Are You Smarter Than Your Tenants?

I am blatantly guilty of the curse of knowledge and even though I’m fully aware of it, I often still fall into as it’s a trap that’s tough to escape. Being aware is the first step and this article hopefully helps make you aware.

So what the heck is this curse of knowledge? It’s what happens when you go talk to your mortgage broker, your financial advisor and even your mechanic.

They speak in some sort of gibberish where they use words like amortization, fiduciary standards or ABS control module malfunction. Fully expecting everyone else knows what these words also mean.

Now often we may know some, but as the conversations drag on new and even more industry based jargon comes out. But it doesn’t end there.

In many situations when dealing with people who work in a specific field, they have specific knowledge that a layperson may not have. An example right off of this site would be something as simple as the master key system I teach new landlords about, or the process I teach for screening tenants. A new landlord wouldn’t necessarily know either of these, often even established landlords don’t!

Task, procedures or simple industry knowledge that seems natural to the person in the industry, but requires further explanation when talking to someone who is the proverbial duck out of water is where the curse of knowledge comes into play. And this curse can affect how your tenants and you get along, how profitable your property is and even how safe it can be!

You Really Just Have Different Knowledge

The biggest problem with “the curse”, is you assume the other person has the same knowledge as you, which which is a gateway to misinterpretations. You believe the tenant should understand the bank requires your mortgage payment on the 1st, hence they have to pay on the first. They may think the bank will understand if the tenant suddenly had to pay support payments or an unexpected expense. Or worse yet assume you will constantly carry them!

You understand leaving windows open in the winter to cool the house down is an ineffective use of utilities (and if you as the landlord are paying them, is an added expense!). Yet to the tenant, they may just think utilities are free and it never occurs to them that it costs you extra money that takes away from potential improvements or maintenance of the property.

It’s not as if the tenants are dumb, they just don’t have your knowledge, or the curse that comes with it. With any luck your business model as a landlord isn’t based on finding tenants that aren’t as smart as you. Hopefully you are finding intelligent, thoughtful people that make your life easier, your property safer and don’t burn your property down.

You just have to remember, it’s not the matter of tenants being dumb when it comes to property versus you, it’s just that they have different knowledge. Often many of them have only been on the rental side, they don’t understand the ramifications of not paying on time, of leaving outside taps open when it’s freezing outside, or the downside of taking smoke detectors down when they go off and not informing you.

Part of your job as a successful landlord is to make sure you educate your tenants on many of these little knowledge gaps that you may have between the two of you. This is what’s called an information imbalance as Dan and Chip Heath refer to in their book Made to Stick: Why Some Ideas Survive and Others Die (which I’d recommend you check out if you are into marketing and/or business, and yes that is an affiliate link so I get a few nickels if you purchase it through there, so thanks).

So How Do We Educate Our Tenants?

This is where the big problem shows up, because it requires more work on our part! We need to take time to educate our tenants and to create systems so we continue to do it every time.

One place to start is creating a property binder for each of your units. In the case of an up down suite, each tenant would have their own binder covering the property. Some of the information overlaps, such as where the water shut offs are for the property, location of the breaker boxes and proper use of the heating and cooling systems where applicable.

This binder stays in the property and is the ideal for putting the tenants copy of the lease, any walk throughs, local information such as shopping, restaurants, schools, post offices and banks as well. It is their go to reference and can even include manuals for stoves, fridges, and laundry machines.

Another area we can work on is explaining our leases in detail to the tenants. No glossing over the fine print. Thorough explanations of why you always need to get paid on X day is required, from there explanations of any penalties or repercussions that also accompany late payment. DO NOT LEAVE THIS VAGUE!

Next step, thorough walk throughs of the property. In one of my email tips I refer to explaining about water shut offs on toilets, taps and washing machines. Make sure you point these all out to the tenants and explain them. With external air conditioning units, maybe take a minute to explain covers need to be off when using them or that they shouldn’t block the sides.

As a landlord, you’re probably already a homeowner, so while much of this isn’t rocket science, it might as well be to someone who this is brand new too. If this is the tenants first rental unit ever ) or they have limited experience with these items), you may have to walk them through how to use the laundry, the oven or even the programmable thermostat!

By putting in the time when you sign the tenants in, you can prevent hours of frustration and possibly expensive repairs or headaches later. But by putting in this extra effort you’ll also stand out in more ways than you realize.

It’s just one of those ways you can be a standout landlord that you’re tenant will also remember and refer people to in the future!

The P.S.

The landlord tenant relationship is a two way street. As landlords and especially as long term landlords, we often forget the hardships involved with being a tenant. There is also a curse of knowledge associated that goes along with being a tenant and it may be a matter of the market changing, new rules being put into place or just our forgetfulness about what it was like being a tenant ourselves once.

While I always caution against being buddy buddy or Facebook friends with your tenant, it is important to let them know they can contact you if there are problems. you don’t want to be the landlord they fear, but rather the landlord they respect because you look after them. Previous bad experiences with bad landlords can color the perception of  tenants and this can taint the knowledge tenants have.

Bottom line, do right to your tenants and the majority of the time they will do right back to you. Now get out there and get your systems in place to break down the knowledge barrier between you and your tenants!