Landlords differ in how they define rental property. But how can this be? Doesn’t residential rental property have a single definition? Objectively, yes. Let’s paint a picture of the scenario at its most basic level: I own a home that I do not live in so I allow someone else to live there in exchange for paying me monthly rent. What could be so complicated about that? Well, as every landlord knows, a lot. Partly because what residential rental property is depends on who you are asking. So, subjectively, there is not a single definition. To keep our conversation focused we will define rental property from the perspective of landlords. We will categorize landlords by how they came to own rental property to begin with because how a landlord acquired their property will determine how they define it.
So, how do landlords come to own residential rental property? There are two types of landlords: the intentional investor and the accidental landlord. The intentional investor is the person who seeks out and purchases a rental property in hopes of generating a return through some combination of rental income, appreciation, and tax savings. The accidental landlord is someone whose life circumstances are such that they happen to end up owning rental property, typically due to inheritance or purchase of a second home. The overarching objective of the intentional investor is to ethically maximize return on investment, or ROI. So for the intentional investor, rental property is just that – an investment. On the other hand, accidental landlords as a group do not have a single overarching objective. More often than not, accidental landlords are hoping to make a modest profit and keep from drowning in all the responsibilities that come with providing housing for others. The stress is compounded by animosity towards landlords in forums such as Reddit. For the accidental landlord rental property is just another responsibility, albeit often reluctantly managed.
This is not to say there is no overlap between how the two aforementioned groups of landlords define rental property. It is quite possible that the accidental landlord sees their rental as an investment and aims to ethically maximize return. Similarly, it is quite possible that the intentional investor, whose intention was to make a wise investment, ends up barely keeping his head above water. As a matter of fact, what anyone who has owned rental property soon finds out, it is not immediately clear how to maximize return. To maximize return, a landlord needs to have the necessary skill set, knowledge, personnel, and time. More often than not, considerations of alleviating anxiety and minimizing risk, both the tenant’s and landlord’s, trump considerations of return.
In RentalHouse Property Management blogs we will look at residential rental property from the perspective of managing property and bring some clarity and focus to the aims and objectives of landlords. The intention of our blogs is not to provide a legal guide, as many legal guides have already been written. More so our aim will be to make sense of the dizzying world of residential rental properties. We will argue that the objectives of tenants and landlords are generally not at odds with one another. After all, the tenant is the landlord’s customer.
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