My Wife Thinks It's Mean To Raise Our Tenants Rent

Summary

Summary of "My Wife Thinks It's Mean To Raise Our Tenants Rent" – The Ramsey Show Highlights

Podcast Information:

• Title: The Ramsey Show Highlights
• Host/Author: Ramsey Network
• Description: A quick, daily dose of advice on life and money in under ten minutes. Features experts like Dave Ramsey, Ken Coleman, Rachel Cruze, Dr. John Delony, George Kamel, and Jade Warshaw. Part of the Ramsey Network, delivered seven days a week.
• Episode: My Wife Thinks It's Mean To Raise Our Tenants Rent
• Release Date: April 7, 2025

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Introduction to Joe's Dilemma

The episode begins with Joe reaching out to discuss a pressing financial and personal issue regarding his rental property. Joe and his wife have been renting out a side of their duplex for over two years. Initially, the rent was set at $600 when they purchased the property, but over time, it's been raised to $750 with plans to increase it to $950.

Notable Quote:

“We live in a three-bedroom side and we rent out the two-bedroom side.” – Joe [03:37]

Joe explains that their mortgage has increased from $1,350 to $1,480 due to changes in escrow, and the current rent isn’t covering even half of the mortgage. This financial strain is the crux of his concern.

Financial Advisor's Assessment

The financial advisor swiftly identifies that Joe's investment is currently unsustainable. They highlight that the rent isn’t covering the mortgage and express concern over the financial viability of the arrangement.

Notable Quote:

“You've made a terrible investment, Joe. I mean, you're literally losing money.” – Financial Advisor [02:33]

The advisor questions the rationale behind purchasing the property, especially given that it's not generating sufficient income to cover the mortgage. Joe reveals that the primary motivation was his wife’s emotional attachment to the house.

Evaluating the Property's Market Value

An expert steps in to assess the property's worth and the local rental market. Joe mentions significant investments in renovating the kitchen and bathroom, totaling $46,000. Despite these enhancements, the rental rates in their area range from $1,100 to $1,350 for two-bedroom units, yet they are only charging $750.

Notable Quote:

“My brother-in-law just sold his house yesterday. He got way more than what he paid for it. The market is really great for selling your house.” – Joe [01:53]

The expert advises Joe to review comparable rentals (comps) in the vicinity, noting that $1,100 is already a high-demand rate in their market, making Joe’s proposed increase to $950 not only reasonable but necessary.

Emotional and Religious Considerations

A significant portion of the discussion delves into the emotional and religious factors influencing Joe's wife’s reluctance to raise the rent. She values the tenant’s long-term residency and views the relationship through a Christian lens, emphasizing compassion and fairness.

Notable Quote:

“She's very heavy in her faith. She speaks at church and everything else. She can't separate the business part of it.” – Joe [03:32]

The financial advisor acknowledges the emotional ties but underscores the importance of financial responsibility. They assert that charging fair market rent is not unbiblical and aligns with ethical business practices.

Notable Quote:

“It's not unbiblical to charge rent for what rent is or charge what something's worth.” – Financial Advisor [04:44]

Communication and Team Dynamics

The conversation highlights a breakdown in communication between Joe and his wife. While Joe feels sidelined in decision-making, his wife remains the primary person handling tenant relations, which exacerbates the financial strain.

Notable Quote:

“I want her to turn it over to me and let me handle that part.” – Joe [05:15]

The expert emphasizes the necessity for Joe and his wife to operate as a cohesive team, focusing on their shared financial goals rather than external relationships.

Strategizing for Financial Stability

The financial advisor recommends that Joe and his wife sit down to align their financial goals, particularly their aim to be debt-free within five years. They suggest running the numbers to determine the exact rent needed and exploring additional income avenues if necessary.

Notable Quote:

“How are we, as a team, gonna solve this? So remember, you're on the same team.” – Financial Advisor [07:04]

This strategic approach involves realistic assessments of their income versus expenses, ensuring that the rental income contributes meaningfully to the mortgage and overall financial health.

Conclusion and Final Advice

The episode concludes with the financial advisor reinforcing the importance of unified decision-making and prioritizing financial goals over emotional ties. They urge Joe and his wife to collaboratively address the financial challenges by adjusting the rent to market rates and exploring other income opportunities to meet their debt-free objectives.

Notable Quote:

“Put the problem out there. You two together against the problem.” – Financial Advisor [07:25]

By shifting their focus from the tenant's longstanding residency to their financial well-being, Joe and his wife can work towards a sustainable and prosperous future.

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Final Thoughts: This episode of The Ramsey Show Highlights provides a comprehensive look into the challenges of balancing emotional considerations with financial responsibilities in property management. Through expert advice and practical strategies, listeners are guided on navigating similar dilemmas to achieve financial peace and stability.

Transcript

[Host]

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[Joe]

I have a question about me and my wife discussing raising the rent for our tenant next door. We lived here 20 years before we bought the house and the owner then didn't have a mortgage so our rent was really low. And he didn't change it for 20 years. He did raise it when he was thinking about selling the house. And so we bought the house two years ago. Her rent was I believe 460 or 465. We raised it when we bought the house to 600. So it's been. And then about a year, a year and a half later we raised it. It's at 750 right now. I want to raise it up to 950 just because I believe it should be offsetting our mortgage more. Our mortgage was 1350 when we first got it and it's gone up to like 1480. Something to do with something with the escrow. I don't really understand it all that much and I know someone else bought the mortgage since we had the first mortgage, I guess someone else bought it and blah blah blah. And you know, it's a different mortgage.

[Financial Advisor]

Company now but it's up to fifteen hundred dollars and your rent isn't even covering your mortgage.

[Joe]

Not even, not even, not even half mortgage.

[Financial Advisor]

Why did you guys buy the house?

[Joe]

That's exactly why I asked my wife. She loves the house because it's got a huge yard. The grandkids come over and play in the summer and all that stuff, blah blah blah.

[Financial Advisor]

But it's a house you don't live in. So is the, is the tenant.

[Joe]

We do live in it. It's a duplex.

[Financial Advisor]

We live in this duplex.

[Joe]

We live in a three bedroom side and we rent out the two bedroom side.

[Expert]

What's the property worth? Like would you buy it for 167? 167,000?

[Joe]

Yes.

[Expert]

And what's it worth today?

[Joe]

We renovated the kitchen which was 34,000, the bathroom was 12,000. I don't know what that brings it up but from what I was told, my brother in law just sold his house yesterday. He said he got way more than what he paid for it. He said right now here the market is really great for selling your house. But she doesn't want to sell the house.

[Expert]

Well, have you looked to see like what are comps for rentals like that in the area?

[Joe]

Yeah, if you can get a two bedroom for 1100, you are lucky there they go from 1100 to 1350 in our area, and that's within a five mile radius of our home. You can't, you can't find it. You cannot find an apartment for sure.

[Expert]

Okay.

[Joe]

These apartments are.

[Financial Advisor]

So my question is, I mean, on your end as the investor, you've made a terrible investment, Joe.

[Joe]

Exactly.

[Financial Advisor]

I mean, you're literally losing money. I mean, it just doesn't. That makes no sense. So. Yeah, so. And then on top of that, what market value is asking for your investment? You're. You're charging half of that. And I understand why, probably from an emotional level of the sweet lady that's lived here for 20 years. And, and I get that. But you guys don't have, you don't, you don't have the financial means to be a blessing to her because you, you have to pay a mortgage. So that's, that's the part of debt, you know, and again, not harping on you, Joe, but. Yeah, like, you, you're, you're in a system now, and it'd be unwise for you and your family to be basically paying a mortgage on like, you know what I mean? Like paying part of her mortgage, paying part of the rent.

[Joe]

Exactly. That's what I feel like. We're paying half her rent.

[Financial Advisor]

Yeah, I mean, that's what you're, that's what you're essentially doing.

[Joe]

And so, like, we're Christian. My wife is very heavy in her faith. Like, I mean, she speaks at church and everything else. I mean, and she's like looking at her like her mom and a friend, and she can't separate the business part of it where you've got to raise this rent up. You want. She wants to pay the house off in five years. You can't do it with the rent we're getting.

[Expert]

Who, who manages. Who's the main driver of the landlord relationship? Is it you?

[Joe]

No. Apparently no. It's my wife.

[Expert]

Oh, okay. Because I was gonna say this might be a time where she, you know, if she feels like this is my friend, this is how I see this person. And, and maybe the separation is. You're the one who's kind of like taking over that.

[Joe]

I did do it last time. I'm the one that did it last time. But she says, oh, I just feel like it's. We're going up to now. I did. She degreed yesterday to go up to 950. Okay. But that's still.

[Expert]

Well, just. There's no moral, there's no moral issue here. Like, there's nothing. I mean, you mentioned the Christianity thing. I'm like, there's nothing. They're not doing anything wrong. There's nothing. That's right.

[Financial Advisor]

It's not unbiblical to charge rent for what rent is or charge what something's worth.

[Expert]

Yeah, yeah.

[Financial Advisor]

Joe, I feel like you and your wife are completely on separate pages here from the. From buying the house in the first place to now.

[Joe]

I didn't want to buy it. I didn't want to buy it.

[Financial Advisor]

So why did y'all buy it?

[Joe]

She wanted it. She wanted it for the grandkids, for the young.

[Expert]

Yeah, but you're still complicit in that. Like, you have to also at this point, once somebody says, I want something, you say, I don't want it. But once you go along with it, now you're with it.

[Joe]

You know what I mean? But I want her to turn it over to me and let me handle that part.

[Expert]

Yeah.

[Joe]

You know what I mean?

[Expert]

Yeah, I do. And I think probably it's for the best because some people, like, it takes a level of like, to be able to stand your ground in business matters.

[Joe]

You rent it just 600. She was like, oh, I'm taking aback. I can't believe you did that. And like, I'm like, are you serious?

[Expert]

Okay.

[Financial Advisor]

Are you guys mortgage? Yeah. Okay. Everything else, Joe, like, from a financial standpoint, are you guys on the same page about what you're wanting out of life? Like, of being debt free and all of that? Okay, so you. You and her.

[Joe]

So this is the big Ramsey financial peace thing at church.

[Financial Advisor]

Okay, so this is.

[Joe]

This is why it boggles my mind.

[Financial Advisor]

Yeah. So you guys together? Joe, I. The neighbor is a side issue. It's really you guys being. Being on separate pages. So you all. Tonight, I would run the numbers and just say, okay, what is our goal? Our goal is to be debt free in five years or whatever, you know, you guys said. Or she said she wants to have.

[Joe]

The house paid off in five years. So then we keep it for 30 years. So then $46,000.

[Financial Advisor]

I hear you. I hear you, Joe. I hear you. So listen, if that. If that what has to be true for this to come to fruition, well, that means we have to pay X amount every single year that breaks out to X amount per month. So we either are going to have to find that from our income and we're both going to have to work extra. We're going to have to raise or we raise a rent over here to meet market value. Again, you're not. You're not. You're not being corrupt to this neighbor and, you know, taking advantage of her or, you know, that's not the case, you are running comp. So.

[Expert]

And the neighbor's still there. So that's the big thing. You've raised rent a couple of times, and she's still there.

[Joe]

She says six kids that are grown, and her son actually pays the rent. He sends a check to our account.

[Expert]

Yeah.

[Financial Advisor]

So. Yeah. But again, I want the neighbor to be the second. I don't want the neighbor to be discussed. I want the. I want the numbers to be discussed. What has to be true for us together with our goal to. To pay this off in five years or whatever? The goal is that you guys decide, here's our goal. What has to be true? Then the numbers are going to lay out the element, and either the goal's going to change or how we get to that goal is going to change by raising rent and other. And other factors. But you guys joke together. You two are a team. Out there is the problem. That out there is the problem. The mortgage is the problem. How are we, as a team gonna solve this? So remember, you're on the same team. You sound like you're fighting at each other. Put the problem out there. It's you two together against the problem.

[Host]

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