Archive for May, 2012

Of Housing and Tenants

I grew up in a family that made money in real estate. Not huge commercial deals, but residential housing that people called home. I bought my first house before I turned 24. I paid cash. The place needed a couple of year’s worth of “sweat equity” invested into it, but with the help and guidance of my parents, the house has remained an asset to this day. For nearly twenty years I have been renting space to others, either to house-mates or outright to tenants for properties I own. There have been times that I have had to rent space to live, usually when I am getting settled in a new place. Sometimes the space is less than ideal, like the tool shed I lived in for my first five seasons on Martha’s Vineyard. This has given me a unique perspective, given the disparity of incomes on the island I call home, when it comes to finding a place to live.

When I decided to return to college for another degree, I decided to rent out my house to finance the tuition and associated costs. I had a few tenants apply, and unfortunately chose a couple that in hindsight had every intention on trying to impress me while lying to my face. I now refer to them as “the gypsies”. Aside from trying to pay me half the rent the month after they moved in, it always seemed that more relatives were “visiting” every time I came to collect the rent. When they fell two months behind, I used every connection I had in city hall to force them out without legal action. Basically, I made it impossible for them to sell their “used” cars from my property, thereby taking their ability to run their “operation”, making life miserable for them. They left a week or two later, luckily for me.

Given that “once bitten, twice shy” adventure, I fared a little better over the years with different tenants, but when the current recession hit, my tenant at the time was already in dire straights. While being a landlord is seldom easy, I would like to think that I am not only fair, but I try to give people the benefit of the doubt. When someone tells me a reason why they will be a little late with the rent, I would like to believe them. Sometimes the experience becomes more like scolding a child for not doing homework. Such was the case when I finally told this tenant she had to vacate. There comes a point where there are too many excuses, you are too far behind in rent, and you have no chance of “catching up”.

Here on Martha’s Vineyard, housing is a bit more complicated. There are summer rentals (vacation homes), summer housing (temporary living quarters), winter rentals (off-season vacation homes), year round rentals (toss up), and people that own their homes. After my time living in an unheated tool shed, I bought a house. I housed people that worked in my office in the summer months, for a nominal weekly fee. Ten or twelve weeks out of the year the house was crazy, but it was necessary.

When I had to rebuild after a house fire, I designed an apartment into the new house. The unit would offset the inevitable higher mortgage, taxes, and insurance. I had the zoning board approve the unit I spent more than $30K on its design and construction, and priced it for a year round tenant. I have run the gamut from perfect tenants to the tenants from hell, fighting and screaming; finally stiffing me after the summer was over. I have helped a few friends with a place to stay when times were tough, but for the most part, the rental unit is a business deal, not a freebie or a “money maker”.

Prospective tenants sometimes ask if I would accept less than the asking price, or if I could just do a seasonal rental; sure, as long as the bank accepts a partial mortgage payment and seasonal payments. While we’re at it, let’s see if I can skip paying taxes and insurance on a duplex, eh? The point is, I busted my ass to make this whole property ownership thing work (and continue to hustle to keep it as so many others lose what they have). There are so many people that seem to think that the rents charged are just not affordable. Well, mortgages, taxes, and insurance are not freebies; they are a serious commitment that involves a responsibility that most tenants have yet to understand, let alone accept. If it was easy, we would all own homes.

Currently, my apartment is part of the Dukes County Affordable Housing Program. My apartment had to be inspected and approved, the tenant went through a thorough screening process in order to be approved for the program, and everything seems to be working out, going on two years. My house in Connecticut is still available for rent, however. After a year and a half of renovations from the last tenant’s “occupation”, it is ready for another roll of the dice for a tenant that can prove an ability to pay the rent and produce references, that are not friends or relatives, willing to vouch for their integrity. Sometimes renting to tenants really does feel like gambling with your hard earned assets.

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