Reward Systems For Good Tenants? Do or Would You Offer It?
- Thread starter MCS_80
- Start date
Yeah but your tenants never pay the rent!
Excuse me! You only see the bad ones. We have good ones too, you know. Difference is that you never hear about the good ones BECAUSE they are good ones.
I've never had to chase a tenant for late rent. Ever.
Never had any damage caused to a property by a tenant.
Never had to caution a tenant to keep the place clean and tidy.
Mayby I'm just lucky.
Or maybe I just choose tenants whose values are in alignment with my own.
My tenant turnover is very low. I've only had 2 vacancies in the last few years - one due to the tenant cashing in on the FHOG boost and the other due to the tenants personal circumstances. Other than that, they just don't want to leave.
They all get a Coles/Myer gift card each Christmas just so they know that I've noticed how easy they are to deal with and manage.
I found out recently that one of my tenants takes his gift card, each year, to K Mart and uses it to buy presents to put under the wishing tree for the needy. How good is that. What goes around, comes around.
We all have our own reasons for doing or not doing this type of thing for tenants. So long as we are trues to ourselves in doing what we do, there is no right or wrong. Each to their own.
Merry Christmas
Never had any damage caused to a property by a tenant.
Never had to caution a tenant to keep the place clean and tidy.
Mayby I'm just lucky.
Or maybe I just choose tenants whose values are in alignment with my own.
My tenant turnover is very low. I've only had 2 vacancies in the last few years - one due to the tenant cashing in on the FHOG boost and the other due to the tenants personal circumstances. Other than that, they just don't want to leave.
They all get a Coles/Myer gift card each Christmas just so they know that I've noticed how easy they are to deal with and manage.
I found out recently that one of my tenants takes his gift card, each year, to K Mart and uses it to buy presents to put under the wishing tree for the needy. How good is that. What goes around, comes around.
We all have our own reasons for doing or not doing this type of thing for tenants. So long as we are trues to ourselves in doing what we do, there is no right or wrong. Each to their own.
Merry Christmas
That's beautiful! I love when people get a present for themselves and give it up for someone else, it's so nice!
Merry Christmas
But Rob, I believe you are a 'do it yourself' landlord & don't use a PM? In this case you would have direct contact with the tenants. I, on the other hand use a PM, so I have little to do with the tenants.
I agree with you that tenant selection is crucial and I have many good tenants that I never hear a peep out of, however have had a spate of really bad ones that came from a bad PM several years ago. We ditched most, but one of them took 3 years for us to get rid of and we are now cleaning up the mess from that particular tenant.
Our lovely PM has gone above the call of duty with the trauma caused by the original PM and has done an amazing job of dealing with the situation. Five of our IPs were caught up in the mess and we had problems with all five of them. Our PM is the one who gets a gift.
Since getting control of our properties back, we have got 2 lovely long term tenants who look after the places like their own. One that is borderline, but the house is not a very nice one (it will be demolished soon, so we don't want to spend much on it) and another that was excellent until her relationship broke up recently. I think the place may be too big and too expensive for a single mum. Keeping tabs on that one.
That leaves the one we are finishing off now. Once we have it ready it will bring in quite a bit more than before too, as it has a small flat that was leased with the house, but we will be fencing it off and renting it separately.
On another note, we have a couple of IP's that we have had for around ten years in another suburb. Both have long term tenants that have been in them for at least five years each. Only ever had one problem with one of them and that was around nine years ago now. The kids were only young and Lil Skater & her sister had to come with us while cleaning up after someone did a runner. The kids had a ball as they found one of those huge money box's that was thrown in the garage and had broken open. It had been used to save $1 & $2 coins. Needless to say, they didn't want us to help them in the garage.
I agree with you that tenant selection is crucial and I have many good tenants that I never hear a peep out of, however have had a spate of really bad ones that came from a bad PM several years ago. We ditched most, but one of them took 3 years for us to get rid of and we are now cleaning up the mess from that particular tenant.
Our lovely PM has gone above the call of duty with the trauma caused by the original PM and has done an amazing job of dealing with the situation. Five of our IPs were caught up in the mess and we had problems with all five of them. Our PM is the one who gets a gift.
Since getting control of our properties back, we have got 2 lovely long term tenants who look after the places like their own. One that is borderline, but the house is not a very nice one (it will be demolished soon, so we don't want to spend much on it) and another that was excellent until her relationship broke up recently. I think the place may be too big and too expensive for a single mum. Keeping tabs on that one.
That leaves the one we are finishing off now. Once we have it ready it will bring in quite a bit more than before too, as it has a small flat that was leased with the house, but we will be fencing it off and renting it separately.
On another note, we have a couple of IP's that we have had for around ten years in another suburb. Both have long term tenants that have been in them for at least five years each. Only ever had one problem with one of them and that was around nine years ago now. The kids were only young and Lil Skater & her sister had to come with us while cleaning up after someone did a runner. The kids had a ball as they found one of those huge money box's that was thrown in the garage and had broken open. It had been used to save $1 & $2 coins. Needless to say, they didn't want us to help them in the garage.
To keep with the theme of the thread.
No I would never 'reward' a tenant. I very much share the sentiment expressed in Skaters last post and would reward the good PM's. We already subsidize and baby tenants way to much, much of it sponsored by the government with their tenancy laws.
I am intrigued as to what happened with this property/properties? Was this a block of units with real bad tenants in place when you bought it?
Cheers
No I would never 'reward' a tenant. I very much share the sentiment expressed in Skaters last post and would reward the good PM's. We already subsidize and baby tenants way to much, much of it sponsored by the government with their tenancy laws.
I am intrigued as to what happened with this property/properties? Was this a block of units with real bad tenants in place when you bought it?
Cheers
No, to cut a very long story short, we had most properties in one area managed by a PM. They appeared to be on the ball, but I made an error in judgement. The principal was in financial difficulty and was fiddling with the books. He would overstep the PM and just 'do things'. She often would not know what was happening and the Principal was a good talker, who always had a 'good reason' for the things he did.
Things started out good, but went progressively bad. Some things were not known until we made the move either. Like bonds not lodged (he pocketed the money), this was only discovered when one of his dodgy tenants left and we applied for a bond that did not exist. Another tenant had rent receipts, but I did not get payment. He would go to her house and collect the rent in person so that it was not recorded on the ledger. This one came out in the wash when the new PM took the tenant to tribunal.
This was just one of many things that went wrong in one nasty year that I am so very glad is behind us now. We were one of the lucky ones that were able to come through without going under. Many other LLs were undercapitalised and were not so lucky.
As some of you may be aware we established a real estate arm to our business about one year ago. This was to provide a better level of service for our clients. We have had an excellent result since inception and clients that have used this service are delighted. We are able to let properties out a lot earlier than the competition as well as achieve better rental yields through good negotiation.
Anyway, back on topic. We have our own reward system for good tenants where we send tenants a gift voucher for a meal at the local restaurant for paying rent on time and keeping the property in good condition.
Apart from this we also mow the lawn three times a year and keep the garden topped up with mulch once a year. This service does not cost our clients any extra.
We believe that the extra touch will keep the tenants staying in the property longer, makes it easier to negotiate rent increases and it means less work for us in dealing with problem tenants.
Anyway, back on topic. We have our own reward system for good tenants where we send tenants a gift voucher for a meal at the local restaurant for paying rent on time and keeping the property in good condition.
Apart from this we also mow the lawn three times a year and keep the garden topped up with mulch once a year. This service does not cost our clients any extra.
We believe that the extra touch will keep the tenants staying in the property longer, makes it easier to negotiate rent increases and it means less work for us in dealing with problem tenants.
business vs. landlording
My perspective being a 2 year old landlord (but 21 year old business owner) is that it's difficult BUT necessary to look at your tenants as clients. It's difficult because tenants don't necessarily behave the same way as good clients.
From a "black and white" perspective, vacancies are expensive as well as time consuming if you do your own managing. Even though security deposits might take care of cleaning and minor repairs, sometimes they don't becuase a tenant used up their security while you were evicting them, etc. BUT even a best case scenario where one tenant moves in right after another moves out and you increase the rent $10 a month or so, you still have some time eaten up, printing and going over lease, setting them up in quickbooks, etc. etc. So my thought is to reward ON TIME payments and also, reward LONGEVITY on a fairly equal basis.
I'm making some notes now, but my first thought is
1. each month a 1-2 year tenant pays on time, you put $10 in a fund then give them a $120 gift card (or cash) December 1 to use for Christmas.
2. This amount can be increased at different levels (i.e. 3 yr, 5 yr, 10 yr, etc.) -- in fact, I'd say a 10 year tenant deserves soemthign very special, especially if they were reasonably on time with their rent.
3. there should be a "stop gap" which penalizes for "neediness" -- by this I mean ... even if a tenant always pays on time and has been there 20 years, what if they are contstantly calling or complaining .... ok just thinking out loud here ... i guess really I should be able to decide what complaints I will address and which ones are just nit picky.
Love some feedback, but I am budgeting 8-12% vacancy on my 35 units. If a tenant causes me to have ZERO vacancy year after year, I want to share in that and encourage it to continue and make it UNATTRACTIVE for that tenant to move. ..... I firmly believe in my philosophy of taking only 75% of the usual money off the table if I can have that amount for 50% of the usual effort.
I may be new and idealistic .... but I also might be ... right!!
Ken
My perspective being a 2 year old landlord (but 21 year old business owner) is that it's difficult BUT necessary to look at your tenants as clients. It's difficult because tenants don't necessarily behave the same way as good clients.
From a "black and white" perspective, vacancies are expensive as well as time consuming if you do your own managing. Even though security deposits might take care of cleaning and minor repairs, sometimes they don't becuase a tenant used up their security while you were evicting them, etc. BUT even a best case scenario where one tenant moves in right after another moves out and you increase the rent $10 a month or so, you still have some time eaten up, printing and going over lease, setting them up in quickbooks, etc. etc. So my thought is to reward ON TIME payments and also, reward LONGEVITY on a fairly equal basis.
I'm making some notes now, but my first thought is
1. each month a 1-2 year tenant pays on time, you put $10 in a fund then give them a $120 gift card (or cash) December 1 to use for Christmas.
2. This amount can be increased at different levels (i.e. 3 yr, 5 yr, 10 yr, etc.) -- in fact, I'd say a 10 year tenant deserves soemthign very special, especially if they were reasonably on time with their rent.
3. there should be a "stop gap" which penalizes for "neediness" -- by this I mean ... even if a tenant always pays on time and has been there 20 years, what if they are contstantly calling or complaining .... ok just thinking out loud here ... i guess really I should be able to decide what complaints I will address and which ones are just nit picky.
Love some feedback, but I am budgeting 8-12% vacancy on my 35 units. If a tenant causes me to have ZERO vacancy year after year, I want to share in that and encourage it to continue and make it UNATTRACTIVE for that tenant to move. ..... I firmly believe in my philosophy of taking only 75% of the usual money off the table if I can have that amount for 50% of the usual effort.
I may be new and idealistic .... but I also might be ... right!!
Ken
No, you are just new and idealistic
Agree! Tenants are there purely and simply to pay rent. As much as possible.
I don't give gifts or bribes or any other incentives. My retirement plan does not include subsidising other peoples' living standards.As a LL I'm already sub-sidising a tenant's real cost of living expenses and like you skater, I feel I contribute enough already. They should be buying me a gift!
Certainly! All tenants should be extremely grateful for their (sometimes) long suffering LL and show that appreciation at least yearly.
Especially those with LL's who neglect to give them rent rises and find they are $50pw undermarket value, but, no, wait, we all scumbags, right? Wouldn't offer anything myself but a different story with my mother.
Went to visit her a few days ago and she was out delivering Christmas
gifts to her tenants.
One she has had for 10 years now has fully restored her property, including
a shed conversion to teenager retreat, new colourbond rear fence went up
a few weeks ago and carport still laying against the front fence ready to
pop up one day soon.
I suppose it can work both ways but still not convinced of it as yet..
added , forgot to mention the new carpet throughout the house.( he's a carpet layer)
Went to visit her a few days ago and she was out delivering Christmas
gifts to her tenants.
One she has had for 10 years now has fully restored her property, including
a shed conversion to teenager retreat, new colourbond rear fence went up
a few weeks ago and carport still laying against the front fence ready to
pop up one day soon.
I suppose it can work both ways but still not convinced of it as yet..
added , forgot to mention the new carpet throughout the house.( he's a carpet layer)
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Interesting point.
If a discount is out of the question because its all about business, why do so many huge companies base a lot of their business on discounts?
Once again, just my opinion, I do not own any IP's yet, however, have experience in sales and business. This is where my curiosity comes from and am very interested in how the landlord/tenant relationship works.
You need to be careful about discounts in any business. If you give discounts then that becomes the expected price. Look at Myer - for the past few years they have had so mnay discount sales that you would feel ripped off to buy something there at full price.
If you look at a business that retails and say before operating expenses has a gross margin of 40%, if to keep the shop open costs 30% and you give 5% off you are actually giving away 50% of your net profit ie to make the same net profit you need to double your sales.
Unless there is high vacancy rate your tenant is going to have selected your property for a number of reasons eg location, layout etc etc. Instead of discounting and giving away your profit, you are better to respond quickly to legitimate maintenance requests and the tenant feels valued that way that they are respected as a person.
Christmas cards might be nice.
I personally rent, and if I can say so myself, I'm an excellent tenant.
I also have 2 IPs myself, and in one in particular I have resisted putting the rent up to market because I have a great long term tenant who keeps the place in great condition and pays on time, and I don't want to force them out and risk vacancies and/or worse tenants.
I think that many Land Lords do reward good, long term tenants in this way without really thinking about it in the same context as something that you explicitly offer like a "X% discount" or movie tickets or a free TV.
Just my 2 cents...
Agreed. We have one property we self manage and are 6 hours from. Former PPOR, invested a lot of time and effort into the gardens. It also has a pool. Maybe we could get $20 a week extra (which would need to go to A PM), but the gardens are well maintained, as is the pool. Tenants have been in for 2 years and resigned for a third year. They are preserving and improving the value of our property.
Hotwired,
When we were new LL's were thought like you too.
We offered tenants a free months rent if they could pay on time, and have no damage for 12 months.(not including fair wear and tear, I mean damage caused by them)
One tenant out of 15 made it then (we didn't have as many units as we do now) and the damage she did was worth about $300.
We now longer give our tenants anything. We had Tshirts made with our company name on the front and Evil Landlord on the shirt sleeve. We inform each one of them if they screw us around we will chase them through the courts. Of course we are smiling, and they give a nervous laugh.
We also start everyone off in this one particular town, with a 3 month Fixed term lease. We know by 6 weeks whether we are going to keep them.
In a couple of years, report back to us and let us know how much you want to reward good tenants.
You will find they are far and few between.
When we were new LL's were thought like you too.
We offered tenants a free months rent if they could pay on time, and have no damage for 12 months.(not including fair wear and tear, I mean damage caused by them)
One tenant out of 15 made it then (we didn't have as many units as we do now) and the damage she did was worth about $300.
We now longer give our tenants anything. We had Tshirts made with our company name on the front and Evil Landlord on the shirt sleeve. We inform each one of them if they screw us around we will chase them through the courts. Of course we are smiling, and they give a nervous laugh.
We also start everyone off in this one particular town, with a 3 month Fixed term lease. We know by 6 weeks whether we are going to keep them.
In a couple of years, report back to us and let us know how much you want to reward good tenants.
You will find they are far and few between.
If 'good' tenants are few and far between, that might be reason enough to reward them.
None of ours have ever qualified.
We do have one tenant we have decided not to increase his rent while he lives there. In return he is improving the property, and we also pay him to do work at our other properties. We pay him a fair wage, and he appreciates it.
These would be repairs we wouldn't expect our supers to do, as they are not normal maintenace (such as installing tie downs on a mobile, repairing the floor under a mobile)
He will find alternate accomodations when it suits him, and he will care nothing of our circumstance..as it should be.
Hopefully he will still be wanting to earn a few extra dollars on his time off from work.
