Note: I added this bit Jan 5th -
I wrote this post a couple of days ago and since posting it on Facebook I'd just like to clarify my intention with writing and sharing it. The intention wasn't to shame our tenants. It was to encourage them to take responsibility, which I hope they do, and to explain the consequences of their actions, while clarifying my own feelings about the issue.
I can't imagine how stressful it must be to have to worry about rent while living paycheque to paycheque. I understand that many people live a cheque away from homelessness and I feel grateful I don't have to live that way. In a landlord/tenant relationship clearly the balance of power lies with the landowner. Maybe this is why tenants sometimes get frustrated and demonstrate a lack of respect for that property. I can understand that.
At the same time, the properties we own represent huge investments for us that carry with them large obligations to banks, the city and our insurance company. Our tenants legally accepted certain responsibilities, including garbage and snow removal as well as repairing damage. If the responsibilities involved with renting our house became too burdensome for whatever reasons, I wish there was more open, honest communication, as we could have worked something out, especially where it was a month to month lease.
I'm hopeful that all involved will be able to discuss this situation as adults, and agree on a resolution. If anyone on the tenant side of the issue has anything to add, I'll happily post it on my blog as I think it could turn into a productive conversation that would make all involved feel better and more empowered by the experience. I'd love to publish other points of view, I got to publish my own, so it is only fair. Maybe it would open an interesting dialogue that would be important for others to see. Maybe there are things Brendan and I could have done differently. Maybe, in the way we made assumptions, you've made assumptions about us and our intentions. Let us know. If we want to attempt to build a successful real estate company that helps people, your feedback could help us improve our skills as landlords. If you have questions, please ask. Add me on Facebook and comment on my wall if you'd like. In general, I hope this experience turns into a positive learning experience, and shows how the housing issue affects us all.
Okay, back to the post.
I love Jim Rohn. Can’t
say I know much about Herbalife, but this video of an inspirational talk Jim gave to Herbalifers
randomly popped up as a suggestion for me on youtube, on New Year’s Day. I think it has a great message for 2014.
This is the part of the video that got me excited, when you read the rest of my post you'll see why:
“You've gotta have a good mature attitude about everybody. Everyone in your family. Everyone in your organization. Everyone in the community. Everyone in the world. Everyone in your country. We need each other to make a successful
life. You gotta have a unique sense of
appreciation of everyone. The last
one. The first one. You gotta learn to appreciate the youngest
one. You gotta learn to sense the value
of the oldest one. And the one that
gives you the most joy, and the one that gives you the most trouble."
I haven’t posted for a while because I’ve been pretty sick
the last week, and because I’ve been wanting to write about some ideas I
have to solve the affordable housing crisis in Nova Scotia. But I felt conflicted doing so, seeing as for
the first time, Brendan and I are in the middle of evicting tenants.
So it took me a lot of thinking but just today I realized
exactly how this experience fits into my ideas about the affordable housing
problem faced not only in Nova Scotia, but across Canada.
I think the affordable housing crisis in Canada could be
solved by private landlords, in a different way that Jeremy Jackson from Killam Properties
described in the Herald recently.
Here’s what I think, and what
I have personally experienced: carefully chosen real estate can be an awesome
investment vehicle that can help people.
I wish more people with good jobs and savings
would quit dumping their money into mutual funds or other investments where
they have no idea how their money is actually being spent. Maybe their investment money is being spent cutting down
rainforests in Borneo, displacing Orangutans to grow palm oil. Maybe the money
is going to some big corporation with bad ethics. Maybe the money will, in an ironic twist of fate, somehow circle back around and be part of the reason the investor gets
laid off, eg, via offshoring of jobs.
A
rental property, however, now there is an investment you can keep your eye on. We all need shelter, food and water. A person
of means could physically buy a house with the intention of giving affordable
rent to people, with the hope that these people would protect their investment
for them.
It can work out beautifully,
and it has for me.
I bought the rural Nova Scotian home that
I currently live in 2003, while I still lived in Vancouver. It was a batshit insane thing to do. "Throwing
your money down black holes” I remember my supervisor saying as I booked my ticket east. But I was frustrated with trying to be a conservation biologist in BC and just
desperately wanted to have a piece of land I knew I could move to someday. In effect, I was planning for my retirement
at the age of 29. I’m so grateful to the
family that rented my house for 8 years, and kept it in good shape. In return I
kept the rent low so they had plenty of time to save up to buy a home of
their own. When I moved to Halifax in 2008, I didn’t give them 3 months
notice, I gave them 3 years notice.
So my point is, the landlord/tenant relationship can be a
respectful, mutually beneficial one.
So why don’t more people, who could afford to give others
cheap rent and help others, do it?
Aha, I realized today it is because of people like the
tenants that we’re currently evicting!
You see, stories about good tenants don’t make it into the news. There’s nothing sensational about good,
honest, hardworking people who keep a nice house and abide by their lease
agreements, and whose landlords abide to their lease agreement too by promptly making
repairs. It isn’t newsworthy that a lot
of time tenants and landlords enter into symbiotic agreements, where rent is
exchanged for tenants making improvements to a house.
For
example, I once gave a roommate-turned-friend free rent in Regina in return for dogsitting and building
me a patio with firepit. It turned into a mutually
beneficial win/win/win situation for me, my friend and the dog as well as
many people who got to enjoy that firepit (I'll note that the firepit wasn't the cause of my subsequent house fire).
But stories like that don't get into the news.
The stories that get into the news are ones
about slum landlords, or tenants trashing rental properties.
Tenants like my current tenants.
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| Trash Heap in my backyard |
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| Smashed front picture window |
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| "firewood" pile from a tree cutting place, which we were ok with for affordable heating, but is now just a frozen mess we'll have to deal with, plus it is blocking half the driveway. normally we'd put wood in the shop but we've heard that is packed with more trash. |
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| part of the side yard trash heap |
|
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| random front yard trash |
My country tenants bought and moved into their home in
Feburary 2012, so I was in a hurry to rent out the house I had bought in Halifax. We rented it to "Tenant A" and "Tenant B", for March 1, 2012. They
were a young couple, had a young roommate and 2 dogs. Tenant A said it wasn’t easy to find a rental house in Halifax that would
take 2 dogs. Being pet lovers, we were fine with multiple pets, and while my house is more suited to a couple, split 3 ways the rent would be relatively affordable. I liked
that.
A friend knew their
reference so I figured they were probably alright.
And they were alright! They were alright, up until this past summer
when we found out that Tenant B had moved out, she didn't contact us, we found this
out when her rent cheque bounced. No
worries, said Tenant A, she’d found roommates and would be taking care of the
rent.
Long story short, while I'm grateful for the months and months of rent that were paid, my yard is now filled with trash,
apparently the shop at the side of the house is as well. Apparently there’s an abandoned car frozen into my driveway. Rent has not been paid for December or
January, and given the current state of the property I can’t see how we could
possibly rent it for February even if it by some miracle it is vacant, spic and
span for the January 8th eviction date. (Note that in Nova Scotia you can now evict 15 days after non payment of rent. We're reasonable people, and hoped to resolve things with Tenant A but gave her a notice on the 23rd in order to protect us against excessive losses, given that we hadn't been able to communicate with her for weeks. We told her we'd tear it up if she cleaned up the trash and paid rent by Dec 31st - she texted Brendan that she would, did neither, and has not been in touch though we've heard she's found another place).
My
front picture window was smashed in October.
We were told that Tenant B’s brother broke it on purpose. Tenant A said it would be fixed right away.
It hasn’t been fixed.
A few weeks
ago, because of the garbage, the City of Halifax issued us a warning that our property is a dangerous hazard
and needs to be cleaned up. Tenant A
assured us this would be dealt with right away; we believed her because it happened once before and it got cleaned up promptly. The trash is still there, and more has been added. There are now 3 dogs living in the house
rather than two and I've heard there has been numerous complaints about barking.
To all of my neighbours, and everyone who has
to see my house when they drive by, I am sorry.
I’m sorry my house looks like a crackhouse owned by slumlords. Brendan and I are not slumlords. We take our duties as landlords seriously and
have done our best to provide energy efficient, comfortable spaces. When something breaks that is our fault, it
is dealt with promptly. The only reason
we’ve let the place stay looking like it does for as long as it has is because
we’re waiting for Tenant A to take responsibility and clean up the mess, and if she doesn't, it will help us with the eviction. It simply is not fair to us, or our other
tenants, for us to have to absorb this expense.
Back to what I was saying about creating affordable housing…
It is stories like this, and the far worse stories we've heard of others, that becomes the topic of conservations that most sane people would end with teeth
sucking and “tsk tsk, this is why I would never be a landlord”.
It is these stories that root into landlords minds when they
treat all prospective tenants as potential vandals.
And maybe, some tenants, hearing that people have done this sort of thing and escaped without consequences, start to think this sort of behaviour is normal and an acceptable protest by the "have nots" against the "haves".
Respect is lost by both sides for eachother.
It is stories like mine that turn people,
who could afford to have affordable rentals, off of having rentals, or compels them to
sell off their properties to other investors or to management companies.
Would-be landlords, who perhaps would have been kind and fair, decide not to bother. Maybe they'd rather invest their money in a Real Estate Investment Trust instead, as it would be way less work. However this gives even more power to big
corporations and property management pools to own and control the rental stock in
cities.
As with the difference between
big box stores and small business owners, that personal touch is diminished when dealing with large companies, as
tenants deal with hired staff rather than the actual property owners. As with most big corporations, business becomes
driven by profit over wanting to create mutually beneficial win/win
situations. Rents rise, in part because
the market bears it, and increased expenses, but also because evictions, property management and repair
costs must be factored into these rents for the companies to return a cut to
their investors. By the way, in my 12
years of being a landlord I’ve never given anyone a rent increase.
So this is my attempt at some communication, to bridge the landlord/tenant
gap.
Hey, people living in my house, what is up with all
the trash in my yard? Did I ever come
to your house and throw my trash in your yard? Do you realize that my house
now looks like a crack house, with its taped up broken window? Is drug addiction playing a role in this scenario? Who broke my window? Was it Tenant B's brother?
What have I done to any you, other than
provide a nice renovated place to live? Do you want to live in a city where your only options for renting a place to live is from big corporations with strict rules? Because that is the sort of consequence that your actions are going to generate.
I think back to the day we signed the lease with these tenants, and how they mentioned that they had friends who were leaning on the tenancy act to live rent free for a few months while waiting out
the eviction process. In hindsight eventhough they swore they would never do such a thing, maybe this was a red flag. Maybe this is
what is now happening in my house. In any
case, I hope that people who do this realize the consequences of their
actions. If that is the case, which I hope it is not, right now we're looking at three months lost rent, garbage
removal, damage – the cost can quickly add up to thousands of dollars, easily wiping out any equity that we may have built up during the tenancy. And I've heard, and seen, far worse happening to other landlords.
I think when people pay rent, they assume
every dollar goes straight into the landlords pocket. It doesn’t.
There are expenses like property taxes, mortgage interest, house insurance, which is high
for us because we afford our tenants the cozy luxury of backup wood heat, repairs,
maintenance, appliances, and lost rent from instances like this. Without instances like this, I think having a well-maintained, well chosen rental
property is a good longterm investment and something more kindhearted would-be investors might take an
interest in, as it would present them with the ultimate ethical investment: an "affordable living" property they get to own and operate. If more wealthy people did this, it could give tenants more choices and help bring housing
costs down.
Unfortunately it is people like the ones in my
house who ruin it for everyone, especially other young people.
This is why nobody wants to rent to young people.
This is why young people end up being forced to take overpriced properties owned
by people who perhaps aren’t as concerned about repairs and maintenance. This is why big corporations get to gobble up
rental stock in cities. It's a bad cycle that makes itself worse.
We’re not deterred, though.
I’ve done well with real estate investing as it has allowed me both
my own freedom and the ability to help other people over the years. One day I'd like to be able to leverage our equity to build a business that would offer not only affordable rent, but also rent to own scenarios and mentorship. In fact long ago I had a daydream about an ethical real estate company called "The Artists Trust" or similar that would help creative types own their own homes, including homes with suites for passive income.
This eviction has just been a good learning
experience so I’m grateful for that. Would I rent to young people again? Yes. But next time I would get far more references, and a family member to cosign. Had we realized when Tenant B moved out that she was the only one that we had banking and employment info on, we would have demanded a new lease right away.
Anyhow, we'll see what will happen on the 8th! Despite my yard looking the way it does, I still like these people. I think the Jim Rohn video at the beginning of my post helped to give me perspective. I'm hopeful the interior of the house will be in much better shape, and everyone involved in this situation ends up doing the right thing. I hope I'll have more favourable pics to post in my next blog post. To Tenant B's credit, she got in touch with us as soon as she found out what was happening. Maybe the yard has been cleaned up since I wrote this post - I hope so. I'm sure this tenancy has been a good learning experience for them as well.
I’m a big believer in the law of karma, so I have every confidence that the
people responsible for violating my property will pay for any damage, in one way or another. I just
hope everyone who thinks it is fun, funny or just plain o-k to rip off their landlord thinks
twice about what they’re doing in the future, and the role they are playing in
making housing less affordable for everyone. Then maybe we could all work together; the people with means, and the people without, to create more affordable housing in Canada.
