I like to look back on what are some of the symptoms of trouble that appear in my business.  Once I figure them out, I try to refine my approach, be it advertising or lease language to help to reduce my exposure to these bad things.  Any bad costs money.  My goal here is to make money as well as to provide clean, safe and affordable housing. 

I am a big fan of determining and eliminating the root cause of problems.  The part I don't like is I am the biggest injector of the problems in my apartment business.  Sure some if it can be blamed elsewhere, but the largest majority of poor management practices come from me.  If we learn by our mistakes, then that makes me the smartest man on the planet!  So, based on that you should either run, or pull up a chair!  Here is my latest adventure...

Most recently, while studying a portion of my historical business metrics, I ran across some disturbing statistics in my apartment life.

Ok we all know the joke – “The word “sympathy” can be found in the dictionary between…” maybe that isn’t a good joke to use here, but the word "statistics fits into the punchline of that joke as well.  Statistics can take you to a place not relevant to your problem if you let them.   We also all know that I am the “little guy” here.  I own 32 units that I am immensely proud of but at the same time disappointed that we are still at 32.  That will be a topic for a future blog entry.  My point is that my 32 units might not be the right sampling with which to pass judgment, but it is the only field that I can test in and the only one that I am intimately associated with.

Regardless, a couple of months ago I wrote on inadvertent gender targeting in advertising (http://www.multifamilyinsiders.com/home/myblog-admin/Calling-all-Girls-I-dont-know-how-to-call-guys-A-story-of-advertising-done-wrong..html). 

The research that I performed uncovered another facet to my business and a question arose that I would like to put out into the universe. 

Why is it that I have NEVER had a successful addition of a person to a lease? I am statistically pure on that one.  100% failure rate, zero, zilch, nada.  If peanut butter met chocolate in one of my buildings, you wouldn't get a Reese's.  You would get something that needs to cleaned up with a paper towel.

When person “A” leases an apartment and later invites person “B” to join them it always ends up where both “A” and “B” suddenly lose their ability to function as good human beings and both end up getting tossed into the letter pile (along with “C” and “D” who were deposited there last month!)  It comes in all shapes and sizes - Either person “A” forgets how to pay rent, or quits their job, or person “B” performs motorcycle repair or arc welding inside the unit or they both just seem to lose their minds. 

I need to remove this variable from my business

Maybe “freeloading initiated” and “freeloading allowed” is symptomatic of not having good judgment to begin with and it is inevitable that it won’t end well.  But, all things being equal I am causing this because I am in charge with who lives in my buildings.  The buck stops here.  I would like the buck to continue on to my bank account!

What I need is somehow to get in front of this.  I need to establish a different approach but one that is fair.  So where do I go and what do I do next?  Are there symptoms, bread crumbs, fingerprints, evidence that can help with this? 

How about a fair warning of what MIGHT happen if someone is added to the lease?  For instance, what would be the harm in adding the following statement to my rental application so people can read it as they are documenting to me their gloried past? 

“Any adults that live with you must be on the lease.  An application must be filled out for the new adult and be approved in the same manner as you.  If approved, rent will increase $25 per month.  If not approved, and they are present in the unit more than three days out of each month, they will be considered as an unauthorized adult and you will be in violation of your lease and evicted.”

Well THAT certainly sounds welcoming doesn’t it?  Hopefully people won’t cringe when they read that, but my thinking is better now than later.

I will probably somewhere, somehow add a boiled out version of the above with a lot of “Don’t Fear Me!” type of disclaimers to my applications and see how it goes.  I have basically that same language in my actual lease agreement, but by then it is too late.  I don’t read my lease to applicants. I only read it to approved applicants that want to give me their money so they can become my new tenants!

Having such a filter in place should cause folks to consider what it means to add a friend after they have settled in themselves.  I have statistical proof that it COULD be very unsettling for the both of us if they don’t! 

I will keep you posted on my findings.  And as the joke goes…you know where you can find "Statistics" in the dictionary?  Hopefully between Satisfied and Success!

Thanks for your input, please give replies and come and join us on our Facebook page - “Adventures in Michigan Real Estate”

Take care.

Doug.