Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
I am constantly reminded that most real estate investors fail to recognize they are not just buying property, they are operating a service business. It seems today everyone can build a 10 tab excel spreadsheet and debate meaningless return metrics, yet the actual customer, the tenant, is treated as an afterthought. Success or failure gets reduced to whether you can pull out 100 percent of your capital through BRRRR, and if you cannot, the deal is viewed as flawed. That mindset ignores the service side of real estate that actually drives long term performance.
I see investors buying properties with known deficiencies, then spending more money to hide their identity than improving the real estate. Yesterday I read questions on a local REIA message board about squeezing an extra few hundred dollars from a tenant that was seemingly a good tenant and was vacating after 7 years. How many similar posts must we continue to read from landlords agonizing over whether they can get away with withholding security deposits over reasonable wear and tear? There is very little focus on what tenants actually want or how management and physical improvements can enhance their experience, drive revenue growth and extend their stay.
The better approach is to understand your tenants, pay attention to their feedback, and look for ways to differentiate your service and unit quality from the market. At its core, real estate is a service business. Your revenue depends on people choosing your product and continuing to choose it. The gap between those who truly understand this and those who do not continues to widen and it shows in the quality of their portfolios and directly tracks to durability and staying power.
For the minority of investors who truly understand this, how are you differentiating your service from the field, both through physical improvements and day to day management to enhance the tenant experience?
100% agree. Squeezing the tenant for every last dollar creates vacancy. Vacancy is the number one cash flow killer. Outperform your competition doesn’t always mean the highest rent you can get. Longevity of a tenant is worth everything. Having a quality tenant and making reasonable annual increases will keep your tenant. A vacancy cost time with no income and repair cost. Could cost $3000-$5000 depending on your market. Modest $50-$100 annual increase will keep the tenant. I have some long term tenants. I do two things:
1. Take care of maintenance items as fast as possible
2. Make improvement for tenants who are in their third year. I ask them is there anything they would like done. Many say everything is fine. Some say the microwave stopped working or it could use some painting.
Those small cost will keep a tenant and those are things you would need to do anyway.
100% agree. Squeezing the tenant for every last dollar creates vacancy. Vacancy is the number one cash flow killer. Outperform your competition doesn’t always mean the highest rent you can get. Longevity of a tenant is worth everything. Having a quality tenant and making reasonable annual increases will keep your tenant. A vacancy cost time with no income and repair cost. Could cost $3000-$5000 depending on your market. Modest $50-$100 annual increase will keep the tenant. I have some long term tenants. I do two things:
1. Take care of maintenance items as fast as possible
2. Make improvement for tenants who are in their third year. I ask them is there anything they would like done. Many say everything is fine. Some say the microwave stopped working or it could use some painting.
Those small cost will keep a tenant and those are things you would need to do anyway.
I am constantly reminded that most real estate investors fail to recognize they are not just buying property, they are operating a service business. It seems today everyone can build a 10 tab excel spreadsheet and debate meaningless return metrics, yet the actual customer, the tenant, is treated as an afterthought. Success or failure gets reduced to whether you can pull out 100 percent of your capital through BRRRR, and if you cannot, the deal is viewed as flawed. That mindset ignores the service side of real estate that actually drives long term performance.
I see investors buying properties with known deficiencies, then spending more money to hide their identity than improving the real estate. Yesterday I read questions on a local REIA message board about squeezing an extra few hundred dollars from a tenant that was seemingly a good tenant and was vacating after 7 years. How many similar posts must we continue to read from landlords agonizing over whether they can get away with withholding security deposits over reasonable wear and tear? There is very little focus on what tenants actually want or how management and physical improvements can enhance their experience, drive revenue growth and extend their stay.
The better approach is to understand your tenants, pay attention to their feedback, and look for ways to differentiate your service and unit quality from the market. At its core, real estate is a service business. Your revenue depends on people choosing your product and continuing to choose it. The gap between those who truly understand this and those who do not continues to widen and it shows in the quality of their portfolios and directly tracks to durability and staying power.
For the minority of investors who truly understand this, how are you differentiating your service from the field, both through physical improvements and day to day management to enhance the tenant experience?
One of the best & easiest ways to measure is by number of positive reviews (assuming someone isn't just buying them)😛
I am constantly reminded that most real estate investors fail to recognize they are not just buying property, they are operating a service business. It seems today everyone can build a 10 tab excel spreadsheet and debate meaningless return metrics, yet the actual customer, the tenant, is treated as an afterthought. Success or failure gets reduced to whether you can pull out 100 percent of your capital through BRRRR, and if you cannot, the deal is viewed as flawed. That mindset ignores the service side of real estate that actually drives long term performance.
I see investors buying properties with known deficiencies, then spending more money to hide their identity than improving the real estate. Yesterday I read questions on a local REIA message board about squeezing an extra few hundred dollars from a tenant that was seemingly a good tenant and was vacating after 7 years. How many similar posts must we continue to read from landlords agonizing over whether they can get away with withholding security deposits over reasonable wear and tear? There is very little focus on what tenants actually want or how management and physical improvements can enhance their experience, drive revenue growth and extend their stay.
The better approach is to understand your tenants, pay attention to their feedback, and look for ways to differentiate your service and unit quality from the market. At its core, real estate is a service business. Your revenue depends on people choosing your product and continuing to choose it. The gap between those who truly understand this and those who do not continues to widen and it shows in the quality of their portfolios and directly tracks to durability and staying power.
For the minority of investors who truly understand this, how are you differentiating your service from the field, both through physical improvements and day to day management to enhance the tenant experience?
I will agree in part, certainly as a PM we are trying to serve both Tenants and our Client Owners, however it is not a pure "service" business. In the case of PM, the Customer is NOT always right.
It is incumbent upon PM's to provide clean, safe, secure, and fully functional products to Tenants. Treating a property simply as a "Cash Cow", sucking every dollar out of the property and the tenant, is not operating as a Business.
It is critical that the Investor performs appropriate due diligence. This includes understanding all of the applicable laws; minimizing "quesswork" and "assumptions" based on very little personal knowledge; failing to know the laws, or making incorrect assumptions, can, and usually does, cost you thousands of dollars. THIS Business, is not nearly as simple as many would have you believe.
As a side note, early in my career I took three of the four classes to obtain a CCIM designation. This is all about numbers and investing, time value of money, IRR's and a lot of the lingo you see on these forums. I was working at the time for a company that had over 800 units under management, for several dozen different Owners. This included guys that owned 50 unit complexes, or multiple 24 unit buildings, or dozens of detached homes in rough areas, many of which were Section 8. As I learned about the deep financial details and calculations, I would share them with these Multi Unit Owners, as well as our smaller, Mom and Pop Owners. Very, Very, Few of them cared or ever used the info I provided them. They all only ever cared about when was their Net Rent going to hit their bank and how much was the check? Now, I will point out, these were all Residential units, no Strip malls, or warehousing, etc. THOSE are the guys that actually run their numbers like had learned in the CCIM courses. But they were mostly doing Multi-million dollar deals. My point is, you need systems to reach the Big League, and they need to be quality oriented to get the best results with the highest rate of repeatability.
Implementing quality oriented systems that you employ consistently across your properties and Tenants, while adhering to applicable laws and offering timely, accurate, professional responses; providing a reasonable product at a reasonable cost; and maintaining a Standard for both property and Tenant will result in happy customers all the way around.
Strong take — and it usually shows up in retention more than anything else.
Most of the long-term performance gains come from reducing friction for the tenant, not just optimizing the spreadsheet. The operators who get this right tend to focus on a few consistent things:
Responsiveness and clarity — fast, predictable communication matters more than perfect outcomes
Maintenance experience — not just fixing issues, but how easy it is to report, track, and resolve them
Unit condition vs. market — clean, functional, and well-maintained often outperforms “just comparable”
Consistency in policies — tenants stay longer when expectations and enforcement are predictable
A lot of owners underestimate how much small operational details compound. When tenants don’t have to chase, guess, or escalate, they’re far more likely to renew — which has a bigger impact on returns than squeezing an extra few dollars on the back end.
The shift usually happens when owners stop thinking in terms of isolated transactions and start thinking in terms of ongoing service experience.
The numbers make the case for you. I've got 6 SFH in Indianapolis, all self-managed, and my average tenancy across the portfolio is about 2.4 years. One of my Beech Grove tenants has been there since 2020 and has literally never paid late once. Not exaggerating when I say she's one of my biggest risk mitigations.
The way I think about it: a good tenant who renews is worth more than whatever I could squeeze on the back end. My Indy market data says a typical turnover runs me 6-8 weeks of vacancy plus $1500-2500 in make-ready work depending on how long they were there. So when I do annual rent adjustments I'm asking myself whether the increase justifies the real risk of losing someone I've already vetted, already know pays, and already knows my properties. Usually that math says "go modest."
On the service side, the main thing I do is respond to maintenance requests same day. Doesn't mean it gets fixed same day, but the tenant hears from me same day. That's it. That's most of the differentiation. Most landlords go dark for days. Tenants remember that.
I am constantly reminded that most real estate investors fail to recognize they are not just buying property, they are operating a service business. It seems today everyone can build a 10 tab excel spreadsheet and debate meaningless return metrics, yet the actual customer, the tenant, is treated as an afterthought. Success or failure gets reduced to whether you can pull out 100 percent of your capital through BRRRR, and if you cannot, the deal is viewed as flawed. That mindset ignores the service side of real estate that actually drives long term performance.
I see investors buying properties with known deficiencies, then spending more money to hide their identity than improving the real estate. Yesterday I read questions on a local REIA message board about squeezing an extra few hundred dollars from a tenant that was seemingly a good tenant and was vacating after 7 years. How many similar posts must we continue to read from landlords agonizing over whether they can get away with withholding security deposits over reasonable wear and tear? There is very little focus on what tenants actually want or how management and physical improvements can enhance their experience, drive revenue growth and extend their stay.
The better approach is to understand your tenants, pay attention to their feedback, and look for ways to differentiate your service and unit quality from the market. At its core, real estate is a service business. Your revenue depends on people choosing your product and continuing to choose it. The gap between those who truly understand this and those who do not continues to widen and it shows in the quality of their portfolios and directly tracks to durability and staying power.
For the minority of investors who truly understand this, how are you differentiating your service from the field, both through physical improvements and day to day management to enhance the tenant experience?
I agree with the sentiment. Being a landlord is a customer service job. The property is the product, not the tenant. They're the customer. The execution is always going to be subjective. You want tenants who take care of your property, who pay rent on time, who are communicative and easy to work with. And you want them to feel like it's their home. You don't want to lose a tenant like this over a few dollars, but you also want to make reasonable returns on your investment.
I see posts frequently that describe this tenant, but who is significantly below market, asking if they should raise rent. Often times there is not a perfect answer. If they're $400 below market and a $50 increase drives them away that's unfortunate. Does that mean you shouldn't have increased the rent on an otherwise good tenant? What happens three years from now when they're further below market while your other expenses (property taxes, insurance, labor, materials, etc.) have continued to rise?
I realize that's not the nickel and diming that you're talking about. I guess my point is that there's a balance between making money and tenant satisfaction. That you can make money while still providing a good service by being communicative and holding up your end in terms of maintenance as a landlord.
I'll give a real example from my own portfolio: I had a tenant submit a maintenance request saying that the florescent bulbs in the light fixtures in her basement had all burned out and she was asking for them replaced. In the lease, the tenant is responsible for bulbs. But florescent lighting isn't exactly common in homes (I didn't put these in, they were already there when I bought the house) and she didn't know how to replace them.
I asked my PM to have their handyman stop by with a box of replacements plus extra, to replace them and to also show her how to do it herself in the future. I also asked her (through the PM) what other handyman type maintenance she needed done since our guy was going to be there anyway. I didn't charge her for this visit or the bulbs. That's a happy tenant, and she's been there going on three years now. But at annual renewal time, we request and receive an increase each year.
I look at like a partnership. If I take care of my tenants then they'll take care of me. I tell them all they can stay forever when they move in. That it's their home. Turnovers within a few years crush profits. I want these people to stay for a decade or two. So I work with them and take good care of them. I've got 37 SFR that I self manage and so far this strategy has worked well for me. They're all under market rent, but I rarely have turnovers which saves me a lot of $ and headaches.
This resonates. The shift from thinking like an owner of property to an operator of a service is where a lot of things start to click.
What I’ve found is that it’s not just about providing a good experience, it’s about making that experience intentional, repeatable, and scalable.
In shared housing especially, but also in traditional single family rentals, the biggest improvements I’ve seen came from designing the environment upfront rather than reacting to issues later. Things like clearly defined expectations, predictable routines, and consistency in how the property is operated create a different kind of stability.
It turns the experience into something that feels structured instead of ad hoc, both for the resident and for the operator.
Once that framework is in place, it becomes much easier to maintain quality across time and across properties, rather than relying on constant intervention.
Curious how others here have approached building that kind of consistency into their operations.
Investors spend a lot of time talking about acquisition, financing, and returns, but long-term performance often comes down to operations and tenant experience.
One thing I've noticed is that the best operators don't necessarily have the fanciest properties. They tend to communicate well, respond quickly, maintain their properties, and treat tenants fairly. Those things may not show up in an underwriting model, but they often show up in lower turnover, fewer vacancies, and more stable cash flow.
At the end of the day, tenants have choices. The investors who consistently deliver a better experience often end up with a competitive advantage that's hard to measure but very real.
Investors spend a lot of time talking about acquisition, financing, and returns, but long-term performance often comes down to operations and tenant experience.
One thing I've noticed is that the best operators don't necessarily have the fanciest properties. They tend to communicate well, respond quickly, maintain their properties, and treat tenants fairly. Those things may not show up in an underwriting model, but they often show up in lower turnover, fewer vacancies, and more stable cash flow.
At the end of the day, tenants have choices. The investors who consistently deliver a better experience often end up with a competitive advantage that's hard to measure but very real.
Brian, I agree with this.
The more I operate in shared housing, the more I think acquisition and underwriting are only the early innings. They matter, but they do not carry the asset by themselves.
The middle and later innings are operations, houseguest experience, maintenance cadence, expectation-setting, and eventually the exit or transition plan. If those pieces are weak, a deal that looked good on paper can turn into vacancy, conflict, legal exposure, or just a property that never performs the way the spreadsheet said it would.
That side of the equation does not get represented enough, especially in shared housing. I recently wrote a book from the single-family coliving operator side, and this thread is hitting on one of the main reasons I wrote it.
The numbers matter, but especially in coliving, operations are what determine whether the deal actually performs.
