Landlords tend to get a bad rap. Oftentimes, it’s rightfully so. Some landlords have the mentality that they own the property and it is a privilege for renters to live there. This mentality can in turn make renters feel like a commodity rather than a human being. This mindset is outdated and ineffective.
What some landlords don’t realize is that the tenant is the one who actually pays the mortgage. While they pay your mortgage, they also sleep, cook, play, raise children and make memories in the property. Your property is where their life happens. On move in day, I always tell my renters, “This is not my house. This is our home.” By setting this tone at the beginning, you lay the foundation for what you want the relationship to be like. I have experienced that in turn, tenants value their home and are more respectful of the relationship. This shift in perspective can yield more timely rent payments, lower vacancy rates and more time for you.
A homeowner doesn’t miss their mortgage payment nor will a renter miss their rent payment if they feel like they are a homeowner. A renter who enjoys where they live and are well taken care of, will want to maintain good standing to ensure their situation continues. You are paid on time. This minimizes having to charge late fees and tracking down checks.
PRO TIP #1: Try to avoid charging late fees. Late fees inevitably hurt your bottom line because they damage the relationship with your renter. Yes, you are compensated for the hassle of tracking down rent and carrying the mortgage for a couple days but as a result you are shaming your renter through monetary punishment. Instead, give grace and focus on the root cause of why payments are late. Sometimes it is as simple as they forget or have trouble collecting money from their roommates. Work with the renter to come up with a plan that makes it easier for them to pay you before slapping on a late fee. An ongoing lack of payment is an issue that needs to be addressed differently.
PRO TIP #2: Make it easy for renters to pay rent! Update your processes to include some type of electronic payment option. Search BiggerPockets.com or the Millennial Investor Focus Group Facebook page for suggestions. Top recommendations include Cozy.co, Venmo, CashAPP, or Zelle. You can also incentive direct deposit or automatic withdrawal options. For example: $5 off of rent each month if paid through one of the above systems.
Vacancy is expensive.
In the corporate world, there is a widespread notion that good people don’t leave companies; good people leave bad managers. Likewise, good tenants don’t leave properties, good tenants leave bad landlords. Your property and the experience your tenant has in the property is fundamentally connected to you as a landlord.
Good renters also tend to know other good renters. I’ve had tenants replace themselves in a home, with their friends and family. This is an immediate savings in marketing dollars, time spent and potential vacancy costs. On the flip side, If you are a bad landlord or never took the time to cultivate the relationship, they are not going to refer you and your property to their network.
Lastly, if you have a good relationship with your renters, they will be more likely to let you know when they plan to move out. This gives you more time to market and find a renter. These renters may also be more apt to cooperate with you when scheduling showings.
Time is money. The amount of time spent managing and maintaining your rental property should be considered when determining your property’s cash flow.
Renters who love their home and landlord are more likely to take ownership of basic maintenance and care of the home. It's not uncommon to see renters fixing small issues like broken door latches, replacing light bulbs, re-caulking showers, shoveling walkways and taking care of the yard. This saves the landlord time and maintenance costs.
"Like any business you want to present the best product possible to attract the best customer possible."
Build a relationship with your tenant while managing a home that you are proud and you will begin to reap the benefits of being a good landlord.
To the communities we serve,
Scott Hoefler with Side By Side Realty