Saturday, April 19, 2014

How to pay your rent with ease! by Lawrence Ladokun

Published:

Lawrence Ladokun

Troubled about paying your next rent? Read this.

I know how tenants can sometimes feel agitated when their rent is about to expire.

Some tenants have high blood pressure, sleepless nights, and tension in the home, and in other areas of life etc.

How would you view a professional advice that could solve that problem? This is what I intend to offer in this article.

You don’t have to bother again about how to pay your rent if you will take up my advice in this article. How would your landlord feel the next time you go paying him his rent with a bottle of chilled fruit wine and a thank you card? I hope he will not increase your rent… laugh.

 

How much is your rent?

Okay let’s start this way, calculate your rent on a yearly, monthly and daily basis and see if you are biting more than you can chew; for example, if your annual rent is N1.2 million. You can calculate your monthly rent as N100 thousand, that will be your annual rent divided by 12 months. Your daily rent will be N1.2 million divided by 365 days which would be N3,287.67 per day. Take a look at your business or pay checks, is it actually convenient for you to pay your rent? A research once showed that an average tenant spends about 60 per cent of their annual income in paying rent.

Please make a simple calculation of how much you are paying annually as rent.

Divide your annual rent by your annual income and multiply by 100 to get the percentage of your income that goes to the landlord and how many months in the year your slave for the landlord!

Annual rent paid =Percentage of rent paid annually

Annual income

E.g. Mr. Opi earns N720,000 per annum and pays a rent of N400,000 at Gwarimpa in Abuja for a well-spaced self-contained apartment. We would calculate his percentage rent as follows:

Annual rent paid (N400,000)

Annual income (N720,000)

Percentage of rent paid annually (55.56 per cent)

Lets round it up to 56 per cent

This means our dear Mr. Opi has 44% of his income left to do every other thing throughout the year. i.e. he now has an average of N316, 800 left throughout the year. That would average N26,400. Lets approximate it to N26,000 per month.

If he lives in Abuja, how much will he spend on transportation? If he has a car, what about fueling and maintenance? If he has a family, would he not have to feed them, clothe them, pay school fees…? He is setting himself up for a life time of poverty except he gets really wise and creates alternative sources of income! On a second look, we would assume his monthly salary is N720,000/12 which would be N60 thousand per month. So, if he pays the landlord, N400 thousand per annum, it means he labored and slaved for the landlord January to July (almost 7 months) before he can pay up his rent! If he is goes borrowing, he may be burying his financial future! Tell me my friend, is this not slavery?

A wise man once said “no man is truly free until he has financial freedom”! If you don’t have financial freedom right now, it’s understandable, but you must work towards it and give yourself a deadline! Pause and think about what I just said. You must work towards your financial freedom.

Let us assume another tenant, let’s call him Joseph Isa. He earns N1,700,000 per annum and pays N1,200,000 for rent in a nice location at Wuse, how will the Joseph Isa manage N500,000 among other responsibilities such as school fees, taking care of parents and other family relatives, saving and investment for the future, etc.

The bottom line of these two examples is that each individual should determine a maximum limit of his or her salary to be paid as rent on any property. Let me state it this way, each tenant should determine how many months in a year he would work for the landlord! This means the individual earning N1 million has no business in a property that is N500,000 per annum except he is willing to work from January to June just to pay the landlord!!!

Yet what do we see, individuals want to maintain statuesque thus “mortgaging” their financial future! Rent a property where you can afford! Simple..

 

A secret about rent review

You can effectively negotiate with the landlord when you have your cash at hand.

E.g. if your landlord or his agent tells you he is reviewing his rent from N500  thousand per annum to N850 thousand per annum, if you have your usual rent of N500 thousand you may pay the rent before the notice gets to you; or if you have been served the notice, you can write a formal response to him stating that you have the rent you normally pay as a sitting tenant and plead with him to accept it because you would not want to default in your rent payment.

If he insists on the review, you could negotiate effectively with N600 thousand and in the worst case scenario, N650 thousand! That is about 30 per cent increment. Compare this increment with your annual income and see if you can accommodate it. If you cannot, look for another alternative!

Some of the reasons why tenants fail to pay rents promptly

1. They rent a property beyond their present financial capacity. E.g. when a tenant has just won a contract and decides to rent a property at an expensive location because of the immediate profit and not considering the means of payment of future rent. Don’t be caught in this trap. Know your limits, then carefully plan your way into becoming financially independent.

2. Poor financial planning, this is a situation in which the tenant does not schedule his rent payment into his financial plan on time so as to make budget for the payment of his rent before it expires and starts running around at the “die minute” to pay his rent.“

3. Acquiring unnecessary liabilities, e.g. buying more cars means more fueling, more repairs, etc Invest your excess income.

4. Parkinson’s Law. A lot of people are still not aware about this law and that is why they never rise beyond their average financial status. The law states that your expenses will always rise to meet your new level of income and sometimes your expenses will exceed your income, if you let it. This is what keeps people financially grounded. Keep your expenses under control. Keep records. What did you do with your last salary etc.

5. Emergency situations, these could be as a result of loss of job etc. I encourage you to have different bank accounts for various areas of your life. E.g. open a recurrent expenditure account, investment account, rent account etc with one or more banks to enable you effectively manage your finances.

6. Indiscipline is another very important reason why tenants fail to pay their rent promptly. Abraham Lincoln once said “responsibility is the price for greatness.” Accept discipline in all areas of life, particularly with your finances and you will qualify to join the great.

7. The statuesque syndrome e.g. you are not successful if you are not living in Asokoro, Wuse, Garki, Maitama! All of these are lies!!! Haven’t you seen people who move from Wuse to Kurudu because they could no longer afford their rents!!! Be progressive, not retrogressive. Live at your level per time while you aspire for more!

Common alternatives that aid rent payment

Other means employed by tenants to pay rent include but are not limited to the following:

 

All kinds of borrowing

This is usually a last minute solution some tenants resort to bail themselves out of the pressure the landlord is mounting on them. This by no means is the best way out of but a lot of tenants bail themselves out by this approach. If you take this approach, I want you to please reconsider it. You are better than that.

Place a demand on yourself, and source for alternatives. But at best build up your financial base. Start by seeking professional help.

 

Overdraft

Overdraft as defined by the Encarta dictionary is the amount that an account holder owes a bank because he or she has withdrawn or debited from the account more than has been credited to it. Well, while this method is commonly adopted by a large number of people, it offers a temporary relief but is still not the best way an individual should live. You should be able to pay your rent with a smile… did I hear you say …ah!!

 

Housing allowance

This is another alternative source of rent payment particularly if you work with an organization that is big and generous enough to pay you your housing allowance in a lump sum and in advance. This means could really assist you in the prompt payment of your rent. What I would suggest here is that you should not use up all your housing allowance for rent payment but invest a sizable portion of it. It will not be a bad idea if you invest 20% of your gross annual housing allowance. You can conveniently use up the 80 per cent difference to get yourself a comfortable apartment.

 

Co-operative societies

I cannot over-emphasize the importance of leveraging in the affairs of life. Has it ever occurred to you that you may not be able to carry two bags of cement alone? But you will agree with me that it is far more convenient to carry two bags of cement with a wheel barrow! The cooperative societies are like wheel barrows, when its purpose is well defined and adhered to. If your church or Mosque has a cooperative society, join them! If it is work related cooperative societies, or other forms it may take, be sure of the seriousness of the members involved before you join. It is really a wheel barrow to assist you in carrying your “load”! If you don’t know about any, get your serious friends together and form one. Consultation with a professional will guarantee the success of such organization.

 

Automation of your rent payment process

You may leave a standing order with your banker to automatically deduct a particular sum from your account every month and post it into another account.

This other account may be known as your “rent account”.

For example, let us assume your annual rent is N780 thousand per annum, this would imply that you would be paying N65 thousand each month. Okay, let us assume you left a standing order

with your banker to automatically deduct N65 thousand every month when you receive your monthly pay and post it into another account. The account will accumulate to N780 thousand at the end of the year. I understand that the number one temptation is to withdraw from this account in the course of the year when you are in dire need for money, but with proper discipline you would be able to resist this temptation.

 

Pay Your Rent and Keep the Change

A caution about investment, when you have a lump sum of money, the temptation is to want to invest the money and make the money reproduce and then pay the landlord his money. Please consult a professional with a proven track record before you put your funds into any of such investments, in fact you may want to also consider getting a lawyer, just in case…

You know, some time ago a man made quite a large sum of money from the sales of his property, he then called me and gave me a large sum of money to help him invest in a quick money spinning investment in which you can get up to 300% of the amount investment in 6 weeks (please don’t bring your money to me I don’t invest in such get rich quick schemes rather, I can help you purchase land instead).

I told him to give me time to think about it and make my findings. I returned his money to him and told him he would lose his hard earned money if he invested it in the fraudulent money spinning investment! He was shocked. The “money spinning investment folded up two weeks after”! The bottom line is this, I will rather have you invest in land than in any other kind of investment or at worst fixed deposits etc where you are sure to get back your money, minimize your risk and pay the landlord smiling rather than to invest the money in something that would make your money ”vaporize” like a puff of smoke! Do you get the idea….good! The bottom line is that you can pay your landlord his rent with less than his rent by investing the rent saved to pay his rent.

 

Creation of multiple streams of income

There are three major aspect of money we need to master which is MAKING IT, MANAGING IT, AND MULTIPLYING IT (then repeating the process without losses).

There is no doubt in the fact that a lot of tenants would love to pay their rent as at when due, but there is too much burden on them hence the reason for default.

A statistics I once read said an average person who is gainfully employed has five dependants, in the light of this fact there is the need to have multiple sources of income. But that notwithstanding, you must calculate your way out of financial difficulties. Let me give you an assignment, if you would not mind. Write out 21 alternative ways in which you can make more money, which would enable you pay your rent promptly (send it to my email), if your answers are great, inspiring, workable and practicable we could go for lunch together and share some more ideas in a nice restaurant. Okay…if you don’t want the lunch, at least do the assignment if you can.

 

If you have to, get more education!

Did I hear you exclaim “go back to school!!!” or did you say “what has education got to do with rent payment” especially in these days of PhD drivers… well… there is a law which says “you are only paid in the direct proportion to the solutions you offer”. In more simple terms, you are paid for the problem you solve.

Doctors solve health problems, Lawyers solve legal problems, Architect solves building design problems, Builders solve building problems, Estate Surveyors among other responsibilities solve Valuation problems etc. Of course, you will agree that there are different levels of qualifications of Lawyers, Doctors etc. Imagine what it would be like if you have a long term perspective of being among the top ten best in your chosen field, in Nigeria, Africa and the world at large! You can do it. I am sure you can!!! This will not only increase your finances but would increase your prestige, your self confidence, and the problems you would solve for humanity.

This will directly or indirectly put smiles on the faces of people. Imagine what you can do, if you have all the education you need to be the best in your field. So what is stopping you? You will not only be able to pay your rent on time, you will build houses and build for humanity. How big can you dream?

 

Attitude matters

I believe in the saying that your attitude determines your altitude. Please note that the following humble suggestion is for all tenants no matter how “bad” your landlord may seem to be! You have heard the saying that, if your enemy is hungry, feed him. A great man once said, “There is no way you will spray perfume on others and it won’t smell on your hands”. Bottom line is, be good to your landlord, even if he is unkind to you. The state of affairs will turn in your favor; it is just a matter of time!

1. Call your landlord or landlady on his or her birthday, wedding anniversary and send a little gifts. It works wonders.

2. Don’t forget your landlord/Agent during the festive period, buy him or her a gift.

3. When your landlord/Agent celebrates, celebrate with him and when he mourns, mourn with him i.e. when an unfortunate incident happens to your landlord be there for him, encourage him or her.

4. If your landlord/Agent is nasty to you, be nice to him, call him up sometimes just to say hello.

If you do some of these things, you may be able to get your landlord to lower the reviews on his rent thereby enabling you to pay your rent with a relative ease.

I am here to tell the world that you are better than what anyone has ever thought about you. You can pay your rent with ease and in fact will build/complete your own house soon. Will you make a definite decision to do that? It would be good to hear from you. Thank you for your time.

 

Lawrence Ladokun ANIVS, RSV

lawrenceladokun@gmail.com

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