A Small Price to Pay

So, Katie and Cole are looking to purchase a rental home. Luckily for them, they have found one. And, as luck would have it, there is a ready-made tenant in place.

Tammy and her seven year old son have lived in this home (under another landlord) for six years. They pay the rent on time. They take care of the home. The son goes to school just five minutes away. Grandma and Grandpa live around the corner and have watched the son since birth.

Currently Tammy is paying $800 a month. Truly a steal. This house could rent for much more. Tammy has told me she can swing $900.

Katie and Cole are buying this home for cash. Their monthly outlay (with home owners' association dues, taxes and insurance) is under $200. They want $950 a month. What did I think?

I think we are talking about $50 a month, or $600 for a year. What I explained to Katie and Cole was just that. What were they getting for a "loss" of $600? They have a tenant who hasn't moved in six years. Tammy takes great care of the home. She has put down roots and is truly happy where she is.

Meanwhile, Katie and Cole don't have a vacant home from the time Tammy moves out until a new tenant is found. They don't have to screen prospective tenants. They don't have to take a chance on a new tenant who might not be so kind. Katie and Cole don't have to pay for general maintenance and clean up when Tammy moves out. And, I assure you, the repair for the television Tammy currently has mounted to the living room wall will cost a good portion of the $600 they are "saving."

Conversely, what if Katie and Cole just came right out and asked for the additional $50 a month? Tammy might just pay it. But what if Tammy isn't stretching the truth?

I am convinced more drama takes place over a tenant living outside their budget than necessary. The tenant wants to stay. The tenant (normally) doesn't want to disappoint. The additional money troubles more often than not become the landlord's burden. And trust me, landlord's don't want to deal with a tenant's burden.

In this case, I happen to believe Tammy. I met her on Sunday. She and I were discussing baseball and she casually mentioned she cut her cable cut off because it wasn't in her budget. I saw the coupons sitting around the counter. Though we didn't talk outright about her rental situation, the conversation turned to the economy and her current state of affairs.

Tammy isn't a victim. She is trying to make it. She doesn't want to uproot her son. When Katie and Cole met her Sunday as well, they saw the same thing and they saw my point: $50 a month is a small price to pay to have a stable, long-term tenant.