It’s a phenomenon we’ll never understand. People turning down free money.
A few years ago CYC bought a modest rental home in a great locale. (The very definition of a smart investment, if we do say so ourselves. No wait, an emergency fund would have been a way better idea.) The price was nothing extraordinary, and the financing terms were agreeable, so we pulled the trigger. The house sits on the Pacific Ocean, there are toucans in the trees and yellowfin grouper in the water, and renting the place out has been easy. We can keep the rental rate low enough that we can garner lots of business while having the renters cover our expenses and then some.
It’s not purely passive income, in that there’s more to owning the place than just watching the checks roll in, but it’s close. We have to advertise the house’s existence, rather than just rely on travelers Googling it and hoping for the best.
A few months ago we were approached by a resale company, for lack of a better descriptor. This company would buy a series of dates from us (for a discount, of course), then resell the room nights. We’d never have to worry about refunding security deposits, or emailing our guests directions from the airport, or explaining the meaning of Spanish street signs ever again.
So…earn a few dollars less in revenue per night, while doing far less work than before? What’s not to love about that? As Paula Pant says, money is for buying time, not stuff. We’d be essentially spending some dollars to free up lots of hours that we can enjoy as we see fit. Greatest idea ever, as far as we’re concerned, and once you get a taste of liberty it’s hard not to want to share it.
The problem, and it’s a good one to have, is that the resale company is extremely good at what it does. It has more business than it knows what to do with. So much so, that it wanted to offer the same deal to other homeowners in our community of 20 or so houses. These are all vacation homes, by the way. None of the owners live on the premises. In fact, none of the owners even live in the country.
So we told them about the opportunity. Yes, there was a finder’s fee in it for us, but that’s not the point. Of the 19 homeowners, only 7 bothered to respond. And of those, 7 out of 7 gave a variation on the same sentiment: “Thanks, but we’d prefer to rent the place out ourselves. We can get more for it that way. Why would we pay what’s essentially a commission to someone else if we didn’t have to?”
We looked. All 7 advertise their houses for rent on the same website, which happens to list the dates that each of those houses is available for rent. The calendar we saw is an ocean of unsold nights. These dummies each have a valuable investment with a huge propensity for comfortable cash flow, and none of them are taking advantage of it.
We tried dialing into their shared universal desire for profit. “Come on. It’s money for nothing.” Still, they weren’t interested. We explained that there was no downside to signing with this company. The contracts are flexible, the company is licensed and bonded, and, oh yeah, the company guarantees the nights it buys. Maybe they sell them to travelers, maybe they don’t, but once we sell to them it’s no longer our concern.
When you appeal to someone’s emotion, you expect them to be wary. But when you appeal to their sense of reason and they still don’t bite, the rational response is to start acting irrationally. Why don’t you want this money? Would you rather get $100 a night for 30 nights next month, or $120 a night for 2 nights? Is this even a question? Why aren’t you answering it? Why do you hate money so much? Why are you forcing us to write in questions instead of statements?
So we gave up. We’ll forgo the finder’s fee and try to make use of the extra hours that have now fallen into our laps. Is there a moral here? None that we could find, unless it was to keep fortune (in both senses of the word) to oneself instead of trying to spread the wealth and watch it grow. Even if you don’t yet own a vacation property, you can still apply this to your own life. Understand that sometimes, people will refuse to capitalize on the most obvious of opportunities. Even if they see you taking advantage of it and basking in its rewards.
Most importantly, resist the temptation to second-guess yourself. We’ll admit, there was a split-second when we thought, “Are we the fools here?” But no, the money was indeed flowing to us and not to anyone else. Once again, thank God for the obtuse and the insufficiently ambitious. It sure makes life easier for the rest of us.