Originally posted by @Jacques Hebert:
Curious as a new investor- with the cash flow so excellent, would you ever consider lowering the rent or covering utilities? Naively, I'd have difficulties sleeping at night feeling like that $1,500 was just coming out of my tenants' paychecks and directly into my pocket without any justification. Obviously you need to cover your initial investment, but after that. Is there any situation where you'd use your increased cashflow to make things easier on your tenants?
That's a really great question Jacques. I am actually really glad that you asked that. I think that it is important that we don't forget about ethics as we work towards building wealth. To answer your question directly, we would not consider lowering the rent or covering utilities without increasing the rent unless the market conditions dictated. We have worked hard to put ourselves in this advantageous situation. My wife and I both have good jobs but have chosen to live off less than 30% of our take home income. This has put us in a position to be able to be real estate investors.
We solved a problem for the sellers who were looking to sell all of their property and retire to a lake house and live out the rest of their lives in peace and simplicity. We paid them a fair price for their property and conducted the transaction in such a way that was a win win for each of us.
When we listed the units at $995 without including heat or electricity in the rent, we had an exceptional amount of interest. We had to turn down several well qualified couples simply because we didn't have any additional units. This part broke my heart. If we had listed them for less, we would have had even more interest. My wife and I take pride in how well we take care of the units, and in my opinion, they are hands down some of the best 2 bedroom units in town. 1200 square feet with views of the river in a great walk able district. We keep the landscaping well done and are very quick to respond to any issues that the tenants bring up. Our tenants are very happy in our units and glad to pay us what they are worth.
We do not feel guilty for getting an excellent return on investment or for building wealth. After all, we are the ones that have to carry the risk associated with owning this property and we need to be able to sleep well at night knowing that we will still be able to pay the mortgage and fix the furnace if it dies on Christmas eve.
One of our tenants is actually an older couple that have been real estate investors for years and I would assume have a net worth much greater than ours. They own a local business in town and are happy to pay us the rent that we have asked for in return for a nice place to stay and non of the hassles of home ownership.
My wife and I have a fundamental belief that building wealth increases our ability to impact the lives of others and give back to our local community. Right now I travel 100 miles each way to work and work well over 40 hours per week on average. We are on a journey to buy back our time so that we can be more involved in the lives of our children and so that we can transition our careers to passion projects.
Thanks for asking such an intelligent and thoughtful question. We take a lot of pride in providing nice, clean, safe places for people to live. We are proud of the choices that we have made and continue to make day to day decisions to live well below our means and invest a large portion of our expendable income into our futures.
One last thought. This property has 8 parking spaces. My wife and I drive the two least expensive vehicles parked on our lot.
I'd like to hear some more opinions on this matter. I think that there is much more to being a real estate investor than simply numbers on a spreadsheet.
