Tough love for landlords

Landlords, this one may not be easy to take at first, but the truth needs to be told.  I promise, it will only hurt a bit and, in the end, the truth will make you a better landlord.  Here it comes:

Landlords, please disabuse yourself of the notion that you are a “good guy”.

Landlords are not here to be “good guys”.  They are business people.  Unfortunately, many landlords allow being a “good guy” to distract them from some of the uncomfortable parts of being a “good landlord” and this can have a devastating effect on the landlord’s business.  Being a “good landlord” is not synonymous with being inhumane and does not mean a landlord should be mean, unethical, unprincipled, or uncaring.  Being a “good landlord” means making informed, reasoned, and knowledgeable decisions about a rental business.

Over the years, I’ve spoken to countless landlords in tough jams with their tenants and in need of help.  Many of these lessors, explaining the details of their situation, suggest that they are in their tough spot because they were just trying to be a “good guy”.

Here are just a few examples of how it works:

Landlord: “She had terrible credit and an incomplete rental history, but, she had a kid and I’m a good guy, so I rented to her and now that she missed her third straight rental payment, I feel burned.”
Translation: “She came to me when I had a vacant unit and I was so desperate to get a lessee into the rental unit that I ignored all of the red flags and chalked up my inability to wait for a better tenant to being a “good guy”.”

Landlord: “They started getting behind on the rent almost immediately, but, I’m a “good guy”, so I let it slide and took partial payments whenever they could pay, but now they are six months behind and I feel burned”.
Translation: “Even though I should have taken matters into my own hands and evicted these bad tenants right from the start, I figured “some cash is better than nothing” and ,instead of being proactive, I decided to ignore the fact that these tenants would never be able to pay and just hoped for the best because I didn’t want to go through the time and expense of addressing the problem”.

Landlord: “He was in a huge rush to move in before the start of the month and before paying the security deposit, but he seemed nice and because I’m a “good guy”, I let him in.  Now, he hasn’t paid rent or security deposit and I have found out that he has judgments and past evictions and it looks like I’m going to have to evict him too and I feel burned.”
Translation: “I thought having my unit rented was better than letting it sit vacant and not earning money, so I ignored the fact that tenant’s moving in before the start of a lease term and without money for a security deposit present huge red flags and I did not want to do my homework or ask the hard questions of the tenant before I turning over the keys”.

No one likes to admit that they are wrong, that they took an “easy way out”, or that, to avoid unpleasant confrontation, they took the “path of least resistance”, especially when those bad choices will lead to wasted time and money and possibly even embarrassment or other difficulties.  Face it – it is much easier to justify a poor decision by chalking it up to being a “good guy”.  So, being a “good guy” is usually just a way to play the victim and justify doing illogical or uneducated things.

What’s the lesson here?  Don’t be a “good guy”.  Be a good landlord.  Be a self-aware landlord. Treat your rental business like a business.  Act like a business owner.  Landlords are not charities.  (If you want to help less fortunate people get housing, volunteer your time or donate your money to Habitat for Humanity or any of the countless and great charity organizations that promote and advance affordable housing and housing rights.)  A good landlord will treat renters fairly and keep rental property safe and fairly priced.  A good landlord will be actively involved in making smart, informed decisions.  A good landlord has the capacity to be kind and compassionate.  The residential rental business is a “people” business and the best landlords are usually the ones who establish honest, trusting, fair, responsible, and ethical relationships with their tenants.

Being a good landlord does not suggest that a landlord must be ruthless or mean.  Its not all about simple cost benefit analysis.  Just don’t be an excuse making “good guy”.  Want to give a tenant a break on the rent due date when they are late because they lost some hours at work?  Do it!  When the tenant comes back the next month with a new story about why the next rent will be late, dig deeper.  Find out the problem and work to solve it.  Be smart.  Be active.  Engage with tenants.  Be ready.  When that tenant is late, serve a five day notice.  You can always be a good person and allow a tenant a bit of extra time or can let a late fee slide, but do so with an awareness of the impact of that decision on the rental business and not out of fear of confrontation with the tenant, desperation for payment, or with false and misguided hope that the tenant will “fix the glitch”.  When things take a turn for the worst, don’t bury your head in the sand hoping that a bad situation will get better.  Way more tenants who are three months late end up evicted than end up paying the landlord back every penny.

Part of being a good landlord is getting help from an attorney experienced with landlord tenant law.  From preparing a fair, reasonable, and effective lease, to learning landlording “best practices” or pre-eviction counseling, all the way to help with the forcible entry and detainer eviction process, Reda | Ciprian | Magnone, LLC has many years of experience preparing landlords how to be good landlords, not “good guys”.

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5 Responses to Tough love for landlords

  1. Joey Kikke says:

    Hi, thanks for your site. I have been searching for what is allowable for owner occupied less than 7 unit landlords. I get that we are exempt from RLTO, but cannot find what that exemption gives us. There must be something or there would not be an exemption, right?

    • Richard Magnone says:

      Its not so much what law applies – it is more what law does not apply. When a property is CRLTO exempt, the common law of landlord tenant law and contract law will apply. That law, unfortunately, is not bundled up in a neat package, but is basically one part Illinois statute, one part case law, and one part contract law.

  2. Richard, well done article. You are spot on with your view. I saw myself in your examples. Fortunately, I’ve come around to seeing things as you do. My trick is to focus on my family – that makes it so easy to be fair and firm with tenants. Also, I never fear vacancies. Of course I don’t like them, but I no longer will do anything for cash flow.