I’ve been a renter the past two years and, I have to say, the world looks a lot different from the other side of the leasing desk.
The first year, I rented at a small community, one of only two owned by a local mom-and-pop operation. This past year, I rented from a big national public REIT. It’s been a study in contrasts: truly David and Goliath.
I’ve learned a lot about our industry, lessons I could only glean by “going undercover.” I saw that small local owners and REITs alike have their own unique strengths and blind spots. And I learned the distance between best practices at the corporate level and their ramifications at the site level.
What follows is some of what I found, “The Local vs. the REIT,” done in a classic “tale of the tape.”
The Local was reasonably priced—Class B all the way, nothing fancy; blue collar. No in-unit washer/dryers, barely an amenity to speak of. Yet, it was totally unreasonable on its security deposit—more than $3,400 (no last month applied, either), compared with just $750 from the REIT, making the big public behemoth seem downright cuddly.
But cuddliness is relative. The REIT worshipped at the altar of revenue management, to a terrible, inhumane degree. When I needed to go month-to-month, I got slapped (and frisked) with a 50 percent rent increase, from $2,400 to $3,600 per month.
The Renter’s Burden
The Local had a policy that anyone living in an upstairs unit had to cover at least 70 percent of the floor with carpeting or rugs. And those rugs or carpets had to have padding at least 3/8 of an inch thick underneath. I failed the first two rug inspections, the first time out of ignorance (“Those are slip pads, not padding”) and the second time out of stubbornness (“You can’t just put two slip pads on top of each other”).
The REIT made you haul your trash about a quarter mile, and for that privilege they charged $10 a month (along with a $15 sewer charge, $19 parking fee, $40 amenities fee … really?). The REIT also poorly handled a flood that occurred in my apartment after a bad storm, telling me my place would be inhabitable later that day, then telling me—two days later, still not able to move back in—I must’ve misunderstood them.
Advantage: A slight tip toward the Local.
The REIT had seasoned, professional staffers, probably in their early 30s. Even when they were challenged, they kept their cool. I snarled that a 50 percent rent increase was damn near criminal, just naked greed, and the woman cheerfully said, “Well, we’re a public company and have to make money for our shareholders, after all.”
The Local had young women in their early 20s, if that. When I engaged one in a conversation about rent payment options, such as via direct deposit or Web portal, or just there in the office with a debit or credit card, she said, “Nope; we only take checks. They told me all I had to do was sit here and take checks.”
Advantage: REIT. When they drop bad news, at least they do it with a smile. Which leads us to …
Rent Payment Options
The Local liked checks and only checks, that’s established.
The REIT, naturally, was more diverse: You could do it on the portal, set up recurring direct deposits, mail in your check, whatever. But the first month I was there, I walked into the leasing office on the first of the month, check in hand, and they said, “We don’t take checks. But we’ll stick it in an envelope and send it to the corporate office for you. You’ll be fine.”
I guess I heard her wrong. The next month, I was fined $75 for a late rent payment.
Advantage: Surprisingly, Local.
So, who came out on top? Maybe a slight nod to the Local—I always root for the underdog. And if you’ve been involved in this industry for any length of time without actually being a renter during that time, you should try it; it’s eye-opening. You should go all “undercover boss” and walk a mile in your customer’s shoes; see things from the other side of the leasing desk. The world looks pretty different from over here.