Selfish Reasons to be a Good Landlord

by Mr. Cheap

I recently enjoyed a post about a tenant referring her friends as potential new tenants on Single Guy and Money.  It might just be a specialized case of what I’ve wrote about before as “statistical karma” but I’ve found that being a good landlord to your tenants is a good way to help YOURSELF out.

My current (and first) tenants in my condo just extended their lease for a second time.  After we had updated the lease and when I was leaving, they told me that a friend wanted to move into the building, but they’d warned her that I just owned their unit, other landlords in the building might not be the same as me.  They told me I was “the nicest landlord they’d ever had”.

Everyone likes being told they’re a good boy (except girls maybe), but my motivations for treating my tenants well are very self-serving.  I view my condo as a business, and they’re my customers.  They’ve been good customers for the last two years (never bounced a check or paid late, have maintained the unit well, and haven’t bothered me with frivolous problems), and I want to keep them.

I didn’t raise their rent again, and I think John T. Reed would chastise me for not doing so (he advocates always raising rents to market rate).  My reasons included not being sure that the Toronto rental market could sustain a higher rate (I didn’t want to drive them out, then end up with new tenants paying the same rate) and not wanting to go through the aggravation and expense of finding a new tenant (and having to travel to Toronto to do so).  With the recent real estate turmoil, I wasn’t sure what the rental market looked like (Thicken My Wallet had an interesting post on this topic recently) and decided it was better to keep the tenants I had then risk finding new ones.

I don’t think they’re staying because of the lack of a rent increase, instead the examples they cited as bad behaviour on the part of their previous landlords were all long delays in making repairs. They told me at one place they had a closet door that wouldn’t open and close properly, and although they lived there 8 months and the landlord lived UPSTAIRS, he never fixed it.

At the current place I’m staying our landlord took 2.5 months to replace a broken dryer (I was smelling pretty ripe by the time the new one was installed).  The $375 dryer she bought isn’t any cheaper this month than it would have been in December.  All she accomplished was saving a TINY bit of depreciation of the dryer and aggravating the women who live upstairs and myself.  We’re all debating whether to stay here at the end of our leases or not, and this is a BIG part of why we’re considering leaving.

To me promptly making repairs doesn’t cost any more than delaying, and it isn’t any more work to deal with it now instead of later.  I can’t for the life of me figure out why landlords don’t make prompt repairs as a free way to keep tenants happy.

The one concern a property owner MIGHT have is that the tenants are making a frivalous repair request and that if he honours it he’ll just get a whole bunch more.  This is fair, but if the repair request is a reasonable one (like a broken dryer), FIX IT! If its an unreasonable request (one of my buddies had a tenant complain to him that another tenant’s children wouldn’t play with her kids) explain that it’s unreasonable and tell them you won’t take responsibility for it (instead of just delaying and hoping they give up on the request).

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{ 16 comments… read them below or add one }

1 Four Pillars

I agree – good tenants are very worthwhile. It’s not worth raising the rent.

That’s funny about the one tenant’s kids not playing with the other tenant’s kids. :)

2 Do You Dave Ramsey?

Business has long known that the cost of keeping an existing customer is much cheaper that recruiting new ones. In your ‘economy of one’ you are experiencing the same thing. A few dollars of extra rent income does not offset the risk of losing the tennants, getting the unit ready for new showings and the potential loss of rents for 2-3 months in the meantime.

Being nice is also a cheap way to win friends and customers.

Good article and lesson for all of us!

Thanks
Dave

3 Silicon Prairie

Some landlords may think they’re too busy to do repairs quickly, rather than trying to save money by waiting. It’s still just as bad though – any business can lose their customers quickly by doing things like that.

4 Mr. Cheap

Mike: Yeah, I had a pretty good laugh at that too. He was annoyed about it (which I would be too if it happened to me), but I found it pretty darn amusing when it happened to him ;-).

DYDR: Thanks! :-)

Silicon Prairie: I suspect you’re right (that they just view themselves as “too busy” and figure that they can put it off). I think its a big mistake (and risks losing the tenants or getting into a pissing contest with them). If they’re really that buys, they should start hiring someone to do the things at the property they don’t have time to do.

5 Mark

My wife & I decided to move from Montreal and took the steps to sell our properties.
One of our properties is a condo that was rented out. The tenant was an outstanding young man; very polite to both my wife & I, never exagerating in his demands. The only thing was: he never cleaned the condo while he lived there…
Our tenant understood our decision to sell but never went out of his way to clean the place up when our agent had prospective buyers visit…
One prospective buyer even told me I’d have a serious problem selling the place…
Well, we did sell it to a gentleman who was looking for a condo he could renovate to his liking.
We figure we lost about 5k in the transaction but I also figure that it would have cost me close to 10k to get the place back in order…
In the end, my tenant left (he couldn’t pay me anymore) and the timing of his departure and the sale of the unit couldn’t have been better.
Don’t get me wrong, there are good tenants out there but I figure that for every good tenant, there must be 8-9 who don’t give a damn about your property.
Living in Quebec just means that the Rgie du Loyer (Gov’t hand that handles leases & such) works for the tenants and definitely not for the owners – they think we are all money groveling fanatics who just want to profit from our tenants… By the way, I had previously taken the steps to tell my tenant I wasn’t renewing his lease but when I asked the Rgie how long it could take if I wanted to evict him: they said approximately 6 months (and that’s if everything was going right)…

6 Mr. Cheap

Mark: I was in a similar situation where a previous landlord wanted me to have the place in top condition for him to show it. My feeling was it wasn’t my responsibility to stage the apartment for him, but I get that this could be frustrating from the landlord’s perspective. I have a clause in the lease I use that the tenant will keep the unit clean, but I have no idea how I could enforce it.

How long was he there (and how messy was he) that he could do $10K worth of damage?!? If you hadn’t sold were you tempted to sue him (although it sounds like he wouldn’t have any cash to pay even if you one)?

There’s always a tension between protecting tenants’ rights and landlords’. Fortunately I think most governments realize if they cater TOO much to tenants, no one will offer housing for rent (which hurts tenants worse if nothing is available to rent).

7 Four Pillars

One of my former neighbours complained to me that his tenants wouldn’t allow him to do any open houses when he wanted to sell the house. The buyers bought it unseen. Is that legal or is that something that should be written into the rental contract?

That has to hurt the resale value.

8 Mark

Our tenant lived in the condo for 3 1/2 years, I figure he never cleaned during his stay.
Carpets in the living room & room needed to be replaced as they were burned and had deep stains. Wood flooring in all other areas also needed to be changed. I also needed to paint the whole condo as well.
I’m a hands on kind of guy but the work needed tools and experience I just didn’t have.
I called a friend who is a contractor and because of the state of the place – it needed to first be cleaned thoroughly (which I could decide to do) prior to any work being started, the cost of the repairs & labour (the most costly part) would come roughly to 8-9k + taxes…
As far as suing my tenant… he still owes me 3 months rent…I consider it a right-off…
The funny part was that when I told him I never expected to see this money, he asked me if I was calling him a thief… I told him that if and when he paid me what he owed me, I’d gladly and profusely apologize for having called him a thief…

9 Mr. Cheap

Mike: Well, I don’t think the tenants could FORBID an open house (as long as the landlord gave them notice), but I think they could sabotage it pretty easily. Insist on being present at all showings (so no one steals anything of theirs), then leave the place filthy and tell the people who come what a scumbag the landlord / seller is… In some areas it *MAY* be possible for them to forbid it entirely (if by renting the property they get exclusive use of it and the landlord can only enter for the purpose of repairs).

Some landlords get weird ideas about what behaviour is acceptable. At one place I lived, the owner had group meetings once a month in the building, and he expected me to let the people at the meetings use my wash room and kitchen (since there weren’t either in the meeting room he had). Needless to say, this did NOT happen.

In a situation like this I’d just bribe the tenants. Offer them something they wanted (or if nothing presents itself, offer a rent reduction) if they help you sell the house. Alternative, wait until their lease is up and keep raising their rent until they leave (harder in an area with rent control) then sell once they’re gone.

In Canada I believe you could also move into the house yourself (or move a relative in) as a way to push them out. Force them to leave, move in and repair the place, then after a couple of months change your mind about living there and sell it.

I’m not 100% sure about the laws behind these ideas (they would vary from place to place I imagine). I’d certainly look into them before I tried to do any of the above strategies. I’d agree that not being able to show a property would definitely hurt the resale, but I’d wonder why the seller is in such a rush to sell (if there are tenants in place paying a fair monthly rate, why not sell when they leave?).

10 Mike

Four Pillars – as long as the landlord provides 24 hours clear notice, they can enter the unit for a variety of reasons. But a new 24 hour notice must be given with each intent to enter (i.e. you can’t write one letter saying this is your notice covering the next three months). If you keep giving notice there is very little the tenant can do other than taking you to the Tribunal claiming the landlords constant entering of the apartment is interferring with the tenants ability to enjoy the unit. Then a judge would come to a decision etc.

11 Mike

Mr. Cheap wrote: “In Canada I believe you could also move into the house yourself (or move a relative in) as a way to push them out. Force them to leave, move in and repair the place, then after a couple of months change your mind about living there and sell it.”

Here’s how I would counter that – I’d prove you have no intent of selling your primary residence that you currently live in (not hard to show itsnot listed and you don’t have an agent asigned to it etc.). Then I’d take you to the Tribunal and likely win some free rent since you were illegally trying to evict me.

BTW – i’m a fantastic tenant. I just know my rights because although there are some good landlords out there, there are many that are slow on repairs, are bullies, or sometimes simply don’t know what they cannot do. So I keep up to date on my rights as a tenant and because of that, I tend to get along well with my landlord as they either know or learn what their rights are as well.

12 Four Pillars

Cheap – yes, the landlord just said the tenants “wouldn’t allow it”. As you point out whether it’s legal or not doesn’t really matter – you need the tenants to co-operate to some degree.

I agree about bribing the tenants – that’s only fair. Why should a tenant help you sell the house they live in so that you can evict them? :)

I can’t believe that landlord expected to you to turn your apartment into a public washroom / kitchen… that’s incredible.

I don’t know why the guy wanted to sell – I think he used to live in Toronto and then moved out west or something. Perhaps the tenants had given notice and he just wanted to sell asap?

13 Mr. Cheap

Mike: That’s why I wouldn’t provide you, as my tenant, with detailed info about my principal residence :-). I’m renting the place I’m in right now, so your gambit wouldn’t work on me ;-). Someone who *DID* own their place could easily demonstrate plans to start renting out their current residence (along with a rationale for why they’re making the switch). I’m not so sure it’d be a slam dunk as you expect.

Does the tribunal really impose free rent as punishment for landlords’ misdeeds?

When I was showing my condo, the tenants I most wanted to rent to were the ones who asked lots of questions, nailed down exactly what we were agreeing to, carefully read the entire lease and knew their rights (like you from the sounds of it). My feeling (and it’s borne out with the tenants in place now) is that people who are aware of the legal way to structure a rental agreement are more likely to live up to their end. I’m happy to live up to my end as well: I’m not trying to impose any illegal actions on them.

I’d only try to pull the whole “you need to leave because I’m moving in” if tenants were violating the lease and trying to dig themselves in (and cause problems for me).

Mike (FP): Yeah, I was pretty shocked as well. I also agree that having their place sold underneath them is stressful for tenants (who usually expect high rent and bad changes after the change in ownership).

14 Mike

The tribunal (i’ve never been, but my law friend hates bad landlords has) and they typically don’t impose fines from his experience. They tent to err on the side of stating rent that has to either be returned to the tenant but some (most?) of the time if the tenant wants to stay they will give the tenant a rent abatement period (that removes the risk the tenant doesn’t get money back from the landlord). This is all general of course.

Smart counter move stating you are interested in renting our your primary residence and to move into the other unit. That would work, but as a tenant, i woudl argue in front of the tribunal that I should only be given my 60 days on or after you’ve signed arms-length tenants to your ‘new’ rental unit. That would be an interesting scenario to see how the judge would rule.

The other side of the coin is that if the tenants are indeed violating the lease, you as a landlord can just as easily approach the tribunal asking to evict the tenants. If the tenants are guilty you should probably win an eviction order. Probably slightly easier than moving in for a few months!

15 Four Pillars

Mark – I just rescued your comment from the sin bin.

That’s a pretty bad tenant!

16 ...

the owner move in clause can apply to a child or parent. Just get them to move in.

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