Landlording is like dating: Typically one experiences a series of non-committal short-term relationships before settling for the right one, who will last for a long period of time. One thing is certain, with dating as well as with landlording, if you stay around long enough, you will always find someone who will stay with you for a long period of time.
Of course I found the assertion self-evident: if one relationship proves to be short-term, I just wait for the next one.
In my landlording experience, anyone rents less than one year is a short term tenant, and anyone rents more than two years is a long-term tenant.
I started to own rent units back in 2004 in order to manufacture capital gains to take advantage of my capital loss. Over the years, I have seen many tenants came and went. Then during the past three years or so, I haven’t had to change tenants.
Having a long-term tenant is a landlord’s dream: you only have to wait for the rent money come in each month without worrying about tenant turnover.
When tenant turn over, you have to prepare the unit for the next tenant, who at least will demand a detailed cleaning of the house. Some may request all the walls to be painted, carpet replaced, landscaping, and many other updates.
All these things cost money and eat into my bottom line.
Having a long-term tenant in the house, I can forget about all these expenses, instead, I can sit back and relax and see my bank balance go up.
Over the years, I have seen very few voluntary non-renewal or early termination of the leases. Instead, more often, tenants moved because they could not afford the rent and after a couple of months, they are forced to move.
Usually when someone is forced to leave, he/she is not going to treat my property nicely, incurring unnecessary repair expenses.
So by all means, I have the tendency to keep a tenant in the house if in long run the tenant can afford the house, event it means charging slightly less market rent.
Still, after all the efforts, some tenants just had to move. I have several horrible stories, which I may go deeper in the future.
For each of my houses, I had to experience several short-term tenants before I got lucky and end up with someone who intend and can afford to stay for several years.
I realize that all my tenants are currently long-term now and my intention of selling the properties are forcing them to leave. In two of the houses, it means kids may have to change school.
Why don’t I keep the rent units for as long as the current tenants stay? In the future, after they move out voluntarily, I can then fix the houses up and put the them for sale.
After all, a passive 15-20% return is still very decent return.
Hopefully, in the next couple years, the house prices appreciate a little bit.