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HOW TO BUILD PRIDE OF
OWNERSHIP IN YOUR COMMUNITY
By Frank Rolfe
I will never forget my first drive through of one
of my communities with a conduit lender. The property was about a
one-star in quality, but was a cash-flow wonder. I wasn’t sure what
the bank’s reaction would be to my down and dirty “family” community
status. As we drove out of the property, I nervously asked the
lender “so what do you think?” His response: “well, they seem to
have a pride of ownership”. With the loan in hand, that term has
grown to sum up what I feel is the most important in any community.
Even a lower demographic property like mine can be redeemed and
affirmed through “pride of ownership”.
So what is “pride of
ownership”? To me, the answer is when all of my tenants make the
best of what they’ve got. They may not be rich, or have nice homes
or cars, and their yard furniture may not be out of the Frontgate
catalogue, but they make the best of it. They have clean, orderly
yards, keep their homes painted and touched up, have all their
skirting up and in line, and keep their yards mowed. These are all
items that are earned with sweat equity – not dollars. Anyone can
aspire to these things regardless of income. It’s really a mindset.
So how do you get “pride of
ownership” from your tenants? Unfortunately, it’s not the easy way
of just asking them nicely and they’ll do it. It takes a definite
strategy to jump start and maintain a “pride of ownership” program.
The first step is to clean
up your act. You cannot expect the tenants to put in any
effort when the community common areas are a shambles. Before you
even ask the tenants to pitch in, you must:
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Make sure all common areas are adequately
mowed
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Make sure all streets and curbs are
professionally edged and cleared of any vegetation (using Round
Up, etc.)
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Fix any fencing that is falling over or
rusted and unsightly
-
Trim and remove all dead branches and trees
-
Install a new, professional quality entrance
sign and other signage throughout
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Patch and repair all potholes in your roads
and parking pads
Once you have set the tone,
send a letter to your tenants, telling them that, effective
immediately, you are going to try to turn the community into a nice
place to live. Explain what is expected of them, but keep it pretty
basic – no big trash in yards, no non-running vehicles, 100%
skirting installed, houses attractively painted, etc.
The next step is to have an
all-community “trash day”. Rent a commercial roll-off dumpster, and
send a note to everyone that you are going to have available a huge
dumpster so that they can finally get rid of that old rusted
swingset, etc. And explain to them that, by Sunday, if their yard is
not clean, you are going to through some of the stuff out yourself.
Impress on them that this is a one-time only thing, and that it is
in their best interest to take advantage of your hospitality.
Hopefully, a ton of the trash in the yards will be gone by Monday.
Starting Monday, you need to
make list of every house and yard that offends you, and send a
letter to each of these tenants stating what you want fixed. Give
them only a week to comply, because they never will anyway. You are
simply setting them up to get ready for some executive action.
Now comes the time that
separates the successful operators from the failures. You can either
spend the rest of your life threatening the tenants to do what you
want, which never works anyway, or try a new approach. The new
approach is to send them a letter stating that you are going to do
the work yourself, and bill it back to them, to be spread out and
paid over the next twelve months on their rent. For example, if
total repairs on a certain lot are $1,200, then you will add $100
per month to their rent for the next year. Don’t expect to get this
in writing, and don’t expect to be able to collect it in court. If
you try and get it all neatly signed up, it will take months to
accomplish just that step, if you can get it done at all. Think of
it this way – if you made the necessary repairs normally, it would
cost you 100% of the cost. Maybe you can get 50% of it back from the
tenants. That’s a lot better than the other option.
The expense you will incur
is in one of three categories.
-
The cost of repainting or touching up their
home.
-
The cost of fixing or replacing their
skirting
-
The cost of removing even more debris from
their yard
Since you will probably have
several of each, you can get an attractive “volume” deal from a
contractor. I have found that you don’t want to put in a lot of
effort in getting input from the tenants, such as coordinating
around their schedule. It is one of those times when “shoot first,
ask questions later” seems to be the best course of action. Have the
contractor speedily get everything done while the tenants are at
work. And if anyone complains, tell them that they have no right to
say a word since they never bothered to lift a finger on their own.
Once you have artificially
jump-started the pride of ownership in your property, keep the
momentum going by sending a thank-you letter to the tenants, and
celebrate their additional work by having a “yard of the month”
program where the tenant wins a free gift. Stay vigilant so that the
property never falls back into disrepair.
You can have tenants
who have a pride of ownership. You just have to give them the first
nudge. And then keep on nudging them.
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