How to be an Ethical Landlord

It's all about empathy, compassion, and kindness!

I'm Cassie Villela, a Realtor®, property manager, and investor here in the San Antonio, Texas market. Today I’m talking about how and why to be an ethical, caring landlord. I haven’t seen much about this in other places and I feel it’s important to bring attention to this issue. Watch the video or read on below to learn the importance of being an ethical landlord and how that can impact your ROI.

https://www.youtube.com/watch?v=cSThJ4p9xkE

Everyone has seen the hashtag #rentistheft, and it’s something people do to complain about landlords raising rents, and while it’s certainly not new, it leads to conflict between landlords and tenants. I don’t feel conflict needs to exist. I believe it can start out well, continue well, and throughout the entire relationship, the landlord and tenant can have mutual respect, honesty, and empathy.

If you are not someone who is attracted to empathy, compassion, and kindness then maybe the word profit speaks to you. What I’m going to talk about is going to lead to higher profits. The number one thing you lose money on and hurts your ROI is vacancy. Repairs happen and cost you money, but vacancy is the one you can control the most. If you are a good landlord, you will have a low vacancy. If you’re a bad landlord, you’ll have a high vacancy. Having high rent, pet fees, and other fees will not make up for having high vacancy. If for no other reason than wanting your ROI to be higher, then I urge you to follow these tips.

Changing Your Mindset

A lot of investors and property managers use negative language, such as, “I always have to babysit my tenants.” “All tenants are lying”. It makes sense. If I’m renting 30 properties and have one negative experience, that’s the story I’m going to tell at an Investor meetup, rather than saying 29 people paid their rents on time and didn’t destroy the house every month. We tend to filter out negative stories about tenants. I want you to change your mindset, I want you to think about your tenants as your customers. As a landlord, you are earning your income by providing a product and a service. The product is the home, apartment, or condo. The service is taking care of that property. If you provide a bad product, for instance, the house is dirty or you’re not making repairs, if you are not doing all the things to make a property better, you’re not putting a good product out in the marketplace. In turn, your vacancy will be higher and it will take longer to find a good tenant. If you put a bad product out there, you will probably get bad tenants. Good tenants will go to high-quality properties. My philosophy is that I would not own a property that I would not move into tomorrow. If I have a problem with a property, I think, "Is that a problem that would keep me from living in the home?" Even it’s minor, if I’m not going to live in it, I’m not going to have anyone else live in it.

You need to think about service from a customer service standpoint. If you were a tenant, how would you want to report repairs? Would you like to make a phone call to the landlord, and the problem is fixed, or text them and nothing happens? You would not want that for yourself. So do not inflict that upon your tenants. For my tenants, I prefer to text. It might be their AC unit. I apologize for the inconvenience and offer tips to help them while the AC repair service is on the way. Last week, we had a situation where a part for the AC was going to take a week, and I didn’t want my tenant to suffer. We were able to put some window units in and have them there for a few days while she waited on that part. Technically, by law, I have a certain number of days to get the repair done, and I didn’t have to install window units. But it was the right thing to do. I want her to stay, she’s a good tenant. That entire process could have been very stressful but it ended up well. She was happy, cooperated and it was a collaborative partnership. I encourage you to collaborate with your tenants and be respectful.

Empathy

The second thing I encourage you to have is empathy. If we had more empathy in the world, so many problems would go away. If you have empathy with your tenants, for example, with the AC repair, saying “I don’t want you to be hot, here’s what I can do for your situation.” Genuinely feeling that you understand their frustration, having a contractor in their house, putting up with the repair. Whatever it is, being grateful, thankful, and showing empathy and kindness, goes a long way.

It's good to have policies but also empathy. Particularly during COVID, we ALL need a lot of empathy over the last couple of years. I had tenants where I lowered their rents. They were very good tenants and one of them lost their job, so my response was, “Let’s lower your rent. We’ll be fine. You guys can stay and we’ll figure it all out later.” That was helpful. They were able to stay in their home, they got back on their feet, and it ended perfectly. I had a tenant who wasn’t paid until the third of the month and asked if they could pay their rent on the third. I said sure! It doesn’t matter to me about two days. If it makes a difference to you to get paid on the first, then you probably don’t have enough savings dedicated to your rentals.

Fair Policies and explanations

Have a policy manual, standard operating procedure, or at the very least, your minimum tenant requirements for when you’re selecting tenants. That way you don’t get in trouble with Fair Housing laws. You need to be able to prove that the way you select tenants does not have anything to do with race, religion, color, or age, etc. You also need to be able to explain these policies to your tenants. Something I like to do, for example, if I have to raise the rent is to be very transparent and explain in a letter about the rise in property taxes so they would know why I was raising the rent. I like to provide explanations because, basically, your tenants are adults. Even if they don’t agree, at least you’ve provided an explanation. Over-communication is better than under communication.

Keep your tenants in the loop. Providing them with exceptional product and service is going to go a long way. My goal is to influence other investors and landlords to be better, to treat their tenants better, to change the whole conversation between tenant and landlord relationship. I don’t think it’s healthy for anyone to be in a toxic relationship. I think we should do what we can to be better.

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