Sunday, October 10, 2010

Should I rent to this nice couple?

They broke up in the past; now they want to live together again. They are both handicapped and they are nice. Should I rent my vacant rental apartment unit to them? This was the paraphased question I read on a real estate forum. I want to share my answer with you:

When I buy shares in a company, there are many reason why I may decide to do so.
  1.  I may buy shares because they have a good track record and have gone up already 40% last year. The statement: 'Past performance is no guarantee of future performance' comes to mind. In fact, when shares have already gone up quite a bit then chances are that the company's merrits have already been included in the price and therefor the risk for under- or non-performance has gone up substantially. I bought such shares and over the long term I made OK money.
  2. I may buy shares because they have fallen dramatically while the only reason for falling appears to be that we're in a bearmarket. There is the risk that I try to 'catch a falling knife'. So maybe I should wait until prices stabilize. On the otherhand overall risk is now a lot lower than before the share price fell. This is the time to buy and you tend to make (often after some stomach sickening moments) excellent money.
  3. I may buy shares because the investment looks somewhat profitable and I like being a progressive and responsible member of society. I usually lose money in such cases. Sorry I don't do story-investments anymore I have learned the hard way.
  4.  I invested in recreational properties and confused my 'Belize' with an investment. I lost my shirt!

 There is investing - being in business and there is being nice for the world around you. I have learned that investment/business in those cases comes first. Once an investment works out I can always give some of the profits back to society. Whether it is a landlord on a small scale, or billionaires like Bill Gates and W. Buffett. It does not matter, you cannot run a charity and a business as one. That does not mean you have to behave inhuman, but neither does it mean that you have to take on more risk than you have to. Greg [this guy gave a lot blunter but correct reply: do not rent] is absolutely right - I wanted to say it more diplomatically because from the way your question was formulated I figured you had already made up your mind trying to be a nice guy.
You don't have to be a nice guy. There are enough vacancies that other landlords may fall for this couple. You have to look out for number one and chances are that this couple will break up again if not soon, then very soon and you walk around without rent-checks.

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