Why Your Landlord is NOT Getting Rich Off Of You
You send your rent check every month, but have you ever really stopped to think where all that money is going?
If you believe your landlord just puts it in his pocket, you’re sadly mistaken. Most reasonable tenants understand that landlords have bills to pay like mortgage and taxes. There are many other expenses to keep an operation running smoothly.
From all the money that landlords collect out of the rent checks , you might be surprised to know how little actually ends up in their savings accounts.
The following comprehensive list gives you some insight into the most common expenses:
- Many landlords have a mortgage on their properties, a big slice of your rent goes to pay their monthly payment.
- Taxes are unavoidable, but the burden is amplified for your landlord. There are income taxes as well as corporate taxes. Worse is if they also lose the homestead and capital gains exemptions, which increases their overall bill.
- You expect your landlord to have insurance, but did you know it’s more expensive because of you. Renters are riskier inhabitants; thus, landlord insurance helps to protect against fire, flood, excessive damage, and loss of rental income.
- As a renter, you’ve probably never gave much thought to how expensive vacancies are. First of all, the unit needs to be brought up to standard. Once the search for tenants begins, there are costs associated with checking credit, background reports and calling past landlords for references. If the owner employs a realtor to find new tenants, there will be commission fees, as well.
- Unit Maintenance between tenants is a cost of doing business. Routine and emergency repairs need to be addressed even while the unit is occupied. There’s never a good time for plumbing or HVAC problems. As expensive as those repairs can be, they need to be addressed immediately. Similarly, appliances and equipment all have a life expectancy and will need to be replaced periodically at a significant cost.
- You take your Building and Property Maintenance for granted. Many of these services get overlooked. There’s lawn care, snow removal, sanitation, roof maintenance, pest control, and preventive maintenance on boilers, furnaces, and air-conditioners.
- Depending on the number of units your landlord owns, they may also work with a Property Management Company. The convenience doesn’t come cheap. Property managers earn a percentage of rent collections and various other flat-rate fees for taking care of the business for the absentee owner.
The above expenses don’t even take into account hidden cash outlays like state and local code requirements and inspections, accounting services, and legal fees.
The next time you complain about having to send in your rent payment, try to understand just how expensive it is to manage rental properties. Landlords have a lot of responsibilities to be able to provide you with a safe and comfortable place to call home.
One thought on “Why Your Landlord is NOT Getting Rich Off Of You”
Good post! Landlords are underappreciated and the solution might be to improve communications with renters. Sometimes it’s just communications that creates enough transparency and make tenants feel connected. Tenants need to reminded of how fortunate they are to have a rental in the era of million dollar homes and homelessness. Landlords too can really help finances by using an affordable yet useful property management software (not plugging here really). These systems keep expenses down and reduce time waste, and improve tenant communications. My point is that communication can really help keep the relationship positive.