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Rental Control – Will You Chicken Out And Decrease Rents?
It is actually a pretty common occurrence for landlords to get emotionally attached to tenants. And these emotions can easily cloud your business sense from one that is pragmatic to one that is illogical. You forget your investment rules and commandments as those were drawn up so long ago. The most immediate bad decision to make is to charge a low rental.
It’s fine that you are a compassionate person who don’t want to squeeze your nice tenants like a wet towel. But remember that you are not in the non-profit charity business as well. If you want to give something back to society which has served you well, go be a volunteer at the home or donate some money to charitable causes. Just don’t treat your property business as a charitable cause. You entered into the real estate investing business to achieve financial freedom for your family and yourself.
Do you remember that moment in your life where you decided to attain financial freedom via property investments? It could be the time when you read a particular page in a book or a particular line that a guru said, or even the moment you realised that a friend was living it off through properties. Did the thought of collecting less rent than you deserve form part of your strategy to take on the real estate world? Now is not the time to relent from your original objectives and become the charitable landlord.
Charging tenants too little rent is foolhardy. And keeping rents low when that market is high is naïve. You might think that it is the nice thing to do. But you are not making sense and your bottom line suffers. This is the reward you get for being Mr Nice Guy. The real world is a scary place. And some tenants, no matter how nice and innocent they might seem, more often than not have cash to pay you. Just that they prefer not to pay you. The next thing you know, they are on a holiday vacation to Hawaii, making you look like a fool. But don’t worry. Because they probably bought you a fridge magnet as a souvenir. They may deserve that holiday break, meaning you deserve full market rentals as well. You might also somehow think that there’s just a slight chance that being a nice landlord to the retired couple will nudge your name into their inheritance documents. But that seldom happens, if ever.
And if you have the weird syndrome of feeling too rich and just have to give away some of your cash, there are other ways to do it. Collect market rentals and give that extra money to your nephews who will worship you like Lady Gaga for doing that. Take your family for a vacation with the extra money, or even donate a water cooler to the nearby school.
Charging proper rental does not make you the type of bad guy that your mother warned you about. If anything, it makes you a proper landlord that people respect. There is something in your head that is telling you to avoid confrontation by being nice. Learn to eliminate that voice and get what is rightfully yours. It’s actually not that hard to be nice and charge property rental as well. You just need conviction in your own head that you are doing the right thing and have nothing to be ashamed about.
As out-of-the-world as it sounds, landlords who are unable to raise rents usually suffer from issues with their self image. They see themselves in some kind of light and project that image onto the tenants. And when this happens they feel that they have to be consistent with their “nice” persona. Which is why it can be so difficult to tell tenants in their faces that rents are going up. If you can be comfortable with who you are and don’t have the need to want people to think in certain ways about you, you will have little problem confronting tenants about raising rentals.