Raise the Hammer

Yea, most people (willfully?) fail to understand the simple economics of many property owners. Just because a landlord/owner owns a house, it seems than many automatically assume that he/she has loads of money as their disposal.

After mortgage, insurance, tax (incredibly high in Hamilton), heat (most often included in Hamilton, hydro (usually only the common areas, as most units have their own) and repairs, there isn't much left.

And that's NOT including some extras such as management fees (if you above a 3rd party assume management, usually at a rate of 8-10% of revenue), different heating/lighting/water/sewer layouts and whatnot.

I'm not saying anyone's at fault here, as there are losers on both sides here, but I can recall many, many, many times over the last decade when explaining to tenants of mine all the costs involved in OWNING PROPERTY and they HAVE ALL BEEN SHOCKED. They just sort of thought were "free" or "someone else's problem". People are funny.

I'd suggest that if you cannot afford to keep a building in decent running condition w/professional management, and that includes being able to discern/hold out/scrutinize for better tenants (you can never tell for sure, you can only minimize the risk), then you might want to look at getting out of the business.

EDITED PART: It's not worth it to risk your financial future (endless money pit) or your tenants personal safety (nothing is worth that!). Do it right, or don't do it at all.

A 4-unit house in the downtown core is only going to net you around $700/month or so (after most of the expenses I listed above), and that's NOT INCLUDING management fees ($200 off of $700NET)and repairs (which with 100+ year old houses, you WILL ENCOUNTER).

I totally agree with the authors statement that the tenants have to let us know if something is wrong. There have been many occasions when something breaks, then is not reported, and the problem gets worse (as it always does), then all of the sudden, you're a "slumlord" who cares about nothing else other than the monthly cheque". Yea, that's it. Genius.

Great article, Tanya!

Comment edited by RB on 2011-12-02 14:28:53