Tying the Knot with Your Tenant?

“What the true proverb says has happened to them: ‘The dog returns to its own vomit, and the sow, after washing herself, returns to wallow in the mire.’”

(2 Peter 2:22)

 

“Winning is not a sometime thing; it's an all the time thing. You don't win once in a while; you don't do things right once in a while; you do them right all of the time. Winning is a habit. Unfortunately, so is losing.”

(Vince Lombardi)

 

“Frustration is a function of our expectations.”

(Stephen Covey)

 

Relationships can be a funny thing.  I remember hearing some version of this soliloquy about a friend’s boyfriend years ago:

 

“John” can be a really sweet guy and make me laugh!  He brings me to cool places and, at times, makes me feel like the most special girl in the world.  He is ruggedly handsome and is a really good athlete.  He seems to be a big animal lover and is loving on his dog constantly (which is really cute!!).  He sees us being together forever.

 

But… he can also be really cold.  He can’t keep down a job and would get really angry at his co-workers and bosses in the past few places he’s worked.  He is really unpunctual and forgets about me when he’s around his guy friends.  His family has largely alienated him and I’m not sure he cares about anyone but himself (and his dog).   

 

He asked me to marry him and I said “yes!”

 

Wait- what??  Congratulations??? 

 

We have a version of this courtship in Charlotte property management with lease renewals.

 

A tenant and landlord signing their first lease could be viewed like a couple dating.  The tenant can see how the landlord treats them, how quickly inquiries are responded to, and if their business is handled competently.  On the other side, landlords can see if the tenant pays on time, follows the rules of the lease, and cares for the house.  It’s a two-way street.

 

When the first lease is near its expiration date, both sides have a decision to make on whether to keep the lease going.  Do they like each other?  Is the price right?  Does renting this home for another year sound appealing?

 

With a renewed lease, most things for the next year would probably be the same.  Any large behavioral change from either party would not be expected; even when people promise they will change some behavior, they tend to regress back to the mean at some point.  What happens during the first year of the lease is going to be close to what is happening during the second, third, or tenth year of the lease.  From a landlord perspective, the question to ask is whether the status quo is acceptable. 

 

If tenants pay late in 6 of the 12 months in the first year, the chances are they will be late as often in the new lease.  If the tenants are trashing the house in the first year, they are probably not practicing good housekeeping in the second.  Fortunately, the inverses are also true.

 

Renewing the lease and keeping a tenant is much cheaper and easier than fixing up a house and finding another.  But having peace with a rental home should not be minimized.  If late payments or communication issues cause landlords consistent unrest and anger, a lease should not be renewed; it’s not worth it.  However, if the business decision is made to renew a lease to a tenant who is not fully meeting the lease standards, expectations of future performance should be recalibrated.  The correct expectation should be more of the same.

 

Much like tying the knot with “John” after knowing his flaws, lease renewal decisions should be made in light of the respective tenant’s known behavior.  Everyone wants positive change, but it can’t be relied on.  Smart landlords become fully aware of who they are tying the knot with before signing on to extend their lease for another year!

 

Happy Landlording!