REAL TALK RENTALS

Disputes, Escalations, & Knowing the Law: How to Handle Unhappy Tenants

Ben Bailey: How do you deal with an unhappy tenant? We're going to answer that today on this episode of Real Talk Rentals. Welcome back to Real Talk Rentals, a podcast brought to you by On Q Property Management. We're here to give you the behind the scenes scoop on owning an investment property and everything that goes into property management. I'm your host, Ben. With me as always. Mr. Eric Dixon, the go to expert on all things rental property out here in Arizona. And this week we're going to talk about something that we had to talk about. Guess eventually which is handling unhappy tenants. It happens. It's probably the reason a lot of people sign up for property management, right? Um, so even with, you know, perfectly placed tenants issues come up, right, and balls get dropped or there's just some people that are unsatisfied no matter what. So let's start talking about, um, we can start the conversation on when there is an issue in a, in a property or an issue with a tenant. If you have a property manager, how is that information communicated? How does the tenant come, you know, communicate to the property manager. How is the owner involved? How does that kind of go?

Eric Dixon: Yeah. So good question. And like you said it's a it's a necessary conversation to have because not just in property management but in all service based businesses, you know, there's going to be unhappy customers at some point. And property management is unique because you've got the client that hires on right there, the landlord, they own the property, and then there's the tenant that lives in the home. And you have to kind of serve both of them, obviously, and you've got a responsibility to to kind of juggle both balls at the same time. Unfortunately, in this industry as well, communication or lack thereof usually comes when there's an issue. It's very rare that, you know, there's happy communication that just says, hey Eric, I just wanted to call and say how awesome you're doing.

Ben Bailey: Yeah, I'm just calling to let you know my rent will be on time and everything's working great. Yeah.

Eric Dixon: It's usually the communication starts with something negative. It's like, hey, something's broken. Hey, I can't pay my rent. Or if I'm the owner, where's my money? Why is that expense? Why is that? It's so expensive, you know, whatever it is. And so you're starting from a kind of on the defense a little bit. And so we always try and train and help help our team understand we need to be more proactive than reactive when we're dealing with issues. So I would just say how the communication happens. Let's just say from the resident or the tenant side is like a maintenance request. It could be online, it could be a phone call, it could be a text. However they're sending that communication, right. The property manager absorbs that. Or the maintenance coordinator or whoever it is absorbs that, makes a decision. And then, you know, calls or emails or notifies the owner depending on what the issue is, you know, and it could be maintenance, it could be rent related, it could be weather related that, you know, hey, the flooding, the the rain. I can't tell you when it rains super hard, man. The monsoons. We know the next day's communication is going to be roof leaks.

Eric Dixon: Yeah. And floods and you know, that sort of stuff. So you know how that's how that communication is made is super important. It's one of the questions you want to ask as you're interviewing property management companies. Hey when there's a repair when rent is late, how am I communicated. You know, how is this communicated to me? Is it by an email? Is it by a phone call? Is it by a monthly statement? Do you guys just do stuff without asking? Do you have a limit? You know, there's all sorts of different things we try and leverage, you know, involve the owners as much as they want. Some of our owners are. They want high touch. They're very involved. Some of them, over time especially, we've gained that trust. And it's just it becomes, hey, Ben, I trust you. You know, you're if you made the call, I have to understand that you you listened and to the tenants needs, you met their needs and then you you let me know on the back end. And some of them, you have to hold their hand along the way.

Ben Bailey: Yeah, they just want to somebody to call and tell them, walk me through the whole thing that happened.

Eric Dixon: Yeah. And the best we can, we leverage. We've talked about it in previous podcasts, but we leverage technology the best we can, whether that's simple technology like texting and emailing, sending photos, or it's the technology of our portals where you can track all of the work orders, all of the inspections, all of the. And that is, in a sense, communicating all this information without, you know, a standard phone call. Yeah, we want we want to be known as the ones that will pick up the phone and we will talk to you. And we if you want to communicate that way, it's just becoming. I just got out of a meeting this morning, kind of not in the day to day management related, but within the real estate side. And people are just so much more responsive by text message than email. Yeah. And or you call and they'll send you to voicemail. You send a text, they'll respond right away. Yeah. And it's like I just called you, but no one wants to pick up the phone and talk anymore.

Ben Bailey: So legitimately never answer my my cell phone. Yeah. Like, unless it's my wife calling, I'm like, they'll leave a message or text me if it's. Well, I was.

Eric Dixon: Talking to our sales team and I'm like, it depends on the demographic. You know, if the older demographic, it seems like they prefer phone calls. Yeah. Younger. You better not call them. You're not getting any anywhere. You better not email them because they've got 34,000 unread messages on their app, you know. Yeah.

Ben Bailey: And you know, to that point, like the reverse is also true where if a tenant's having an emergency, where the roof is flooding, you know, it's like, hey, I want to talk to you and know that you're doing something like, they don't want to just, you know, submit. Like just send a picture via email. You know, like, I understand that urgency of being like, I need to talk to a human to know that they understand the gravity of this.

Eric Dixon: Yeah. And so it we could go into a million different scenarios, but a lot of it is your property manager has to digest the information and decide, hey, is this a phone call? Is this an email? Is this a text? You know, and those are different variations of urgency, you know? Yeah. If it's Sunday morning and your house is on fire, like you're getting a phone call, email and a text, yeah, we're figuring out a way to get a hold. For you and your emergency contact. You know, but if it's hey, the tenant put a request in because their fans unbalanced. It's like, hey, we're just going to work with the tenant to resolve that issue. Not going to cost you any money. It could be a phone call, and we may not need to call the owner to tell them we had that phone call, but. Right. You know, so there's just different different scenarios there.

Ben Bailey: So so speaking to that, um, is there ever a scenario where an owner would be speaking directly to the tenants if they have a property management company?

Eric Dixon: No. Yeah. Yeah, I'm going to say no. Next question then. No. So they're really you know, you want to be touchy. You want to be a little touchy with it. Because it's not that we don't that it's illegal to or anything like that, but it really crosses the boundary of like, hey, why did you hire a manager in the first place? If you're just going to go circumvent around them and go talk to them directly? Yeah. And it could most of the time that it does happen. It happens innocently. They're like, oh, I just wanted him to let let them know I hired a new pool service and wanted to introduce him. So I have a group text with my pool guy. That's great until there's an issue, and then they're texting the owner directly instead of the management company. Yeah. And it's not. That stuff will get handled faster. It actually is slower because then the owner is looping in the property manager. The property manager is reaching out to the tenant and the is like, dude, I already told the owner about this, you know, and it's this, this whole issue. Um, I recently actually had without getting too, too into the details, but there was an issue where a tenant deserved a rent credit because their house wasn't habitable because of this repair. Right. There's a warranty issue and this big repair. Nobody's fault.

Eric Dixon: It wasn't the owner's fault. It wasn't the tenant's fault. Wasn't the management company's fault. It just it was a home warranty issue. And honestly, it usually doesn't take this long, but it just took forever for this part. Right. Um, and so anyway, the tenant got a credit for the rent credit. The owner was unhappy with the with the credit amount. But I'm like, it's an Arizona statute. Like, sorry, it has to be this. Sure. Well, the owner took it upon themselves to call the tenant and negotiate this rent. Right. Or this credit. It didn't come didn't wasn't successful. So then I get roped in and the owner is like, hey, how about you call? And I didn't know that they called. So I'm like, do you know what? Yeah, I'll call the tenant and I'll just see, like, hey, see if there's some wiggle room, if we can mutually agree to a smaller whatever. And the tenant told me, like, because the owner contacted me and was so rude to me, I. I'm going to stick to my guns and take this credit. Sorry. Yeah. And so it actually like worked against the owner that they reached out and didn't call the owner back and tear him a new one was just like, hey, unfortunately, because there's been multiple communications, right? You know, it just doesn't work. And now they have your cell phone number. Yeah.

Ben Bailey: Guess what?

Eric Dixon: Guess what. So yeah. So I don't know. It really is to answer your question, hopefully there isn't a need. And if there ever is a need and you're the owner, ask the property manager why. And usually it's like you want to create distance. You want to create. You know, there's there's a reason you have a manager. You listen to 1 in 1 ear, listen to one in the other ear, and then, you know, the property manager has got to figure out, you know, the solution.

Ben Bailey: And we talk about, I mean, we've said this a million times, but. Take the emotion out of it. You know, owners are going to be that's their house, that's their property, that's their investment, you know, and they're going to be emotionally invested in in a way, a property manager can look at it objectively and say, no, no, no, no, here's the rule or here's the law or whatever, and let's do this. You know, so I've heard.

Eric Dixon: People say, like the it's kind of like you wouldn't call your stock, you know, you have your stockbroker and let's say you bought the stock and it's tumbling. It's not like I'm going to call the company directly and see what the heck's going on. It's like, I don't know, maybe just talk to your stockbroker who's like the in between and you know, and that's doesn't relate apples to apples. But it is the same premise that it's like, hey, you hired a professional to manage your investment. Yeah, your rental house. You know, if you don't trust the manager, that's one thing. But, you know, certainly don't take it out on the tenant by by directly communicating with them. And usually there's a there are many, many reasons why you shouldn't. So just just take those into account. Work with your property manager. And if it's not us, if it's somebody else and you're having trouble, just just remember be the squeaky wheel until you figure out you know, the solution.

Ben Bailey: I'd say like 90% of the time, too, when we see upset tenants and we see complaints and stuff like that, like. The issue if you put yourself in their shoes is understandable. You know, like, well, of course, you know, the roof's leaking. Of course they're going to be upset. They're not mad at any one person in particular. It's just the situation. And as a property management company, it's our job to not be defensive. Like you said, you know, to we represent both and to say like, hey, I get it. Yeah. That sucks. Let's help you.

Eric Dixon: Out. And you want to create a win win while still honoring the lease and honoring your agreement with the property owner. Like there are win win scenarios. Yeah. Tenants understand that. Yes, I have my rights, but I also don't own the house and they get it. As long as you communicate and you answer and you're trying to work towards a common solution, like you just need to trust the expert and let them do their job.

Ben Bailey: Yeah. All right. So let's talk about the most common issues that tenants have and how they can be avoided. I know you and I both know a lot about this because you often deal with escalations. I'm usually the one who deals with the complaints online or something. So we see all the stuff that comes in. But let's talk about what those situations are and then what you can do to be proactive to not have an unhappy tenant.

Eric Dixon: Yeah. So the I would say a lot revolve around maintenance because and it goes on both sides like maintenance costs the owner money, you know, the landlord responsible maintenance issues that come up and tenants are like, hey, I'm paying rent and I work a full time job or two, and I can't just sit around waiting for vendors. And so if you can solve the issue of maintenance, you know, that's half of the issues. You know, it's right, especially in Arizona. You know, if your AC is out during the summer, it becomes a touchy subject, you know, and it's like people can't just take time off work to sit at their house and wait for an air conditioning tech to show up. Yeah. And I get that. So it's it's, you know, the property management company is trying to find the vendor vet the right vendor that's nearby that can get there quickest, but at the same time trying to work with the tenant schedule and the owner's budget, you know, trying to like, juggle all these balls. Right? And then if it does come back high, then it's like, hey, maybe there's another couple other solutions or something like that. So maintenance is the biggest thing. And what solves it, even if it doesn't solve the actual repair, is communication 100% right? A lot of our training, like we've invested tons and tons of time and energy into quality assurance checks, trainings, just trying to figure out ways to communicate better.

Eric Dixon: Yeah, it's it's a better phone call to let the tenant know, hey, sorry they can't come today, but they can come tomorrow instead of no one. Nobody showing up. And then the tenants upset and is online that night emailing you like, dude, no one showed up today. What's going on? If you would have just sent the message that said, hey, sorry they couldn't make it today, they'll be there tomorrow. Yeah, get in a hotel tonight or, you know, whatever it is. Um, on maintenance, you kind of touched on it. A home warranties, like home warranties. You know, it's hard because I've owned them. I've sold real estate a lot where the owner or the buyer or seller involves it in the transaction. And it's like this win, right? But then it's like on the management side, it can be a big lose and it makes it super difficult for the property manager to to facilitate the maintenance. Yeah. Because you're totally putting it to a third party who then vendors it to a third party. Yeah. So it's like I don't know, what was that fourth party or whatever it is. Yeah. But dude, it's like.

Ben Bailey: Too many cooks in the kitchen.

Eric Dixon: It makes it so hard. And the tenants sitting there like, I don't care if it's a home warranty. Not my problem, dude. Like my I don't have hot water or I don't have AC or I don't, you know, I can't use the bathroom now because your home warranty vendor is three weeks out. Like that's not my problem. Yeah. You know, and the owner is like, no, sorry. That's I just want to pay the fee to the home warranty so that that one is a word of caution. They're not great. And as a landlord, you very, very rarely save money anyway. So, you know, I wouldn't I wouldn't prioritize getting a home warranty.

Ben Bailey: And then. Okay. And then it's funny, I just stopped there because I was gonna. Piggyback on your your comment that how important communication is. And maybe this story is a little out there, but I'm going to share it anyway is so I used to before I got into office type work and stuff, I'm I waited tables, I was a waiter and I was terrible at it. I was very bad.

Eric Dixon: Like I just waiter man.

Ben Bailey: I just couldn't carry the trays. I would drop food all the time, like I was just like a cartoon character version of waiter. Just bad. But I got amazing tips and my coworkers and I actually worked with my wife at the time. She was a cocktail waitress there, although we weren't together or married. And she goes, how do you get such good tips? And I said, I'm just, I just tell people the truth, you know, just come up like, hey, it's going to be a little longer on your food because I dropped it like, and.

Eric Dixon: It's my bad.

Ben Bailey: Yeah. And that goes such a long way for just them knowing that as opposed to me avoiding the table, which is like your instinct. You don't want the bad news, like I'll just. I'm going to avoid them until they look really angry and then tell them it was the kitchen's fault. Yeah, but I would just go straight over and go, hey, do you hear a crash a second ago that was me dropping all your food. So it's going to be another 20 minutes. Sorry. You know.

Eric Dixon: That's my bad. And to your point, it's just little communication along the way. Yeah. Instead of just like you could handle the initial phone call or the initial order. Perfect. Yeah. But if it takes forever and you're just like, dude, Ben, you're horrible. Like what? And you're like, oh, it actually I dropped it and they're like, oh, if you would have told me that. Yeah, I would have been fine. Exactly. Like, your strategy works great. You know, you just communicate along the way. Yeah. Help them along the way. There's nothing else you can do. Sure. And there were people.

Ben Bailey: That were furious. And it's understandable, you know, like, can't believe you did that. But I tell you, nine times out of ten, just being honest and telling people where we are in the process while it's happening. That's how I got good tips. It certainly wasn't because I was delivering food in a timely manner because I was terrible.

Eric Dixon: So that's dude, it's exactly how it is. But, um, getting back to your question, I thought about the so that's maintenance. We talk a lot about that communication with maintenance. The other thing that we talk a lot about with tenants and owners is payment. And so, you know, rent is due on the first it's late on the third it's, you know, all this stuff. But if you don't communicate to the tenant that, hey, I don't know if you realize this, but you're a day late already. A lot of times the tenants don't even realize, oh, shoot, yeah, I forgot to pay rent. They don't have it on auto pay, they don't pay online and they just forget. And it's like, oh, it's 4th of July. Like we have. 4th of July was coming up and it was like, you know, it lands on a weird day during the week and rent's due. And I can't tell you how many people just space it. And so it's communicating but then it's communicating to the owner. Hey the tenant's rent is late. You're going to get it a day or two later than you thought. Yeah. You know, because it's clear in the bank or whatever. And those simple communications save a ton of heartache, a ton of stress.

Eric Dixon: And if the owner, the owners will tell us if the property manager forgets, they're like, if you would have just told me it's two days late, it's no problem. Yeah, exactly. But if I have to, if I have to reach out to you to find out it's two days late, like, yeah, it's a totally different thing, even though it's the same issue. So I'd say payment and repairs are the big two that are just that. It's probably most of our communication. And then the last one I would say is the move out process. You know, because the tenants moving out, the owner sitting there freaking out like I'm gonna have a vacant property. I've got a ton of maintenance coming up. I got to get my house ready. We're getting people to apply to move in, and it's just you got to communicate this process along the way to keep the owner in the loop 100%. Get the tenant security deposit back that they deserve. You got to get, you know, all these things and it's just simple communication along the way, even if it's, to your point, bad news. Yeah. Just deliver it along the way. And they just want to know like yeah, yeah.

Ben Bailey: All right. So, um. Last question then, does a property management company alleviate liability from the owner then in situations?

Eric Dixon: Um, I would say it can. Right. So a lot of kind of a two part answer, but in a lot of states in Arizona kind of has a, a rule to like if you are out of state as a landlord, you have to appoint a local statutory agent. And a.

Ben Bailey: Lot of people probably don't even know that they.

Eric Dixon: Don't. And actually, when they hire us, we're like, hey, we'll be your statutory agent as part of this deal. They're like, oh, I didn't even know what that was. And you're like, oh, actually required to do that and been.

Ben Bailey: Breaking the law.

Eric Dixon: For, you know, but, you know, just in case they need to get served or there's communication from the county or something that needs to get to the owner, they'll let us know. And then we let the owner know. But, um, you know, alleviate some liability. But I would say for the most part, the liability that you are alleviated from is because you're hiring a professional that knows the laws with fair housing, with move ins and move outs and a tenant landlord act and all of that stuff. There are little laws and statutes that you have to follow. And so it's not like, hey, hire us and you have no liability. You have the same liability, but you're hiring an expert to keep you out of the crosshairs of a lawsuit or a right or an issue, you know, especially around, um, lease placement. You know, when there's applications and you're dealing with fair housing a lot or, you know, we emotional support animals or, um, discriminating against certain things on an application. It's like we have that honed in so tight that, no, we're you're you're not going to be liable because we're doing it right. You know. And so it does you do alleviate some liability there. Um, ultimately, as a landlord, you are responsible to make sure that that your home is, you know, in good repair and that sort of thing. But your property manager should keep you up to date on maintenance, keep you up to date on, you know, health and safety concerns or fair housing issues and stuff like that. And so it's really. Just make sure you hire the correct local expert and you'll alleviate most of your risk and liability altogether just by having an expert represent you.

Ben Bailey: Yeah. Plus, you know, when you hire someone, like a property management company. You know, we've dealt with every kind of angry tenant situation you could think of, you know, and to your point, that owner that called, you know, before and lost, you know, basically money because he upset the guy. We would have known right away, like, hey, we know how to approach this. Let us talk to us. Well.

Eric Dixon: It actually going back to that exact example, I let the owner know, say, hey, part of our job is to keep you out of the courtroom. Yeah. Part of our. The reason you think we're standing up for the tenant. We're not just standing up for the tenant. We're helping them. But we're making sure that you are not going to be in the crosshairs of a lawsuit. Like you want to make sure that you are. Everything's buttoned up, that they can't go after you and sue you because ultimately, as the landlord, you're liable, you know? And so part of our job is just to let them know, say, no, you can't do that. Obviously it's against the law. But for the other reason is you don't want to get sued. You don't want to, you know, lose this place because of a silly decision. So to your point, it's really just to alleviate the most liability possible, hire the best property management company you can. Yeah.

Ben Bailey: All right good advice. So let's end it on that then. That's it for us this time. Be sure to follow the show and leave us a five stars wherever you're listening. And we'll see you guys next time.