Are You Hiring the Right Tenants?

I have a friend in Colorado Springs who owns a bank. Several years ago I complimented him on his employee retention. My banker and I both understand that his most important assets walk out of his bank each night to go to their respective homes and that his job is to get them to come back each morning. His key to hiring great employees is to screen for proper job skills, attitude and moral code and then empower them to be the best that they can be.

Jim Collins states in his book, Good to Great, that all great companies put the right people on the “bus” and that great people will know where to drive the bus. He is saying that great companies hire the best people that they can find and then let these people “drive” the company where it needs to go in order to make the company soar. Great employers do not micro-manage or hire for specific tasks as much as empower great people to grow into their potential and be great at what they do. 

I believe that if landlords would take these examples and apply them to their rental business, then their success and bottom line profit would increase dramatically. Landlords expect tenants to do a job, but many have never defined the job description and few share their expectations with their tenants. If I were running an employment ad for tenants it would read something like: “WANTED – tenants with the skills, ability and willingness to maintain and improve properties, pay rent on time, get along with the neighbors (and stay for at least 5 years!). I want people who have integrity and who can be empowered to solve problems on their own. Over the years people have asked me how I can view tenants as employees since I am not paying them money. The answer is that I am paying them and the currency I am using is good housing.

In today’s market, it seems that many landlords are accepting the first people who apply, as long as they can pay one month’s rent and hopefully some portion of a security deposit. This happens in part because landlords are strapped financially and cannot afford vacancies or the time to show the property. I find it also happens because landlords are paranoid that they may be accused of violating federal, state or local Fair Housing laws if they don’t accept the first person that applies to rent their property. Landlords are afraid to screen for the best applicant and instead set a minimum standard accepting the first applicant who meets that standard. Can you imagine my banker friend hiring employees based upon a minimum standard? If he did his bank would not be the profitable bank that it is today. Discrimination is not inherently evil or even illegal. There is nothing in the Fair Housing law that prevents us from accepting the best tenant we can find. We must not discriminate against a protected class and it makes no business sense to do so. We need to treat all applicants fairly and consistently and we need to advertise our properties rather than advertise for a specific type of applicant.

When you accept an applicant who does not meet your expectations you need to understand that it is your fault and not the applicant’s. You hired the wrong person for the job (of becoming your tenant). He or she either didn’t have the skills that you needed, didn’t have the correct moral code or you didn’t communicate the job description. It’s your fault; move forward and resolve to do better the next time.