Month: May 2022

This may be the most powerful tool in your box, and one that other landlords would never think of using but sets you head and shoulders apart from competing landlords.

What do you say to prospective tenants to keep them from even thinking about renting from another landlord? Maybe nothing will help if your property doesn’t fit their needs. But how many do you lose to other landlords? How many prime candidates say “we need to think about it” and end up being gobbled up by another rental property owner?

You can chop that number way down with the preemptive marketing strike.

You can immediately put all other landlords on the defensive, without their even knowing they have been preempted, if you warn prospective tenants that there are some vital considerations that they need to think about before they make their decision about a place to live.

How about this one. Did you know that most landlords get no training in rental property management at all? It’s true. The vast majority of them have never even heard of an apartment, landlord, or rental owners association, much less attended a class or a meeting. But you have. Why is that important? It means that those other landlords don’t know about the latest trends, techniques and legal issues in property management. Membership enables you to serve your customers, your tenants, better.

So after they have talked to you, what’s one of the things a prospective tenant will ask another landlord? “Do you belong to your local rental owners association?” What will be the answer? “Well, no, I don’t have time.” Or, “what’s that?”

By setting up a preemptive strike you immediately get tenants thinking in the direction you want them to.

Do you know that many landlords don’t respond to repair complaints the same day? So you say, “we respond to repair complaints within eight hours,” (or whatever). The next landlord they talk to will then be forced into the position of answering a question he or she never thought about before. Chances are the answer will be nowhere near as powerful as your preemptive strike because you thought it out first and know what to warn them about.

A couple of others. Did you know that many landlord don’t have a regular maintenance program? That means properties might look a little shabby after a while or things might break in a tenant’s home when preventive maintenance would have prevented it. But you have such a program: as a result your properties are places tenants can be proud to call home.

Did you know that many landlords don’t enforce the rules of the complex consistently? You do because we have found that it makes for a better place to live for all the people who rent from us.

You can probably think of a couple more things you do that you can express in such a way that they will become a preemptive marketing strike. Think of four or five, then use them to warn prospective tenants about the dangers they face renting from just any landlord.

Let’s add one more idea about the preemptive strike. Harry Beckwith in his 1997 book Selling the Invisible (available from Amazon both as an ebook and hardcopy) in the chapter “The Possible Service” writes about taking customer service one step beyond what even your customers ask for or could even think to ask for.

He divides customer service into three historical stages.  Stage One consists of meeting minimum acceptable standards. “Get a basic, acceptably reliable product. Buyers accept this minimal product—the first car, the first VCR , and the first fast-food restaurant—because they desire the unique benefits is offers.  Buyers will accept that good with some bad—typically the fact that bugs aren’t out and the price is high.”  Tenants who don’t expect too much, who are young and living on their own for the first time, many times fall into that category, as well as people who aren’t too particular, or who figure they’re never going to get a great place to live, anyway.

In Stage Two, you start getting competition.  You have lots of that as a rental owner and manager.  “Differentiation of this core product [housing] becomes vital.  Enter the marketers,” continues Beckwith.  “They listen and make refinements the customers ask for: more colors, an ashtray so that drivers can smoke, and later an AM/FM radio.  Answering customer needs is the driving force during stage two of an industry. Stage two is market-driven.” That is rental property now.

“Few companies enter stage three,” writes Beckwith.  “These companies are in the pantheon of the marketing gods—the Disneys, Federal Expresses, and Lexuses.  Disney entered the stage when it created amusement parks that went beyond what customers said they needed—or could ever have imagined.” The surveys companies took had hit dead ends.  Customers no longer could think of what else they wanted, but the companies’ missions became surprising the customer.

Beckwith concludes the chapter by saying, “Create the possible service; don’t just create what the market needs or wants.  Create what it would love.

Some larger apartment complexes work on creating things their residents would love with on-site child care, office services, decorating services, and valet cleaning services.  Smaller rental owners and managers don’t have the size and capability to offer those things.  And for the most part, if you rent single-family homes and small plexes, your tenants don’t want those particular items.  Apartment dwellers many look for “five-star-hotel” amenities, but not single-family-home renters.

That is something to think about and plan for in your business.  How can you surprise your prospective customers, the rental market, with things they would love?  It requires a leap to thinking about what is possible, not just what your customers say they want.  After you do all the things good tenants say they want, what differentiates you from the rest of the good rental owners and managers who have a place to rent?

It would be the unusual rental owner and manager who could come up with Stage Three features and services.  Of course, that doesn’t mean you don’t want to try to think of some.  If you do succeed in creating a great new idea, you will have to take the “good” tenants on a first-come, first-served basis. 

While Stage Three is something to think about, Stage Two is something to do right now.  Do the things that the cream-of-the-crop tenants expect and require, and you will get them.  Many times even Stage Two will be enough to eliminate most of your competition for attracting the top-notch applicants.  Most other rental owners won’t do it.  Think of the preemptive strike you have there!

And so…

That’s how you package yourself.  You think of the things you do well, the things that make you unique, the things that you do that other landlords may do but don’t tell anyone, and you make those selling points of YOU and your business.  It is that simple and that powerful. Get it rented.

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

“There’s a sucker born every minute,” PT Barnum didn’t say it, and we might be suckers for believing that he did say it. Ryo Mac wrote, “It seems that everyone believes things a little too eagerly, especially if they want to believe it.”  It was likely a banker named David Hannum from Syracuse, New York who actually said it.

The fact that it most likely came from the mouth of a banker provides us an entirely new slant on suckers considering that financial “experts” fool people far more often and more destructively than any circus impresario ever could. 

Some people seem immune from suckerdom. When they try something, they think it through to avoid potential problems. They think critically. People who will fall for about anything lack critical thinking ability, lack financial savvy, lack self-control, and lack the ability to see consequences and alternatives. A black cloud follows them around ready to rain on them every time they try to do anything to help themselves.

People who lack critical thinking often intone the mantra “it’s not fair,” but reflects the fact that they make little or no effort or ability to counteract unfairness. They blame bad luck rather than their own bad decisions and lack of common sense.

One of the biggest financial hits can come when buying property. The Pew Charitable Trusts studied alternative financing, one way suckers can get fooled, and reported that one in five people have at some time used alternative financing and one in fifteen, about 7 million US adults, are using it as you read this. Alternative financing includes land sale contracts, lease-purchase agreements, personal property loans, and seller-financed mortgages. Alternative financing can be an excellent way to finance property. But financial peril lurks for the unwary.

Science News explained in its August 24, 2018, issue. “Nearly a third of young adults in a recent study were found to be ‘financially precarious’ because they had poor financial literacy and lacked money management skills and income stability.” The dream of homeownership is just that for many of them until the opportunity arises for them to buy a property using financing other than from a bank or mortgage lender.

Alternative financing may be their only chance ever to buy a home. Their credit is in the cellar, they owe thousands in credit card debt, they have financed cars beyond their abilities to pay, and get trapped in low-paying jobs. Eluding them are the toys and trinkets of people who have college degrees, well-paying jobs, and critical thinking ability. “It’s not fair those people have them and I don’t,” they say.  Life isn’t fair, but putting oneself in crushing debt won’t make it fairer. What will give them a leg up is growing the ability to think critically, to be able to say “what if” to protect themselves the same way the people who don’t get fooled do.

It may simply be beyond their capabilities to spot a bad deal. They “aren’t good at math,” they believe experts, they get their information from TV news, which tends to reinforce the “not fair” scenarios, and they tend to believe people who, they believe, are smarter than they are. Chances are they aren’t any smarter, just more practiced at the art of deception. The fooled can’t afford or don’t even think to use a lawyer to look at the contract.

Most of the time nothing untoward happens using alternative financing to buy a home. But sometimes it does and usually for the same reason: they don’t read and understand well. The legalese is beyond their reading capabilities and thus the ramifications of agreements they sign. They may believe the people who drew up the contract who tell them what it all means. A vicious circle, they have poor credit, low-paying jobs, lack of financial education, and poor reading and math skills. Bad guys put their feet on their desks offering to “make them a deal.” The suckers born every minute.

They may be stuck buying low-end properties using alternative financing because it’s not worth it for conventional lenders to loan less than a specific amount, maybe $125,000, or on properties with habitability issues such as utility connections, unfinished kitchens and bathrooms, and manufactured homes sitting on rented land.

How do alternative financing contracts backfire? A few get caught in a trap written into the contract of sale that puts them at a disadvantage. For example, the law varying by state, bank-loaned mortgages carry legal requirements. Not so with alternative financing mortgages. Strict legal procedures require that bank-loaned mortgage require some four months to foreclose if the buyer can’t or doesn’t pay. The lender of a seller-financed property might foreclose in a month. Buyer doesn’t pay, seller forecloses and boots the buyer out, who loses everything he or she put into the property, all the principal and interest payments, all the improvements, and the down payment. But a buyer would also lose all that with a bank-financed mortgage. It just takes longer and the buyer may be able to sell the property before the sheriff comes to evict. With alternative financing, good luck. When the 30 days are up, the buyer is out, losing all rights to the property.

Manufactured housing presents another quandary. If the house is in a park and the manufactured housing owner rents the space, no conventional lender will touch it and the buyer must get a personal property loan. Conventional mortgage lenders loan only on fee simple property, that is, property where the buyer also owns the land where the housing sits. Say the park owner sells and the new owner triples the space rent. The buyer can’t pay the higher rent amount, can’t afford to move the house because of the major expense, find another place to put it, and loses everything just as with seller financing. Plus, the personal property loan remains owing. The park owner might offer to pay off the loan for the current balance owed, or the manufactured home buyer might simply default, destroying any credit he or she might have had.

Do alternative financing buyers know any of this? Do they think, as the lender promises, this is standard procedure? There is no such thing as “standard procedure” in a real estate contract.

With little or no financial savvy and critical thinking ability, they simply don’t know how the world works. The result is they are in constant financial trouble. They may be resentful of anyone doing better than they are. They often have collections and bankruptcies.