Tenant As Manager

By: Wojciech Kic

Many owners of rental properties hire real estate management companies to manage their holdings.The reasons for hiring a property manager vary.

Some owners desire no interruption at their place of employment; others turn to a property manager due to the perception of advanced property management knowledge and experience.

The decision to hire a property manager usually yields the expected financial results. In addition, owners enjoy the benefit of professional management without ever interacting with a single tenant. But what commonly upsets the apple cart is an unexpected note from tenant to the owner, grateful for the fine housing, but still, concerned for its condition.

A tenant’s unexpected report to the owner forces reevaluation of the management approach.The tenant makes it evident that she would pay higher rents if only property improvements were made.Thus the owner is forced to ponder why he isn’t getting the higher rent as the tenant suggests? Minor expenses here and there, the letter goes, will pay for itself in just a few short months with tenant’s self-imposed rent increase. “Why didn’t the manager think of that?” communicates the note.

The financing solution is evident. For a temporary reduction in rent the tenant will provide the necessary improvements that will soon make the property more valuable. The landlord will not only get the exact level of improvements for higher rent now and high quality tenants in the future but the on-going maintenance as well.The elimination of the property management fee will largely offset the rent reduction and lead to the recapture of past opportunities.

The tenant’s grass roots knowledge of future tenants’ desires makes the property manager’s role no longer relevant but even questionable.The owner can do much better!

The tenant’s assault of the property manager has credibility. It is difficult to argue that more is less.The tenant’s credibility is further enhanced by the owner’s failure to accept why the tenant would undertake such an assault, knowing in advance that retaliation for a frivolous claim could be a permanent poor rental reference and a possible loss of housing upon the lease expiration.To the owner the imminent threat becomes the loss of the tenant and the already projected forward profit.

The conflict quickly accelerates – the tenant is right! The solution casts a cloud of bitterness over many years of success; the management never worked! Only the fortu- nate oversight by the tenant unravels it.

The tenant’s faithful service does not go unrewarded.Will you please manage the property?

But the strike against the owner’s property manager is a strike against the owner. Not only does the tenant secure the management authority over the owner’s domain but the future promises even greater rewards. As the tenant’s strong hold grip slowly tightens, the control of the property by the tenant becomes permanent.The point of no return is suddenly crossed.The sale of the property on the terms acceptable to the tenant becomes the owner’s only way out of the bondage.

Property owners are in the inferior, handicapped, position in the landlording game relative to their tenants. On one hand, no amount of effort by the owner increases gratitude from the tenant. On the other hand, no amount of the tenant’s prosperity finds satisfactory housing.

Professional property managers eliminate the owners’ landlording handicap. Property managers, armed with the owner’s confidence, have the power to keep the tenants’ permanent rebellion in check. The challenging tenant, however, skillfully navigates the web, and prompts the owner’s concerns about having ceded too much power to the property manager.The owner’s early read of tenant’s bypass, however, reasserts the integrity of the lease and enhances the property manager’s performance, thus increasing the owner’s yield.

Ultimately, owners must protect their self-interest by periodically visiting the property (not the tenant) and by hiring a property manager who is working in the owner’s best interest.The latter is ensured by hiring a property manager whose livelihood is wholly dependent on the owner’s satisfaction with the continued ownership of (not the sale of) the property; the former is ensured by not hiring the tenant as . . . the property manager!

Leave a Reply

Back to Blog