Other formats

    Adobe Portable Document Format file (facsimile images)   TEI XML file   ePub eBook file  

Connect

    mail icontwitter iconBlogspot iconrss icon

Salient. Victoria University Students Newspaper. Volume 37, No 26. October 2, 1974

Profit and how a landlord figures it

page 26

Profit and how a landlord figures it

Sir,

Man being lashed by a whip of letters

I have read much about the evils of being a landlord and being a property owner myself, I think it is time the record was put straight.

Firstly I agree wholeheartedly with the condemnation of landlords who deal in substandard properties and who do not carry out the necessary maintainence. However the unilateral application of this condemnation to all landlords is far from doing justice to the majority of them.

I present below a sample of the accounts of a plot owned for three years, assuming it is a 'decent' property with rental of 10% of capital. Lower quality properties return as high as 20%. I have also assumed 10% inflation.

  • Purchase price $20,000.
  • Rental 3 yrs @ 10% 2,000+2,200+2,420 —6,620
  • Interest at 10% on 2/3 (13,000) of capital — 3,900
  • [unclear: Repaint] every 3 years — 1000
  • Land agents fees on sale (2½ % of 24,200) — 630
  • Legal fees and stamp duty — 800
  • Increase in capital value of 10% inflation —4200
  • Rates for three years — 450
  • Nett income - 4,240

On an investment of $7000, this represents a return of 18% p.a.

Since I assumed inflation of 10% this must be taken from the calculated return, to give an actual 'after [unclear: nflation] return of 8%.

The total actual money made therefore is $1817. From this I should deduct the hours I put in but being a student my time is free.

Your article in last week's Salient described these profits as enormous capital gains. For myself, I hardly consider this money worth the effort.

Landlords also must contend with tenants leaving in the night owing rent, and tenants leaving damaged flats, which generally cost more to repair than the board put up.

My first comment follows from your statement that housing being an essential, should be state owned and not a profitable business for individuals. I conclude from this that since food and clothing are essential to survival, all manufacturers and retailers of food and clothing should be non-profit state owned institutions also.

(Unsigned)