Thoughts on "empowering" tenants with a few small tasks...

[Brian H.]

Hey folks. Hope everyone is well!

So, I was talking to someone today that has been a successful landlord for 20+ years. He was talking about a few of his multi-family setups where he has maybe a couple quadplexes or duplexes on one plot.  He will pick a tenant and offer them the opportunity for a little less rent each month in exchange for a little help from them. They are by no means a property manager. He may drop their rent by $100/ month or something.  He will ask them to collect rent from everyone (if they don't pay online) and drive it up to him where we are. His rentals are about an hour away. Mine are about 40 minutes.  He will also have them do their best to sort out any relational issues between tenants if they arise. Tenant 1 hates Tenant 3 because of blah blah blah. A mediator of sorts. He obviously will be involved if needed.  He said he has had pretty decent success with this.

Do any of you do anything like this? Is this just bonkers? Just curious what peoples' thoughts are on here.

Thank you all!

[Thomas S.]

Just bonkers. It is not a wise decision to give tenants responsibilities related to other tenants. They can not be trusted.

Sounds like the landlord you were talking to has given up land lording and basically leaving the inmates in control of the prison. Probably doesn't do inspections either. After 20 years he has lost interest.

[Dennis M.]

Donot repeat this business model ( if you can call it that ) I can’t think of a worse idea . It is like leaving the fox in charge of the hen house or having Bernie madoff in charge of your retirement accounts  .The tenants have just one job and that is pay you rent .its hard to believe a veteran landlord who’s been in the game that long would make such a  mistake  . It’s a sure fire way to lose money each month and cause yourself a lot of grief .it is possible it could work in some situations I guess but I sure wouldn’t do it 

[Mike Dymski]

Resident managers are common in small to mid size multifamily. Those properties are too small for onsite apartment management companies...and too big for SFR management companies (a different business model). The typical structure is more formal than your description (it's full management, not empowerment).

[Bob B.]

@Brian

@Brian H. I would NEVER collect rent in person.  My utility companies, insurance companies and others don't send collectors to my house.  The bank might send a repo guy over if I don't pay my car note.  Your need to train the tenants to pay electronically.  

[Brian H.]

@Thomas S.  @Dennis M.  @Bob B.

Thanks for the heads up on that. Was just curious.  He has been doing this for over 10 years with his 20+ year rental business and claims it has worked great for him but maybe he is just lucky I guess?   I thought it sounded a little nutty but was curious what others thought about it. I appreciate the honesty!

@Mike Dymski   He is very happy with it on his end. He doesn't have them fully manage, though.

I think I will just keep doing it all myself ;) I am fine with that at this point.

[Michael Gefvert]

I've heard of this sort of arrangement for onsite handymen who get a rent reduction in exchange for being on call for maintenance issues.  But, having a tenant collect rent or resolve issues is a recipe for disaster.  It also might be illegal-- in my jurisdiction collecting rent money is real estate activity and can only be done by the property owner or someone acting under the supervision of a broker.

[Brian H.]

@Michael Gefvert

Thanks so much. Hadn't thought about the legal end in regards to that. I appreciate the heads up there as well!