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Building or a Business?

March 16, 2017

 

The #1 rule of customer service is the customer is always right. That is unless we’re talking about real estate. For some reason, many business owners (landlords) see their customers (tenants) as a nuisance, even though they are the ones who fund the entire business.

 

Have you ever been to a restaurant where the servers treat you like an inconvenience? How about going to the bank and the teller seeming upset that you actually came inside instead of using the ATM? In this age of social sharing – on Facebook, Twitter, Yelp and more – a business owner cannot afford to earn a reputation for poor customer service.

 

A large part of the problem is many owners don’t treat “buy and hold” investing like a business. They think they’ve bought a property and assume they can just buy and hold it and collect rents. This may be easier to get away with in 1-4 unit properties, but when you purchase multifamily apartments, you’re basing the value off of the financial operations. You are actually buying a business, not just a building.

 

And just like any business, poor customer service leads to a decrease in sales and profitability. Granted, some residents won’t be happy no matter what you do. There are always people with unreasonable expectations and some can be manipulative, spiteful and even destructive. These are the people who leave 1-star Yelp and Amazon reviews for the pettiest of reasons.

 

After college, I opened a group home and respite care facility with my family’s help. It took months to get our license and as my personal reserves dwindled, I had to get a part-time job in the evening waiting tables. I remember there was one customer who would come in that had ridiculously high expectations. She expected to be greeted within 15 seconds of sitting and if it did not happen, she did not leave a tip. She expected her meal to be on the table within 10 minutes of ordering and if it was not there, she did not leave a tip. She expected her iced tea to be at least 1/3 filled at all times and if it was not refilled… you get the point.

 

Most of my co-workers despised her. They would tip the hostess double just to ensure she didn’t sit in their section. I welcomed the challenge as I prided myself on delivering great service. In fact, she once tipped me $50 on a $50 check. 

 

Now, I’m not saying a tenant is going to pay you double the rent for acquiescing to all their needs, but on the flip side a problematic tenant can easily slash your profits in half with repairs, unpaid rent, and evictions.  That’s why it helps to be prepared to handle the harshest tenants.

 

Sometimes quality service means helping a customer take their business elsewhere. This happened with the demanding restaurant customer, as the general manager realized the effort it took to make her happy had a great negative impact on the staff and the service they were able to provide to other patrons.

 

As a rule of thumb, I never want to force a tenant to stay in an apartment simply because we have a lease agreement. Most of the time their complaints and concerns can be remedied. However, if someone sets their mind on leaving, contract or not, I’d prefer to let them leave on terms that are mutually beneficial so we can find a new resident and move on. The key here is the mutually beneficial terms. Disgruntled tenants tend to cause major damage to units and your reputation.

 

One of the easiest things you can do to deliver quality customer service is simply to listen.  There is a reason every business has a customer service phone number and email. If you don’t want to deal with the calls yourself, find someone who can and then help them work on a solution that’s best for both parties.

 

Customer service is about solving problems and ensuring that customer needs are met. Doing so will help your business thrive. Even if you fall short, it will help you identify areas of opportunity. When you buy a building you are actually buying a business.  Ensure your business is rooted in delivering quality customer service because your customers are a necessity, not a nuisance.

 

 

 

 

 

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