms. Adams agreed to take care of the front yard. That saved him $50 month-by-month. No matter how small this achievement sound, in the big scheme of the things it’s a huge step forward for James. For an example, this 50 bucks, if paid as a prepayment towards the mortgage month-by-month, it can be a huge interest saving in the long run. By negotiating this lease condition, James continued onto his habit of achieving some small gains at every possible instance.
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