Be Hard on the Problem and Soft on the Person

An investor who has owned four rental properties for the past three years called me for help.  He was at his wits’ end.  Because he hated dealing with tenants so much, he was seriously considering dumping all of his rentals!  By the way, this is not an uncommon feeling for new, inexperienced, and under educated landlords to have.

When we met to discuss his situation, he let me hear a recording of a conversation he had had with a tenant a few days prior…and I use the word “conversation” with loosely.

The tenant consistently paid his rent six to ten days late.  This sent the landlord into orbit.  Over the phone, the landlord screamed at the tenant, “You are a liar, an idiot and you’re totally worthless!  Pack your crap and get out of my house right dang now!”  And from there, the landlord’s words really turned foul.  I felt sorry for the tenant and angry with the landlord for losing control. 

The landlord knew he had lost his cool and crossed a very serious line.  His main question was whether I thought he should get out of landlording because of his hot temper.

I’m a big believer that folks – with a lot of work – can learn to do many things well and some things great – including landlording!

When asked, the investor explained that he and his wife bought the rental homes so they could have a steady income stream during their retirement years that had a low tax rate and hedged inflation.

(I’ve been fortunate to learn from the very best real estate investing teachers in the country: Dyches Boddiford, Jack Miller (God rest his wise soul), Pete Fortunato, David Tilney and Gary Johnston.  But you can’t learn from the masters if you don’t attend their seminars!) 

Regarding this landlord’s situation, I remembered something David Tilney taught us: When landlording, be hard on the problem and easy on the person.  Another critical Tilney lesson that came to mind was: The tenant – not the rental property – is your capital asset.  Treat the tenant as such.

The mistake this investor made was being incredibly and unfairly hard on the person!  The result was a complete breakdown of the landlord-tenant relationship.  Bottom line: He treated his capital asset like he was a junkyard dog.

I require four things – and only four things – from our tenants.  They must: 1) Take good care of the property both inside and out.  2) Pay on time.  3) Be easy to work with.  4) Be a good neighbor.  As long as the tenant does these four things, he can stay in the house for as long as he lives.  (This is yet another Tilney lesson.) 

Sometimes we have a tenant violate one of the four rules.  When this happens, ninety-five percent of the time we meet face-to-face and solve the problem.  We usually find a mutually agreeable solution to the conflict, but if a solution can’t be found, then we tell the tenant to move.

Most of the time, if you treat your tenant with the respect he deserves, the tenant will move from the property with no muss or fuss.  Case in point: In twenty years of managing rental property and tenants, I’ve only been in court five times to evict a tenant!

In this situation, I’m happy to say that the landlord left our meeting and went straight to his rental property.  He met with the tenant and apologized for his actions.  I think you’ll agree that this took a lot of guts.

In the end, his tenant agreed to stay in the property.  The late payment problem was resolved by moving the payment date from the first to the fifteenth of the month.  I’d call this a win-win solution, wouldn’t you?

Remember: Landlording is a learned thing, not a born-knowing-how-to-do-it thing!