Rick Mirza, Founder and CEO of Daulat, a private equity firm.
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There’s been a renewed focus on the relationship between landlords and renters amid the ongoing Covid-19 crisis — especially now that so many people are unexpectedly struggling to meet each month’s rent. While this emergency raises undeniable difficulties for both parties, it also presents an opportunity for proprietors to reflect on the fact that it really doesn’t cost anything to be kind.
Since starting my real estate portfolio, I’ve always tried to be in tune with who my leaseholders are and what hardships they may be going through. Not only is it the right thing to do, but it actually makes sound business sense. Here are three reasons a little bit of kindness goes a long way toward building a healthier long-term enterprise, even in more stable times:
1. Your renters are your livelihood.
In the course of my career, I’ve come across a lot of properties where you can tell the landlord has just checked out. They’re the places where the pool is always some funky shade of orange and the landscaping looks like it was performed with a garbage truck.
They’re also the properties that always seem to be at half occupancy. If your tenants get the sense that you don’t respect your obligations, you’ll inevitably see a drop in your overall cash flow when they realize they can find a better situation elsewhere.
That’s why it’s always in your best interest to add to the solution rather than compound your tenants’ problems. Sometimes that means keeping up with maintenance, and other times that means working through payment issues. It all boils down to earning their respect.
2. Today’s tenants are tomorrow’s marketing team.
Let’s face it: Not all of your lessees will live in the same spot for five or 10 years. Those who leave will ultimately have a major say in how your property is marketed in the future. Just like how an unhappy employee can take to Glassdoor and leave a bad review, frustrated ex-renters will find a way to air their complaints online and send them all the way to the top of Google’s first page.
As anybody who has spent any time on social media knows, bad news spreads a lot faster than good news. When you’re dealing with properties that hold 60 units or more, that rule goes into overdrive.
Since we live in an age of digital research, you are going to run into problems if you don’t have a solid reputation, particularly once it’s time to refinance or sell your property. You can avoid this by doing everything you can to invest in your tenants’ experience.
3. Happier tenants mean longer leases.
We all know that one business in town that everyone steers clear of. It’s the one that always seems to be under new management every 18 months. Needless to say, a high turnover rate is just not a good look. And if your property’s a revolving door, it will hurt you in the long run.
Just consider how long it takes to prepare a unit, put it on the market and then finalize the paperwork. That lost time directly translates to lost opportunities. Instead, you need to approach your property as a community. Your renters raise their families together; they have barbecues together and essentially build a neighborhood all in itself.
If you do your job right and treat your tenants with kindness, they’ll realize that they can never imagine living anywhere else.
From a business perspective, fostering that strong community will help if you eventually decide to sell that property in five or 10 years. You’re going to get top dollar because of the value that you built.
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