If I had a dollar for every time a landlord says, ‘I charge my tenants cheap rent because they are good tenants,’ I would be a wealthy man.
As if anyone less than good should be considered. A good tenant pays in full and on time and looks after the property. These behaviours should be normalised (not ‘celebrated’ or ‘compensated’). I am not sure why anyone should expect any less from a tenant.
On the face of it, discounted rent makes good business sense, but I see it as a fundamentally flawed model that keeps landlords in a rut:
- A well-located and well-maintained house will also command a higher rent than others;
- The assumption is that reduced or cheap rent keeps tenants from moving; I don’t think that is right. If comparable properties cost the same to rent, then moving could only be more expensive for tenants (relocation costs). And if the cost disincentive is already there against moving, then wouldn’t you just be taking an income hit for no reason?
- More time and effort should be spent attracting and selecting the right tenant. If discounting is your only strategy, then the odds are your marketing and selection processes are broken;
- If you treat your tenants like valuable customers, you should be compensated accordingly. Premium product coupled with premium service means premium price. I don’t know why any landlord should treat then tenant as less than valuable customers;
- Future-proving the property means timely repair, maintenance, and a sinking fund for future works. Throughout your property ownership, you’ll probably have to replace the roof, re-carpet, paint (multiple times) and more. These are not small ticket items, and the money has to come from somewhere;
- With interest deductions being phased out and the removal of other tax...
