Landlords should always look after their tenants, but is there a point – at all – in which buying gifts for the incumbent tenant becomes a good idea? With one only week left until Christmas and a week further to the New Year, that’s the question we explore in today’s blog.
Does it constitute good property management? The truth is that there are both pros and cons to each side but, on balance, it is preferred – for reasons we explore below – that landlords establish a strictly business relationship with their tenant.
That being said, there are many positive arguments for which, in some cases, providing a simple gift can improve the landlord-tenant relationship and is, therefore, more likely to lead to the tenant staying longer.
Advantages of Providing Gifts
Providing rental accommodation is a form of business, in the same way as owning an employee-based business. That fundamental fact should not be overlooked.
Business owners want to reward hard-working employees. This can take the form of events, gifts or even a raise. The purpose is simple – to reward the value that the employee has brought to your business; both reputational and financial value.
The same could be said of property investments – this time, the tenant is the value of the investment.
Providing gifts is a simple and convenient way to show appreciation to your tenant. Perhaps the tenant has gone out of their way to help you throughout the lease – proving cooperative during a challenging time; promptly informing you of maintenance issues that need to be addressed etc.
Research shows that the most commonly selected gifts are inexpensive items such as a bottle of wine, flowers or other housewarming gifts. So, while these gifts do come at a cost, it’s not a prohibitively expensive one.
Disadvantages of Providing Gifts
However, there are downsides.
There is a growing, powerful argument that not only should business owners offer gifts, neither should they receive gifts either. There is a legal dimension to this argument, too – as the business in question does not want to succumb to existing bribery regulations.
As well as this, it’s not often easy to know what constitutes the perfect gift.
For example, you may end up purchasing an item that actively offends the tenant. This could become particularly problematic if the item was purchased to iron over any previous landlord-tenant dispute. In these cases, then, purchasing a gift can exacerbate, not facilitate relations between both parties.
Buying a gift now may give the tenant an expectation of future gifts. If you’ve purchased a gift this Christmas, what about next Christmas? Failure to purchase a gift may give the tenant the impression that you don’t appreciate their tenancy any longer.
In addition – what about every other major celebratory event; birthdays, anniversaries and other festive events? By transforming a purely business relationship into one that borders on friendship, it increases these complexities.
Research has been done on whether buying gifts makes a difference to how long tenants stay. The statistical difference is around the 10-15% mark. However, there may be other reasons for this increase.
For example – the landlord more likely to gift may also be more likely to think about how best to improve the tenant experience. In this regard, purchasing a gift would make almost no difference at all.
Though we can appreciate the advantages of buying gifts for tenants; it makes far more business sense not to.
It reduces the risk of personal friction. It reduces costs. It reduces the likelihood of the expectation of future gifts and it eliminates the risk of becoming too close to the incumbent tenant. By not buying gifts, it also means the landlord doesn’t succumb to bribery regulations.
So, while in theory buying gifts can seem harmless, it can – in more extreme cases – lead to unnecessary risks that compromise the value of your real estate investment.
Check back to our Las Vegas property management blog soon for even more great articles on how best to foster landlord-tenant relations in a way that maximizes the return on your investment.