Quote:
Originally Posted by TiltonBB
One thing that stood out to me is the statement that the landlord would raise the rent if something like a new roof or other expense were needed. That sounds good but really doesn't work in the real world. The rent can only be the fair market rent for the property, not what the landlord would like to get to make a profit. The tenant will not care what your expenses are and will move if they can get a better deal somewhere else.
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I would argue that a landlord that does not plan for maintenance issues and adjust the rent to deal with it is a poor financial planner. I fully understand the financial constraints on the amount of rent. However, if the roof on a house is 15 years old and you are not setting aside some money to replace it sometime in the next ten years you are foolish. A well maintained rental property should draw a higher rent. That's why landlords paint their properties, if needed, between tenants. If a window pane cracks, they replace it. A $10,000 roof expensed over 20 years is about $40 a month. That shouldn't drive away most tenants, especially if they see the overall property is well maintained. Maybe the rent is set $80 per month higher to be ready for all maintenance issues.
Maybe a landlord who is only in it for a short term may minimize the rent to attract people, figuring he will be long gone by the time the roof needs replacement and the heating system goes dead. Eventually however, the work will have to be done and the owner at that time will have to pay for it and if renting the property will need to recoup his costs through rent.
Overall, it's a business and the landlord needs to make enough money to pay all his costs AND make a profit or it's not worth being in that business. Instead he would be better off investing in a nice 9.5% return growth fund with dollar cost averaging.