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7 Sep 2011

Banking on Mom and Dad

Yep, young professionals are having it tougher financially and are daily banking on mom and dad, or even on grandparents for survival. We are raising a back home generation. You may be remembering my post about my "about to be vacant" duplex. I am back to preparing it for rental and marketing it again, after just one year of doing so. My tenant's (soon to be ex) story goes...

By the way, she was the best tenant ever. I had a few maintenance complaints but nothing out of the ordinary. Money was in my account on time every time. One of those tenants you want to hold on to for a very long time. Unfortunately, after a year of a contract and a few months, she had a change of plan. I can imagine her sitting down with her balance sheet, as she should, and seeing the highest expense being rent. She emailed me, "I do not want to do this but the matter is off my control now because of the reasons stated on the letter." And yes, the letter attached was the one serving as notice to vacate the property. Yeah right, she gave me reasons too...."I have some financial problems and will therefore be moving back home".

Its sad that I am losing the best tenant, but I must say, Good for Her. If she still has a bedroom at home, and can stand the nagging that comes with a package, why not. She decided to forget the reasons she left home to start with, and objectively decided on banking with mom and dad again.

Forget the back home revolution, some of us are downgrading. Living in small spaces is more fashionable than a yellow dress. I must say, its quite sexy. Even I love small and intimate spaces, but with two kids, I just cant.

Beginning of 2010, my then young family tenants requested to be released from the contract before the end of the term. They were moving to a smaller and cheaper home due to changes in their finances and budget. I was impressed by that move, but still sad to be going back to searching for the tenant. Recession can teach a person a thing or two about themselves. Downgrading from a spacious family home to a tiny apartment has to demonstrate some strength in one's character.

The trend with investing in real estate follows the same trend. The first time buyers often rely on their parents and even grandparents to help them with achieving their dream of owning their first home. I found out from one of the National Association of Realtors publications that 24% of first time buyers in 2004 received gifts for a down payment from friends or relatives compared to 18% in 1991. Other financial help options include having adult children stay at the parents’ homes for longer than they would choose to, whilst they raise the down payment for their first homes. Some parents buy their adult children their first properties or cosign to secure them good mortgages. 

As I am traveling at the moment, my tenant agreed to show the place to prospective tenants at a fee we agreed on. Its good to build great landlord - tenant relationships. Here's to hoping I get an even better tenant.

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