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The first step is a very difficult to understand – not obvious – and many don’t take this step into consideration. You ask what does mindset have to do with letting? A lot, but not necessarily the way you’re thinking, so lets get started….
The first step is mindset. Yes, mindset. If you think all tenants are
bad, I promise you they will all be. It’s very difficult to find a good
apple when you think all apples are rotten, so why look for a good one
in the first place.
Tenants are people and your property is your asset. By lending your
asset to another, you are constantly worried because you own it, and
you are worried about what will happen to your property. That is
completely understandable, after all you are responsible to pay the
mortgaged bond.
This causes many investors to become emotional about property to the
extent that they see all tenants as bad, potentially bad or capable of
doing harm in one way or another.
So, the first step is to start looking at tenants as people and human
beings. Some humans are good and some are not, but you have to start,
without emotional baggage, to be able to identify the potentially good
tenant that will up-keep your property at all times and the potentially
bad tenant that will not or even not pay the rent.
I know this may be the hardest step you will ever take. But put
yourself in a good tenants shoes, isn’t a good tenant constantly afraid
he or she will end up with a bad landlord?
It works both ways.
In any business transaction there are two parties, the vendor and the
customer. In the buy-to-let industry, the vendor is the investor and
the customer is the tenant.
As a person, would you like to get good service from vendors? Do you
think tenants expect to get good service? Or at least fair service? I
think you do, tenants do, we all expect this.
But in the buy-to-let industry, there is a massive emotional factor
that makes property investors view customers as an “enemy”. Do you
think you will have a good vendor-client relationship when you get
started with such perceptions?
Of course not and I am sure you agree.
But investors say: “I have more to lose than the tenant, I am paying
the bond, I have incurred debt for this asset”. And you know what … you
are right, but that still does not mean that all tenants are bad.
Imagine if you walked into a car hire business. Cars cost money just
like houses now imagine the car hire company sees in every person
entering the shop a reckless driver and an “enemy” or the “necessary
evil” to cover their costs of cars – do you think they will last long
in business? I don’t think so.
In summary, the first step to successful buy-to-let investing and
avoiding bad tenants is to start a fresh. Remove the fear that every
tenant is bad, that tenants are the necessary evil and property
investing is only about capital growth and tenants are required as a
“by the way thing” to pay the bond or part thereof.
Buy-to-let is a business, your tenants are your customers, you can get
good and bad customers. But if you are constantly afraid of customers,
you can’t make any clear judgments about your business or the customers
you are accepting to service.
Sure all businesses will land some bad customers, some will turn bad in
hard economic times, but that is not a good reason not be in business,
nor a good reason to make a flat out judgment that all customers will
be bad.
In the Letting Workshop we teach all this and much more, but in the
next couple of posts we will give you more procedures and tips that you
can implement right now with potential and current tenants. After all,
property got thousands people to financial freedom and it can do the
same for you.
In the next post we will be talking about the Second Step to Eliminating Bad Tenants.
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