Rental ownership is face-to-face capitalism. It’s hands-on. When you own shares in a large corporation, you don’t get a say in how that company is run. When you own rental property, you make decisions that affect your income stream and the value of your asset.
Good landlords increase their property’s value. The best landlords learn how to obtain the best rent increase for the lowest cost: That creates value for the rental owner and for your residents. Renters may like you more after you improve their apartment. The better rental home justifies higher rents.
When you become a rental owner you also become a landlord. As a landlord, you will affect many people whom you would never encounter otherwise. Rental owners have more and deeper contact with renters than investors who only own stocks and bonds.
Good landlords provide their tenants clean, safe, and functional housing. Wise landlords understand their tenants as people, not revenue sources. Their compassionate actions show and earn respect. That is part of leading a life worth imitating. Good landlords respect tenant privacy. They listen to complaints and suggestions and make repairs properly and promptly.
Landlords and property managers may have conversations with tenants about home, family, culture, neighborliness, and appropriate adult behavior in a community. Most people will never need to talk with another adult outside their family about moving the headboard an inch away from the wall, to prevent it from disturbing the people in the next apartment. Yet there may be times when someone needs to explain what consideration means and how to ensure a neighbor’s quiet enjoyment.
Smart landlords have clear “house rules,” and they are firm, fair, and consistent in enforcing those rules. If you are a landlord, you or your property management team will deal with tenants. Most of those dealings will be pleasant. Some will not. Someone, maybe you, will have to talk about your house rules with a tenant. You may say something like “You can’t throw your cigarette butts over the balcony any longer. You can’t play loud music at 3:00 a.m. any longer. If you’re going to live here, that is not a permissible activity.”
Most problems with tenant behavior aren’t self-healing. The longer you put off a difficult conversation the harder it will be. Someday you will have to evict a tenant because they’re not a good neighbor. Even when it’s the right thing to do, it won’t be easy or fun.
Sometimes you’ll deal with people in crisis, and that gives you an opportunity to build your legacy. Here’s one of many examples I could cite from my clients’ experiences.
One of our tenants had a family emergency. Her parent died, and she needed to go to Texas by bus. And I worked out a thing where she paid part of her rent and then she’d pay me $100 extra a month until it was resolved. Some people make good on that. Some people don’t. But I choose to give people a little bit of the benefit of the doubt, especially people who’ve had a lot of disadvantages in their life.
As a rental owner you’ll live out your values. Your actions will demonstrate your ability to create value, compassion, and wisdom. Rich people should know how poor people live and poor people should know how rich people work. Face to face capitalism can help people understand that net worth has nothing to do with true human worth. Our society has too much strife, too much stereotyping and not enough genuine human connections.
Not only can you earn wonderful, amazing returns, you can also be a peace maker. It’s true. Hundred of my clients have served tens of thousands of renters. Almost all my clients became millionaires, and many became multi-millionaires by providing housing to folks who earned less.
Do good and do well! What could be better than that?
Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. This post is adapted from the content of that book. Read his “Welcome to My Blog.”