Tenants are Landlord's Business Partners

Not adversaries

by: Gary Mach JD, Legal Aid Director

As I have told real estate investors so many times in the past, there are two kinds of landlords, professionals and amateurs. I have always found that those who join rental housing associations are more likely to be professional in their approach to the business at hand, and it is an honor and a pleasure to deal with true professionals in any field. Much of the material I will supply to you through this column in upcoming months was developed over the decade or so I represented tenants in eviction proceedings. Please forgive me if I repeat anecdotes or lessons previously offered at one of my appearances before landlords as a guest lecturer from the "other camp".

This is precisely where I would like to start, the notion of the "other side", or any feeling that you and your tenants are on opposite sides of a fence. If you find yourself viewing your tenants as anything other than your business partners, then you need to take some time out to examine how you got yourself into this position, and the benefit in rethinking this concept.

Lets look at the facts. A landlord, tenant relationship is a voluntary business arrangement between two strangers, based upon a "contract" (lease), and designed to produce a benefit for both parties to the agreement. You, the landlord, bring the investment capital and equipment to the partnership (the down payment and the premises), and the tenant brings the operating capital (rent) and agrees to be in charge of the daily operations.

When it is a successful partnership, the tenant enjoys a comfortable and secure living environment for the family, and the landlord enjoys the growth in equity of the investment. As with any form of business partnership, this can only be successful as long as the partners want to be in business with each other, understand their respective roles, understand the other person's role, and each "do their job".

A partnership can never be successful if you do not trust your partner. Once you begin to distrust or dislike your partner, the question is not if the partnership will fail, but when and under what terms.

If you understand and agree with this concept or "partnership" with your tenants, then you must also understand the need to concentrate on the selection of your tenant/partners as the key to a successful business operation. This does not mean that you have to be "friends" with your tenants, indeed that is probably a mistake in and of itself. But you do have to believe that they are worthy of half of the partnership.

If you don't trust one of your business partners, take the first opportunity to legitimately dissolve the partnership. If you don't trust any of your business partners, find another line of business to be in. The most successful partnerships, be they in business or marriage, are when the partners are able to place themselves in the position of the other party, and respond to partnership needs as they would want their own needs addressed. The golden rule applies, and if you treat your partner exactly as you expect to be treated, success will come to both of you.

Gary Mach, JD