What Cost For Profit?

Managing a rental for spiritual profit
has turned out to be a bargain

One of the articles in Living Business (IC#11)
Originally published in Autumn 1985 on page 18
Copyright (c)1985, 1997 by Context Institute

Part of the freedom we have in re-envisioning business is in choosing for ourselves what we mean by success. Frieda Forselles is a retired school nurse, now living in a small community by the ocean, north of Bodega Bay, California.

TWENTY-THREE YEARS AGO, when I purchased a small size unit apartment house with garden cottage as a retirement investment, my friends advised me I would have to be firm and shrewd with tenants, screen them carefully, require leases, carry heavy insurance coverage and charge as much rent as I could get from them if I expected to make a 20% profit, as other rental property owners were expecting. One older acquaintance even suggested, "You have to cheat a bit now and then if you want to make it in the business world," and, "Get the other guy before he gets you"!

Now, twenty-three years later, I have proven them wrong. Not only have I been honest in my business affairs and with my tenants, but I have kept the rents at least 25% below current rates, did not screen my tenants carefully, did not require leases and, for most of the time, carried no insurance. I had no vacancy problems, gained the trust and respect of the tenants and the business became solvent while all about me I heard bitter complaints from other income property owners who were harassed by property abuse and rent dodgers. Many of them spent hours in court trying to collect unpaid rents.

Profit? Yes, there has been some profit and there has been some loss. But early in the game, after much soul searching, I determined not to sacrifice human integrity, respect, trust and hope for the sake of seeking the kind of material profit the greater society covets. At what cost would I force tenants to pay high rents in order to make the customary profits and prove my business prowess to myself and others?

I pondered upon a statement made by Jesus: WHAT DOES IT PROFIT A PERSON TO GAIN THE WHOLE WORLD AND LOSE HIS/HER OWN SOUL?

My original tenants were seven little old retired ladies on limited incomes. I could not gouge them for rents beyond their means, forcing them to move. In addition, I would have to live with a miserable conscience and perhaps bring upon myself problems resulting from unhappy tenants who felt exploited.

Immediately after I purchased the property, I was in a state of panic when I discovered the many problems I inherited. The house was old, a conversion from a single dwelling. Rusty plumbing, substandard electrical and structural conditions caused numerous petty maintenance problems which I would not be able to resolve without help. I had no tools or skills for house maintenance nor would I have had the time, being employed full time as a school nurse. In addition, the city urban renewal program was pressing me to bring my property up to code within two years. I had had no previous business experience and for weeks I was in an emotional dilemma over my "profitless" business venture.

How would I be able to bring the property up to code, maintain it, meet the mortgage payments and break even financially, let alone make a profit, without doubling the rents? I was tempted to follow a friend’s advice and try to sell the place for what I had paid but then realized that it would be very difficult to sell a sub-standard dwelling at a time when the urban renewal program was active. Though I had a good, reliable income from my job, I did not want to operate a business on the side at a financial loss. It made no sense to me to "rob Peter to pay Paul"!

Then one day, after much intense reflection on values and purposes, I flashed on the idea of accepting a different kind of challenge. I would operate the business not primarily for material profit, though I would use good sound economic and ecological practices, but I would operate it for humane or spiritual profit. My primary motivation would be to provide affordable housing for people of low incomes and foster a caring, trusting community spirit. I could not accept a distrusting relationship between the tenants and myself merely because I owned the property.

Other property owners had warned me not to make friends with tenants. They claimed it was a bad business practice. But the idea that I should not make friends or be friendly with ANYONE for WHATEVER reason sounded like bad business to me! I subscribed to the belief that we are all God’s creation, that God’s spirit is omnipresent, and that we all are worthy of respect, love and friendship. Why should I exclude tenants?

In order to accomplish my goal I had to operate differently from the usual rental property routine. This is what I did:

First of all, I decided not to worry about losses. I had another income on which to live and some of the loss could be retrieved as a tax write-off on my salary. Eventually, however, I hoped the business would be solvent.

Functional improvements took priority over nonfunctional improvements or "frills." Waste and expenditures for vanity were avoided. I hired unemployed, independent laborers who were willing to learn on the job for less pay. The benefits were mutual and most of the work was satisfactory.

Tenants were involved in maintenance chores in return for rent reductions. There was a garden and yard person, there was a hall and stairway cleaning person and there was a general maintenance person for small repair jobs. Later, there was a person in charge of waste recycling and composting. Eventually I advertised for tenants with specific skills.

Most importantly I TRUSTED. Instead of subscribing to increasingly expensive insurance policies, I subscribed to a strong faith in God, my tenants and those who performed jobs for me. I felt my faith would be honored if I, in good consciousness, did what I understood to be right in fostering humane, sustainable living conditions.

Within three years I had corrected the code violations. Rents were only increased a few dollars every few years or whenever a vacancy occurred. There were years with operating losses and years with marginal profits, but the goal of operating rental units offering affordable rents was accomplished, primarily because everyone living on the property was involved. I have come to believe strongly that people should be directly involved in everything that affects their lives.

Over the years I developed an intuitive sense of trusting the Universe to send the right person whenever a vacancy occurred. This did not always result in a situation without problems, but working through those problems was always a positive learning experience for both the tenant and myself. And sometimes for other tenants. Who is without problems, anyway? The least I could do was give the other person the benefit of my respect and trust with the hope that my energy would connect with the respect and trust energy within that person. By trusting them I was encouraging them to become their own best person. I saw them first as people and secondly, as tenants.

Sometimes tenants told me their problems, sometimes they did not. It did not matter. Every person needed space to find his/her own path. Some of my former tenants and I still are good friends, and many have thanked me in different ways for the opportunity to have lived in a place where all their resources were not drained by exorbitant rents. Some were able to finish school, job training programs; others were able to repay debts, begin savings accounts or just have the time and space to re-focus their lives. Sometimes I thought of the place as a "half-way house," an interim home where people could afford to live while reviewing their lives, collecting inner and outer resources, and then move out into the greater world with renewed energy and hope.

Profit? Yes, there have been many profits. I would not exchange the opportunities given me for learning and for bringing together people from many different walks of life to live harmoniously in a small community. The mental and spiritual profits far exceeded any material profits involved. This business venture has been one of the most worthwhile experiences of my sixty years. Six of those years I lived in one of the apartments and was a member of the community, a move which was frowned upon by other apartment owners as being a poor business practice. There were no problems and it was with some regret, for me and for my tenants, that I moved out to live in the country after I retired from my job.

Within the last few years, New Age people have moved into the house and have formed a planned cooperative community with the name, Peace Gardens. They manage the place and it is completely solvent. At present I am negotiating to sell the house at a bargain price to the Northern California Land Trust which assures me the place will continue to be operated as a facility offering affordable rents and the promotion of a humane, sustainable community.

I trusted the Universe. It did not fail me.

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