Insights on Managing C-Class Rentals: A Balancing Act

[Jessie Dillon]

across the 3 properties i own/co-own, we have 15 tenants right now (+2 vacant units). of those 15 tenants, a handful have had to pay late over the last month. i know a lot of investors and property managers who would've given formal notices as soon as possible. that doesn't work for us.

every working role i've ever had has been in customer service, and property management is just as much a 'people business' as anything else. as a property manager, you're selling a product/experience to a customer, and if your product/experience sucks, you'll have a hard time keeping customers around.

part of providing a great product/experience, is knowing your audience. so in this case, knowing what type of tenants your units are going to attract, what exactly they're looking for, their pain points, etc. that said, an "a-class" rental require one style of property management to be successful, "b" requires another, "c" requires another, and "d" requires another.

most of our units are in c-class areas. what i've found is most effective in c-class areas, is being human. if a tenant is hit with a bunch of unexpected expenses one month, they very well might not be able to pay in full on the first. HALF of americans do have less than $5,000 in their bank accounts right now.

but here's the thing: if someone's making a clear effort to catch up, they're on the right track, they're communicative, they're respectful, and they take care of their unit... i'm perfectly happy having them as a tenant, and don't want them to leave. i will always want to work with someone who's making those efforts.

obviously a line has to be drawn, because you're not doing anyone any favors by letting them dig themselves into too big of a hole. and once in a while, someone does have bad intentions, and you usually don't figure that out until they're way behind.

but that all goes to show that managing c-class rentals is an art, not a science. *yes* we should have processes/procedures to ensure a consistent renter experience and protect ourselves legally, but i just don't believe in throwing the book at people every chance we get.

finding the balance here is just something that comes with time, and i'm sure my thoughts on it will keep evolving as my RE journey goes on. but for now, i'm very thankful to have a PM company for our out-of-state property that is nailing this balancing act on our behalf.

[Michael Smythe]

@Jessie Dillon after 23 years of doing this, can agree with you BUT - a landlord should ALWAYS send an eviction notice to "start the clock" on the eviction process.

This keeps the landlord in control of the situation and let's the tenant know this is a serious matter they need to address.

Great customer service skills should be used to explain all this to a nonpaying tenant, so they don't panic or resign themselves to an eviction - basically, to get them into a reasonable payment plan.

Also recommend that tenants be required to supply a current paystub and give specific dates & amounts they will pay. We put this info into a timeline spreadsheet that also adds future rent payments, to show when they will be caught up. The amount of time has to make sense or what's the point of the payment plan for the landlord?