Needy Tenants & the Power of the Cost-Benefit Analysis
Tenants are people, and we respect all people…but some people are easier to get along with than others.
Some tenants are needy. We’re not talking about being low-income or Section 8 or whatever; We mean they’re the kind of people who constantly ask for (or demand!) your time and attention. Sometimes they’re just unlucky and they really do need an extraordinary amount of stuff from you in a short period of time. But some tenants are just overly abusive to their homes, and others are simply lonely and have decided they like socializing on the phone with a captive audience and having someone “visit” to fix some small thing. So other than counting your grey hairs, how do you know when ‘needy’ goes from mild annoyance to expensive problem?
Introducing the Cost-Benefit Analysis
A Cost-Benefit Analysis (CBA) is a simple enough process. Basically, you list all of the costs of taking an action, and all of the benefits you’ll gain by taking that action, and you decide whether or not the benefit is worth the costs. We should say, it sounds simple enough — but this is property management. Nothing is ever simple.
What Are We Analyzing Here?
You can’t just evict a tenant for no reason, so unless your needy tenant also happens to be in an evictable state, you can’t just make them disappear. Instead, what we’re analyzing is the cost/benefit of inviting them to move. Basically, you say “Hey, you don’t seem like you’re really getting along well, here — if you’d like to move, I’ll suspend any penalties for breaking the lease early.” We can’t guarantee they’ll actually leave, but we can at least figure out whether or not it’s worth it to make the offer.
Determining Benefits
We’ll start with the easy part: how beneficial is it to invite an overly-needy tenant to depart? There are three forms of benefit.
• First, assuming you replace the needy client with an average client, you have all of the time and money you save by not sending people out there every week for the foreseeable future.
• Second, you have the opportunity to get into the property and perform all of the maintenance and updates that will potentially let you increase the rent. That, of course, depends on the individual property.
• Finally, if they’re the type of needy tenant that is needy because they’re abusive to the property, you’ll save money from your maintenance/repair budget as well.
Determining Costs
Costs, on the other hand, are a little more difficult to figure. Losing a tenant means:
• Your income goes down because you’re not making rent from that property. This is hard to figure because you can’t know ahead of time how long the property will be vacant. Take a look at the last few times you filled this particular vacancy, and overestimate the cost.
• Your advertising expenses go up because you have to fill the vacancy. Same deal as above.
• And as much as repair and maintenance might mean you may be able to increase the rent, it also means you have to pay for that repair and maintenance.
An Alternative
There is one alternative to keep in mind when it comes to needy tenants: slow down the flow of need. You should always be prompt and courteous in your responses to tenant requests, but you don’t have to make it super easy for a tenant to make those requests. Stop accepting repair requests by phone and text. Instead, include in your lease a requirement that all non-emergency repairs must be submitted via email, or for those tenant that don’t use email, require them to send a letter.
Whenever you get a non-emergency request from a tenant via phone, voicemail or text, firmly require them to email/mail their request. Not only will this get rid of ticky-tack requests, but you’ll also discover that it’s great having documentation of tenant maintenance requests — handy if you go to court over a tenant claiming they’re withholding rent due to ‘maintenance issues’. Win/win!