I bought my first home in 1971 or so. It was an older two-story brick home with a cement block garage in the back yard. I paid $22,500 for it. A year or two later, my brother and I bought a 38 acre farm together for $12,500. It had an old frame house on it which, while somewhat dilapidated, could actually be lived in. We used the farm as a weekend retreat. We kept horses there for ourselves and our friends to ride on. We paid a local man to visit the farm daily to make sure the horses were fed and watered. Imagine what those properties would be worth today.
I have owned a lot of real estate over the years. Some properties I lived in, some I bought to fix up and flip, some my wife and I rented out. Real estate can be a good investment if you can buy and flip, or buy and hold. The one thing I never, ever, wish to do again is own rental real estate.
In many jurisdictions, laws are stacked against landlords. Tenants get away with murder. Landlords, because they are perceived as rich, have to put up with whatever happens. Numerous times, we had tenants leave while owing us months of unpaid rent. As they blissfully ignore their responsibilities, the landlord has to get judgements against them, spend time and money creating the legal documentation required, only to end up with essentially unenforceable pieces of paper. We had broken windows, doors kicked in, carpets burned. We had one tenant use one of the two bedrooms in the apartment as a dog toilet. There were piles of dog feces everywhere, some weeks or months old. The tenants were not only too lazy to take the dog outside, they were too lazy to clean up the dog shit in their own abode.
Are all tenants like this? Of course not. The percentage of bad tenants, however, is high enough so that unless you are an owner of many buildings ,with a full-time property management crew, it just isn't worth the trouble.
My wife and I owned a beautiful complex of 17 units on a large, park-like lot in a small town in southern Ontario. I was there one day checking things out when a female tenant indicated that she wanted to talk to me. It was a hot summer day and I just wanted to get home to a cold drink. She had other plans. She wanted me to build a swimming pool for the complex, so that she and the other tenants could keep cool.
I did some quick mental calculations. I estimated the cost of construction of a pool large enough for the complex, with fencing to keep children from falling in, chemicals to keep the water clean, and labour to keep everything functioning. I amortized the cost over a period that I thought would reflect the useful life of the pool, added in interest costs, and divided by the number of months in the period. Then, I told her by how much the rent for each apartment in the complex would have to be raised to pay for the pool. The woman was flabbergasted. She expressed shock that I would want the tenants to pay for the pool. She thought that they should get the pool at no cost, because they deserved it. And I, rich landlord, should pay for it. At that time, the total cost would have been around $50,000 or so to build the pool, plus annual maintenance and monitoring costs of perhaps $2,000 or so.
I mention this all because I often hear about greedy landlords who are supposedly ripping off their tenants. I'm sure there are shyster landlords out there who gleefully take advantage of tenants at every opportunity, just like there are unprincipled tenants who think they have a right to live (and swim) at someone else's expense. The reality is that landlords, and business men and women in general, have to work very hard to get anywhere in life. They borrow money, make personal sacrifices, and suffer from relationship stress because of the financial pressure of trying to hold everything together. Then, when they achieve some measure of financial success, they are deemed greedy, capitalist pigs.
Well, colour me a greedy capitalist pig.
How in the world did I get side tracked into writing about real estate and landlords and tenants? Oh, I know. I just got a call saying that our offer had been accepted on a new house. It is just being finished and we will be able to move in late August, just in time for my son to attend high school just a short walk away. At least now I will have more time to concentrate on other things.
Hmmm... interesting how getting good news about our new home somehow triggered memories of things and times that were not quite so good. Where is Freud when I need him?