When it comes to influencing someone’s behavior it’s a lot easier to set the desired ground rules from the beginning than it is to change a habit once it’s already established. Anyone who has struggled to correct a bad golf swing knows this, as does anyone who has raised a child.
Buy-and-hold real estate investors should bear this principle in mind when it comes to dealing with tenants. At the end of the day you are a service provider and the tenant is your client. Good tenants are a key component in your long-term investment strategy. That said, it’s important to realize that you have a leadership role in maintaining the landlord-tenant relationship.
The desired endgame is a happy tenant who is content with the property, stays long term, and who willingly agrees to fair, periodic increases in rent which are in line with inflation and the local housing market.
I always look at a new tenant as a great opportunity to shape a desired set of behaviors that will make my life easier, and will also make it easier for me as a landlord to provide a quality service to the tenant. In my opinion the following are the “big four”:
- Pay on time
- Take care of the property
- Alert me early about small problems that will turn into big problems (evidence of a roof leak; a problem with the air conditioner)
- Refrain from bothering me about small problems that will stay small and that the tenant can safely tackle himself (a toilet that runs, a burned out fuse, a leaky faucet)
The four desired behaviors in the bullet points above should be objectively laid out in your lease agreement, but in practice I’ve found that there are shades of gray in managing them, as there are in all human interactions.
Let’s look at each one in turn:
- Pay on time: The average person has a lot of financial obligations placed upon them every month. Telephone bill, gas, car payment, entertainment, and a myriad of other priorities compete for the tenant’s paycheck. Your job is to show them that every month paying the rent is in pole position when it comes to prioritizing. Your tenant’s mindset needs to be: it’s annoying to have my cell phone disconnected, but late rent payments will result in my eviction. But if your tenant views the phone company as the real priority she’ll start turning to you for a little slack when she’s having a touch time making ends meet. Once you let this happen one time you risk establishing a habit that will be impossible to break. This is an area where you need to be consistent and tough.
- Take care of the property: You can do some role modeling in this category before the place is even rented out. Be meticulous with cleaning the property before you show it. Take care with the landscaping. Show that you care about how it looks. If you show a property that is dirty and unkept you will be sending a clear message that you don’t care about it. And if you don’t care about it why should they?
- Alert me early about small problems that will turn into big problems: A water stain on the ceiling or a weird sound out of the AC unit should prompt an immediate phone call. And you can encourage this by acting immediately when they call. This is in your best interest. You want to catch a roof leak before it causes major damage (or, heaven forbid, causes a mold problem.) Note that these calls should be rare. If they’re not then it’s likely that you have a deferred maintenance problem.
- Refrain from bothering me about small problems that will stay small: This is a tricky one, because it is, to an extent, the flip side of the point above. You want to get a phone call when the tenant expects that a major problem has arisen, but you don’t want to be getting a call every time a knob on a kitchen cabinet comes lose. One way to deal with this is to ensure that there is a provision in your contract stipulating that the tenant will be responsible for the first $____ of any repair that you make on the property. I generally set this at $100 using standard language from the Texas Association of Realtors lease agreement: The Tenant will pay Landlord or any contractor Landlord directs Tenant to pay, the first $100 of the cost to repair each condition in need of repair, and Landlord will pay the remainder...
Related posts
