TENANTS ARE YOUR CUSTOMERS…AND YOUR BOSS
Real estate investment differs from other types of investment because you, the property owner, can have a greater impact on how your asset performs. If you put money into crypto, you just have to sit there and wait to see what happens. If you put your money into a favorite stock, say Amazon, you’re ordering a bunch of boxes to be shipped to your home the next day is not going to move that price. You are powerless once you’ve decided where to put your money. But real estate is different. As the landlord, you naturally have a relationship with the tenants you house, and how you manage that relationship can make a substantial difference when it comes to your long term earnings.
LEARN MORE: 4 TYPES OF LANDLORDS: WHICH TYPE ARE YOU?
A UNIQUE DUAL RELATIONSHIP
Unless you’re a slumlord (which you’re not…because you’re here), you appreciate that a big part of your responsibility as a property owner is maintaining comfort for your tenants. You allow them to live in your property, making them your customers. Ideally, you are adding value to your own property while also adding value to their lives and tenant experience. If something breaks and needs to be fixed, they let you know. They tell you what needs to be done to maintain their comfort and safety and they reward you with rent…with money. In this way, they are very much like your boss. They compensate you for completing necessary tasks.
This may appear to be an oversimplification but the truth at its core is essential to long term financial success: you need to foster cooperative relationships. In the same way working for an angry boss ruins a job, or an unruly customer can ruin an experience for all patrons, conflict with tenants can be toxic. You need to do all you can to decrease friction and that’s easy to do if you understand and appreciate the nature of the landlord/tenant relationship.
WHERE PEOPLE GO WRONG
1. DEALING WITH ADVERSITY
So many people struggle handling adversity. We live in a world where it’s easy to shield yourself from the views, opinions, and people you might disagree with. Similarly, people can’t handle being wrong. We’ve become so accustomed to getting our way so often that the skill sets needed to address naturally occurring conflict are rusty and dull. And rental properties are rife with naturally occurring conflict. Whenever there are large sums of money involved, people are likely to disagree. Do you have the skill set to calm an angry tenant, that customer who is also your boss, and make decisions that are best for your bottom line in the long run?
The answer to that question is certainly “no” if you make the common mistake of thinking your tenants are beneath you…that they need you and you don’t need them. That they’re simply your customer.
LEARN MORE: DOES IT WORK BEING THE TOUGH, MACHO LANDLORD?
2. VOLUME
There are plenty of people out there who have the necessary skill sets and experience to manage their tenants and properties. But all too often those abilities are overstressed by an overload of volume. There’s only so much maintenance or evictions or tenant placement people can handle on their own. In our experience, three units seems to be about the right number for individual landlords to handle efficiently and successfully. Beyond that, quality typically decreases and stress on relationships (and landlords) increases.
LEARN MORE: THE NEX-CESS STORY OF MANNY ANICETO: Building A Legacy For Your Kids And Grandkids
A SMART SOLUTION
Real estate investment is most successful when you’re able to grow your portfolio over time. If you’re successfully managing your three unit building and you’re happy with that, by all means continue doing what works.
For those investors with more on their plates, professional property management is an investment that pays off. Dealing with discomfort is what property managers specialize in. At Nexus Property Management®, we’ve managed over 1000 units over the last decade. Our size and experience allows us to add efficiencies and price savings that single landlords just cannot provide on their own. Hiring a property manager is the best way to make your money work for you. Contact any of our offices to learn more.
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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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