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How to Deliver Bad News and Still Keep Your Tenants

If you have ever spoken with any of us at Active Renter Property Management, you probably know that we put customer service at the forefront of our business. Therefore, you will probably not find it surprising that we believe all landlords are, at their core, customer service providers.

Sadly, it is all too often that inexperienced property managers fail to recognize that this is a major component of their role. This always ends in the same way for those owners—they lose tenants.

One way that an owner can offer better service is by breaking bad news to tenants nicely and in a timely fashion. If bad news is communicated in a way that is less than competent, this is when trouble can start.

The Wide Scope of Bad News

Are you going to have to repave the parking lot? Is there a need for massive maintenance that will result in no electricity or water for a lengthy period of time? Maybe the swimming pool is becoming a problem and will be removed or have extensive upgrades? Or, worst of all, maybe you are going to increase the rent.

No matter what the bad news is, you have to approach it like a band-aid. That is, you don't want to break the news slow or dance around it because that won't make the news any easier to hear. Instead, ensure the bad news is made clear, justify your course of action, and make it understood that you regret any inconvenience that will result for your tenants.

However, to prepare for breaking the bad news, you will need to set the stage. Planning might involved a huge list of activities, but first and foremost you will want to prepare what you will say, including the justification for why the event has to occur.

Implementing the Plans

We provided a brief list of the kinds of unwelcome news you may have to break to tenants, and none of them have an identical timeline. Emergencies are emergencies, and nothing you can do will prepare you for everyone of them. However, you can still have contingencies in place for when emergencies arise.

If you work with a property management company like ourselves you can even ask for assistance with planning for emergencies. For instance, we have worked with customers to draft plans for emergency repairs and utility shut offs-both of which can be managed better with plans in place.

On a positive note, not all bad news is "emergency" in nature, like the aforementioned example of repaving a parking lot. Issues like this will have enough lead time for you to issue notifications at least two to four weeks ahead of time.

This has two benefits. First, your tenant will appreciate the fact that you gave him or her enough time to plan ahead. Second, this will offer you the opportunity to answer questions and work with your tenants in order to minimize the impact it will have on their lives.

Finally, there is one special case of bad news that we would like to address, and that is the case of rent increases. When you have to increase your rent it is crucial that you follow all local and state guidelines. For example, in Arizona, if "you have a long-term lease…landlords may not increase the rent until the lease ends and a new tenancy begins—unless the lease itself provides for an increase." (NOLO.com)

In addition, state law also demands a 30-day advance notice (in writing) of an increase (for month-to-month arrangements). We always suggest that owners allow their property management company to handle these correspondences to make sure that they are managed correctly.

Drafting new leases, sending out notices at the right time, and letting everyone know that such changes will be implemented as new leases roll over can be complicated, but it will also ensure that tenants can get in touch and discuss any challenges long before the lease takes effect.

Bad news is a fact of life, but if you handle the delivery of the bad news correctly you can effectively provide the customer service that your tenants deserve. Over time this will result in a stronger relationship and improved rates of tenant retention.

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