Tuesday, May 24, 2011

Leveraging The Chinese Landlord Principle

I've previously written about why Asians love real estate. At the time, I mentioned the Chinese Landlord principle, which has much broader implications for how to approach life. The basic Chinese Landlord principle is this:
The best tenant is one who sends a check every month and never calls.
I learned the Chinese Landlord principle at a young age; my Chinese family owned (and still owns) several apartment complexes, and the trials and tribulations of being a landlord were a frequent topic of conversation.

Nothing was more frustrating than badgering tenants who were late with their rent check, or dealing with weekend calls to take care of clogged toilets and other such annoyances.

If you got a good tenant, you would do everything in your power to keep them, including letting them pay a below-market rent.

I've put the Chinese Landlord principle to work in my own life--we rent our house in Palo Alto from Chinese landlords. I've set up automatic monthly bill payments to send our rent payments without fail and slightly early, and we do everything possible to avoid calling, including changing our own light bulbs and other such tasks.

We've been renting the house since 2002, and it took our landlords seven years to raise the rent--even now, we probably pay $500 per month less than market, all because we know how to be a perfect tenant.

The broader principle is that people will pay a premium for convenience and stability. Take away risk, and you will be rewarded. Offer a better "user interface" to your boss, and you'll get plum assignments and raises.

Who are the Chinese landlords in your life, and how can you apply the Chinese Landlord Principle to get a better deal from them?