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MY FATHER WAS BUILT like a linebacker and hollered like a coach. One evening in the late 1950s, I accompanied him as he went door-to-door to collect rents.
A tenant called Schoenfeld—I only recall his surname—paid his rent reliably, but he was always a month late and he didn’t include the late fee. This drove my father nuts. That night, he unloaded on him. When I asked my father why he had to be so hard on Schoenfeld, he had a few choice words for me, too.
“Stevie, you’ll go to one of those pom-pom colleges,” my father said. “I graduated from the school of hard knocks. You’re too soft. Don’t be a wimpy landlord.”
Today, I, too, am a landlord, and have been for the past four decades. Along with my wife, I’ve owned 30 or so properties over the years, and we still own 12 today. I never wanted to be a pushover for my tenants, but I also never wanted to pulverize the lives of people who, in some sense, were in my care.
Folks who rent worry about their safety, their comfort and their budget, just like homeowners do. Pride of ownership is fine as far as it goes. But what about pride of partnering? Of course, there’s an inherent conflict of interest and a hierarchical relationship between owners and renters, but I believe there’s also a common thread. Both want a living space that’s functional and presentable.
Partnering doesn’t only help the renter. We once had a scheduling snafu and couldn’t arrive in time to meet a prospective tenant at the property. The vacating person offered to show her around the apartment on his own time. I like to think he was returning the respect he received during his stay with us.
Though never reviewed on Yelp, I know I’m appreciated. In the midst of the COVID scourge, we voluntarily renegotiated leases and, in one instance, gave a single working mother a two-month rent holiday. We set up a delayed payment schedule for a valued renter whose finances were temporarily tied up in a divorce proceeding. Over time, I collected almost all the rents due. A prospective buyer of a fourplex once requested multiple walk-throughs that unduly inconvenienced people. We gave everyone a onetime $25 rent credit.
Compassionate landlords are often derided as naïve by the real estate cognoscenti, who say our trustworthiness is just a cover for our spinelessness and that we’re frequently duped by deadbeat renters and unscrupulous service people. Unfortunately, I think this is sometimes true, and it behooves landlords to be vigilant.
I made a colossal blunder in 2015, when a fire destroyed our 16-unit Victorian office building, the crown jewel of our mom-and-pop enterprise. To my dismay, I discovered that I’d neglected to get insurance coverage for loss of rents. For five months, I had the usual fixed expenses like mortgage, insurance and property taxes, with zero income to pay them. I can still hear replays of my father’s admonition about my unfitness for business.
Remember those eight wonders of the world? You’re probably also well-versed in the wonders of jacking up rents as fast and as high as local regulations permit. Besides being repugnant, that playbook is financially counterproductive. It’s a sure way to alienate renters and motivate them to suddenly come up with problems that need fixing.
That brings me to some real estate blasphemy: Macho management is a losing financial proposition. I don’t like to raise rents too much because I risk losing good tenants. In my book, if there are no calls, no problems and reliable rent payments, I’ll only ask for a small increase.
Recently, however, I blew it. I raised a responsible renter $100 and she left in a huff. “So what,” you say. “Just increase the rent by $200 on the bloke coming in.”
Talk about naïve. First, I had to primp the unit, including $200 for carpet cleaning, $175 to caulk the tub and another $200 to fix a leak under the kitchen sink. Next, I had to pay $5,000 to paint half of the two-bedroom duplex.
Sound bad? We aren’t done yet. Throw in a month’s “rent up” fee—the payment to a real-estate broker to find us a new tenant. Add in the lost income from a unit that’s vacant for at least a month, while we prep the unit and find a new renter. It might take over two years to recoup these various expenses. I’ll place my bet on longevity any day. Ditto for my property manager, who has held my hand through 38 years and many rocky times.
By my parents’ standards, I was never cut out to be a landlord, and I’m still haunted by my father’s misgivings about me. My life and career were jumpstarted by the diligence and perseverance of my parents, and—strange as it may sound—that’s made me glad I’ve been a responsive, caring landlord. I feel doing so has enriched the lives of my renters, folks who didn’t get as good a number in the birth lottery as I did.
Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Steve’s previous article was Calling for Yield.
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Hello Sir, Very good article and points to some things folks who don’t have a rental or two don’t understand.
I’ve got some single family homes and have been a landlord for decades. Hiring managers takes care of almost all the problems with being a landlord. They cost money but peace of mind is so nice!
In the years past, yes I’ve had crappy people in the homes, but, not since I’ve hired proffessional people to find good tenants. That’s the key, get people who pay on time and take care of the property.
I keep the rents below the market which helps keep good tenants and makes the managers cringe. Ha!
But, treating people like people is a joy. They like being liked. This in turn makes land lordship a joy.
Also, rental investment makes a great way to pass on a legacy.
Thank YOU!
Thank you. Nice to learn I’m not alone! I totally agree with you about legacy. The whole idea of stepped up cost basis (which I consider an unfair loophole) is a Godsend for heirs. It also encourages owners to hold on to their properties rather than sell late in life when you don’t need all the hassles of negotiating, closings, etc.
I am also a professor at UCD (go Ags!). We spent one year as landlords in Davis after moving up from our starter home and renting it out. Then the housing market improved (this was in the 90s), and we were able to sell the rental halfplex at a modest profit. We were busy with our careers (husband is a lawyer) and kids and just didn’t want to bother with being landlords.
Of course, selling that place in 1999 was a terrible decision. It’s worth easily four times now what we sold it for, and as I’m sure you’re aware, Davis is a terrific rental market, and it never would have been a problem to keep that place occupied with reliable tenants. We had two vet school students renting for the one year until we sold, and they were quiet and studious.
As a parent of now young adults who have had their hard knocks with uncaring landlords, I appreciate your perspective here. Thanks for the article.
What a coincidence! I also own a property in Davis rented to medical students. Great renters, never a problem in 3 years. I actually got a thank-you phone call after raising her rent $25 amidst all the inflation hysteria. Would rent to your young adults any time. Wouldn’t even ask for a co-sign.
We rent four older townhouses and I tell new renters they are old buildings so they need to call immediately when there’s something amiss. We try to have someone look at it within 48 hours (I use a warrantee company to pay for the service provider which is considered a cost of doing business). One renter took it to heart and noticed a bubbling in the upstairs ceiling paint. One thing lead to another and we were able to make an insurance claim for storm damage that saved us $1,000s. I like to reverse that trope that the renters only damage a property and ask them to vest in keeping it in shape. The service mentality doesn’t cost that much more, ups the professional behavior by everyone and makes some hard working people feel like they are getting their money’s worth. Turn around when they leave are much quicker too because there’s less damage.
Couldn’t agree more. You bring up some benefits of humane landlording I haven’t even thought of before. Thank you.
I’m sure your father did well for the times and the clientele. Meanwhile, you have a full career – and an eminent one at that. Your real estate investing is a 2nd full-time endeavor. Of course you are going to have less time to read the fine print on the insurance policies; that’s a cost-benefit equation just like anything else. Give up your entire career, and sure, you’ll pick up the fact that there was no coverage for lost rents, pennies compared to what you have gained from your primary career.
Also, the times have changed, both in terms of how clientele expect to be managed, and legal protection for renters which can allow them to live for months without paying rent before eviction proceedings can take place.
Which is all to say, it definitely pays to choose renters who will partner to make this as pleasurable (or painless) an experience as possible.
My wife and I have two rental properties in a major city. Due to coop and condo board approval procedures, they will sit empty 1-2 months even in the best of circumstances between renters. A simple cost analysis demonstrates that it’s much better to raise the rent less and keep the renters longer – not to mention the hours of work required to acquire new renters, prepare the apartments, and file the paperwork.
It goes without saying that there are areas where firm limits are imperative. Recognizing and reacting to how particular renters push these limits is important. But there is also joy from building trusting relationships with our renters. After years, I know they have my back and I have theirs.
Yup, the joy of responsible landlording is very real. But as you say problems are part of the territory, even more so now with all the tenant-protection covenants. For people who don’t want any of those hassles (or can’t afford a down payment), real estate investment trusts (REITS) are an option. Of course, you then have the vicissitudes of the stock market to contend with, a whole other ball of wax.
You and me, we are on the same page (on what you wrote). Compassionate landlord and reliable tenant is like “lining the moon and and unknown star” in the right way. My wife is like your father (ie. renter is “a dime a dozen”). Before I raise my rent, I did a sample of rents in 5-mile radius and take an average of those numbers.
Insighful article !
Hey Neyugn, my wife is a little like yours. She keeps me on my toes. Maybe we couldn’t be as responsive as we are if we didn’t live with someone more comfortable drawing the line for us.
You sound a decent guy, but I have to say this: when a tenant left because of a $100 increase you say you had to caulk the tub and fix a leak so you could get a new tenant – why weren’t these problems fixed when the original tenant was living there? Didn’t she mention them?
Hi Sandy
Good question and you made me look back a ways. The leak was tiny and the caulking was marginal. Current tenants often overlook smaller problems and only contact me when they become larger and interfere with their everyday lives. Incoming renters generally expect things to be real spiffy right off the bat and it’s best for them and for me to address any problems before they move in.
You sound like a kind, compassionate, caring landlord. We would do well to have more landlords like you, Steve.
Hi Nate
Thank you. Only my wife knows my other side……
I tried being a landlord one time, I couldn’t hack it because I was way too soft on my renters. I sold the property and never looked back. It’s odd because I had over 700 people working for me at the company I ran and I had little trouble hiring and firing and making all the other tough boss decisions, but for some reason being a landlord was different. You sound like the kind of man anyone would be fortunate to rent from and your dad was definitely wrong about your ability to run a business!
Thanks steveark. Been trying to figure out why the difference for you. You couldn’t possibly have felt close to 700 employees. But you might have seen your renters’ life struggles from up close and empathized with them. As a good guy you may have wanted to make their lives as comfortable as possible.