Morality in Property Investment: Balancing Empathy and Business

We receive a lot of questions about this topic and a huge amount of discussion surrounds what is perhaps more of a controversial topic of late due to the significant shortage of rental properties. We have very strong convictions about both the business aspect and morality when managing property. Moni and Justin’s original business in 1997 was the first to stop what they considered a poor practice in offices who did not want tenants to enter their premises and ‘bother’ the receptionist. As such it was common practice for rental lists to be placed in a holder on the wall outside the office. Moni and Justin changed this by putting a sign outside the office and asking tenants to please enter for the rental list, and then provided hot and cold drinks, snacks and fruit. They saw this as a way to show tenants that they are an important part of real estate investment, because, as we say at Rental Property Network, “we are stating the obvious but without a Tenant an investment property can not return an income, Tenants are a critical component of property investment!” As such we believe there is a level of morality that needs to be balanced with the business aspect, and getting this right begins with the way Property Managers interact with Tenants.

Property investment, like any business venture, operates within a complex web of economic and ethical considerations. While the primary goal is often financial gain, navigating the moral compass of property investment requires a delicate balance between empathy and sound business practices. In this article, we explore where to show empathy, where to view it as a business, and how to discern the line between the two.

1. Tenant Relations: Empathy is Key

Empathy should shine brightly when it comes to Tenant relations. Renting a property is not just a transaction; it’s the provision of a home. Showing empathy to your Tenants involves:

• Fair Treatment: Treating all Tenants with fairness and respect, regardless of their background or circumstances. This is not always the case but Property Managers who adopt this approach achieve a far better result.
• Communication: A Property Manager who listens to tenants’ concerns and responds promptly is critical for effective management. Good communication can prevent conflicts and build trust.
• Flexibility: Property Managers must be understanding of legitimate Tenant needs, such as repairs.

Remember, empathetic Property Manager-Tenant relationships often lead to long-term, reliable Tenants who take better care of the property.

2. Property Maintenance: Business Efficiency

Property maintenance should primarily be seen as a business responsibility. Regular maintenance ensures the property retains its value and remains safe for Tenants. Neglecting maintenance not only puts Tenants at risk but can also lead to costly repairs down the line. It’s essential to:

• Schedule Routine Inspections: Regular inspections can identify issues early, preventing costly repairs. Property Managers should ensure routines are carried out four times a year. While some are now adopting a three times per annum schedule this puts the investment at considerable risk to save around $30-60 per annum. The cost risk analysis simply does not stack up because every thirteen weeks is essential.
• Budget for Maintenance: It’s important to allocate a portion of rental income for maintenance expenses.
• Prompt Repairs: Property Managers who respond quickly to maintenance requests ensure Tenant satisfaction and prevent further damage.

While it’s a business duty, maintaining the property with diligence ultimately benefits both Landlords and Tenants.

3. Financial Considerations: A Fine Line

The financial aspect of property investment is where the line between empathy and business becomes most blurred. On one hand, you have a business to run – the business of managing an investment for Landlords, and with that the responsibility of ensuring, in the best way possible, your Investors income and ROI. On the other, you have a moral obligation to provide safe and habitable housing.

• Rent Increases: We consider the local rental market and quite often, especially with reliable tenants, their ability to pay before increasing rent. While it is a business decision, steep hikes can harm tenants and lead to high turnover rates. That’s not to say a property should be below market value. Regular increases ensure the property remains on or near market value. Steep hikes are often caused when Property Managers do not keep abreast of market rates nor implement moderate rent increases.
• Evictions: Evictions are a last resort. We seek mediation and provide tenants with ample notice and resources to resolve issues before resorting to eviction.
• Bonds: We return bonds promptly, deducting only for legitimate expenses such as damage, outstanding rent, and outstanding invoices. Holding bonds unfairly or unreasonably can destroy a relationship with a tenant, but remember tenants must also do their part with Bonds on Line.

4. Social Responsibility: A Broader View

Property investors can also consider their social responsibility. This involves actions such as:

• Affordable Housing: Offering affordable rents in areas with housing shortages can make a significant positive impact on the community.
• Sustainability: Investing in sustainable and eco-friendly property management practices contributes to a greener, more ethical future. At Rental Property Network we contribute by reducing travel and working remotely for the majority of the time.

Conclusion: Striking the Balance

In the realm of property investment, empathy and business are not mutually exclusive; they can coexist harmoniously. The key is to strike a balance that recognises the financial objectives of property investment while also acknowledging the moral responsibilities that come with providing housing. By approaching property investment with this balanced perspective, investors can achieve financial success while also contributing positively to their communities and maintaining the ethical high ground.

Want to experience the Rental Property Network Difference – Call us today on 8285 9125