In the age of social media, poor tenant relations can cost you more than money.
I never thought I would mention TikTok in this newsletter. I, for one, am not a subscriber, but recent articles I’ve seen mentioning the platform inspired me to address a larger topic: weighing tenant satisfaction with your bottom line.
A recent article, which you can read here, tells the story of a tenant whose landlord charged her for unclogging a drain. In retribution, she filed a complaint with the city building inspector, who then wrote the owner up for several building code violations. The apartment owner then incurred many more expenses in order to comply with the Notice of Violation. Or this one where a tenant was told they would be charged for their dirty grout upon moving out, so he demolishes the tile. I can actually see his frustration, as the grout looks clean to me. However, that does not justify his actions.
Or this one, where a tenant, frustrated that her landlord schedules apartment showings to prospective tenants without her permission places items around the apartment that would deter a prospect from signing a lease.
It is impossible to know the relationship history between the landlords and tenants in these stories. However, the stories provide fodder for a topic that I sometimes struggle communicating to my property management clients: weighing your net profit and what may be “right” against tenant satisfaction.
Tenants are in possession of one of your most expensive assets, so unfortunately, that gives them a bit of an upper hand. In many instances, saving a small amount of money by forgoing an improvement, charging a tenant for a repair, or deducting an expense from a tenant’s security deposit, isn’t worth a tenant’s dissatisfaction, especially in the social media age. The prospective retaliatory behavior, negative reviews, and future maintenance issues that result in long-term damage or emergency repairs need to be factored into your bottom line.
Weigh your past interactions with tenants. Tenants today are more difficult than I have ever seen in my 20+ year career. Unfortunately, I don’t see that changing, and it will likely get worse. While we can look at tenant applications to make sure they are financially responsible, there is nothing in their application that states how they treat people and property. We can generally get a good read on people during our apartment showings, which is why it is Lingsch Realty’s policy to ALWAYS show tenants the property in person. However, we can’t always foresee a tenant’s behavior in all situations. If your past experience with a tenant indicates they will be cooperative and reasonable, you can probably expect that reaction. However, if they are easily disgruntled, you may want to take the high road and save yourself the headache. I feel conflicted advising that easy-going tenants may not benefit from their cooperation, but in this instance, it really is true that the squeaky wheel gets the grease.
Lingsch Realty prides itself on being fair to both landlords and tenants alike. If a tenant flagrantly violates their lease terms or causes damage beyond “normal wear and tear” to an apartment, of course we recommend pursuing legal or fiscal remedies. You are, after all, protected by the law. However, if the tenant’s intent is more inconspicuous, it may be best to incur the expense yourself, share the cost with the tenant, or just grin-and-bear it through a tenant’s bad behavior. This may sound shocking at times, especially in a city that is already as tenant friendly as San Francisco. However, saving a couple dollars, or passing on an expense to a tenant, may not save you money in the end.
Because tenants are living on the property, and usually do not have assets, your fiscal remedy is usually limited to their security deposit, which is limited by law. Therefore, should they decide to retaliate by causing more property damage, you will likely be caught with the bill. Likewise, should they fear having to pay for more repairs, they likely will not report issues, which can lead building compromising deficiencies such as leaks or unsafe conditions going unchecked. This will lead to more expensive deferred maintenance and emergency repairs once the issue manifests itself.
So, if Lingsch Realty advises you go soft on an issue, it is not because we don’t agree with you or think it is not within your landlord rights to act. It is because we try to look two or three steps ahead to see how the situation may play out financially and with the tenant relationship. What may save you a bit of money, or convenience in the near term, may lead to more expenses or lost revenue down the line. These can be in the form of both maintenance costs and legal expenses, or longer vacancies.
Recent research reports from The Center for Generational Kinetics found that 86% of Gen Z, currently our largest renter demographic, read reviews before making a purchase. Tenants now have many public platforms to voice their discontent. Therefore, you risk permanently destroying your reputation as a landlord, your buildings’ reputation, or Lingsch Realty’s reputation as someone you would want to rent from, which could cost you much more in lost rent revenue if an apartment sits vacant because a prospective tenant read a review written by a disgruntled tenant.
When applying Lingsch Realty’s philosophy to the above TikTok examples, paying for a minor repair in the name of good customer service, may pay you back threefold in good reviews; spending a couple dollars to clean a departing tenant’s grout is worth the hassle of potentially ending up in small claims court where the tenant can be awarded punitive damages; postponing showing an apartment to prospective tenants if you don’t have a good relationship with the current tenant may be the best decision. While you may be trying to minimize downtime, alienating a serious prospect early on, may leave you waiting weeks for the next serious applicant.