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Is your tenant-phobia affecting your property investment’s profitability?

1st January 2015
If you’re nervous about dealing with tenants, you’re not alone – but it affects your profits. Here’s how to act confidently with your tenants.

If you’re nervous about dealing with tenants, you’re not alone – but it affects your profits. Here’s how to act confidently with your tenants.

Did you know that many Property Managers are fearful of dealing with tenants?

It’s true… and it can be property owners who are self-managing as well as so-called ‘professional’ Property Managers who can be tenant-phobic.

You only have to watch ‘Renters’ on TV to see that there are a good number of NZ Property Managers who let the tenants set the rules.

Being scared of dealing with tenants won’t get you anywhere!

Well, the only place that tenant-phobia can get you is on TV, on ‘Renters’, but that’s something best avoided, in Bridgman Property Management’s view.

Instead, you need to deal confidently with your tenants

And dealing confidently with tenants isn’t as hard as you may imagine.

The reason for this is a tenant’s repertoire is actually quite limited. There are a finite number of objections that a tenant will present for each type of problem.

In time, you will be accustomed to these objections, as you will hear them time and time again! With experience, you’ll be able to head off expected responses before they materialise… or you’ll know exactly what to say in response.

Example: negotiating the rent

One of the first negotiations you will have with a tenant applicant is over the rent.

It’s very common for an applicant to say, “that rent seems high”. In most cases this tenant response is purely negotiation – after all, they’ve come to view the property knowing full well how much rent is being asked for!

However, the tenant-phobic landlord may genuinely end up believing that an average tenant can’t afford more than a certain amount.

We know of one landlord who believed that tenants couldn’t afford more than $300 per week… yet other tenants in the same block were being charged up to $340 a week! This tenant phobia cost this landlord $2,080 in rental income in just one year!

It is not going to aid your cause if you are uncomfortable with charging a tenant a fair market rent.

So when you’re negotiating with tenants, you need to know their likely objections – and then plan for those.

Thus the correct answer when a tenant says, “that’s a lot of money” (be it to the rent, or the four weeks’ bond and two weeks’ rent in advance) is: “Yes, it is a lot of money”.

Dealing confidently with tenants takes time and practice

In your travels to becoming a seasoned negotiator, you need to consistently analyse each tenant problem to define what went well and what could be improved on next time. It is very important that you understand why the negotiation failed or why it became more drawn out than necessary.

If the communication failed, it is likely because the tenant is a better negotiator than you. Or maybe you are uncomfortable with face-to-face tenant communication. The tenant will realise that you’re out of your comfort zone – and will make the most of it.

You will improve with time and practice

Like mastering any skill, tenant negotiation takes time and practice.

If you can master it, the cost-benefit is huge. You’ll be able to resolve tenancy problems quickly, rather than the problem becoming drawn out and a tenancy tribunal hearing being required, and a requirement for a debt to paid-off over 5 years.

In short: mastering tenant negotiations will contribute directly to your bottom line, and will lower your stress levels too.

You need to portray that you are confident and in control. At Bridgman Property Management, we think of ourselves as ‘speaking softly but carrying a big stick’. In other words, we work to achieve firm and respectful outcomes in property management.

Mastering this firm, fair and confident approach may take practice, but it will be well worth it.

Summary

  • Tenant-phobia can be very expensive.
  • Conversely, if you can master tenant negotiations, you’re likely to save both time and money.
  • Tenants have a limited repertoire of problems and objections.
  • With time and practice, you will be able to head-off expected responses before they materialise, or have a set answer that stacks the odds in your favour.
  • After any tenant negotiations, analyse what went well and what could have been handled better.
  • You need to come across as being firm, fair, confident and in control at all times. This can take practice, but like any skill, this can be learned over time.

 


 

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