In the aftermath of the Brisbane floods, there were lots of stories circulating about the prospect of rents ‘skyrocketing’ due to higher demand, both from misplaced residents and from workers coming into the area for the reconstruction process.
BY VANESSA DE GROOT
I noticed that comments below those stories (on the internet) were quite often very scathing of landlords. Obviously written by tenants, they complained about ‘money hungry’ property investors, who are always seeking a buck and trying to get more out of renters, who can’t afford to buy a home themselves.
But while landlords were getting skewered for potentially rising rental rates, they were suffering in the aftermath of the floods, being unable to get any financial assistance, which has been of great concern for those landlords whose properties were damaged.
While money is being handed out (and rightly so) to residents who were impacted, which of course includes tenants, property investors have totally missed out. In fact, many have even regaled tales of being treated with disdain by people offering assistance, as soon as they find out they’re actually property investors.
The thoughts of many, I suppose, is that property investors can afford to pay for the damage out of their own pockets.
If they can afford to have an investment property, then it’s assumed they have squillions of dollars to play with.
I was even shocked to hear one of my friends – who’s renting a house in a flood-affected area, for which the landlord had to fork out considerable money to fix things like the hot water system because it went under – recently say "oh, don’t worry about the landlord, they’ve got plenty of money, they don’t deserve anymore". This is coming from someone who used to be a landlord themselves!
While some investors might be in a situation where they do have surplus funds at their disposal, I believe for the vast majority it’s almost the total opposite. Many property investors are just getting by; they’re trying to further their wealth prospects for the future, but in the process they’re certainly not flush with money. Often they’re meeting their commitments and don’t have a whole lot left over at the end of the day. So why should they be punished for wanting to secure themselves a good future?
Where does this negative attitude towards landlords come from? Is it merely the tall poppy syndrome, and people just don’t like those who seem to have more than them?
Or does it perhaps come from the way renters are treated? I used to be a renter and I can confess that I, too, had a lack of respect for my landlord, which admittedly, was probably a result of the way I was treated by the property manager.
Without property investors people who couldn’t afford to buy homes of their own wouldn’t be able to have a roof over their heads, because there wouldn’t be any homes to rent. So, in a way, shouldn’t we all be glad that there are investors out there?
Is there a way tenants and landlords can live harmoniously? I strongly believe that a tenant – as long as they’re doing the right thing – should be treated just the way that a landlord would like to be treated. And in most cases, that means they need to make sure their property manager is treating them well.
If the tenant is respected, surely they should also respect the landlord? That’s a mutually beneficial situation for both parties, I would have thought.
Once you’ve got a good tenant it’s beneficial for a landlord to treat them well, so they can keep them. I think perhaps even giving them a small present, like a bottle of wine or box of chocolates, after they re-sign a tenancy, could be a good way to maintain a good relationship.
The relationship between a landlord and a tenant should be thought of as a business-client relationship, just like it’s a business arrangement. And usually in business you can keep your clients happy if you treat them with respect and every now and then do a good deal for them. In tenancy agreements ‘a good deal’ might be not upping the rent by, say, $40 in one hit, but keeping increases minimal, especially if you’ve got a good tenant.
Similarly, in business, if a client is respectful towards the person providing the service, often that person is more willing to be of assistance and accommodate their needs.
Perhaps if tenants and landlords viewed their relationships more like this, it would be a more harmonious and understanding union.
What do you think about the attitude of tenants to landlords? Do you think there’s animosity from renters towards landlords? And do you think landlords treat renters well, in general? Is there anything we can do to improve relationships between the two?
Vanessa De Groot is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au
As someone who arrived from the UK 3 years ago with money in the bank to purchase a property and wanted to rent for a year while we scoped out the areas, we could not believe how we were treated like 3rd class citizens by rental property agents. We did not get to meet any landlords but the one we dealt with via the agent was awful. We have heard other horror stories from new migrants. The attitude towards tenants in Australia is shameful. The agent we dealt with lost out on a property sale commission because we refused to deal with them on a house sale. In our’s and our friends’ experience, the assumption is that if you rent, then you can’t afford to buy a house and therefore you are not worth treating with any degree of respect.
Comment by SusanD — February 16, 2011 @ 4:06 pm
I would have to agree with you, SusanD – I think there’s definitely an element out there that do have a bad attitude towards tenants and treat them with less respect than they deserve. I’ve even heard some people call renters ‘low life’, which I’m completely offended by as I’ve rented before and so have my family and friends – they still do! Why on earth would someone be less worthy because they’re renting rather then owning a property? I understand that renters may have a bad name in some ways because there’s an element who don’t treat properties with respect, but let’s face it, lots of people don’t treat properties they own with respect either. And what’s more, owners default on payments, just like renters do! Renters are an important part of the equation – without them you wouldn’t have a very viable property investment – and they should be treated just like anybody else.
I’ve recently been searching for a property manager and one of the things I’ve found is that until I explain that I’m an owner wanting to rent my property out, they often have a less than friendly manner on the phone. I’ve wondered if this is because they think I’m a tenant? Or maybe they’re just used to dealing with difficult situations so their manner is less than affable all the time.
I actually received some information today about the fact that property investors are increasingly renting themselves, so they can live where they want and buy properties in growth areas elsewhere.
I wonder if this will help to improve the situation at all? Maybe if they see what it’s like they’ll be more aware of the way tenants can be treated?
I do believe, however, that not all tenants are treated badly – I think there are many investors out there who endeavour to reward renters that treat their property well and pay on time. I just hope there are others out there who can relay a nice story about being treated well by a property manager or a landlord.
Comment by Vanessa De Groot — February 16, 2011 @ 5:09 pm
Thanks for your reply Vanessa. I think it will be a long time before this deeply embedded attitude towards renters changes in Australia. In Europe many people rent all their lives and it is not looked down upon. I have retired friends in Brisbane who have a couple of investment properties in nice suburbs. I asked why they employ an agent when they have time to look after the rentals themselves. They looked at me as if i was suggesting something gross. “But then we’d have to deal with the TENANTS!”, they said! As if tenants were the untouchables. I am now in a situation where I want to rent out my property – it does not seem to be a good time to sell. I would like to find my own tenants and organise it myself!
Comment by SusanD — February 16, 2011 @ 5:39 pm
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Pingback by Tweets that mention Australian Property Investor :: API Property Blog -- Topsy.com — February 16, 2011 @ 6:31 pm
great article, well said and well done! Thank you
Comment by Stacey Holt — February 19, 2011 @ 12:26 pm
Excellent article – thanks.
My partner and I own a couple of properties that we rent out.
We can’t afford to live in one of them and do wonder if the tenants realise that we are paying almost as much as they do to the bank over and above the rent we receive from them.
We choose to self-manage the other property. This is mainly due to a bad experience with the local agents. We find that we can do a better job at responding to tenants’ needs by being a little more involved. We have greater control over costs but the greatest advantage is that we have a very human relationship with our wonderful tenants. Everybody wins!
I think having an agent in the middle can make it all too easy for each party to take the other for granted and do things to people that that wouldn’t if they knew them as real people.
Comment by Jasmine — February 22, 2011 @ 2:14 pm
you hit the problems with landlord/tenant relationship exactly right! The main problem being the ‘middle person’-property managers. They have little regard for either party often. I suspect they lie to both, or they are too lazy to even do the required inspections they are paid to do. A good one is worth their weight in gold! We have many investment properties and have more horror stories than good ones, and yes, I am surprised by how some people treat others property.
We are in this form of investment for our retirement, and we are not rolling in money as lots think re investers. In fact, we often ‘subsidies’ many of the terrible tenants rents by what it costs once they leave (I’m talking up to $8000) and what rent we have managed to get over the year leaves us well out of pocket! And don’t believe all the stories that insurance will cover damages, not so!!! With hindsight I would never go into property investment again, I feel so disillusioned by how it has been for us.
Comment by beth — February 22, 2011 @ 3:25 pm
My husband and I have a townhouse as an investment property, which we have had for about a year, and the first two lots of tenants were a bit of a nightmare and cost us a lot of money. This was due to pathetic onsite management, but thank goodness new management took over and they got some fantastic tenants in for us who have been there for the last 4 months.
We have just recently done up our 3 bedroom home of 8 years and are about to get tenants in it, whilst we have moved about 2km up the road to a lovely near new apartment with little luxuries like air conditioning, and now have no maintenance to worry about. We are paying less in rent at the apartment than the tenants will be paying to rent our house. It’s all about lifestyle for us, and in fact what put the idea in our head was a mention in API a few months ago about someone who owned a number of average investment properties and got so much in rent per week, but rented themselves so that they could live in a million dollar home but pay less in rent than what they are receiving for their properties.
By the way, we are far from wealthy – we have two young children, my husband is a tradesman and I’ve been out of work for 6 months. So any extra dollars that tenants cost us, hit us hard. Having said that, I leave a folder with a friendly welcome in it for our tenants at both properties, with our phone number in case they are in any way dissatisfied with the property manager. I am hoping that by being nice to them and not just being faceless landlords, that they will respect our property more and be more inclined to pay the rent on time.
Comment by Kim — February 22, 2011 @ 8:23 pm
We only use a property manager to find tenants for us. It takes time & resourses to do that job properly so we pay a PM to do it. We then manage the properties ourselves, we have very good relationships with our tenants who appreciate that we respond quickly to maintenance issues and treat them with respect. We also ring them if the rent is one day late, a property manager may do nothing for anywhere from 3 days to 3 weeks. We save many thousands of dollars each year & have a lot less stress. The only Property Manager that we have is for the 2 houses that we have in Queensland, we spend more time on these two, managing our property manager.
I think that there are no property managers who can manage rental properties well, or at least as well as we do. They are fine with good tenants who pay rent on time & look after the property but inspections are slack if they are done at all, they have no systems in place for timely collection of rent, water accounts are never followed up and their handling of maintenance issues is dismal. One property manager told me that I couldn’t accuse the tenant of stealing, after they took the timber wardrobe and the griller tray when they vacated.
Comment by Graham — February 23, 2011 @ 3:46 pm
1 million properties are negatively geared in Australia, so the assumption that the landlord has plenty of money is totally incorrect. They do not.
Investors have insurance, or should have. If they do not, too bad for them. Write the loss off against other capital gains.
You have a few to many false assumptions and incorrect conclusions.
For example….
32% of Australians rent and some of them own investment properties that are rented out. They are renters and landlords, the true uberbulls…..
Comment by Pauk — February 24, 2011 @ 11:47 am
Thanks for all your comments. This really seems to be a very controversial and prominent issue. The divide between tenants and landlords seems to be deeply embedded.
Many respondents here seem to think the answer could lie in taking out the middle man – property managers. Is this the answer? I’m just about to move out of my home to rent it out and I actually considered managing the property myself, but it just seems like too much hassle, and too much to get my head around, with different rules etc – for instance, with smoke alarms and processes involved if rent goes into arrears.
I do have concerns, however, about property managers. Many of you have mentioned that you’ve had bad experiences with property managers, and so have I. But surely there are some good ones out there? I certainly hope so! I will be soon putting my trust in one so fingers crossed they’ll do exactly as they have stated they will.
I think there’s a lot of merit in the idea about taking property managers out of the mix. Jasmine, you said, in managing one of your properties yourself, “the greatest advantage is that we have a very human relationship with our wonderful tenants”. I think you hit the nail on the head – putting the human element into things makes a big difference. As a tenant, if you know the owner of your property – and have a good relationship with them – you’ll feel more of an obligation to do the right thing by them and it’s the same for landlords – if they know they’re tenants they’re likely to be more inclined to do the right thing by them.
Putting a face to a name is a key factor. Let’s think about road rage – many of us will get angry in traffic in our cars and yell at other people on the road, and even cut them off, from the safety of the inside of our car. But the majority of people wouldn’t do the same face-to-face – you don’t scream at someone that walks in front of you in the shopping centre. Well, most people don’t.
Is this whole landlord-tenant tension caused by the dream we have in Australia of owning our own home? Do we look down upon those who don’t own their own home? As SusanD said, renters are respected in Europe, and there many people rent their whole lives – their culture is such that they don’t necessary aspire to own their own homes.
Kim – I like your folder idea – I might just have to adopt that practice myself!
Comment by Vanessa De Groot — February 24, 2011 @ 1:02 pm
There are good property managers out there, but they can be hard to find! Worth paying a bit more for a good one certainly!
I’ve recently sacked one who never returned calls or replied to emails, didnt call when he said he was going to, and on changing to a different manager have found the tenant had reported a list of maintenance issues to the manager that he had never even bothered to tell me about!
Of course the tenant blamed me for not fixing these, having no idea that the ‘middle man’ manager hadnt bothered to tell me about them. Maybe this is partly why landlords get a bad name?
My properties are negatively geared, I’m not loaded with cash (asset rich, but cash poor maybe) but I dont normally admit to being an investor as many will then assume that I am ‘loaded’.
Comment by Wendy — March 2, 2011 @ 9:03 am