4 Levels of Landlord Engagement:
How Much Day-to-Day Involvement Should You Have With Your Rental Property?
It’s evident that you’re a smart investor because you’ve gone ahead and hired a property manager to add efficiency and value to your property owning experience. Unfortunately, being a successful landlord is not quite that easy. Nexus Property Management®’s Vice President of Franchise Sales, Greg Rice, shares knowledge and recommendations regarding the different types of clients we’ve worked with in almost a decade of managing properties in Rhode Island and Massachusetts.
[ Learn More: What To Ask Before Hiring A Property Manager ]
TYPE 1: THE MICROMANAGER
WHAT IT LOOKS LIKE:
The micromanager means well but also wants to (and needs to) be overly involved. He or she often tells the property manager how to do their job and commonly interferes and confuses lines of communication. The micromanager creates inefficiency and frustration for all parties, including vendors and tenants. We’ve seen distrusting micromanagers require quarterly inspections of tenants’ living spaces. We’ve seen them patrolling yards and complaining about how tenants are parking their cars...more or less looking for trouble and issues to correct. They effectively channel their own stress down to the tenants and to the company who’s been tasked with shielding them from those stressors. It can get out of control and messy pretty quickly...don’t be a micromanager.
WHAT IT LEADS TO:
First off, tenants don’t feel valued or trusted, and they’re more likely to break their lease or leave immediately after it ends. The goal of property management is long-term tenancy. Vacancy is the enemy. Micromanagers feed the enemy.
Secondly, micromanagement also sours the relationship with the property manager. It is difficult for a manager to do their best work when the claws are always sinking in. Similar to a “boy who cried wolf” type mentality, it becomes more difficult to provide efficient services under an umbrella of inefficiency. In all honesty, motivation decreases despite a concerted effort to be professional at all times.
THE SOLUTION:
Micromanagers should put their high energy and attention-to-detail toward making sure they choose the right property management company to work with [Which Type of Property Manager is Right for You]. Investing time and that extra effort in fully vetting the company and being comfortable with that choice is a best first step. Letting micromanagers know that they are micromanaging and explaining how this will decrease the value of their investment and your ability to manage their property in terms of money lost can also be effective.
Learn More: [ Not Every Customer Is A Good Candidate for Property Management ]
TYPE 2: THE ACTIVE PARTICIPANT
WHAT IT LOOKS LIKE:
Active participants are the best. They’re what all property owners should want to be. Instead of telling property managers how to do their jobs they instead actively make decisions and keep up with communication. They approve or deny maintenance work orders promptly by actively monitoring software via their phone or computer. They ask for advice and take advantage of our experiences in given situations. They are the most successful landlords because they are proactive and get the most value they can from their relationship with a property manager ← Note: That’s what the micromanager is trying to do as well, but with far different results.
WHAT IT LEADS TO:
Success! Added value! Money in your pocket! Happy tenants! Your property manager is happy to assist based on the decisions you make and that assistance will create win-win-win situations for all parties. Active participants value their properties, make the necessary calls to town hall when they need to, and their tenants feel valued, leading to long-term tenancy, minimal hassles, and a successful investment experience.
THE SOLUTION:
None needed...just keep up the good work and when you’re ready, reinvest in another property using the equity you’ve built thanks to consistent tenancy and minimal issues.
Learn More: [ The Nex-Cess Story of Manny Aniceto, One of the Most Successful Investors in the Area ]
TYPE 3: THE PASSIVE OBSERVER
WHAT IT LOOKS LIKE:
As Greg has outlined in his metaphor, this is the landowner who does just enough to put a check in the box. If they’re at the gym they’re the person who is walking on the treadmill, checking their phone constantly, and barely breaking a sweat. Did they go to the gym?... Technically, yes. But did they even come close to tapping into the potential of their time and effort? Not a chance.
This property owner approves the big ticket items such as heating systems that need replacement, or turnover costs and evictions, but they leave the smaller (nuisance items) alone. Fixing a wobbling ceiling fan or cleaning a dirty hallway means a lot to the tenants, but the passive observer can’t be bothered. They cherry pick and neglect the smaller items...which eventually become bigger items.
WHAT IT LEADS TO:
The passive observer creates situations that can get costly. Whether it’s deferred maintenance that leads to a more costly expense or to vacancies, being in and out of sleep at the wheel can have dire consequences over time. Happy tenants stay and pay rent. Is saving a couple hundred dollars on installing a new ceiling fan worth the discomfort of your tenants in July and August that causes them to leave and now you’re out $1200 per month? In the best case scenario, this leads to a learning experience that helps the passive observer become more like the active participant.
THE SOLUTION:
Passive observers need to be reminded that happy tenants are the key to success in real estate investment. It’s the landlord’s home, but to be successful he or she needs to break a sweat. Denying maintenance requests because they don’t seem like a big deal is a long-term recipe for disaster. They need to take care of the people who pay the rent, and ultimately the mortgage. By doing so, they’ll become more and more like active participants, and each step in that direction should make it easier to see the benefits of adding greater effort and care into the equation.
Learn More: [ Why Keeping Up With Maintenance Is So Important ]
TYPE 4: THE SLUMLORD
WHAT IT LOOKS LIKE:
This will be quick...it looks like no one cares...like the apartment is abandoned. Slumlord types deny everything, ignore everything, don’t respond to property managers, don’t pay water or sewer bills, and certainly don’t cut the grass.
The property owner is literally just that...an owner of the building. One has to wonder why they even bought the property [Maybe They Inherited It???]. What are their goals? What do they want to get out of this?
WHAT IT LEADS TO:
Big problems...obviously. With no attention to maintenance and unpaid bills, the units become borderline unlivable. Tenants stop paying rent or leave altogether. Only those with no other options stay, and these owners take advantage of the difficult financial situations these families are in.
THE SOLUTION:
The property owner has not created a win-win scenario and the tenants are losing. We find it very difficult, if not impossible, to work with these owners and in some cases have had to terminate our relationships. Prior to getting to that extreme measure, we do our best to remind owners of their legal responsibilities while trying to sell them on ways to add value, despite the upfront costs. At Nexus, we always think long-term and slumlords are cutting corners because they’re living in the here and now. We do our best to lend them our binoculars for the sake of all parties involved.
Learn More: [ Learn The Best Approach To Dealing With Difficult Tenants ]
CONCLUSION:
The world needs more active participants. We all need to be more intentional and focused on the long-term in all that we do. We live in a society that is all too automated that allows us to coast through our lives without much worry. Hiring a property management company is not equivalent to cruise control or buying a self-driving car. Instead, you’ve hired an efficiency tool that will consistently add value to your journey, but not without you steering the wheel.
To learn more about your own potential as a property owner and real estate investor contact Nexus Property Management®. We pride ourselves on our ability to add value to the investment experience and to improve the lives of owners as well as tenants throughout Southern New England. Our goal is to rewrite the expectations and opportunities that can come from real estate investment done right. Be sure to reach out if you’d like to be part of our team or are interested in franchise opportunities throughout the country.
Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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