I am a landlord and I am so happy I survived Covid.
I was afraid that my tenant was not going to pay the rent, I would be stuck paying municipal taxes, insurance, condos fees, school taxes, maintenance, and the mortgage without having any revenue from my property to pay for all those expenses.
Tenants have a misconception that landlords make a lot of money, they think that the rent money goes straight into their pockets, but to be honest, in the first few years, most landlords don’t many any money at all, they barely cover their expenses.
Most landlords are individual investors, including “mom and pop” landlords who own a few units as their primary source of income. Some rely on those properties to fund retirement. At the same time, there are tenants who are abusing the eviction moratorium to dodge rent, with no intention of ever paying it back.
The risk landlords take on is high: they take the loan, risk foreclosure if they can’t pay the mortgage, and could potentially lose everything. It’s an extremely risky position. In most cases, the earnings don’t compensate for the amount of risk, labor, and stress involved with being a property owner.
Most landlords have a full-time jobs because they don’t make enough money to live from their investments.
When I bought my first property, I asked a friend to lend me money for a downpayment (I paid her interest for the loan), and I borrowed the rest of the money from the bank. I financed my property 100%. I didn’t have any room for error.
During the first year, I wasn’t able to afford insurance or any maintenance, I didn’t have a provision for vacancies either. It was a huge risk, I was counting on everything going perfect. Fortunately, nothing went wrong.
It was only during the second year of ownership, after I increased the rent by 1%, that I began to have a bit of cash flow for emergencies and a reserve fund for vacancies.
Now it’s been more than 10 years since I have been a landlord, and I am happy to say that I survived, but I am also quitting.
I realized that the reward was not worth the risk and the effort involved in being a property owner. I just sold my property at a modest profit.
There were rumors of a rent moratorium due to the pandemic.
I am lucky that my tenant was able to keep his job and pay the rent every month.
During Covid, no one expected groceries stores to give their food for free, in spite of the pandemic, but many people were talking about a rent strike. Many tenants decided not to pay the rent, putting the landlord in a difficult situation, because the landlord still had to pay all the expenses related to being a property owner.
Most landlords don’t make much money for their properties. Their properties, in most cases, are their retirement account. They gambled their future in their properties and they deserve some compensation for their product and service.