Managing tenants by mail is a totally different concept for most rental property owners. In fact, even professional property managers will tell you it’s not likely to work very well because most tenants will insist on discussing their problems or personal issues one-on-one with a real live person who will listen to them. The property managers are absolutely correct – if given a choice, tenants will always choose to plead their case with someone who can argue with them.
But the truth is – in spite of what the tenants may or may not prefer, my memos work extremely well as a substitute for making personal contacts. If you’ve been managing for awhile and you’re border line suicidal because of tenant frustrations, you owe it to yourself to give my memos a try! Who knows, they might just save your bacon ‘till you’re rich enough to dump ‘em.
Make no mistake about it; unruly tenants can turn an unsuspecting owner into a total nut case barely recognizable by his own mother. Furthermore, it doesn’t take too long for this to happen! How do I know this, you ask? Because over the years many of my most prized property acquisitions have been negotiated with sellers who could easily qualify for a permanent residency in the coo-coo nest! Take my word on this; tenants are one of the biggest reasons why sellers give up on rentals. They’re also the reason that many traveling carnival acts (real estate gurus) recommend flipping’! If they were to mention the word landlording in a room full of “fired up” wannabees, it’s like yelling fire in a crowded theater. It’s extremely hard to sell “get rich” programs when managing tenants are part of the package! Getting rich with houses is a very worthwhile goal, but you must dedicate the time to learn some basic landlording skills. Emotional confrontations should be avoided whenever possible and that’s exactly what my memos will do for you!
Emotional Confrontations Can Be Avoided
Early in my investment career, minor tenant arguments would often irritate me. Worse yet, they would consume a great deal of my precious time! You see, back then I had two jobs! I was a telephone man during the daytime, an investor most evenings and on weekends. The time I spent debating with my tenants meant less time for sniffing out bargain properties. I can still remember wasting entire weekends brooding over minor arguments with my tenants! Sometimes these confrontations would become quite emotional. It finally became quite clear to me – I was wasting far too much time and getting very little satisfaction! It was obvious, I needed a better mousetrap.
I don’t know about you folks, but I’ve stayed mad at an obnoxious tenant for as long as 10 days or so! I still remember some unpleasant times not being able to get these emotional battles out of my head! Although it’s been quite a few years now – I still recall how upset I used to get arguing with a tenant. Obviously, my tenant wouldn’t occupy my thoughts every single minute of every day – still, it boils down to this — My tenant stole my valuable time! You simply cannot be a productive investor and get things accomplished if you are constantly upset with your tenants.
I still remember when I had 218 tenants living in my rental properties! Can you imagine the nightmare – or what it might have cost if I had to give away 10 days of my time to battle with each one of them! Don’t bother reaching for your calculator – I’ll save your battery and tell you the answer. If I were to give away or somehow lose 10 days (16 hours when I’m awake) to each one of my 218 tenants, if would cost me 34,880 hours of my precious time. Figuring $75 per hour, which is what I earned fixing’ up my eleven Haywood houses, I’d lose $2,616,000. Even a tiny fraction of this amount is a lot more money than I wish to give away arguing with my tenants.
Doing business with tenants is what we landlords do. Needless to say, it’s where the money comes from! However, nothing’ says we have to personally go see them – or even call them about every little issue that pops up! Things like too many guests showing up at their duplex, cars parked on the lawn, habitual late rent payments, etc. Most of these matters involving their tenancy can easily be handled much more efficiently and without emotion with short hand-written memos.
A Landlord’s Mind Is a Terrible Thing to Waste
I discovered my memos almost out of necessity. Seems the more tenants I took on, the less time I had to deal with their individual problems! Also, I found that many of my one-on-one conversations would often become emotional – especially when tenants felt the need to defend their actions. These emotional discussions are a terrible mental drain on landlords, as well as very time consuming. This is how my MEMOS got their start! I was extremely desperate to find a way to free my mind of tenant problems. We human types (landlords included) can only process a single thought in our brain at one time. It’s nearly impossible to have constructive, money-making thoughts or ideas if your tenants are constantly keeping you upset! Believe me when I tell you, the time and money you can lose over emotional tenant confrontations staggers the imagination – and as I told you earlier, can eventually drive you nuts!
Listening to most tenant sob stories is a terrible waste of time! Worse yet, many of these one-on-one type discussions heat up, or become emotional! Allowing your emotions to take over will almost guarantee that nothing positive will result from the discussion. In fact, emotional discussions are extremely harmful to having a good landlord-tenant relationship, which should be the goal of every rental property owner.
Here’s a typical telephone call from a landlord to his tenant: “Hi Bobby – thought I’d better call; I haven’t received your rent this month! You probably don’t realize this, but my mortgage payment is always due on the 1st of every month – no exceptions! When you don’t pay me, I can’t pay my mortgage! The bank doesn’t care if I have medical bills, car payments or the baby needs pabulum – they just want their money. You’re making me wait a few days, but I need you to understand, the bank won’t wait – so what do you expect me to do?”
This one way communication is very touching, but almost a total waste of breath! Quite frankly, I’ve yet to meet the tenant who gives a tinker’s damn about my mortgage payment! Why should he, I’m the one who bought the stupid property – not my tenant! For just a moment, think of yourself as the tenant! Now ask yourself, do you really care anything about the landlord’s mortgage? If you’re truthful, I would imagine your answer is about like mine – not very much!
A late rent discussion might go something like this: “Lester; I don’t see how you can afford that turbo sports car when you can’t even pay your rent on time. Just look at me, I still drive a fifty-one year old Studebaker pickup; I certainly can’t afford to drive a car like yours!” There is absolutely no reason in the world to say something like this to your tenant. It doesn’t build a better customer relationship – it weakens it!
“Clyde; this is the fourth time I’ve asked you to clean up all the junk in your front yard. I don’t see how you can even stand to look out your window. It’s a pigsty; it looks like you were raised in barn! Didn’t your parents ever teach you anything about keeping things neat?”
Once again, these remarks will only put you at odds with your tenant! Think about what kind of response you might get from Clyde next time your refrigerator in his apartment quits working with 200 bucks worth of frozen fish inside – or maybe the Sear’s air conditioner repairman can’t make it out for two more days. When your tenant calls and tells you he’s not about to wait – or after you’ve paid for 20 pounds of stinky fish, perhaps then, you’ll understand why your pigsty remark does very little for landlord-tenant bonding.
In each of these situations, my memos will avoid a personal visit and certainly prevent an overheated telephone conversation! You might be thinking to yourself – wouldn’t a phone call be so much easier? Possible yes, as long as an argument don’t develop! But you must always remember, what’s said during a telephone conversation isn’t rehearsed – and often not very well thought out. Sometimes in the heat of the moment, it’s easy to blurt out things that later you wish you hadn’t said! With a memo, you can simply erase or cross out a hostile sentence or two before you mail it! I sometimes write my hand written memo three times – I keep toning it down to avoid being confrontational with my tenant!
Never Blame Your Tenants for the Problem
When I teach memo writing lessons at my seminars, I always suggest writing them immediately after you decide you have something important to tell your tenant. Quite often, I’ll write my memos after driving around viewing my properties. This way, what I have to say is still fresh in my mind. For example; things like, too many cars parked around the property, trashy-looking yards, inside furniture stacked outside the house, lack of watering the lawn or working on vehicles, etc. I will immediately sit down and write a memo with the hope of fixing the problems. I always begin my memos with big bold letters – WE NEED YOUR HELP.
To help you write without emotion – I suggest you pretend that you are the tenant receiving the memo! Ask yourself – how would this memo set with me if I receive it? When I can say to myself, this is a reasonable request and it sounds pretty fair to me – only then do I send it to my tenant. I rarely need to waste much time thinking about what I want, I already know! My challenge is to write a memo that my tenant is likely to respond favorably to! You must always remember that threatening memos seldom change anything. Your goal is to present a written argument to your tenant making him understand that he’ll be much better off to comply with your request than if he doesn’t. See how simple this stuff is!
One of the big differences between calling your tenant on the telephone or knocking on his door versus writing him a memo – you have more time to think about what you plan to say and how to say it! This is very important! Many times after returning from a quick property drive-by and seeing something I really don’t like – I’ll sit down and quickly pencil out a memo, then I’ll read it back to myself. “Good heavens”, I can’t send something like this, my tenant would kill me! There’s way too much emotion in my first writing, but still, no harm is done – I haven’t mailed it yet. The best method I’ve found is to draft my memo, then let it sit overnight so I can re-read it again in the morning. About 50% of the time, I’ll need to re-write the memo and tone it down a bit! I call this “draining the emotion”. You can’t do this with a personal conversation – once your blurt something out, you’re stuck with it!
You must never play the “blame game” with your tenants. It’s not necessary when both parties already know who’s at fault. Remember, your memo is a request to get your tenant to do something you want done. Scolding or blaming him is counter-productive, even if he has it coming. My memos are not a whole lot different than the most memorable Marlon Brando line in the Godfather flick! “I’m going to make them an offer they can’t refuse!” Try and visualize as my tenant, whether or not you might be better off to comply with the following memo. It’s my request to save water when I’m paying the bill!
“DEAR WILLIE SMITH: WE NEED YOUR HELP! I know we’re all concerned about saving money where we can! Driving by your house several times this past month, I’ve noticed the water running “full blast” in your front yard and down the driveway. With this hot summer weather, I’m sure the kids love cooling off in the hose. However, the times I’ve driven by, no one is ever in the yard! I realize the owner pays the water bill, but I would really appreciate your help with this. As I’m sure you know, our rents are probably the lowest in town and we’ll try our very best to keep them that way. With this is mind, I would be most grateful for any help you can give me to reduce our water expenses. Sincerely, Bob – Rental Manager.”
Memos Must Always Have a Hook
The hook part of my memo is the sentence that suggests to the tenant what’s likely to happen if he doesn’t respond favorably. In the memo above, my hook is the sentence that says: AS I’M SURE YOU KNOW, OUR RENTS ARE THE LOWEST IN TOWN AND WE’LL TRY OUR BEST TO KEEP THEM THAT WAY! You must clearly spell out or present a clear vision of what will likely happen if the tenant ignores your request. Obviously, most tenants are very sensitive to any words that sound like a rent increase could be in their future. My students who have learned how to use these memos effectively wouldn’t trade them for anything. Most claim that once they learn to design, or create a convincing hook – they work like magic!
Before I stop bragging’ here, allow me to share one of my favorite memos I designed for my late paying tenants – I’m trying to convince them to “pony up” their late fees. This memo enjoys about a 92% success rate.
“DEAR TARDY TERRY: WE NEED YOUR HELP! During the past six months or so, our records show your rents have been coming in later and later! This month (Sept.), we didn’t receive your payment (check 9171) until the 13th. Apparently, you forgot to add the late fee to your payment! As you know, we allow five (5) extra days (grace period) after your rent due date. Our rental contract shows your rent date is the 1st of every month, but it’s always mailed quite a bit later. Starting immediately, we ask that you please include the $40 late fee with your rent payment when it’s mailed after the 5th of the month. We use the postmark on the envelope to determine late payments. I hope this sounds fair to you! As you probably know, we only have two ways to collect these fees. You may pay them with your rent check when you’re late – or, we can increase your rent to catch them up. We have found that most of our tenants prefer paying a one-time late fee rather than having their regular monthly rent increased! Thanks so much for your help – Bob, Your Loving Manager.”
With this memo, my hook is in the last sentence, which I’m sure you can easily pick out! Tenants can spot it in a split second – and I will tell you, this is an extremely effective memo for beefing up late fee collections. I might also point out – no tenant has ever called me with any questions about this particular memo – it seems, they all understand it perfectly well!
In Courtroom – Written Evidence Prevails
Courtrooms are not the place most landlords like to be, but sometimes we end up there just the same! Being prepared in court counts for everything – hearsay and BS don’t mean didily squat! Regardless of the matter at issue, be it an eviction or a tenant suing over the use of his deposit money for cleaning – WRITTEN MEMOS will very often save the day. Judges will listen to the storytelling and drama from both sides, but when it’s over, if you have memos, letters or documents to support your position and substantiate your story, you’ll win the day, I guarantee.
When you explain your side of the story – how you’ve written your tenant three (3) times during the past several months, for example asking him very nicely to stop violating the lease agreement (working on vehicles) without any response – the hearing will be over! Naturally, your tenant will jump up from his seat to deny everything! But unfortunately for him, you just happen to have the copies of your memos, marked EXHIBITS 1, 2 & 3. The contest is over; it’s landlords three – front yard auto mechanics – ZIP!
Jay P. DeCima, “Fixer Jay”, lives in Northern California where he operates multiple rental properties. With nearly 50 years’ experience, he’s a street-wise landlord and best-selling real estate author. Jay’s recession-proof, adding value techniques are ideally suited for small-time, Mom & Pop investors seeking faster paydays and financial security. Jay’s self-help books, published by McGraw Hill, have been voted No. 1 by both the Los Angeles Times and Chicago Sun. They remain top selling real estate books on Amazon and Barnes & Noble lists.
Readers are invited to preview Jay’s latest “How To” e-Book, LIVING THE DREAM (free download) at: www.bit.ly/aoa-2.