The news is not all bad.
Buy and hold real estate investors are doing quite well in spite of the gloom and doom talk of higher interest rates and higher prices.
And that brings me to one of my most favorite subjects. The metamorphosis of the humble [tag-self]tenant[/tag-self].
What makes today’s tenant so contrite and pliable, yet kinder and gentler to deal with?
A market where prices have gone up;freezing him out of homeownership.
I can’t tell you how many tenants we have lost over the last five years because of the easing of credit which aided them in the buying of their first homes.
Even those that we thought didn’t have “the credentials” managed to get the loans.
This was a new phenomenon that we really hadn’t seen before. (I work with my 81 year old Dad who has been investing for 50 years).
As we all know it all happened because interest rates were at a 40 year low. Naturally they didn’t stay there long.
The smart [tag-tec]tenants[/tag-tec] got out and into their first homes fast while the getting was good.
Now the music has stopped.
Here’s the point. They have to do business with you now.
They have to have a place to live and if you are a buy and hold real estate investor who has done your homework you’ve got the roof.
So what’s changed exactly?
Here are the 5 statements most likely you will be hearing in such markets as Nashville, San Jose, Seattle, Salt Lake City, Austin, Portland, and yep, San Diego and San Francisco.
1.“How many people have been looking at this unit?”
Translation: “I’ll take it now because I know I don’t have that many choices. Nobody is giving any deals.”
2.“You mean it’s higher than it was last year?”
Translation: “Okay, okay, I’ll pay it, even though I won’t be getting that new custom built computer because of you.”
3.“You’re not going to give me a new carpet? What if I don’t like it after you have it cleaned?”
Translation: “I know it will get dirty again just as soon as I move in but since you’re charging me a clean-up fee (only legal in some states) I wanted to make sure I get my money’s worth.”
4. “What if I don’t like the neighbors, it’s too noisy, or that train passing through bothers me?”
Translation: “I’ll tough it out. I know I will have to pay even more for a more perfect environment that almost totally pleases me .”
5. “You won’t be able to get an air conditioning repair man out here at a reasonable price on a Sunday afternoon?”
Translation: “Okay, I’ll wait it out until regular business hours.
After all, paying double for a simple repair job on a weekend that was probably my fault anyway ,since I didn’t pay attention to the compressor freezing up, is not economically feasible.
Besides, I guess you’re old enough to remember when people didn’t even have air conditioners.”
See the difference?
Believe me, we are experiencing these new refreshing tenant attitudes right now with our properties in Nashville.
These are good times for [tag-ice]landlords[/tag-ice].