Well, it's official folks. We signed a rental reservation form and faxed it over. Right now, our applications are being run and, if we're approved, we'll plunk down a deposit on the apartment community in Phoenix.
There was a moment of panic when I saw a rent that was $676 instead of $605. I checked my notes and found that I had, indeed, been quoted a price quite close to that based on available units. (Of course, I didn't find this out until after calling and making an ass of myself.) I had latched onto the $605 figure since it was the base price. The $676 is after w/s/g fee ($35), pet rent ($15) and a couple small miscellaneous charges, such as 2% tax charged in the area.
When the leasing agent emailed us the documents to download, print and sign, I noticed a document called "upgrades." Curious, I opened up the pdf.
HARDWARE UPGRADES: $ 5.00 /mo
Nickel Brush Door Knobs
HARD WOOD (vinyl) FLOORING: $10.00 /mo
Recommended w/ White Cabinets
RESURFACED COUNTERTOPS: $10.00 /mo
RESURFACED CABINETS (WHITE): $15.00/mo
REDUCED PACKAGE COST $40.00/mo
(We Pay Apx. $80/mo)
YOU GET IT FOR ONLY…. $30.00/mo
We pay only $30 a month for something that costs them $80?! Wow, how selfless!
Those upgrades are not a monthly fee the community pays off. They're a one-time fee that is paid by the time you move in. (This is, obviously, minus repairs that can't be charged to the renters upon move out, such as new paint or carpet.) The community isn't being nice to its renters, it's trying to get them to pay for the upgrades the community wants.
Don't get me wrong, I'm well aware that renters pay the price one way or another. But presenting the upgrades a monthly cost to the community is just disingenuous! My guess is that the $80 figure is derived from a 12-month lease. IE, it costs them about $1000 to upgrade, so they can say to a renter signing a 12-month-lease, that they pay the equivalent of $80 per month. Meanwhile, they're only charging you $30. Because they're such good guys.
The truth is quite different. Most renters stay past their initial lease. So if the renter stays two years instead of one, the community has recouped 75% of its outlay. Once the renter passes the 32-month mark of living there, the community is officially making money on its outlay. While still presenting the renter with the "opportunity" to save.
And, yes, arguably upkeep has to be performed. But if it is to the upgrades -- a scratched floor or dinged door knob -- that comes out of the renter's deposit. The community doesn't have to pay for more upgrades. Once that original renter leaves, the community can continue to charge $30/month as an upgrade fee: Live here for $670 or pay a little more for one of our "updated" apartments.
I find the whole process a tad distasteful. If you want to charge more for upgraded apartments, that's well within your rights. Plenty of places do it. But they simply fold it into the rent. Lots of leasing agents quote the rental rate and then quickly add that the apartment includes upgrades, like all new counters, nicer appliances and brushed-nickel fixtures.
People understand the inherent value of a re-done apartment. They're willing to pay a little bit more each month. Even if we had been quoted $700 for the place, along with the information that it had been revamped, we probably still would have taken the place. It was still the best option, given the area we wanted to live in.
But don't make us feel like somehow we're "getting one over" on the community. Don't tell us it costs you $X per month. It's a cheap ploy and it's not true. Your costs are toward permanent value in the community, which equal higher rent (and, thus, higher profits).
Did you prorate out the purchase/development costs as monthly expenses when the first tenants signed up? All while telling them you were "only" charging them the basic rent? No. Of course not. Because it would be misrepresentation. When you spend money in upkeep of the property it is to keep money coming in as rent -- preferably higher rent.
Also, remember that your business expenses are tax deductible from your profits. That means your costs aren't nearly as high as you're claiming. That $1,000 spent renovating goes directly against $1,000 in rental income. So, in some ways, it actually pays for you to upgrade.
So go ahead and charge us more. But please, for goodness sake, don't pretend you're doing us a favor. You're a business. You're there to make a profit. We get it. We accept it, even. It's not like we choose to live in these places just for the opportunity to give you money. We're both self-interested parties, and we're fine with that.
It's only when you pretend to be in the business of selfless acts that we call you out. Call a spade a spade. Raise the rent if you want to upgrade apartments. Just don't pretend that it's for anything other than your balance sheets. We know better.