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It’s Not Us vs. Them By- David Crown

Posted on 01. Sep, 2020 by in all

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In this time of uncertainty and struggle, amid danger and misinformation, the last thing we should do is assume the worst about each other. Crises like the current pandemic inevitably divide people to some extent (and this one divides us physically from one another), but when we rigidly refuse to give the benefit of the doubt to those who aren’t like us, we make healing all the more difficult. In property management terms, I’m talking specifically about an Us vs. Them mentality between landlords and tenants. 

Misconceptions

Let’s start with landlords and their misconceptions about tenants. I know how these misconceptions can form, because I’ve been guilty of them myself. COVID-19 brought about a halt to evictions, a measure to protect those whose ability to pay rent had been eliminated by the virus. And while the Mayor and the Governor sounded magnanimous announcing this in televised speeches, they glossed over the fact that neither the city nor the state had granted any rent forgiveness at all, meaning rent was still owed in full in the long term. We had already taken great precautions to ensure the safety of our tenants and worked to make sure those affected by the virus were accommodated, but in the wake of these announcements, I feared the worst. 01

Along with some of the owners we represent, I thought scores of tenants who hadn’t lost income due to the virus would take advantage of the situation and refuse to pay rent. And although some tenants may be acting in bad faith, for the most part, we were incorrect. So far, tenants in the units we manage have paid their rent in much higher percentages than we expected, despite the seeming implication from local leaders that they could’ve gotten away with not doing so. The vast majority of tenants are hardworking and honest people who do what’s right; we shouldn’t cynically underestimate them, because that eventually leads to treating them unfairly. 

On the flipside, I’ve found that some tenants mischaracterize landlords as hyper-rich fat cats plotting to scam the inhabitants of their properties. Now, of course the financial standing of people who own property is typically higher than that of the people who rent it, but the vast majority of landlords we work with are by no means affluent. 

Studies

An article from the Department of Housing and Urban Development shows that, nationwide, business entities own 25.8 million rental units, and individual investors (commonly referred to as mom-and-pop’s) own 22.5 million. In our experience, these mom-and-pop operations often rely on their rental income to pay for everyday expenses and the upkeep of their property. A study by the National Apartment Association recently broke down what rents go toward on average: for each dollar of rent paid, 39 cents go toward paying the mortgage on the property, 27 cents go toward payroll expenses for employees who operate/maintain the property, 14 cents go toward property taxes, 10 cents go toward capital expenditures like roof and HVAC repairs, and 9 cents go to the owner. 

It’s Not That Simple

To assume that landlords are financially invincible (or can withstand rent freezes or rent strikes) is to misunderstand the relationship between owner and renter.

Have you made incorrect assumptions about the people on the opposite side from you? It’s important that both sides view one another as vital to the balance. Each should recognize that they depend on the other and the other depends on them. An intermediary like a professional property management company can significantly improve owner-tenant relations, because that’s their job. Ultimately, we should all choose to stop seeing it as “Us vs. Them,” because it’s not that simple.  

 

David Crown is the C.E.O. of Los Angeles Property Management Group, and has over twenty-five years of experience managing all types of income properties. A hands-on leader who has managed properties in 16 states, Mr. Crown has been asked to serve as an expert witness in property management matters, and currently serves on the Forbes Real Estate Council. He can be reached directly at 323-433-5254.

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