We’ve all heard the saying, “The customer is always right.” While every property management firm should strive to respect all stakeholders, there are some times that the customer is better served by standing firm.

Do you know when to give in to owner demands and when to gently guide your customers toward a better solution? Check out these examples.

Keeping it Legal

Some things are negotiable, some aren’t. If a property owner asks you to “fudge” the accounting records so they can report less taxable income, don’t. Beyond the obvious, knowingly ignoring federal law, your clients may not understand the complexities and nuances within tax code that allow (or require) changing the reporting method for rental property as new regulations emerge. Not all changes expand tax burdens, some include additional credits and incentives.

Recommend owners schedule a sit-down with their tax accountant to discuss options. Need some research to back up your position? Roughly 20% of attendees to Appfolio’s webinar titled “Is Your Business Ready For An Audit?” reported they had been audited by their State Department of Real Estate.

Your best solution is to remain firm, explain that potential negative sanctions associated with tax fraud far outweigh potential benefits. Then, provide accurate records accessible through your 24-hour on-demand owners’ portal supported by accurate monthly owners’ statements.

Negotiating for the Lease

Another time to stay firm is when owners want to go outside your current lease structure. If you live in an area with strict regulations, explain this to your owners, and provide resources for confirmation.

New York City residents and landlords have myriad laws governing responsibilities and rights on both sides of the fence. But, not every community falls under rent control rules and regulations.

So, what happens if an owner wants to allow a resident to repaint in exchange for rent or refuses to allow long-term residents to change the wall color?

#1.  First, make sure your lease documents always agree with local, state and county laws governing who must paint and how often.

#2.  If your lease doesn’t specifically exclude residents from painting interior surfaces, discuss preferences with your owner/clients and modify the lease. Exercise caution here. You can’t just march in one day and announce a change in terms in the middle of a contract.

#3.  Keep all stakeholders on the same page and document the details. Communicate with your residents and owners in writing.

If you allow renters to repaint interior walls, you should schedule a before and after inspection to identify paint splatter or damage caused during the remodel. Establish some ground rules, in writing, of course.

Things you might include in your agreement are:

  • Acceptable color palette
  • Who pays for paint and supplies?
  • Will tenants be required to repaint before vacating the property?
  • Texture and type: flat, semi-gloss or satin paint
  • What about trim, molding and baseboards?

Defining Owner Involvement Levels

There are roughly 206 thousand property management firms in the US, but no company dominates the market. Some owners are looking for a hands-on relationship, others are content with their property management company handling all details from screening tenants to replacing appliances and negotiating landscaping and maintenance contracts.

Your role as a manager is to make them so happy they wouldn’t dream of voiding their contract in favor of another team. To do this, you need to constantly evaluate your level of service and “happiness factor.”

  • Keep communication lines with tenants and owners open.
  • Respect owner and tenant rights and responsibilities.
  • Work hard to provide resources and support services that help both segments meet financial goals.
  • shape policies and settle disputes with contracts and written agreements.

Helping your owners make sound financial decision is sometimes difficult. While it is never fun to tell a customer “no,” sometimes that is the only way to make sure everyone is protected. Planning for conflict before tempers flare is perhaps the best conflict resolution strategy.