About Lease Cosigners

By: Wojciech Kic

There are several approaches to the complex business of making money. One can earn a salary from employment, gain profits from a business venture, receive rents from real estate rentals, or be paid interest on monies one already has. Many people derive income from one activity; others earn income, simultaneously, from different sources. The desire for a better life drives most to want to earn even more.

But it is difficult to increase personal income. While many factors enhance the ability to earn it, such as the level of education or working experience, no one, it seems, is able to predict accurately that their personal income will hit specific target levels within a specific period of time. For example, if a million people were challenged to make $1,000,000 in 2008, only a handful would succeed.

Why do only a few succeed? Perhaps, there is no better place to look for an answer than in the modern gold mining operations. How is gold mined today? Gold mining requires many coordinated steps. Before getting started one has to identify the geographic area where the gold is prevalent, secure the right to exploit it, and then bring the equipment to start digging for gold.

In the midst of all this comes the hiring and negotiations, typically involving foreign governments, and what goes with it, a constant political risk. Add to the decision making the continuously changing price of gold, and you’ve got a big mess, even before the first ounce of gold is produced.

The actual production of gold requires the sifting of gold specks out of dirt. One ton of dirt yields about 4 grams of gold.The ability of the modern gold mine operator to make money by handling dirt for less than $15 per ton is truly amazing.Thus,a successful gold mine operator is not really in the business of making gold. For him, making money is the reward for handling a lot of dirt.

The real estate rental business is no less complex than the modern gold mining operation. It requires finding land, building a property, and operating it after securing a tenant. But producing a tenant who will predictably pay rent, can be a frustrating task.

Some prospects are rejected in advance for lack of references; others will be accepted only to move out at will despite excellent credit and a stable income. For landlords longing for a stable profit, lease offers accompanied by a lease cosigner, simplify matters.

But not all that glitters is gold. A lease cosigner knows that the promise of gold is a shortcut on the landlord’s path to profits. She understands that landlording profits are an outcome of active management. And that a profit promised in advance stops the labor required to produce it.

With the landlord’s eye off of the landlording operation, tenants’ responsibility to report the changing conditions of the property is no longer fulfilled. In no time, the cosigner refuses to pay, because . . . of the suddenly abhorrent condition of the property. As the cosigner exits the lease, the landlord ends up worse off than with any, stand alone, financially unassisted, tenant.

Ultimately, the cosigner’s victims are both the landlords and tenants. How does a landlord defend against the cosigner’s gambit? By challenging the cosigner to lease the property, and agreeing to accept the intended tenant as a resident on the lease.The landlord’s resolve must overcome the outrage of the cosigner’s likely refusal. How about the tenant? The offers of assistance are difficult to reject. For the tenant, the cosigner’s intent becomes transparent only when challenged by the landlord. It is the landlord’s challenge that provides the tenant with the only clean opportunity to break free from the cosigner.

. . . And how does the landlord communicate his personal vulnerability in the first place? By communicating his focus on the rent (read: the gold) proceeds and dismissing the labor (read: the dirt) required to produce it.

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