Tenant Mindset

[Scott Stevens]

Hi everyone,

I searched, but couldn't find anything, so am starting this post. I have rentals in decent, middle class neighborhoods, sort of upple middle of the spectrum in the area. My objective is to decrease vacancies and decrease tenant turnover. What's do you think the mindset of your tenants are (and please list the types of rental). Mine has changed throughout the years. When I was 18, it would be cheapest rent possible, college it was finding a nice place, but when they would send the renewal letters with a slight rent increase, I felt upset and had no clue back then that they were running a business and their expenses increase. I just thought they were being greedy... little did I know.

At this point in my life, we are property tax payers, but I know that being in the military, where I go next, I will likely seek a cheaper apartment in a moderately safe area and seek a company that maintains their propertly well and addresses repairs and issues quickly, but won't care if the interior is dated looking so longs as it is clean and things work, but I am definitely not seeking a place with a yard that has to be maintained. I just don't want to spend my time maintaining someone else's yard.

I know everyone is at different stages in life and opinions change over time, but what do you think the mindset of today's tenant is? Does a 3-5% increase make them upset and want to move? Do they mind having to cut the grass or change the air filters? Do you think they are glancing at the rents of other homes in the area, or do they find one home and stick with that and stay content? Do they manage their money in a way to ensure rent is factored into their budget first and that's the first bill they pay, etc? Other thoughts on your tenants? Please describe your home/neighborhood type and what you think that tenant's mindset is. Thanks in advance.

[Richard C.]

I absolutely believe that a tenant might move over a $15 rent increase, or similarly small-seeming thing.  My firm had a large client leave over a .25% "Infrastructure" fee added to their bills for management consulting.  Not economically rational.  Even assume they could get results as good elsewhere (which I don't)  there is time, effort and money involved in making the switch, and inefficiency while everyone gets to know the new operation.  On the other hand, it was also not economically rational for my firm to risk losing clients to recapture some money for IT types supporting the consultants.

The issue is, I think, two-fold.  First, you introduce some doubt into a stable relationship.  Is he trying to take advantage of me?  Am I going to start seeing a lot of these little fees and costs?  Second, you may just cause people who were on autopilot to actually look at what they are paying, and then they might decide to look around.

I don't think you can control all of this.  Sometimes you need to do what you need to do, and if that means a business relationship ends, then that's what it means.  

But it is always worth remembering that you are engaged in a two-way transaction.  There is no boss, and the power relationship is often a lot closer to even than many landlords realize.  I am thinking of my best tenant, who currently rents my worst house.  She could, in all honesty, replace me a lot easier than I could replace her.  Am I going to raise her rent?  Even if she is there 5 years?  Hello, no.