Tuesday, August 18, 2015

The Entitlement Mentality In America

This Blogger recently went to a Republican Luncheon in Reno, Nevada where I live.   There was an invited speaker from Breitbart, who purported to be involved in Conservative election campaigns.   He was a young guy with a primary focus on protecting 2nd Amendment Gun Rights.  But then he mentioned that he had worked on a campaign in Michigan, to defeat a Republican in the primary, who ended up winning, that had supported state legislation taking the number of days for tenant eviction from 180 down to 30.  This young man, who obviously has never owned rental property, went on to say that is was the result of "greedy landlords" seeking to throw people out of their rental properties that had fallen on bad luck and could not pay the rent. 

This young man went on to say that it was unreasonable to think that anyone could vacate a property in 30 days, saying that the 180 day period was perfectly reasonable.  As someone who owns rental properties, I could barely contain myself until it came time to ask questions.  Clearly, I am very sympathetic to the poor, or anyone who has fallen on hard times, which is why we donate a lot of money to various charities and pay taxes that support Unemployment Insurance, Welfare, Food Stamps and Disability benefits, not to mention a million other Socialist Schemes that are supposed to help these very same people.   And, whatever happened to the idea that everyone should have 6 month's income in savings as a rainy day fund. 

I asked this young man why he would think that anyone should be able to live in one of my rental properties for free for one day, 30 days or any number of days.  In attempting to educate this young man, I explained that just because the tenant cannot pay the rent, for whatever reason, that my mortgage, property taxes, maintenance, HOA dues and other expenses do not stop.  And, why would a landlord, that invested hard earned money to buy the rental property in the first place, do so if there was an expectation that a tenant could live rent free for any amount of time, for any reason, no matter how sad the case.  

While we give a lot of money to charities, our businesses are not charities.  We expect a Return on our Investment (ROI).   And, specific to rental properties, if we earn 6% before income and other taxes, we "greedy landlords" are lucky.   The fact is that the only reason to invest in real estate is in anticipation of appreciation caused by inflation.  Otherwise, rental properties, given the headaches that often come with them, would not be the best investment.

Clearly, this young man, who purported to be a Conservative was clueless.   He represented the Entitlement Mentality that exists in the United States.    What he was saying is that a property owner should be more than willing to allow someone to live in their properties rent free if they could not pay the rent.  It is actually the equivalent of stealing. That may be OK for government housing; but it is not OK for privately owned properties. 

No one should have an expectation that they can live in a rental property, free of charge, for one day, let alone 30 days or longer.  If that became the norm, there would be no investment in rental properties and then where would we be as a nation, since many young people in particular cannot afford home ownership.   This would just drive rents through the ceiling because of a little thing called supply and demand as occurs in many major cities now. 

Renters of all ages would end up living with their parents, other relatives or friends until they could afford to do otherwise.  We need more people willing to invest in rental properties to keep rents reasonable.  Making eviction difficult or impossible would cause investors to put their monies in other investments, which would drive up the monthly rent.  That is the real world we live in.   This is another lesson in Economics 101.     

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