Let's start by defining a successful Rental Business... Well, a Rental Business is a services business and in order to be successful, you need to be excellent at service delivery to the extent that people will tell other people how great you are. In addition you need to be excellent at executing a good and well designed business process that will ensure that you reap the benefits of scale. That is how you build a successful rental business. It is as simple as that.
Let me ask you a question... Why is it that Rental Businesses very seldom ask their Landlords and Tenants to rate their services when most other services businesses thrive on Client Feedback and how to use that to their advantage in a very competitive market. It is almost as if the Rental Industry do not want to leave a door open because we are terrified of the feedback that we might receive.
The one thing that will prevent your Service Delivery from being perceived as Excellent is FRUSTRATION and EXPECTATIONS feed frustration. We have discovered that many things that go wrong in rentals can be related back to someone having an incorrect expectation. Think about this for a moment …
Would the Tenants have been upset when he had to pay for the un-blocking of a guest toilet 14 days after moving in if it was pointed out to them that it’s their responsibility to test all the toilets because they have 3 days to report blockages according to the Lease?
Would the Tenant have thrown his toys 3 days after moving in because no one pitched up yet to fix the defects recorded on the Entry Inspection if someone explained to him what will happen after the inspection and how long it might take?
Would the Landlord have been upset that the agent can’t find a Tenant for his property if it was pointed out to him that his property had some serious security risks which might effect the time to find a tenant?
Would the Landlord have been upset if his rent was not in his bank account by the first day of the month if it was explained to him why this is not always possible?
Would the Landlord still insist on maximum rent increase year on year if he understood the value of a tenant with a track record of on time rent payments and who takes good care of the property?
Would the Tenant have been upset when his deposit was withheld after he moved out if he knew how the process worked and what he could be held liable for?
Would the Tenant have been upset when he had to pay for the after hours call out fee for a contractor tasked to fix a problem due to the fact that he could not provide access during office hours if this was pointed out to them when they insisted that the contractor must visit after hours?
Would the Tenant have stopped paying his rent to place pressure on the Landlord to repair a leaking roof if he knew what recourse he had and that by doing this he would actually compromise his case against the Landlord?
And so the list goes on and on, you get my point.
From the above examples it is clear that Expectations originate from assumptions made by people, incomplete information given to people or incorrect information given by people. If you can successfully eliminate invalid expectations, you can effectively remove a large chunk of potential problems from the equation.
Now you might say that most of the above issues are covered in the Lease Agreement. Good point, the Lease Agreement is an excellent Expectation Management Tool, but totally under-utilized. Why am I saying this…
Well, when last did you sit down for 20 minutes with a Landlord and a Tenant, walking them through the Lease clauses and using the clauses to manage expectations and explaining under what circumstances these clauses will be valid with some practical examples.
In most cases Leases are just sent to Landlords and Tenants who might or might not fully understand everything. You might say that there is a statement in the Lease where they sign which states that they fully understand what they sign for. Yes I know, but you know people. The content of the Lease is like fine print. Do you read the fine print when you sign your bond agreement or car purchase agreement. This is not helping.
So how can expectations then be managed?
By using the Lease as a tool, as explained above. Those clauses are there for a reason. People do funny unimaginable things and they seldom forsee that they would be doing them. Given the right set of circumstances, they might just surprise themselves. I had tenants laugh when I explained what would happen if they didn’t pay. They were completely unaware and even ignorant that the process could potentially end in their assets being attached as part of the Landlord’s hypothec.
By communicating information Just in Time. This is a big problem! People are bombarded with lots of information when they don’t have the mind space to take it in. For instance it doesn’t make sense to try and talk to a Tenant about how the Municipal Accounts process works when he is busy moving in and with him running around trying to navigate the removal guys to deliver boxes and furniture to the correct rooms.
By ensuring complete and accurate communication. This can be done by checking whether something has been understood and by confirming verbal communication in writing. How often does it happen that something is promised by the Landlord and then never done. I know of Landlords and Tenants that promised to remove their rubble and then it just never happend and it becomes someone else’s problem or frustration.
By using Process Guides. A process guide is a tool that explains in layman's terms how a specific process works, with examples. This can be used to communicate to tenants and landlords. For example, do you have a Process Guide for Default Management that explains to your Landlord what you are doing when his tenant is defaulting. Don’t you think the Landlord will feel less stressed if you send him a process guide explaining how you are handling the situation when it actually happens? Also having it in a process guide helps you to minimise effort to explain the same thing over and over again.
Bottom line… we have learnt that becoming good at Expectation Management helps the business to avoid many of the problems experienced by the Rental Industry.