The dichotomy in this business...

[Treivor Cashion]

So I'm in the process of writing my business plan to start my real estate investing in a couple of years, once I build the connections, systems/processes and the capital to do so. While writing my business plan, I came across an interesting dichotomy that I'd love some input on.

I've gone through this forum quite a bit over the past six months and one of the things that many investors on here emphasize is that your business is, in fact, a BUSINESS and you need to run it like a well oiled machine that doesn't divert from it's criteria or make emotional decisions. While I certainly agree with that, it's also interesting that real estate is primarily a SERVICE industry in that our business model does rely heavily in part on acquiring and maintaining good tenants to provide consistent and timely cash flow each month. Without the tenant, the monthly mortgage payment and other various expenses would quickly eat any small time investor alive, unless they're heavily capitalized. On that note, in theory we should also provide exceptional and unique services to deserving tenants, to keep them coming back to our properties and staying as our tenant. For example, if a tenant comes across hard times or some other financial fallback, it would make sense that if they're a good enough tenant you might work with them on a payment plan or maybe even delay rent payments to keep them on. Even though this might affect the short term profitability of your operations, you've established a loyal tenant that could pay off in the long term for a number of reasons. This is one example of many that I'm sure landlords everywhere have stumbled across, so I'm curious...

How have you landlords out there established a good balance between running your real estate business like a business, but still focusing on the service aspect of the business? 

[Steve Vaughan]

I have seen a lot of loyalty from granting mercy when appropriate.  I don't mind and actually have an undisclosed to the tenants 'policy' of waiving the first late fee if they've been with me in good standing at least 6 months. People appreciate that. I also give, granted lame, holiday cards to everyone that says 'I appreciate you!'

 I have a single mom that has owed me $385 in rent. For 5 years.  She got behind and could only pay half one month. Not a big deal to me. Meant the world to her at the time.

In exchange, she has kept the parking lot squared away, given us 'extra stuff' she had like a window a/c unit and yard items that I use at the property. I get a warm smile and how are you from her and her daughter when I see them. Etc.

I have also given leeway to rats that took major advantage of me. Pick your mercy. Big difference between a hand up and a hand out.  I like that you see there is a human side to running this very human business, Treivor.  Just be careful not to waive something for someone but not somebody else.  That's why I have my 6 months+ thing. I have to apply it to everybody.