Tenants Are Not Your Customers
Recently,
I had the pleasure to participate in a national conference for
landlords. During my presentation, I asked the question: “How many
landlords think your tenants are your customers?” The majority of the
room raised their hands. Then I dropped the mental bomb and made the
statement “Your tenants are not customers!” After making this
statement, I intentionally paused for a few seconds to simply observe
the reactions in the room.
It was amazing. The
expressions on the faces in this room full of landlords ranged from
mostly confusion to one person who absolutely refused to have an open
mind even after paying a registration fee to attend a learning
environment focused specifically to benefit landlords. This poor fellow
reminded me of the selfish greedy child who has to win at all costs or
pick up his ball and go home. He decided not to play and chose to
leave, making a scene, slamming a chair, and stomping his feet. What an
eye-opener to childish behavior on the part of a self-proclaimed 30
year landlord. (I’d expect this kind of behavior from some folks who’ve
applied to become one of our tenants.) This was unexpected
entertainment for attendees as well.
That’s why we have two ears and one mouth. We learn by absorbing
information and new ideas. What’s the definition of insanity? Doing the
same thing over and over, but expecting different results. I’m guilty
of this myself. As investors, property managers, and landlords, we
should understand the legal position of our role as landlords and the
role of tenants. In addition to the legal definition part, we’re
actually running a business. Our objective with our investment
properties is to increase our wealth, cash flow and quality of life. It
doesn’t matter if your business is small or large, it’s still a
business.
Business Relationship
Here’s your challenge. From a business relationship standpoint, are
your tenants customers? Seriously, think about it for a moment. Many
landlords and experts say our tenants are our customers. Most retail
establishments have slogans “The customer is always right.” Do you
really want to adopt a slogan “Tenants are always right”? Hmm... did
you hesitate a minute here on this one? Can you etch in stone or really
think and believe tenants are always right?
Don’t
pull the trigger yet on your mental knee-jerk reaction to these
comments. If you operate a retail store, you’re at the mercy of your
customers and the customer is always right slogan can apply. You must
get them in the door to buy. If you operated a flower shop, would each
customer have to fill out an application and sign an agreement? If you
operated a stop and rob food mart, would your customers have to fill
out an application and sign an agreement to buy beer, smokes, or
lottery tickets?
Don’t get me wrong, there are businesses requiring customers to fill
out applications and agreements such as rental car companies, loan
companies, credit cards, and more. The point to understand is the wide
range or scope of the word “customer”. There are cash-paying,
no-agreement, always right customers one end all the way to the other
extreme of qualifying customers after an application process. As far as
the business relationship definition, try this on for size.
Tenants are Not Your Customers.
Try this mind set:
Your Tenants are Employees!
Think of them and treat them as highly valued employees. This should be
a good thing. At the national conference mentioned earlier, the
landlord who couldn’t accept this idea of tenants being employees
vividly displayed his attitude that customers are more valuable than
employees. Wow! What a horrible boss and leader.
Thinking of your tenants as your employees may generate a tremendous
amount of very intense and emotional opinions. Your range of reaction
to this comment is based on your experiences of the word “employee”.
It’s great! Use it to your benefit. A very similar concept might be Dr.
Stephen Covey’s paradigm shift of the position or role of boss vs.
leader. If you are a boss and follow the stereotype role of boss as a
dictator and the person who simply announces things to do, we can all
grasp the tremendous amount of negative vibes associated with this kind
of behavior.
On the other hand, if the “boss” has behavior more in line with a
“leader”, the boss becomes more of a role model, a positive, respected,
and friendly person. I’m not an expert on all of this stuff, but I’ve
attended several courses on this subject and learned how to put these
ideas and concepts into my real estate business. We can apply many of
the same ideas in our world of real estate investing and dealing with
tenants.
Keep an open mind here. Don’t fight or challenge this thought-provoking
brainstorming session. On the surface, I’ll admit tenants are customers
because we provide a product and/or service for a fee and they pay for
it; however, how can you make it better, more profitable, more
efficient? Here’s the education challenge. Instead of the typical
landlord-tenant relationship, let’s make a relationship change to
employer and employee. With your tenants becoming your employees, you
become their “leader”. Interesting? Employees should be viewed as a
great asset. Good employees enable your business to be profitable and
should make your life easier, not harder. Try this exercise. Read the
following statements and see if you can substitute the word “tenant”
for the word “employee”.
- You should have a good relationship with good employees.
- Good employees are valuable.
- Exceptional employees should be rewarded for outstanding performance.
- Employees have responsibilities.
- Employees are expected to perform satisfactorily or suffer the consequences for poor performance.
- An employee who is a bad apple, can ruin the good apples.
- Allowing one employee to remain with poor performance can bring down performance and attitudes of good employees.
- Not treating all employees the same is not fair.
- Employee appreciation programs promote good performance, loyalty, productivity, and profit.
- Employee’s length of service should be a guideline of additional benefits to employees promoting employee retention.
- Outstanding
or exceptional community service or personal achievements by employees
or their immediate family members should be recognized.
- Employees with poor performance should be dealt with in a fair, consistent manner, including termination.
Just like above, substitute the word “property manager” for the word “employer” and “tenant” for “employee”.
- Employer should be responsive to employees concerns.
- Employer should be a leader, not a boss.
- Employer has responsibilities along with consequences.
Got
the idea? This attitude kind of opens a new attitude in dealing with
tenants. Good, effective communication among responsible parties sets
the stage for great results. I assume you really want to have the
lifestyle of the successful real estate investor as played out on the
infomercials on late night TV. Once again, it doesn’t matter if you
have one or two investment properties or hundreds, this paradigm shift
of thinking of tenants as highly prized valuable employees should
really get you some long overdue results as seen on those infomercials.
Don’t keep this focus on tenants only. Spread it around. How about your
own help? Office staff and maintenance staff should be treated as
highly valuable employees. Your furnace person, electrician, plumber,
roofer, lawn service provider, painter, carpet installer, carpenter,
and so on. Here is an absolutely powerful and cheap way to reward your
employees. Most investors I know have had a job or still have a job
today. For those of you who are “unemployable”, go back with me for a
moment to the days of punching the clock.
Think of the holiday season. From Thanksgiving to the end of the year,
what happened to those folks (including myself) who have jobs in
government or the corporate world? Holiday parties and more holiday
parties were offered for the unit I worked for along with invitations
to holiday parties for all of the other districts. It was almost a
competition atmosphere about who could throw the most extravagant
holiday party. The bragging rights for the best holiday bash usually
went to the police district who had live entertainment, a dance floor,
a huge hall, plenty of food, booze, beer, and even limousines! Sounds
great doesn’t it?
Switch gears with me here for a moment. While I worked my full time job
as a police officer and observed all of the free holiday events for me
and my wife, I happened to hit the pause button and reflect on the
holiday happenings of those who are valuable to me in my real estate
investments. Remember my furnace person, electrician, plumber, garage
killer, etc.? Most of these folks have mom and pop operations. (that’s
why we use them because they are usually cheaper than the ones who have
the full page ads in the yellow pages) What are they doing during the
holidays and where are they going? Do they get invitations to any
holiday bashes? I guess some do if their spouse has a job somewhere.
Here is what I do every year for my vendors, contractors, resident
managers, and those who are an integral part to my real estate
business. For the last several years I reserve the banquet room at a
nice local Mexican restaurant for the Saturday before Christmas. We
mail homemade full page simple invitations to the 8th Annual Vista
Holiday Bash from 6pm to 10pm. They can bring their spouse or
significant other. This banquet room also has a very small bar and we
include an open bar as part of this annual holiday event. We’ve never
had any issues of anyone abusing the open bar. In fact, my experience
is just the opposite. These folks are not used to the extravagant
holiday bashes and are very, very appreciative of this event to benefit
them for free. In fact, every year they try to pay the bartender for
their drink and are amazed when the bartender waives his hand and says
“no charge”.
The restaurant has a “buffet style” of presenting the food on a
portable steam table. Nothing fancy, pick and choose what you want and
how much. From tortilla chips and hot cheese dip to beans, chicken,
beef, and soft flour tortillas along with several vegetables and
sauces. This covers almost every food tastes including vegetarians
making me politically correct again. Good music, fun, food, and drink
set the stage for these folks to network and have a good time. I
usually take the floor around 7pm or so and introduce each and every
vendor by name along with their product or service and a little light
hearted humorous story on each person. This is powerful. I’m fortunate
to have a garage killer who has outrageous stories and he usually grows
into the center of attention before all is over.
These folks come from all backgrounds and dress accordingly. My
electrician starts talking about this annual event in June of each year
and said his wife really looks forward to it, even though she’s not
much fun (his words, not mine). Okay, now the bad news. This annual
event cost approximately $ 600 total. That’s right, room, food, booze,
and tip for the waiter and bartender. Believe it or not, this is a nice
restaurant just two blocks from my office.
The rewards and paybacks can’t be measured. Guess where I am on their
list of valued customers. I’m willing to bet I am probably at the top
of their list. I might not be the biggest, but I am probably one of
their best. We’ve had a rash of horrible storms and tornadoes recently
and guess where my tree guy put me on the list of next in line? I
didn’t even have to call him. He called me asking where to go first! In
addition to the great business relationship this kind of event
promotes, it makes me feel like a million bucks to see the wonderful
feeling of appreciation and value of the skills, trades, and
workmanship of these folks. Several vendors told me no one has ever
done this before. This is a great way to let those who make your
business successful know that you really appreciate them, their work,
and relationship. Not only doing a good job for you, they are a
walking, talking billboard for your business – by referring tenants,
sellers, loan customers, etc.
Work on this one now and start planning for your own event for this
holiday season. I’d like to hear how your event works for you. Here is
a helpful list of those to consider. Invite your banker(s), furnace
person, electrician, plumber, carpenter, lawn service, resident
manager(s), office manager, bookkeeper, CPA, attorney(s), siding and
gutter person, tree service, pest control, roofer, insurance agent,
highly valued real estate agent, auto mechanic, Section 8 inspector(s),
helpful service clerk(s) at local hardware store, paint store, supply
house, newspaper for your classified ads, your painter, garage killer,
trash/junk hauler, and the person who lets you place your dumpster in
their rear parking lot for free.
This is just a small list to assist you in identifying those who might
be important links in your strong real estate chain. So remember, good
employees are a good thing and make your life easier and more
profitable. |
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