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Resources Mentioned on this Episode:

https://www.medicalnewstoday.com/articles/326738.php

Show Transcription:

Eric Worral: (00:00)
Hey everybody. Welcome back to another episode of RentPrep for Landlords. I am your host Eric Worral. And this is episode 296 and today we are talking about four cases of landlord tug of war. And we are not talking about the traditional tug of war that you think with your tenants. We’re actually talking about the tug of war that happens inside of your own head. And I’m going to be going over four specific case studies of this, things that you probably relate to from being a landlord and we’re going to talk about ways that you can circumvent these issues that pop up in your own mind. But we’re gonna get to that right after this.

Voice Over: (00:36)
Welcome to the RentPrep for Landlords podcast and now your host Eric Worral.

Eric Worral: (00:41)
So today’s episode is really talking about cognitive dissonance, but I thought if I put that word in the title that it’d be like, all right, that sounds annoying. I don’t want to listen to today’s podcast. So I’d call it the tug war or something we’re all familiar with. But basically cognitive dissonance is a theory in social psychology. And it refers to the mental conflict that occurs when a person’s behaviors and beliefs do not align. So again, that conflict or that tension occurs when a person’s behaviors and beliefs do not align. So to give you an example, I think it might be best to just give you one of a landlord. So that’ll be our first example that we’re going to talk about today. And a lot of these are things that I personally have experienced, but some of them are also things that I’ve noticed in the Facebook group or things that I’ve heard from friends that are in real estate.

Eric Worral: (01:29)
And so hopefully some of these resonate with you too. So the first one that I wanted to talk about, the first, cognitive dissonance or belief actually that creates cognitive dissonance is the belief that I take pride in my work and doing my best. I think this is a great belief to have, right? This can create great work. There’s some great, great output things that you feel great about. But where I see this belief creating issues for landlords is that it can create tension. When, let’s say you have a D or C class rental, but you have this belief in putting your best foot forward. So you want to put in, you know, marble countertops and custom cabinets because you want this place to be a place that you would want to live in. And I’ve heard that and I’ve seen that in the Facebook group quite a few times and feedback I’ve gotten from landlords over the years.

Eric Worral: (02:16)
And it’s that belief that you want to make something as nice so that you’d want to live in it. Well, that works. If you live in a nice house and you rent out class properties, but if you’re not doing that, that does not work for you. And what’s going to happen is you’re going to end up spending too much money renovating a property. And it’s going to take for ever to even break even because you probably went outside of what the market really was telling you to do. So in this particular case, where you can do, if you think you might be one of these people with this type of belief, is create a principle. An example of a principle that can help in this situation would be that when I get a property, I do a property and market analysis and create a reasonable budget for renovations based on those factors.

Eric Worral: (02:59)
Stick to that budget. So let’s say you just bought a new property and needed a lot of renovations. It’s a classy property. The rents in that market are going for $800. You can kind of do an analysis of what the other properties look like based on just what even people are listing for rent, see what they’re doing in their properties, get an idea of what the marketplace is doing. And you always want to try to at least be even with the marketplace preferably just ahead of it as far as the quality of your property. Cause that’s going to dictate the quality of your tenant. But you don’t want to be so far ahead that you’re not gonna make any money on your property. So just creating a strict budget and plan when you go to renovate a property might be the principle that allows you to kind of ease that cognitive dissonance or that tension that you’re feeling because you’re, you believe in taking pride in your work and doing the best possible work that you can.

Eric Worral: (03:50)
So if that one didn’t resonate with you, we’re going to go on to the next one that I see a lot of landlords deal with. And in this particular case, that belief is I am a kind and generous person. Now, if you have been a landlord for more than six minutes, I’m sure you see where this coin is going and where the conflict is. Because the behaviors you have as a landlord when you operate your rentals as a business can really affect you. So the conflict with the behaviors might be a situation where you have a tenant who says, you know, X, Y, Z has just happened to me. I think I’m going to be late on the rent. And then you as the landlord are forced into this uncomfortable position where you’re feeling tension. And that tension is because I am a kind and generous person, but this person is saying something that goes against what we have established as in our agreement and they have to pay a late fee.

Eric Worral: (04:44)
But they’re asking you if they can not pay the late fee. Trust me, I’m going to have the rent to you next week. This happens all the time. Now if you don’t have that belief that I’m a kind and generous person, maybe it doesn’t create tension for you cause you just say, Nope, you got to pay the rent. But if you do have that belief, it’s really hard to tell somebody that if you do believe them that they’re going through this difficult time. In these situations, and we’ve talked about this quite a bit in the podcast, is you have to create an ironclad lease and point to it as the reason why. Now, this does two things. Having the ironclad lease is at least something that you know you both have signed. It is a legal binding document. So it is something that’ll hold up in the courts, but also it’s something that allows you to take the onus on yourself instead of being on yourself and put it on something else.

Eric Worral: (05:33)
Right. Some people, they’ll go as far to say that they’re actually not the owner of the property. They’re the property manager, even though they are the owner, just so they can kind of say, Hey, it’s above my pay grade kind of thing. I think that one can be kind of dubious a little bit. But in the case of having a lease, an ironclad Lisa, you point to a, there’s a lot of studies that have shown that just giving somebody a reason why is enough to get them to say, okay, so in this particular case at the tenant just, you know, makes this request. And you say, no. They’re like, well, why not? But if you say no, because in your lease it says, and then you point out where it says that in the lease you’re giving a reason why when you put that word because, and then you add the reason just by doing that people are more likely to accept your reason and then just move on.

Eric Worral: (06:23)
So in this particular case, the principal is creating an ironclad lease to give you something to point to. Now our third case study here, the belief is I believe that everyone deserves a fair shot. So this is a belief that you have a, you believe in fairness. Frankly, this can create conflict intention for yourself because if we’re speaking not in specific terms but more so just kind of an honest way the act of tenant screening itself is discrimination. Then it breaks down into two buckets of is this legal discrimination or illegal discrimination? So in the bucket of legal discrimination, depending on what state you live in you might have something where you don’t accept tenants with a below a 700 credit score. So that is a form of legal discrimination. Now, of course, we’ve covered illegal discrimination quite a bit.

Eric Worral: (07:20)
Things such as familial status or ethnicity. If you are screening based on those elements, it immediately drops into the illegal bucket. So not only are you creating tension for yourself if you have that belief screening in those ways, but you’re also creating potential legal issues too. Now in this particular case, the best thing you can do is create a criteria. So similar to the way the lease works by creating screening criteria, you document out exactly what you are willing to accept and deny based on these criteria. And then you use that as kind of your report card, your score your scoring metric for your ton of applicants. So then when somebody comes through and they don’t get the property, you can say, well, it’s because of that. Again, you have a reason why you have something to point to. This is going to help you with your own tension that you feel as a landlord, but it’s also going to help in the case of you getting a discrimination allegation against you that you can say, no, this is actually what I do for my screening criteria.

Eric Worral: (08:22)
This is why this person failed and I am consistent in the way that I administer this. So that is the best way that you can do it. And you always want to make sure that your screening criteria are aligned with your state and local municipalities, laws, and regulations on tenant screening. All right, so this last one is definitely one that I’m guilty of. And this belief is I am a do it yourself kind of person. So this could be a pretty costly a belief at times and you can also create some tension. So in this particular case, it can create conflict or tension when your time becomes scarce and you need to hire someone. So at a certain point, like maybe you’ve actually built up your rental portfolio to a decent size, but you’re still doing it all yourself because you’re a DIY kind of girl or gal.

Eric Worral: (09:07)
And I said, girl or gal, didn’t I? You’re a DIY I guy or gal. And you can you know, it creates that tension because you don’t want to hire somebody to do it, but at the same time, all of a sudden it feels like you’re working constantly because you can’t keep up with the request and all the things that you have going on in your life on top of it. So in this particular case, you can create a principle that you can kind of point to and a principle and you know, you can make it whatever you want, but just for an example, you could do a set list of do’s and don’ts and stick to it. So I will troubleshoot a broken dryer assuming that you provide, you know, a dryer for that rental property, but I won’t touch plumbing or electrical.

Eric Worral: (09:49)
So having do’s and don’ts are things that you can do where when an issue pops up again, you have a principal and you almost have this checklist that you can go to and it’s like, am I going to do this? No. Or yes. In my case, I kind of started doing that with my rental property because I did everything when I lived there because I was on the lower unit. Tenants lived upstairs, they had an issue. Of course, I’ll come up and troubleshoot that issue. But when I started living about 20 minutes away that’s when I started having the issues because I was going back to mow the lawn, I was going back to remove snow. So depending on how the seasons go, I mean, I might be going out there 30 times just between those two duties throughout the course of the year.

Eric Worral: (10:33)
And I was thinking, this is ridiculous because it’s 40 minutes, you know, and then probably 30 minutes of actual you know, mowing the lawn in that particular case. So spending over an hour time just to mow the lawn. And I ended up saying, you know what, this is going on my don’t list. I am going to pay for somebody to come out and mow the lawn. And it was one of the best decisions I made because at the end of the year, I think I have a costing me like 250 bucks and the guy went out like 20 times or something like that. So it was a, I forget what the, it broke down to. The math probably doesn’t work how, based on what I just said, but I feel like it was about 25 bucks a cut. And was it worth it for me to not have to spend an hour and 15 minutes every time I wanted to mow that lawn and also putting a lawnmower into the back of my trunk because at the time I had a car and then having grass clippings all over the back of the trunk and having the trunk smell like gasoline and all that kind of stuff.

Eric Worral: (11:30)
And at the end of the year that $250 bet is money well spent. So coming up with your principles and what the do’s and don’ts of your rental property maintenance are can be a way that you can circumvent the belief that I am a do it yourself kind of person. Now you still might have a little bit of tension, but if you actually put things in writing, you put it down to paper or you’re putting on your computer, maybe you put it on your notes in your phone and you say, you know what? I sat down, I thought about these things. This is my principle when it comes to this belief and this is how I handle it. And just by doing this simple trick, you can kind of ease some of that tension that a lot of landlords feel. And really the ones that have been added the longest are the ones that are usually the best at this because they’ve figured out their systems and their processes so they don’t have a lot of tension from managing their properties. So that is all we are talking about today. I hope you found this helpful. I have found this extremely helpful in my own life as a landlord, but also outside of being a landlord and just being able to use principles to be able to kind of combat against beliefs that create tension for myself. All right, guys, hope you really enjoyed this podcast and I look forward to catching up with you next week. All right. Take care.

#296 Landlord Tug of War

Can you do us a solid?

Resources Mentioned on this Episode:

Show Transcription: