Have you ever heard a music band that was just off? Sure, each musician was probably great, but for some reason it wasn’t coming together? I experienced that once, but the reason was obvious: the drummer was missing. Because of this, the band sounded disjointed and off-beat. You could also see the concentration on their faces as they all strained to keep the beat. Nobody, include me, was enjoying themselves.
When he finally showed up, they were in the middle of a song and kept playing. He calmly sat down and got out his sticks. He found the beat in his head and started playing. The impact astounded me. Within 3 taps of the drum the band went from slightly off and not working, to sounding great! Each musician started to smile as if saying, “yeah, that’s the groove.” In the blink of an eye, everyone was suddenly enjoying themselves.
It was memorable to watch and taught me a lesson: No matter how amazing each other musician was, they needed that last critical piece to succeed. The drummer was that piece who created positive momentum for other band members to find the groove.
Rental real estate is the same way (didn’t see that coming, did you?).
Responsible Tenants Are the Drummers of Rental Real Estate
You might have the best property, in the best location, with the best systems in place, and funded by the best financing possible. You could have all of this lined up which seems to make it impossible to fail. However, if you do not attract and retain responsible tenants to your property, you will not succeed. That’s because responsible tenants create positive momentum for everything else to succeed, just like the drummer. Sure, with a bad tenant you could probably still make it work like the band did, but you’ll be straining yourself the entire time and eventually give up claiming, “it’s not worth it.”
Have you ever heard someone tell you real estate is risky? Or that they used to be in real estate, but now they’re out? How do they usually follow up? It’s with a horror story about how a tenant completely destroyed a property, “It smelled like cat urine and garbage was everywhere, and they stole all the lights, and never paid, and screamed at other residents, and cost me thousands of dollars.” Yikes! That does sound bad.
That’s why it’s so important to find responsible tenants: they will create positive momentum towards your gyroscopic cash flow. No matter how amazing your property is, attracting and retaining responsible tenants is a critical piece to success.
What Makes A Responsible Tenant?
Responsible tenants behave consistently in three ways. As a landlord, these should be the three behaviors you care about and are looking for.
1) Responsible Tenants Pay Their Rent In Full and On Time
Responsible people honor their commitments. If they agree on a price, they pay that much without complaint. If they agree on when to pay, they pay on time (and probably early). How easy would it make being a landlord if you didn’t need to worry about tracking down your rent payments each month?
You job is to reciprocate: Set a fair price that won’t induce them to complain and make it easy for them to pay you.
2) Responsible Tenants Take Care Of The Property
We once scheduled a 6 month walk-thru and upon entering it was obvious that the tenants spent all weekend cleaning and organizing to make sure the place looked amazing for us. Those are the kind of people we like. Tenants don’t have to make improvements, but they should clean regularly and not break anything. Turnovers would be a breeze if all you needed to do was touch up the paint and change the locks.
Lead by example with this one: Start off with a property in good condition and make it clear what your expectations are. Conduct regular walk-thrus to look for broken items. If something breaks, fix it. That will show them you care.
3) Responsible Tenants Respect and Communicate With Myself and Other Residents
My wife and I once rented on the second floor of a larger complex. Our downstairs neighbors felt it necessary to let us know that moving our chairs across the floor was too loud… by pounding a broom stick on their ceiling! Who does that? When I went down to talk to them, they pretended to not be home. Once we finally talked, I learned that she was a communications major in college. No joke.
Our situation is not what you want. You want tenants who will tell you when something breaks, and if they’re going to have trouble with rent this month. They communicate conventionally, not with broom sticks or screaming.
In today’s world of multiple communication channels, try to meet them where they’re at. I currently have one tenant who doesn’t have his voicemail set up, but is very responsive when texting. If, for some strange reason, most of my tenants where on Twitter, I would probably set up an account so they could message me. In other words: make it easy for them to communicate with you by using their primary communication channel.
Your Goal Is to Attract and Retain Responsible Tenants
By now you probably have a few questions:
- How do you identify someone who is responsible?
- How you do attract them?
- How do you retain them?
These are great questions that we’ll dive deep into on an upcoming series. For now, it’s simply important to recognize that responsible tenants create positive momentum towards gyroscopic cashflow. They are the drummer. They are critically important since they have a direct impact on your cashflow and headaches. When we talk about tenant screening and criteria, we’ll be looking for behaviors that demonstrate they are responsible.