[Note: To follow is an excerpt of an interview with Robert Cain from Rental Property reporter. To listen to, or download the show archive MP3, go to www.IncomePropertyInvestmentTalk.com/081308.]
Mosca: What are the three most important or overriding messages of your presentations when you get out there and talk to income property owners, landlords, property managers, etc.?
Cain: The first one is paying attention. Rental property ownership is a hands-on business and people seem to think it is a passive investment. Someone has to manage the property. If not, you will lose money. The second one is to be good with people. If you are not good with people, then you are going to find yourself in trouble. The third one is just caring about your investments. Too often people forget that tenants are the ones who pay the bills. They pay the mortgage, the taxes, the insurance, and they make you a profit (sometimes). They are your customers. For the most part, I figure 90 percent of tenants are good tenants. We don’t remember all the good ones; we remember the bad ones. Treat them as valuable customers -- customers who are making you money.
Mosca: Are people an investment like the property itself?
Cain: They are. Customer service and customer relationship management, which is how you manage the relations with your customers, is big in corporate America. It should be in property management as well. How often do you get thank you notes from people or thank you cards? You get e-mails, but e-mails are not the same. I wrote a little book called “How to Keep Good Tenants” a number of years ago and I still sell it.
George W. Bush Sr. used to get up every morning and the first thing he would do is get on his manual typewriter and type thank you notes to people on the typewriter. People remember thank you notes you send. A letter coming to you or a card coming to you with a stamp on it and a handwritten address or whatever is far more impressive than somebody just saying thank you on a phone. It doesn’t have to be a two-page letter, just a couple of paragraphs saying thanks for your business, thanks for being such a good tenant, thanks for paying your rent regularly, thanks just for being our customer because we really appreciate it. People like to be appreciated.
Mosca: What makes a good tenant?
Cain: Good tenants have a solid history of paying the rent on time, and being who they say they are. Remember, you are only as good as your last tenant selection because bad tenants can cost you a chunk of change.
Mosca: If you buy a used car today you can go online or buy a report that details that car’s history. Is there something like that to find out where tenants come from?
Cain: There are a number of things. Bottom line, if you don’t use a tenant screening service, then you are shooting yourself in the foot. You know that people actually lie on their rental applications (laughing).
Kent Anderson (guest from RealSource.net): What are some techniques that you would recommend to manage that manager?
Cain: Your property manager is a contractor just like anybody else. Never hire a property manager without references and make sure that this is somebody you can work with. Not every state requires it but in those that do, of course work with one who is licensed. Always remember that you are in charge. The property manager has a fiduciary responsibility to you as the property owner. They represent you. If the property manager isn’t doing the job he or she is supposed to do, fire them. If they’re licensed, file a complaint. As I said, rental property ownership is a hands-on business.
Anderson: At RealSource Equity Services we try to leverage our property managers with a number of larger projects and get their attention. For the clients though that are out there managing their own, I have seen clients get together collectively as a way to get attention.
Cain: That would give them a lot of leverage. Go with the assumption that they are trying to do a good job until you have evidence otherwise. The best way to find out anything is to ask questions as opposed to being confrontational. If you don’t trust them then you need to get somebody else.
Mosca: What is your ‘Golden Nugget?’
Cain: Bad tenants don’t deserve the privilege of living in our properties, assuming we have maintained them well. Treat your business like a business.