Triple Win Property Management Blog

How to Structure a Property Management Company

The property management industry is full of entrepreneurs – self-reliant self-starters who got in the game as a side hustle and grew their property management company to be a full-time occupation. But, of course, with growth comes the need to hire a team. And the key to successful team-building? An optimized property management org chart. An organizational chart is a visual representation of a company's structure, showing the roles and relationships between different positions within the organization. Property management companies are no exception, and getting your property management company structure right from the beginning has a massive impact on the quality of experience of your investors, employees, and residents. Example of a property management org chart with 500 rental units In this article, we’re exploring the benefits of having a clear and concise property management company org chart with the help of Kelli Segretto, Founder of K Segretto Consulting. Kelli has helped with the launch of hundreds of property management companies and has tons of insight into how a PMC should be structured for success. Key Learning Objectives: What does an ideal property management organizational chart look like? How should you structure your property management company? What’s the difference between an org chart for a PMC vs. a real estate agency? How can you use your org chart to align employee roles? Who should you hire first? What’s the most important role in a property management company? What are the most common mistakes made in structuring a PMC? Meet the Expert: Kelli Segretto, Founder of K Segretto Consulting Kelli is a sought-after speaker and consultant with over 20 years of experience in the property management industry. Kelli has expertise in single-family, multifamily, and LIHTC property management, having coached across all 50 states and six countries. She has helped launch hundreds of new property management businesses and has developed in-depth knowledge of the types of organizational structures that work best in property management. Example Property Management Org Chart We asked Segretto about the primary areas of responsibility – or key roles – that that are essential to a successful property management business. She outlined six key focus areas regardless of how you end up structuring the company: Operations Management Property Management Leasing Maintenance Bookkeeping Sales According to Segretto: “Different structures will dictate the position titles and responsibilities within these roles, but these are the foundational pillars each property management business needs.” To get started with the cascading structure of the org chart, Segretto explains that in a full property management company structure, you typically see three-deep leadership: owner/broker, manager, and coordinator, each with their own focus area from the list above. “Even if your business is small, it is important to have an organization chart to plan for your future growth,” Segretto says. Here’s how it might break down in your PMC. Tier 1: Owner/Broker The Owner/Broker is the executive leadership or highest role and tier in the org chart. “In most states, you cannot operate a property management company without a licensed broker,” Segretto says. “The requirements to obtain your principal broker license varies by state, but most require a combination of time as a real estate sales agent, experience points, and education.” Of course, the owner of the PMC isn’t always the broker, depending on various circumstances or state laws. “A person with a broker’s license can sign on to be the broker of record or broker in charge for a property management business,” Segretto explains. “We see this when the business owner cannot yet meet the qualifications for their broker license, for example, in franchise property management companies and other organizations that are coming into property management from outside the industry.” Anyone newer to the industry should take note, says Segretto, “This arrangement can be tricky in some states, like New Jersey where you must operate under the same roof as your broker, or Ohio where any brokerages active under a broker must have the same core company name. There are many state and local regulations you have to be aware of when opening a property management company. My recommendation is always to reach out to your local department of real estate for guidance and information or work with a consultant that specializes in property management business startup.” Related: Property Management Startup Checklist Tier 2: Management (Operations, Sales, Finance, Maintenance, and Leasing) Reporting directly to the owner (who is usually also the broker) is a set of management roles. Depending on the size of your company, this may be one or many individuals, depending on the expertise and skills gaps of the owner. Your management level typically includes roles for Operations, Sales, Finance, Maintenance, and/or Leasing. These individuals have a fairly high level of responsibility overseeing their area and any direct reports under them. Related: Best Property Management Maintenance Software Tier 3: Coordinators (Property Management, Maintenance, Leasing, and Bookkeeping) Reporting to the management roles are employees at a coordinator level. You may hire coordinators that focus on property management, maintenance, leasing, and bookkeeping. These roles will fall under the purview of the manager above them. Tier 4: Assistants In large organizations, you may also see assistant roles that support the coordinator or management roles. For each of these tiers of responsibility, Segretto says, “the titles and function will vary depending on the type of structure you are operating under, but the core organizational buckets remain the same. In a small property management business, it isn’t uncommon for the first roles to be 1099. This helps keep costs down for the property management company as long as they are not treating their 1099 partners like employees. For example, scheduling their time, requiring uniforms, etc. As a property management business grows and stabilizes, most of the roles in the business become employees.” (Segretto provides her clients with several org chart templates that walk through the different roles and responsibilities in each configuration.) Types of Property Management Company Structures “Each property management business is unique,” Segretto says. “Some businesses service savvy investor clients, some focus on small multifamily, some are only high-end luxury while others have found their niche in Class C rentals. This means that the best property management business structure can vary for your organization.” Segretto explains that the ideal organizational structure for your business is the one that provides the best user experience for your clients, assigns ownership to the essential tasks, and keeps everyone on the same page. “Too often, I see businesses that have everyone trying to do everything, which ultimately creates chaos and confusion,” Segretto says. “Phone calls don’t get answered, emails get lost, and everyone expects someone else has ‘got it.’” Instead of this chaotic approach, Segretto recommends choosing from three common property management company structures: Portfolio Management, Departmentalized, and Process Driven. “Determining which one is best for your office is dependent on your location, your staffing capabilities, your goals, and your budget,” Segretto says. Here’s how they each work Portfolio Management Structure The portfolio management structure typically involves assigning a dedicated property manager to oversee a set of client accounts. That PM is responsible for all aspects of the portfolio, including property maintenance, resident relations, leasing and marketing, financial management, and other activities related to the management of the real estate assets. The manager is typically supported by a team of administrative and support staff, including accounting and financial specialists, leasing agents, property managers, project management specialists, maintenance technicians, and other professionals who work together to ensure the successful management of the real estate assets. Overall, a portfolio management structure gives clients a premium experience with one point of contact and allows for nimble decision-making. On the downside, portfolio management requires employees to have strong cross-skills, opens the PMC up to risk if that property manager leaves or goes on vacation, and makes it difficult to create operational consistency between portfolios. Related: Best Property Management Podcasts Departmentalized Structure Department-style management organizes the PMC into separate functional categories, grouping employees and teams based on their roles and responsibilities. You might see departments such as accounting and finance, leasing and marketing, property maintenance, resident relations, and other functional areas. Each department is headed by a department manager who would oversee the day-to-day operations and staff within that department. The benefit of a departmental structure is specialization over generalization. Employees are experts in their field and can focus on improving their area’s performance. The downside is that clients and residents may have multiple points of contact, and communication may get repetitive. No single person is keeping an eye on a specific property’s overall performance. Process Driven or “Pod” Structure A pod-style management structure in PMCs is a relatively new management concept that organizes employees into small, cross-functional teams called "pods.” Each pod is responsible for managing a specific portfolio of properties or assets within the company and typically consists of a portfolio manager, a leasing agent, a maintenance technician, and an administrative staff member. The pod-style management structure is designed to bring the benefits of the portfolio and departmentalized structures together – but can also suffer from their weaknesses. Pod-style management encourages collaboration and communication among team members and gives residents and clients an excellent customer experience. The structure also allows for greater flexibility and agility, as the pods can adapt quickly to changing market conditions and resident needs. Pod-style management is ideal for a fast-paced, dynamic environment where rapid response times and a high level of customer service are essential. By working in small, self-managed teams, pod-style management can lead to greater efficiency, productivity, and innovation while also improving employee satisfaction and engagement. The downside is that the pod structure can be expensive until you fully scale up. What is the difference between the structure of a PMC and a real estate agency? We asked Segretto to explain how a PMC org chart differs from that of a real estate agency. Segretto explains: “I had a client that structured their business like a real estate office, and it worked really well for them when they were small. As they started to grow and scale the business, it became limiting. Real estate offices have a very simple structure. Typically you have an owner/broker, and in larger offices, back office services like marketing, bookkeeping, office assistants, and maybe a transaction department. These are support services made available to the sales agents. Sales agents are independent business owners, often with their own LLCs. They are not employees of the company.” She also points out that some companies operate as both a real estate business and a property management company. “In these businesses, you may have a blend of the two org charts. You will still need all the same buckets as a property management business, but often those roles take on double duty to support the sales agents who still remain independent contractors.” FAQ: How to Use Org Chart to Align Employee Roles and Make the Right Hires So, let’s say you have an idea of the property management company structure you want and the types of roles you need. How do you actually get started? How do you make your first hires or align your current employee roles with your planned ideal structure? We asked Segretto some of the most frequently asked questions on this in the property management space. Here’s how she answered. What should I focus on in the hiring process? Segretto: Property management is an industry that can be trained, but human behavior is much harder to adjust. Pick the right personalities and drive for your team rather than the person with the most experience on paper. That doesn’t mean you should pick the person you get along with best or you think you could be friends with. It is important to identify the key personality traits that will be most beneficial in each role. Remember, your employees will be the face of your company. They will be the ones delivering on the promises you make each client. Make sure you have written job descriptions and a deep understanding of the role the person would fill. Setting proper expectations will also aid in finding the right person who will enjoy the work they are hired to do. In the interview process, ask qualifying questions and provide scenarios to see how the individual problem solves. This industry is fast-paced, multifaceted, and complex. It isn’t for everyone. Most of all, be patient. Start hiring before you need to so you don’t feel pressured to pick someone fast rather than ensuring you have the right person in the right seat. Take your time and avoid costly mistakes. Who should I hire first? Segretto: I have had the opportunity to help launch hundreds of brand-new property management businesses in my career, and one of the most common questions is, “Who should I hire first?” Initially, a property management company is typically run by a sole operator. The business owner wears all of the hats. It is beneficial for the owner to go through this phase of start-up as they learn all the ins and outs of the business and discover their strengths and weaknesses. I like to then take my clients through an exercise where we can discover the highest and best use of their skillset and time. From that exercise, you can then determine what role would be your ideal first hire. For many people, this is a business development manager to cover sales or a back office employee, like a bookkeeper. What are the key components of management structure in a PMC? The key components of management structure are customer experience ownership, work specialization, organization, coordination between departments, and continuous training. Property management is a customer service business. The structure you create should focus on the components that will foster internal communication, collaboration, and a culture of learning. What is the most important role in a property management company? Segretto: This is a tricky question! It reminds me of the grade school phrase, “There is no ‘i’ in Team.” Property management is a team sport; there is no one role that is most important or featured in the line-up. Your team will only be as strong as your weakest link, which is why it’s so important to hire talented individuals with the right personality and drive for each role. Once you have your superstar lineup, it’s crucial that you treat them well, trust them, and listen to the valuable feedback and insights they have. It’s more about having the right person in each role than it is about one role being valued higher. What are the most common mistakes you see in a PMC organization structure? Segretto: The two most common issues I see in the property management structure are: Too many points of contact for property owners and residents to keep track of. Keep it simple! Assign a point of contact to every relationship, and if that point of contact needs to shift, arrange a proper handoff. This business is built on trust, and as humans, we inherently don’t trust strangers. Lack of communication between departments. This business is built on a foundation of excellent customer service. It’s critical that you have processes in place that keep everyone in the loop. Most processes require multiple team members' effort, and when communication breaks down, the card house collapses. Final Thoughts Segretto recommends hiring a consultant to help you develop your org chart for both today and your future growth plans. A good org chart should include “job descriptions, KPIs, and personality traits for each role within your chosen structure,” Segretto says. “A consultant can take you through a process to identify your core values, goals, and action plan, which will help set a solid foundation for your business.” Learn more about property management structures, growth, marketing, and more in our Second Nature Community, or get in touch with Segretto via her website.

April 18, 2023

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Property Management Revenue: How Can Managers Increase Ancillary Revenue?

Ancillary revenue is a huge profit driver for property management companies. Today, we're looking at what ancillary revenue is, how it can give you better results, and how to get started building ancillary revenue streams. What is ancillary revenue? Ancillary revenue refers to any additional income not including rent that you derive from the properties you manage. By becoming greater service providers, PMs create opportunities for more revenue streams. There is a lot of money to be made in ancillary income in the property management industry and real estate industry. But many property managers don’t even consider the wealth of opportunities to increase profit, grow your business, and increase the satisfaction of your residents that ancillary income opportunities provide. It may seem counterintuitive to suggest that a practice exists that will simultaneously increase the amount your residents pay and increase their satisfaction with you, but if you provide the right ancillary services, and your residents find value in them, you can build a winning situation for all involved parties. How can property managers generate ancillary revenue? The best way to sustainably drive ancillary income for you and your business is through generating more value that your residents and investors want and charging for what that value is worth. Ancillary charges can apply to your investor clients and your residents. In short, property managers should figure out what’s important to their residents and clients and monetize those things. Ancillary revenue opportunities can come from programs that drive resident satisfaction, such as Resident Benefits Packages, property upgrades, pet insurance, pet rent, etc. You can also drive extra revenue through additional fees such as application fees or pet fees for new residents or for behaviors you want to discourage, such as late payment fees, early termination fees, paper lease fees, vendor screening fees, etc. Ultimately, each of these programs help to achieve what we call a “triple win.” A triple win, as described in this video, is any concept that manages to benefit the renter, you and your team of property managers, and the property owner. ‍ ‍ The importance of the triple win comes from the idea that long-term success that results in long-term profit must correlate with long-term satisfaction. Keeping all involved parties in a transaction satisfied will lead to high rates of re-signing, whereas ancillary income programs that residents don’t find value in can decrease renter satisfaction and hurt your bottom line in the long-term. Ancillary revenue stream examples in property management Let’s look at some of the most common and successful ancillary revenue examples. Ancillary programs work well for both multifamily and single-family rentals. You can break ancillary charges down into two categories: fees vs. special programs. Ancillary Fees First, there’s the ancillary fees approach. Those can include the following. Resident-Focused Security Deposit Processing Fees Leasing or Lease Amendment Fees Paper Lease Setup Fees Lease Renewal Fees Renters Insurance Late Fees Investor-Focused Inspection and Maintenance Monthly Fees Marketing Fees (social media, etc.) Insurance Risk Mitigation Fees Vendor Screening Fees Rent Protection or Eviction Fees Essentially, property managers should be sourcing income on anything they’re spending money on themselves. This ensures that you can continue to grow, add on value, and pay your employees. Ancillary fees also help encourage the kind of behavior you want from your investors and residents. You don’t want residents to pay late? Incentivize on-time payments by adding a fee for late payments. You don’t want investors requiring you to use their vendors instead of yours? Charge a small fee for vendor screening. Then you’re either getting paid for your extra time, or the investor will decide it’s not worth it, and you’re saved the extra burden on your team. Special Programs Of course, property managers can also generate additional revenue by developing programs that boost resident happiness and satisfaction. These programs can also help encourage the behavior you want, but the goal is more driven by a desire to improve the resident experience. The most popular – and effective – form of special program is the Resident Benefits Package. An RBP can include several different benefits for residents, from credit reporting to move-in concierge services to identity protection. And they’re easy to monetize for property managers. Increasing property management revenue The residential real estate market is changing. By finding new ways to generate revenue, property managers can accelerate business growth. Ancillary revenue is one of those ways, and it works by providing real value to the resident. These programs don’t necessarily have to directly create revenue, although many do, but the key is always to create value. Of course, some programs work better than others – and some attempts to drive ancillary income can actually do the opposite: drive investors away, or cause resident complaints. Let’s look at a few examples of what is and isn’t working for property managers. Ancillary revenue streams that are working Here are a few examples of the best drivers of ancillary revenue in property management. Resident Gift Programs One example of a program that creates value for the resident without charging the resident is a Christmas gift program run by the Home River Group based out of Boise, Idaho. Residents at HRG’s properties receive a gift package every holiday season that includes gift cards to local restaurants, movie theaters, bowling alleys, etc. This comes at no charge to the resident, but it does create happy renters, which leads to sustainable revenue in property management. 24/7 Maintenance Another great example is 24/7 maintenance, which is often amenitized. Professional SFR managers have web portals, apps, 24/7 hotlines as part of their operations that enable a more professional and convenient resident experience. And it leads to faster resolution. Including maintenance support in a resident benefits package helps differentiate your service. Adding value through a resident benefits package also adds a new revenue stream for a property management business. Convenience Services Convenience services are great examples of ancillary income programs that do drive immediate profit and achieve a triple win. Residents tend to realize a lot of value from convenience services, and these services have become the expectation for renters. Second Nature’s air filter delivery service, which is widely used by property managers around the country, achieves this by providing the resident with cleaner air to breathe and lower utility bills, providing the owner with the peace of mind of knowing the air filters are being changed on time, and providing you with some added ancillary revenue. A great way to identify opportunities for ancillary revenue services that achieve a triple win is by asking your residents. Just ask them. They’ll tell you what services they’re interested in and willing to pay for. This will not only help you identify key insights for your business, but it has a positive side effect of improving the relationship you have with your residents. What doesn’t work in driving ancillary revenue As you can probably infer, programs that don’t work will be the ones that don’t achieve the aforementioned triple win. Property managers are starting to realize the value of the long-term game. The extra effort required to make sure residents feel respected and not leveraged specifically for profit creates a lot of value for the PM as it keeps renewal rates high. Here’s the type of behavior PMs should avoid when designing an ancillary revenue strategy. Cheap Money Grabs When your residents feel like they're just a warm body that pays monthly rent, that's really going to sour the relationship that you need to be focused on here. Truthfully, ancillary income can be created very easily, but cheap money grabs that make residents feel used are not going to be sustainable, and sustainable is the key word here. Not Understanding What Residents Value If the resident doesn’t see value, your program’s long-term prospects are not going to be good. Understanding where a resident will find value also requires you to understand how a resident perceives value. There is a saying in marketing that perception is reality, and whether or not you realize it, you're perpetually marketing your properties to residents. How they perceive their experience is going to affect how they feel when it's time to renew. Mixed Messaging The best ancillary benefit package in the world is going to be perceived negatively if the messaging around it uses words with negative connotations. Avoiding words like “fees” can help prevent a negative perception of a service you as the property manager are providing. A perceived lack of value for a required program contributes to a resident that feels disrespected, and a perceived lack of value for an optional program results in a program nobody uses. Either way, no benefit to the resident means no benefit to you. ‍ In the end, the best way to drive ancillary income is to find programs and services that add value for your residents and clients, and generate profit for your business.

April 10, 2023

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AI Property Management: Tools, Benefits, and Challenges for the Industry

Artificial intelligence (AI) property management is one of the buzziest terms in the industry right now. Today, with a special guest Wolfgang Croskey, we’ll break down its practical applications, how it can help property managers, and how it could hurt them. Meet the Expert: Wolfgang Croskey, President of The Perfect Tenant Key Learning Objectives: How to use AI in property management Best AI property management software Benefits of using AI in property management What you shouldn’t automate with AI in property management Challenges of AI in property management Future of AI in property management What is AI in Property Management? AI property management is a business strategy for real estate or property management companies to simplify and improve their processes through software-powered property management automation. It streamlines operations by automating tasks like resident screening, maintenance scheduling, and rent collection, enhancing efficiency and decision-making. In its current state, artificial intelligence best serves property managers by supporting and expediting administrative tasks. It’s essentially calendar clearing, in that it gives property managers more time to focus on their business. In fact, Croskey has implemented AI solutions into his business and noted how much extra free time his property managers have to be property managers. Croskey says, “Now, with the time we have, our property managers call an owner every day just saying, ‘Hey, how’s it going?’” Croskey’s team is able to devote more time to elements of a great resident and investor experience. It’s ironic to think that AI is helping you forge stronger relationships with clients, but it’s true. With more time to devote to opening lines of communication and being proactive in doing so, PMs can build that experience that’s the primary differentiator in modern property management. That’s what it means to work on the business. “Can AI replace a property manager? No. Because at the end of the day, what is a property manager hired for? To provide solutions for crazy problems. And that's what we do. But if your whole day is filled with all this admin work, how are you going to have the energy and time to solve crazy problems? Use these tools to unload as much admin stuff as possible, so you can really focus on the property manager’s true value proposition, which is solving crazy problems and helping owners make money.” The bottom line: AI has enormous potential to help save time if used correctly. How to Use AI in Property Management So, how do you actually use these programs to cure your team of their grunt work pains? Let’s look at some of the top business areas and use cases for AI property management. AI for Tenant Screening AI tools can streamline the screening of potential tenants by automating background checks, credit evaluations, and rental history analysis. Tools like TenantCloud analyze applicant data to predict lease default risk, ensuring property managers select reliable tenants more efficiently. AI for Reducing Maintenance Costs AI can predict and prevent maintenance issues by analyzing data from Internet of Things (IoT) devices and past maintenance records. Tools like Building Engines use AI to schedule predictive maintenance, reduce downtime, and lower repair costs by addressing issues before they become costly problems. AI for Generating Listing Descriptions With the rise of natural language processing (NLP) tools like ChatGPT and Jasper, creating unique marketing collateral has never been easier. These tools can generate compelling property descriptions quickly, allowing property managers to focus on other tasks. Copy.ai also assists in crafting listings and marketing content, saving significant time and effort. AI for Automating Lead Generation AI-driven platforms like Manychat and HubSpot can automate lead generation by engaging potential clients through AI-generated text and chatbots. These tools help capture and nurture leads, ensuring that no opportunity is missed. “Maybe once a year, take your templates, throw them into one of these AI tools, and say, ‘Hey, can you rewrite this?’ You’re just kind of freshening up,” Croskey says. “You could ask it to rewrite something with a more friendly tone or add some comedy to it or different things. And so now, each year, the point of the message is the same, but you're kind of making it new and exciting.” AI for Property Analysis and Search AI tools such as Keyway's keypilot and Saleswise AI provide in-depth property analysis by aggregating and analyzing market data, investment potential, and neighborhood insights. These tools help property managers make data-informed decisions on property acquisitions and market trends. AI for Fraud Detection and Compliance Monitoring AI systems like AppFolio can detect fraudulent activities and ensure compliance with regulations by monitoring transactions and resident activities. These tools use machine learning (ML) algorithms to flag unusual patterns and potential compliance issues, safeguarding property managers against legal risks. AI for Leasing AI assistants such as EliseAI automate leasing processes by answering prospective residents’ questions in real-time and scheduling tours. This enhances customer service and increases the likelihood of lease conversions by providing timely and accurate information. AI for Accounting AI-driven accounting tools such as Buildium automate financial tasks like rent collection, invoice processing, and financial reporting. These tools ensure accuracy, reduce manual errors, and provide real-time financial insights, improving overall financial management. AI for Scheduling Maintenance Requests and Showings Tools like Reclaim.ai offer smart scheduling solutions for maintenance requests and property showings. These AI tools prioritize tasks based on urgency and availability, optimizing time management, and ensuring timely responses to resident needs. “The biggest problem with any basic scheduling app is the concept of priority, right?” says Croskey. “Apps without AI integrations simply look at free and busy times. For example: ‘Oh, this person wants 30 minutes. Let me find the next open spot for 30 minutes and plug them in there.’ But let's say you wanted an hour with me. If I didn't manually intervene, you probably wouldn't be able to get the hour for like two weeks because finding an hour-long spot is not going to happen. But I want to give you priority, so I had to override my account and say you know what, let's do 8 a.m..” AI for Marketing AI tools are revolutionizing marketing efforts for property managers. ChatGPT and Jasper can create blog content, social media posts, and email campaigns, while Synthesia helps produce high-quality marketing videos with AI-generated avatars. Evolv AI enhances digital experiences by identifying drop-off points and improving the renter's journey. “If you are still wasting your time writing creative property descriptions, you just need to stop,” says Croskey. “Nobody reads them anyway. I’ll buy you lunch if you actually leased property because someone said, ‘You know what? That marketing description was phenomenal. That’s why I want to lease this house.’ Nobody has ever said that so why would you spend a lot of time on it?” Best AI Property Management Software You Should Try Croskey has used several AI platforms to help with administrative and communications work. Here are some of his recommendations: ChatGPT and Jasper: For content creation and marketing collateral. These tools can generate high-quality written content quickly, enabling property managers to maintain a strong online presence with minimal effort. Grammarly: To maintain consistent and effective communication tones across various platforms. Grammarly ensures all written communication is polished and professional, helping property managers avoid misunderstandings and maintain a positive brand image. Note: There’s a free version, as well as a handy Chrome extension. Reclaim.ai: For smart scheduling based on priorities. Reclaim.ai optimizes your calendar by automatically adjusting meeting times and task schedules to prioritize important activities, ensuring that critical tasks are never missed. Keypilot from Keyway: For property research, investment analysis, and contract drafting. KeyPilot leverages AI to quickly analyze vast amounts of data, providing actionable insights that help property managers make informed investment decisions, and draft precise contracts. EliseAI: To automate resident communications and improve customer service. EliseAI enhances resident interactions by providing instant responses to inquiries and efficiently managing follow-ups, which improves resident satisfaction and operational efficiency. These tools collectively enhance various aspects of property management, from resident interactions and maintenance scheduling to marketing and financial management, making operations less time-consuming and more effective. Benefits of Using AI in Property Management Automating Routine Tasks AI algorithms can automate repetitive and time-consuming tasks such as rent collection, invoice processing, and scheduling, freeing up time for property managers to focus on more strategic activities for their property management company. Enhancing Resident Communication and Satisfaction AI-driven platforms provide real-time responses to resident inquiries, automate follow-up communications, and schedule property tours, significantly improving residents’ experience and satisfaction. Reducing Operational Costs AI helps reduce operational costs by optimizing resource allocation and predicting maintenance needs, performing predictive maintenance to reduce downtime and costly emergency repairs. Generating Accurate Financial Reports AI-powered tools can automate financial reporting, ensuring accuracy and compliance while providing real-time insights into financial performance. Predicting Maintenance Issues AI analyzes data from IoT devices and maintenance records to predict and address potential maintenance issues before they become major problems, saving time and money and reducing stress. Improving Marketing Strategies AI assists in creating engaging marketing content and optimizes digital experiences to enhance lead generation and conversion rates. Screening Residents More Effectively AI-based resident screening automates background checks, credit evaluations, and rental history analysis, helping property managers select reliable residents more efficiently. What You Shouldn’t Automate with AI in Property Management While AI can solve various issues and make work better, there are still functions that are better accomplished by a human being. Indeed, if used incorrectly, AI can do more harm than good. Here are two common pitfalls of over-dependence on AI. Creating Business Policies and Procedures Croskey says, “The reality is that if you don’t have your policies and your procedures, there is no tool on Earth that is going to save your bacon… Look at McDonald’s. At one point, somebody had to roll up their sleeves and make the process of how to build the Big Mac. It probably took quite a while to do that, but now that it’s done, they haven’t changed the Big Mac for at least 40 years." Property management AI can help you repeat your processes, but can’t create them for you, and it can streamline them, but not optimize them for success. Overreliance on technology is kind of an innate vulnerability with tools so robust. Croskey is quick to clarify that such a mistake can lead to notification overload, where you can’t keep up with everything that all these tech tools are delivering to you. You still have to be aware of what’s going on in your business. Training Personnel The veteran PM also notes that, just like with any new tech, proper training for the team is of critical importance. “Really do your team justice by providing them training, providing them opportunities, not just saying, ‘Okay, starting tomorrow, we're using Jasper, have a nice day.’” For training, Croskey recommends the non-AI tech tool, Loom. You can create screen recordings and build a library of training materials for your team. “Loom does provide transcripts of the videos, too,” Croskey says. “You could take those transcripts and say, ‘Hey, ChatGPT, Could you write me a summary of this?’ And it will do it. So now you can put that summary in your email.” Challenges of AI in Property Management Data Privacy Implementing AI in property management requires handling large amounts of highly sensitive resident data, raising concerns about data privacy. Ensuring compliance with data protection regulations and maintaining resident trust are significant challenges. Security AI systems can be vulnerable to cyberattacks, posing a risk to the security of resident information and property management operations. Robust cybersecurity measures and regular updates are necessary to protect against potential threats. Cost The initial investment in AI technology can be high, including costs for software, hardware, and training. Smaller property management companies could find it challenging to justify and afford these expenses. Complexity AI systems can be complex to implement and integrate with existing property management processes. The learning curve for property managers and staff can be steep, requiring significant time and resources for training and adaptation, and checking in to make sure these processes are integrated properly. Lack of Human Touch While AI can automate many tasks, it lacks the personal touch that human interactions provide. Maintaining a balance between automation and personalized service is crucial to ensuring resident satisfaction and effective property management. Future of AI in Property Management As of now, the strategies above outline how Croskey and other PMs are finding value in artificial intelligence. AI will continue to evolve, and the technology is going to build more advancements for PMs in the future, especially with integrations with property management software. “Right now, all the AI is around language because I think it’s probably easier,” Croskey says. “I think the next step is going to be the math and numbers side, being able to look at your numbers, your portfolio, your financials, and start making recommendations from that.” Croskey predicts that AI could aid in ROI analysis and decision-making, essentially doing analytics of data points associated with specific properties and identifying trends and associations within your portfolio that can help you increase the profitability of your doors. The last place you’ll see AI reach, according to Croskey, is the maintenance realm. “There's a reason why nobody has really fully nailed down maintenance,” he says. “There are just so many variables and one-off things that it's hard to get a machine to learn that. For example, work orders come in, and the tenant says, ‘Oh, my toilet is leaking.’ Well, is it leaking from the floor? Is it leaking underneath? Is it just running? So there are three variables right there. Is it a low-flow toilet? Is it not a low-flow toilet? There are variables there. There are just all these things that can be going on that make maintenance hard. So I think that maintenance is going to be later in life.” Final Thoughts AI property management tools are nothing to be afraid of and can be a massive support to streamlining business processes, workflows, and day-to-day operations. Many leaders in property management are already leveraging AI apps and products to make their work better. The true benefit of AI is that it can automate busy work and repetitive tasks – freeing you up to be strategic, focus on relationships, and build better resident experiences. AI tools help PMCs keep up and compete with commoditization, as well. Follow us on LinkedIn, Twitter, or Facebook to stay up to date on these AI conversations. We’ll keep the conversation going and continue to deliver the best insights from experts across the industry. ‍ Hear more from Wolfgang Croskey and other PMs who have used AI on the Triple Win Property Management podcast.

April 10, 2023

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Property Management Referral Program: Create, Promote & Track Success

A study by McKinsey found that the main factor behind up to half of purchasing decisions is word of mouth. A good referral can set up your property management company for the long term. A bad referral can lead to stress, late nights, and overwork. So how do you nail a good referral program? We sat down with an expert to get some answers. Jim Roman is the Director of Results at Business Owners Institute, LLC, and a speaker and coach well-known in the property management industry. Jim helped us talk through the best practices for getting referrals, how to build a (legal) referral program, and how to follow through for success. Key Learning Objectives: What you need for successful property management referrals How to optimize the referral process How to promote referrals How to track your success How to maintain and nurture your referral relationships Meet the Expert: Jim Roman, Director of Results at Business Owners Institute Jim Roman founded Business Owners Institute 18 years ago to help business owners and their teams make more money, have more time, and – most importantly – have a life beyond their business. He coaches leaders from many industries and has a strong client base in property management. From a course called “How to Double Your Income in 90 Days,” his work has grown into a nationwide coaching and consulting business. What’s needed for a successful property management referral program A property management referral program is a marketing strategy that incentivizes your current clients to refer new clients to your PMC and grow your doors. Referral marketing is one of the best ways to grow a quality client list in any business. But in the property management business – where relationships and word of mouth still reign supreme – referral marketing is an essential strategy. A relationship-based approach Roman urges property managers to keep local laws and regulations in mind when discussing a referral “program” rather than casual referral strategies: “A referral program would be that you get compensated for referrals,” Roman says. “You have to be careful in the property management industry when you do this kind of stuff. The laws are different throughout every state. For example, in Virginia, you’re required by law to give two to three people when asked about a realtor or realtor referral program.” Roman urges that a relationship-based, win-win approach – over a referral fee – is far more effective for long-term outcomes. He has coached hundreds of companies on how to build a successful, relationship-based referral strategy. Defined target audience A defined target audience is critical to the success of your relationship-based referral marketing. Roman outlines three key audiences for getting referrals: 1. Current clients According to Roman, the average investor has two to three property management relationships with many rental properties. You may not even know about those other properties if you don’t have a strong relationship with their investor. “One of the things I teach my clients to do is what I call an Owner Outreach Program,” Roman says. “Reach out to the property owner, check in on them and how they're doing. Tell them ‘We're not asking for money and there's nothing wrong with your property. I just wanted to check in and find out where your goals are for this year.’ Next thing you know, they go, ‘Well, it's funny you should call. I have a couple of properties I want to give to you.’” 2. Past clients The next strategy for your target audience is to check in with past clients. “You might check in with them and see how they're doing,” Roman says. “They might say, ‘Oh, it's funny you should call me. I'm not happy with my property manager. I should never have left you.’” He adds that if they are happy with their current arrangement, they likely won’t pick up the phone when you call anyway – “so you have nothing to lose.” 3. Strategic partners Roman says, “Think about people who have databases that you would want where partnering with them could be very profitable.” The number one source of business for property managers is real estate agents. After that, Roman lists CPAs, investment advisors, and estate planning attorneys. "If someone passes away," Roman says, "and someone else inherits some properties, who's going to know that? The CPA, the investment advisor, or the estate planning attorney.” Achievable goals for referrals The next factor is to set achievable goals for your referrals. Roman advises his clients to identify between six to eight referral partners to refer clients. “It only takes three technically, but you don’t know which of the six to eight will be your three,” Roman says. “If one quits, you’re down, losing a third of your referrals.” He advises a strategy to focus on the three target audiences above – current clients, former clients, and strategic partners. “I might have three relationships in each category,” Roman says. “Not all are going to refer you. But the key is that you can answer if someone asks you for a CPA, etc. Then, eventually, those partners will start returning the favor and referring you a lot of business.” A clear referral reward system Roman says that the best rewards systems give people options. He shares an example of a referral program he promoted. “It was a March Madness referral program,” Roman says. “For the month of March, if you refer us any clients, you get a choice of one of three things: $250 credit towards coaching in the future, $100 gift card to your favorite restaurant, or $100 to your favorite retail store.” The power in that is it’s giving you options, which helps ensure you’ve hit on something that each person might want. Note: Again, remember to follow your local laws. A marketing strategy to promote your referral program According to Roman, the key to any marketing strategy is to bring awareness to the fact you are looking for referrals. “This is important,” Roman says. “Some people think you’re doing so well you don’t need it. But who doesn’t want new business?” Romans says that he sends a survey at the 90-day mark of getting a new client and asks, “How are we doing?” Then, they add the question: “What could we do to make it easier for our clients to refer us?” “One woman said, ‘I just need a flier,’” Romans says. “That was so easy!” Optimize the referral process Next, Roman walked us through the steps to optimize the referral process. He advises his clients to use the RISEE process: build Relationships, Identify opportunities, Strategize, Execute, and Evaluate. Step 1: Build Relationships (R) At this point, it should come as no surprise that the “r” is for “relationships” – the most important part of any referral plan. Roman says, “One of the questions I love to ask people is how they got into their industry and what they enjoy most about their business. You're going to find a connection and build that relationship.” He also warns that how you approach is key. “You don’t say, ‘Let’s get together to see how we can help each other out.’ You should be trying to identify what is a good referral for them. So you should say, ‘I would love to learn about how we would be able to refer you and see if it’s something we can partner on.’ It’s about them, not you.” Step 2: Identify opportunities to refer (I) That leads us to the next step: Identify opportunities to refer – both for them and for you. Roman says it’s important to get very specific here. For example, if you’re working with a realtor, don’t just go with “they’ll take anybody looking to buy a house.” For your own referrals, be clear on what property management services you’re offering. Roman says, “That's not specific enough. Is someone upsizing? Downsizing? Is it a half-million-dollar house? A million-dollar house? Another way I go about this is I'll ask them to give an example of some of the types of clients they’re working with now.” “This identifying step takes some time,” Roman adds. “The whole process should not happen in one sitting.” Step 3: Strategize on how to do it (S) Roman says the key here is to identify what has worked before. “So when I ask how I should refer someone, they always give a sales answer. They'll give you the words that they would say if they were in front of the prospect. But you're not a salesperson for them, so you can't do it that way.” Instead, says Roman, “I might say, ‘What are different ways people have referred you in the past?’ Rarely does anybody ever ask that question, but it makes the strategy part so much easier.” Step 4: Execute that action (E) This is all about holding up your side of the bargain. Once you’ve identified opportunities and built a strategy for both of you to refer to each other, you need to actually execute. “Tell them, ‘I want to commit to giving you at least one referral by this month,’” Roman says. “And that's important because usually if I really want a referral relationship, I have to give first. A lot of times, people say, ‘Okay, this was great. I'll figure out how I can help you.’ Yeah. You're not gonna help me, you're gonna forget about me.” Instead, commit yourself to a goal and timeline so your partner knows you’re serious. Roman suggests a script like: “Okay, I’m looking to refer you in the month of April, and I'm going to work on getting you one referral. Is that okay with you?’” They’re going to say yes. Step 5: Evaluate how it went (E) “A lot of times there is no evaluation,” Roman says. “But the second E is the power in this whole process – debriefing, training me to know what worked. I need to learn.” “Ask ‘What would be better,’ rather than just asking, ‘Is this going okay?’” Roman recommends. Without following up, you can easily lose that referral to another relationship. Roman says he’s seen it happen time and again. Follow-up and evaluation are critical to generating more referrals. We’ll share more on evaluating your program below. How to promote a property management referral program Remember that when it comes to referrals, your state’s laws may have strict requirements on what is allowed. Keep those legal restrictions in mind. However, in terms of building referral partnerships and strategies, you can follow several paths to promoting your plan. Create a dedicated referral program landing page Again, people don’t know you need referrals unless you tell them. Create a landing page for your website that’s simple, clear, and lets people know exactly how to refer you. Use social media Reviews, likes, comments, and more on social media are one of the best ways to get word of mouth out there. (You can join Second Nature’s Facebook group of active, supportive property managers.) Send email marketing campaigns Once you’ve identified your target audience of current clients, former clients, and strategic partners, you can build email campaigns targeted specifically to each. Sign strategic partners for cross-promotion Strategic partners are any businesses that have a database that could add value to your company. As Roman outlined above, the best partners for property managers are real estate agents, CPAs, investment advisors, and estate planning attorneys. Remember: To get referrals, let people know you want referrals! Use hyperlocal advertising campaigns This is so simple but so effective. Roman says, “I always recommend going out to real estate offices on a frequent basis. Bring donuts or bagels or offer to do a real estate sales meeting and buy breakfast. Make it frequent, not just one and done.” It’s about relationships and being the first PMC that comes to mind the next time they’re asked for a property manager referral. How to track the success of a referral program This brings us back to the second “E” in RISEE – evaluation. According to Roman, this is the most overlooked but important part of the process. Here are his tips to track and build upon your referral success. Track best-converting referral sources The key here is talking to your referral partners about your definition of a good referral, a better referral, and the best referral. “In referral relationships, we don’t always talk about that,” Roman says. “What’s a good referral? What’s a bad referral?” In property management, he says, a bad referral would be someone who is not flexible with their property management team and management agreement, won’t let you make any changes, etc. By contrast, Roman says, “A great referral will be an investor who says, I don't care, just get it done. I trust you. You're the expert.’ A middling referral might be the landlord who has a personal attachment to the investment property and wants to know what's going on on a regular basis. It's profitable, but it's not like the investor is ready to say, ‘I trust you, you're the expert.’” So the key here is to track which types of referrals you get that most quickly convert into profitable clients. Then let your referral partners know exactly what that client looks like. Optimize the referral program based on your partnerships Set your success metrics for your referral program and optimize your program based on reasonable goals. “First is setting your referral goals,” Roman says. “How many referrals are you hoping to get on a monthly basis?” Decide how many referrals per month you want from each of your strategic partners. “An average door, let’s say, could be worth $2,000 of revenue a year for a property manager,” Roman says. “So if I get three realtors giving me all three referrals, that's $6,000 of revenue to the company. Plus the first month's rent if you charge something like that. So I would wanna have a referral goal and then monitor how many I'm getting from all my partners.” The goal, too, is to be sure you’re getting as many referrals as you’re getting. How to maintain and nurture referral relationships All of this is pointless, Roman says, if you aren’t nurturing those relationships. “It's important that you stay in touch with the person you’re referring and the person you’re referring to,” Roman says. “This is a team effort, not an individual effort.” Similarly, when you receive a referral, let the referring partner know how it’s going. Let them know if it was successful and how you’re nurturing that referral. They’re more likely to continue referring people to you if they know you’ll really follow through and take care of that person. Tiered reward system for best performers If you’ve built a reward system (within legal boundaries), consider creating tiers for the highest-converting referrals. Companies do this all the time with employee referrals. Set up rewards that correspond with the stages of growth or future sales with that referral. Do they convert into clients? Do they last over six months or a year or multiple years? Thank your referral partners by gifting them rewards for these milestones. This practice also helps to highlight for them what a good vs. better vs. best referral looks like for you. Understand what’s working by talking to your top-performing referral program partners Roman shares an example of how to really invest in those referral relationships. “I was working with a staffing firm where the boss was one of my top three referral partners. She told me, ‘If you can help Tracy, you'd be helping me.’ I said, ‘Consider it done.’ So I would get together with Tracy at least once a month for a cup of coffee to give her resumes. And she’d go, ‘Oh, thanks, Jim.’ And that was it. Six months into it, something told me to ask her, ‘Are these good referrals?’ She says yes, yet again. So instead, I asked, ‘Tracy, what would be a better referral for you?’ She had an answer: ‘Oh, a better referral would be orders. Resumes are great, but when companies give me an order, and they want me to place the person, that’s the best thing you could do for me.’ Within weeks, I came across a company that was looking to fill an order. I hooked them up with Tracy and followed up afterward. She told me it was the biggest deal of her career.” Roman says it’s critical to ask not just “Is this going okay?” but “How could it be better?” Again, that helps you nurture and understand their needs, and it’s likely they’ll return the favor. Property management referral program best practices Okay, let’s review all we’ve learned from Jim Roman and make one last list of best practices. Here are some best practices for property management referral programs: Offer a valuable incentive: A strong incentive can motivate your existing clients to refer new business. Roman says, “A strong incentive from my experience is doing a great job for the referrals received. If you are going to give them monetary incentive, give them options.”‍ Keep it simple: Make it easy for clients to refer others by providing them with a simple and streamlined process. This could include a referral form or a unique referral link that they can share with others. Ask for this from your partners, as well.‍ Communicate regularly: Keep your clients informed about your referral program by communicating regularly via email or newsletters. This will keep your program top of mind and increase the likelihood that clients will refer others.‍ Leverage social media: Use social media to promote your referral program and encourage clients to share it with their followers. This can help you reach a wider audience and generate more referrals.‍ Follow up quickly: When a new referral comes in, follow up with them quickly to show that you appreciate the referral and are excited to work with them. Follow up with both sides.‍ Track results: Keep track of the referrals you receive and the incentives you offer. This will help you assess the success of your program and make adjustments as needed. In the end, it’s all about building meaningful, effective partnerships that benefit everyone in the long run. Get more property management tips, insights, and expert advice in our Second Nature Community.

April 10, 2023

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Top 20 Property Management KPIs to Track

Property management KPIs (key performance indicators) are critical, quantifiable metrics that measure your PMC’s performance over time and help you evaluate the success of your objectives, projects, or team members. PM KPIs can be divided into three broad categories: Financial performance KPIs: These measure the financial performance the the property management company Operational performance KPIs: These measure the effectiveness of the property management company’s operations Property performance KPIs: These measure the performance of the rental property that is being managed A narrow focus on KPIs isn’t a magic pill for company growth or stability. By nature, KPIs are very transactional. They tend to focus on short-term goals like maximizing rent/fees/etc. at a specific point in time. While those point-in-time metrics are critical to success, they need to be contextualized with the view of maximizing customer lifetime value. Build your KPIs with two overarching questions: “How do we create experiences so good residents never want to leave?” “How do we create investor experiences that are so good that they generate organic referrals?” These questions helps you to keep a “Triple Win” mindset – that we can grow the pie for ourselves, for our residents, and for our investors. Meet the Experts: Matthew Tringali, CEO of BetterWho, and Daniel Craig, CEO of ProfitCoach Matthew and Daniel are both experts in their respective fields, helping PMCs drive greater productivity and profits. We asked Matthew and Daniel to share insights and help us review the most important things to know about property management KPIs. 1. Net Income/Profitability Net income and profitability (which is net income expressed as a percent of total income) is what you’re making after you subtract your operating expenses from your earnings. PMs also track “profit per unit,” so they can break down exactly how much each unit is making – or costing – them. Related: Property Management Profitability: Tips to Maximize Revenue PMC valuations are typically done as a multiple of revenue or a multiple of EBITDA, so tracking your revenue and net income can help you keep an eye on the value of your business as a sellable asset too. When it comes to net income, one of the leading strategies to “grow the pie” is to build opportunities for ancillary income. Ancillary income is anything outside of the core service of rent collection. Enterprising PMs have found ways to generate more value for their investors and residents by offering supportive services like a Resident Benefits Package. With that extra value comes the opportunity to charge what it’s worth and create more net income. Adding value to the resident experience eliminates preventable vacancy costs for investors, keeping them – and your business – happy. KPI Formula: Net Income(Profitability) = Earnings - Operating Expenses 2. Labor Efficiency Ratio Labor Efficiency Ratio (LER) tracks how effectively you are deploying labor in your company. It certainly plays into improving company financial performance, but it’s also about helping your team members hit their individual goals and perform better – so they and you end up more satisfied. According to Daniel Craig: “LER is the most important driver of profitability. There are only two ways to increase profitability in any business: charge more for what you do, or spend less to get the job done. LER takes both aspects into consideration. There are three key levers to improving LER – we call them the three P's of LER: Pricing (how effective you are with client pricing as defined by your Revenue Per Unit), Pay (how effective you are in compensating your team), and Productivity (how effective you are in enabling a high-performing team).” Improving LER starts with making sure you have the right people in place. Find people who embrace your core values, who believe in the triple win, and in the importance of the resident experience. Look for people with initiative who understand that proactively seeking success for others is the way to achieve success for themselves. Matthew Tringali’s secret sauce for a better LER? Global remote team members. Tringali says: “I used to tell people that utilizing global Remote Team Members (RTMs) can be your unfair advantage against your competition. Now I tell people that if you aren't properly leveraging global RTM's, then you are going to get left behind. Top property management companies have 65% of their direct labor comprised of global RTMs. Companies who have six or more global RTMs on their team have a 7% higher profit margin, on average, compared to companies not yet using RTMs. LER is a master KPI that captures right people, right seats, revenue, efficiency and payroll. These type of A-players add value, nail performance metrics, and keep residents and real estate investors around. KPI Formula: LER = Gross Profit / Direct Labor Cost Related: 10 Property Management Goals to Set for the Year (with examples) 3. Resident Acquisition Costs Some may track this as “tenant acquisition costs" or customer acquisition costs. But, again, our focus should be on the resident experience to generate value for a triple win. That’s why we call this KPI “resident acquisition costs.” Language matters! You can calculate resident acquisition costs by totaling your annual sales and marketing budget and dividing it by the total new units you acquired in the same date range. As you track this benchmark year over year, you will see how effective your Biz Dev strategies are. The objective of both the PM and investor is to lower acquisition costs while not sacrificing the quality of the resident match. One of the best ways to reduce the cost of resident acquisition is to focus on building an attractive experience – particularly one that attracts the best residents in the applicant pool. A resident benefits package or another value-add can draw in residents without much effort on your part. KPI Formula: Customer Acquisition Cost (CAC) = Total Costs of Acquiring Customers / Total Number of New Customers Acquired 4. Average Maintenance Costs Tracking average maintenance costs is tricky as an SFR property manager. The properties you manage can be far apart and vary greatly in their needs and resident requirements. Plus, repair and maintenance costs are a huge chunk of expenses for PMs and investors. One great way to build value for yourself and your investor is to take a proactive approach to maintenance. Offer services like an HVAC filter delivery subscription, comprehensive renter’s insurance, and other features of a resident benefits package. With Second Nature’s filter delivery service, property managers saw a 38% reduction in HVAC-related ticket requests. This saves hundreds of dollars in maintenance costs a year. For more advice on using your KPIs and data to drive value, check out this video from BetterWho featuring Ray Hespen of Property Meld. KPI Formula: Average Maintenance Costs = Total Maintenance Costs / Total Number of Units 5. Average Arrears Every property manager’s approach to arrears is some form of: “MINIMIZE!” Arrears – otherwise known as the unpaid debt owed by residents – can have a massive effect on your company’s cash flow. Tracking average arrears helps you see who is paying rent on time vs. who isn’t. These metrics can also include delinquency rates (paying late and how late) and eviction rates (never pays and must be removed). Here are a few examples: Offering credit building as part of an RBP – reporting on-time payments to credit bureaus can have a huge impact on residents’ credit scores. Offering rental rewards programs through an RBP – turning rent day into rewards day. Identity protection – this guards the resident’s financial security and ability to pay rent. The triple-win approach here is working to prevent delinquency and eviction before they happen. The best way to do that is to incentivize on-time payments and continue to add value to the resident. KPI Formula: Average Arrears = Total Amount of Overdue Payments / Total Number of Tenants 6. Occupancy and Vacancy Rates We all know vacant properties come at a high cost. They require upkeep and payments, but they aren’t generating any revenue. That’s why occupancy rates are one of the most important metrics that a property manager can track. Your turnover rate or average days vacant can tell you a lot about your company. A higher occupancy rate than the market average can be a huge selling point for your property management company, signaling to potential investors that you provide a better experience for residents and, therefore, have better retention. (Or it could signal you aren’t charging enough!) One of the best ways to drive that coveted retention is to offer experiences that residents will pay for and stay for. That means identifying services that offer long-term value, not just a fancy one-time “shiny toy.” An example of this in the multi-family housing space is the apartment complex that invests in a $15k pool table. Sure, it’s great for tours. But 99% of the time, it isn’t used, and a pool table is never the reason someone chooses to stay in their home. Professional PMs know better and take time to think about what’s attractive in the sales process vs. what’s going to make people stay. For example, a better benefit than the pool table might be co-working phone booths so people can more easily work from home and save money. Finding ways to add value like that in the SFR space will go a long way to boosting this metric. KPI Formula: Occupancy Rate (%) = (Number of Occupied Units / Total Number of Units) x 100 KPI Formula: Vacancy Rate (%) = (Number of Vacant Units / Total Number of Units) x 100 7. Maintenance Request Response Time It’s important for PMs to know how long it takes for maintenance requests to be solved. When we’re talking about resident expectations, a reasonable response time for maintenance is one of the most basic things residents need and want. When requests take too long, residents can quickly become unhappy with their experience and decide to leave. Tracking this metric helps you understand how well your team is doing and if you need more resources to ensure timely responses. An online maintenance request portal can help streamline this process, and an RBP with services like air filter delivery can help reduce maintenance problems in the first place. KPI Formula: Maintenance Request Response Time = Total Time Taken to Response of Requests / Total Number of Requests (this gives you an average overall) 8. Property Inventory Property inventory is the metric tracking the number of properties you’ve acquired successfully and the number of properties lost. It’s also important to consider whether you’re acquiring properties that really support your business. Is your team burning out? Do your investors fit with your property management niche? One of the best ways to get more doors and keep them is to build resident experiences that are the best on the market. By offering more value than your competitors, you can attract more of the kind of business you want. KPI Formula: Track the total # of properties at the start and end of a period. Subtract Properties Lost from Properties Acquired. 9. Average Time to Lease Tracking the average amount of time to lease helps show the cost to your investor when a property hits the market. Property managers and investors both want to reduce the average time to lease. The best way to do that? Build experiences that stand out. When someone sees your listing – beyond the property and rent price, do they see a different experience and set of benefits by renting from you as a professional PM? Are you offering benefits that residents will pay for and stay for? Other things that help with this metric: Measure traffic and conversion from listings to showings Provide attractive photos, 3D or virtual images, and clear pricing, etc. Provide and track the availability of showing times, self vs. guided showing experience, etc. Track incomplete applications, qualified %, time to approve/reply, etc. All of these impact two critical business metrics: "days on market" and "days vacant,” which are key to this KPI. KPI Formula: Average Time to Lease = Total Days on Market for All Properties / Total Number of Leased Properties (during the same period) 10. Revenue Per Unit Tracking your profit goes beyond simply adding up revenue and expense. Not all revenue is created equal. Tracking revenue per unit is a key KPI to increase profitability. Revenue per unit does just measure whether you have enough doors. It also assesses whether those doors are worth your time. What if the doors are unprofitable? According to the 2022 NARPM Financial Performance Guide, “it’s worth noting that a 10% increase in RPU can easily lead to a 100% increase in profitability.” We’ve said this before, and we’re saying it again – the most innovative way that professional property managers are generating greater revenue for themselves is through building better experiences. According to Eric Wetherington at PURE Property Management, “Revenue is all about providing a service.” You can increase your RPU by adding more value that investors and residents are willing to pay for. With the right tools, you can add that value without increasing your cost too significantly. That’s where services like an RBP and other value adds translate directly into revenue growth. KPI Formula: Revenue Per Unit = Total Revenue / Total Number of Units 11. Unit Churn Churn is one of the leading KPIs for any business. After all, what’s the point of all your sales effort if you’re losing as much (or more) business each month as you gain? According to NARPM’s Financial Performance Guide, “Cutting your churn rate in half will double your average lifetime revenue per unit.” Some churn is out of your control and subject to market changes. But for the most part, churn is a direct result of customer satisfaction. PMs should find out why customers are leaving, where they would like to see improvement, etc. And, of course, that’s where resident and investor experience comes into play. Figuring out how to make the experience so good that your best clients never feel the need to look for another manager. KPI Formula: Unit Churn Rate = (Number of Units Vacated / Total Number of Units) x 100 12. Ratio of Customer Acquisition Cost (CAC) to Lifetime Value (LTV) of a Client The Ratio of Customer Acquisition Cost (CAC) to Lifetime Value (LTV) of a Client is a crucial metric in property management and business, as it evaluates the cost-effectiveness of acquiring new clients relative to the value they bring over time. Nothing feels better than letting a bad client go. This metric can help you put numbers behind that decision and helps property management companies understand the long-term financial impact of their marketing and sales strategies. Customer Acquisition Cost (CAC) is a key metric for any business dealing with clients and customers. This is the total cost of acquiring a new client, including marketing and sales expenses. It’s calculated over a specific period, and you can use the following formula: CAC = Total Cost of Sales and Marketing / Number of New Clients Acquired. Customer Lifetime Value is another common metric in business, and it’s calculated by adding up the total revenue you expect to earn from a client throughout their relationship with your business. You can calculate it as LTV = Average Revenue Per Client x Average Client Lifespan. A lower ratio between these two indicates a more cost-effective client acquisition strategy relative to the value the clients bring. Typically, a healthy CAC to LTV ratio would be below 1, indicating that the lifetime value of the client is higher than the cost to acquire them. KPI Formula: CAC to LTV Ratio = Customer Acquisition Cost / Lifetime Value of a Client 13. Executed Renewals This is a measure of how many lease renewals have been successfully completed within a specific time frame. This will help you understand your tenant retention rates and the stability of your income. A high number of renewals is the goal since reducing turnover can help cut costs and improve income and revenue. A low number of renewals could be a signal that resident satisfaction is on the decline or issues with property conditions, market competitiveness, etc. KPI Formula: Executed Renewals = Total Number of Renewed Leases within a Given Period 14. First Call Resolution & Number of Unanswered Calls The "First Call Resolution" KPI is essential in property management as it measures the efficiency and effectiveness of your customer service team in resolving tenants' or clients' issues during the first interaction. This metric indicates the quality of service and the ability to address concerns promptly. Essentially, you’re tracking how effective your team is at resolving an issue right away – or escalating it to the right person or process. You can also track the number of unanswered calls that come to your team to know if too many are getting missed. If you track days and times of unanswered calls, you can better understand where your team may have gaps or how to communicate to residents and clients the best way to contact your team. KPI Formula: First Call Resolution Rate = (Number of Issues Resolved on First Call / Total Number of Calls) x 100 15. Average Hold Time Average Hold time is a common KPI in any customer service or customer management role – but is just as important in property management. The metric helps assess the efficiency of your team’s call handling and refers to the average length of time callers are put on hold before speaking to someone. Longer hold times, as we all have experienced ourselves, generally lead to frustration and dissatisfaction, while shorter hold times can indicate your team is more efficient with service and your residents are happier. Reducing AHT is key to boosting resident experience and operational efficiency. KPI Formula: Average Hold Time (AHT) = Total Time Callers are on Hold / Total Number of Calls 16. Number of Overdue Tasks This KPI is critical for tracking the effectiveness and productivity of your team members. It tracks how any scheduled tasks or maintenance jobs are past their due date. Prioritizing this metric helps ensure that your team is tracking tasks in a way that drives efficiency and resident satisfaction. Obviously, a high number of overdue tasks can indicate workflow bottlenecks, staffing issues, or inefficiencies in task management. If this number is increasing, it’s a red flag (or maybe a beige flag?) that you should open up the hood and evaluate your operational effectiveness. KPI Formula: Total Tasks Scheduled - Total Tasks Complete on Time (it’s key to track deadlines for tasks) 17. Average # of Units Per Client While most SFR property managers work with clients who have one or two properties at most, you may want to consider this if you have any multifamily units or clients with a uniquely high number of units. The average # of units per client can help guide your business strategies and service offerings. It can also help you identify if your business is niche-ing down in the right direction. What kind of client do you want to work with? KPI Formula: Average Numbers of Units per Client = Total Number of Units Managed / Total Number of Clients 18. Average Google Review Rating While residents in single-family homes aren’t a great referral source, their reviews of your company can go a long way toward building your reputation and bringing you to the attention of new clients. Google reviews are a great way to track how your reputation is faring in your area. It may feel like moving this average up is out of your control, but you can influence it if you don’t like the direction it’s going. First of all, the baseline is to provide excellent service and resident benefits to boost your resident satisfaction. But beyond that, you can also give perks for filling out a review, simply ask good residents if they’re willing to give you a rating, etc. KPI Formula: Total Sum of Review Ratings / Total Number of Reviews 19. Number of Tenant Delinquencies This metric tracks how many of your residents are behind on their payments. It’s crucial for assessing the financial health of your rental portfolio and the effectiveness of your rent collection processes. If the number is higher than you’d like, you should look for a few culprits. Maybe you have several residents who aren’t able to make the payments, and you need to consider being more clear in your rental requirements at the application stage or your tenant screening process. Or, maybe it’s difficult for residents to figure out how to pay, and your payment system needs an update. KPI Formula: Ensure your property management system tracks the total number of tenants with overdue rent payments 20. Client Net Promoter Score (NPS) In SFR property management, residents don’t tend to make referrals, but you know who does? Clients. Your clients can be your best promoters if you’re looking to grow. And you can track how well you’re doing in that area by keeping track of your Net Promoter Score (NPS). NPS is a widely used metric to gauge customer loyalty and satisfaction. To get it, you need to conduct a survey. Ask your clients how likely they are to recommend your property management services to others on a scale of 0-10. Categorize responses like this: Promoters (score 9-10): These are your most satisfied and loyal clients, who are likely to recommend your services. Passives (score 7-8): Satisfied but not enthusiastic clients who are unlikely to actively promote your business. Detractors (score 0-6): Unhappy clients who might not only refrain from recommending you but could potentially damage your reputation through negative word-of-mouth. Next, calculate the percentages of respondents who are promoters and detractors. Subtract the percentage of detractors from promoters: the result is your NPS. KPI Formula: NPS = (% of Promoters) - (% of Detractors) How 1,000s of Property Managers are Creating Triple Wins with Savvy KPIs Property management KPIs are critical to success in the property management industry. Tracking metrics like these eleven KPIs also set professional property managers apart from hobbyists or amateur landlords. The key to all of it is building metrics around the idea of incredible resident experiences – all aligned in such a way that we’re creating new value. When we’re focused on driving success in that arena, the resident does better, the investor does better, and our team and talent do better. Creating triple-win experiences for everyone involved allows a more rewarding relationship focused on lifetime value. Through value drivers like a Resident Benefits Package, property managers are building those wins across the industry.

April 10, 2023

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How To Ensure A Smooth Resident Benefits Package Rollout

Rollout is a high stress time for any new program, but it doesn't have to be. One of the leading concerns for property managers any time they seek to roll out a new program is resident pushback. In the property manager/resident relationship, there’s a narrative that’s persisted for too long that the two parties are at odds with each other and playing some sort of zero sum game. Oftentimes, this is internalized by residents who have been exposed to said narrative or have had a bad experience themselves, and the natural inclination is to push back on any advances from their management team. Related: State of Resident Experience Study Having to battle this is one of the main concerns property managers have when it comes to introducing a resident benefits package. This includes Kyle Hendricks, Vice President of Hendricks Property Management in San Antonio, Texas. “It was ours. For a couple years, we were like ‘I don’t know if that's going to work, you know?’ But it’s the same with a lot of programs that we’ve rolled out. Our fears are never really founded. The pushback is usually pretty minimal if at all, and it was the same here.” ‍Read more about why pushback on RBP is minimal ‍So how did Hendricks Property Management deliver such a seamless rollout? Well, it’s pretty simple actually. It’s all in the communication. Hendricks was quick to note that open communication and transparency are big keys to minimizing pushback and easing the path to successful rollout. The actual logistical rollout of an RBP is handled by Second Nature, so there’s very little for the property management company to actually physically do, making acceptance and adoption by residents and investors their primary concern. Hendricks Property Management nailed this part with clear and concise communication. Second Nature's resident facing flyer “The flier that Second Nature provided was a pretty clear point of communication. It says on there that you’re being enrolled in this program and the charge is this much. It’s just simple like ‘welcome to Hendricks Property Management, we give you a resident benefits package, here are the things you get with the resident benefits package.’ Because of course the question is ‘what am I paying for? You’re saying this is a benefit package, what are the benefits?’ So that just clearly outlined what they were, and did everyone love it? Not necessarily, but the amount of pushback was definitely minimal." Beyond the reality that most residents simply don’t object to a resident benefits package, clear and open communication is part of a great resident experience anyway and will certainly ease any fears you have about rollout, as well as any fears residents or investors might have. It's another part of delivering a triple win. “Be ultra transparent and get it done in the beginning, just saying, we're not hiding anything. This is what you're being enrolled in. This is what it is. I think that helped the adoption rate a little bit. And if people did call in with questions, we were happy to answer them and talk to them about it. So ultimately, it was fine. But I don't think we did anything special. I think just making sure we had that transparency up front was crucial.” ‍A resident benefits package creates a triple win. Everyone benefits. The purpose of clear and open communication is to establish those benefits within the perception held by the resident and owner parties. They may not know much about this, they may have never heard of a resident benefits package, so you have the opportunity and responsibility to show them the value it creates for them and how you are committed to ensuring it remains a mutually beneficial undertaking. Hendricks touched on how team buy-in has affected Hendricks Property Management’s ability to do this. “For me and anything that we adopt, we believe that if it's not something I can stand behind and competently tell a tenant or owner ‘this is good,’ then I'm probably not going to do it. I was easily able to do that with this program. So get your team on board. If they can't confidently tell a tenant or an owner, this is what it is, this is why, and this is how it benefits you and your tenant, then you're going to run into trouble because they can tell if it's kind of lackadaisical, if it's just this thing that the owner of the company wants to do. We try not to go ‘well it is what it is, so just deal with it.’ We try to explain in a positive way what the benefits are. So kind of getting that script together, you don't have to be like a robot or anything like that, but just have the main talking points available to your staff about what the benefits are.” At the end of the day, ensuring a great rollout of your RBP with minimal friction isn't too hard. It's just about positioning the services as the mutually beneficial programs they are and always being up front and willing to communicate. From there, the sky is the limit with resident experience.

March 21, 2023

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Why You Should Focus On Resident Experience

What's the best way to stand out from other Property Management Companies? How can you stay relevant and keep residents and owners happy? Andrew Smallwood from Second Nature explains why focusing on the resident experience can make all the difference. Related: State of Resident Experience Study For more on the topic of wow-ing your residents and building resident retention, check out some of our other articles and podcasts: Top Resident Retention Ideas from Real Property Managers How to Screen Tenants: Tips for Property Managers Types of Resident Problems and How to Handle Them How to Streamline Property Maintenance for a Business Win How to Ensure a Smooth Rollout of Your Resident Benefits Package Here's more from Andrew on how to approach resident experience, and the best perspectives he gather along the way. ‍ TRANSCRIPT Andrew Smallwood: Hey everybody, Andrew Smallwood back again with Stevie Wonder for a quick video. And in today's video we're going to talk a little bit about how property managers have been resonating with this concept of focusing on experience. And I want to share with you a concept that I need to credit to Joe Pine. And you know what Joe Pine says: Hey, if you go back hundreds of years, materials were valuable. People were trading wood for metal, for gold, etc. And what happened is those materials became commoditized. And so in order to create value, those materials got turned into products. The metal turned into nails, right? The wood turned into a wall, etc., or a skateboard or what have you. And so materials turned into products and suddenly the dollar amount here that was very low and commoditized went here and the dollar amount became more. But at a certain point, products even have become more competitive and commoditized. And what you've seen more recently, the last few decades, is a move to services, the services that are built around those products. So it's not just, here's a nail, but here's also a person to help you hang everything in your home and have it designed the way that you want. Instead of just here's a skateboard, here's also a teacher to help teach you how to use it. And even now, we've seen commoditization of service industries, entire industries, being commoditized. And a lot of people are noticing and saying that's what's been happening in property management. And so where does that lead us next? It's really, here's where we are now: experiences. The customization of materials leads to products, the customization of products leads to services, the customization of services leads to experiences. Whereas commoditization moves things down this way, and the value goes down here -- the value goes up as you move up this way. And so experience is really the name of the game today, and that's why we have RBP is because we believe the experience, the number one resident experience is where property managers are going to win. The people who create the best experiences for owners, the best experiences for residents, the best experiences for their team, create what we call a triple win. And an RBP is just a great example of a triple win. It's why we've had the podcast, it's why we've had so much of this content. This is just part of the mental framework of what we believe is important and part of the way that we see the world. Would love your commentary if you've read The Experience Economy by Joseph Pine. Would love to hear your thoughts. If you haven't, would love to hear your thoughts. And we hope this helps you in some small way or some big way. With that, take care.

March 21, 2023

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The Pod System Defined by Phil Vera

The Pod System helps Auben Realty provide an excellent resident experience at scale. ‍ Auben Realty CEO Phil Vera joined us on The Triple Win Podcast to discuss a number of topics in the property management industry, including the innovative Pod System. The Pod System is a management technique Auben instituted in recent years that’s helped them to focus on long-term benefits of a great resident experience while building meaningful relationships with investors to create a triple win where all parties benefit. This triple win is also the concept behind Second Nature's Resident Benefits Package. Related: State of Resident Experience Study What is the Pod System? As Vera explains, most property management companies employ traditional property managers who serve as a jack of all trades for the properties they are tasked with managing. This is portfolio-based management. They handle everything from leasing, to maintenance requests, to communication with the investor and the resident for their portfolio of properties. The end of the spectrum opposite a portfolio-based company structure is a departmental structure, where employees handle a specific piece of the management channel for many different properties. Neither is necessarily a wrong way to do things, and both work well for certain companies, but Auben was convinced there had to be a better way. Enter the Pod System. The Pod System is innovative because it has hybridized portfolio with departmental, creating teams of people to manage a portfolio of properties, with each person serving in a specific role. This structure allows Auben to provide excellent and reliable communication as part of its resident and investor experience while not sacrificing the advantages of an effectively scaled property management company. How does it create a Triple Win? Within each team, Auben employs an Investor Account Manager. These roles are designed to foster a great working relationship with investors and create open and accessible communication channels. “They are the investor’s main point of contact,” said Vera. “They build a relationship with the investor, provide updates, communication flow, all those things. If an investor has a question, they pick up the phone and they call their investor account manager and they have a direct line.” This is a differentiating experience for Auben, as most PM companies don’t offer a direct line of contact for investors. Auben employs a resident experience manager as well, which Vera touches on, noting the value it’s created for Auben. “We kind of went outside of the norm and we created the resident experience manager. So traditional property management, we’re focused on the investor. That’s our client. The resident pays rent. If you don’t pay rent, we’ll find someone else who can. We wanted to kind of think outside the box there and say ‘okay, the resident is important in investing because if we can decrease vacancy and reduce turnover and keep the residents happy, they’ll stay in our properties for long periods of time and ultimately increase the investor’s return as well.’” The innovative company structure used by Auben is a perfect example of creating a Triple Win. Auben has built itself around the importance of the resident and investor experience, and the satisfaction those parties receive as a result directly benefit Auben in the long-term. Experience is the key term there, as that's what property management companies need to start delivering to stay ahead of the curve in an evolving industry. Being part of the first wave of companies to transition their offerings from service to experience creates an opportunity to grow and thrive that isn't otherwise available in the SFR space, and that's the reasoning behind Auben's innovative pod system. Have you thought about implementing a Pod System in your PMC? Do you think it could work for you, too?

March 21, 2023

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What is The Triple Win?

In this video, Andrew Smallwood walks you through the process of the triple win. Property management strategies have historically been focused on a zero sum game: getting the most out of your clients for the least amount of work. But in the end, that strategy doesn't generate more value for anyone. The Triple Win is about a completely different business mindset. It's all about finding a way to elevate the SFR rental experience for everyone - Residents, Owners, and Property Managers. We aim to help build property management products and services that add value for all three. In this video, Andrew talks about how to build programs that deliver wins. That's why we call our podcast the Triple Win Podcast. In it, we talk with property management and real estate experts around the country and outline the best innovations in the SFR property management space. Programs like an filter delivery service, move-in concierge, credit reporting, and more. All of these can be wrapped into a Resident Benefits Package (RBP). These programs help solve for what residents want, and what they'll pay for and stay for. It also helps build the kind of behavior the property managers and investors need. Andrew introduces these concepts in the video below. To learn more, get in touch with our Triple Win Leadership Council, or join the Triple Win Leadership Exchange. ‍ ‍ TRANSCRIPT: Andrew Smallwood: Hey everybody, Andrew Smallwood coming back again. Listen, I wanted to record one more short video because the last one got such great feedback, and I had an idea that I've been talking about to a number of folks and they say has really been resonating with them. Again, I'm just going to move over here for a little visual help. People have been talking about, "Hey, this triple win concept in your podcast and everything like that, what's really going on here?" There's three parties that professional property managers are thinking about anytime they're making a decision or structuring their business. And that's residents, owners, and then you and your team. Here is often what property managers feel stuck with: They make a decision that benefits their owners, maybe in a meaningful way, right? But there's a little bit of a trade-off as far as how it impacts a resident, and then here's their team cut in the middle between these two expectations, right? It feels like everything's kind of going every direction. What we want with a triple win is something more like this, right? You've got your residents, owner, you and your team, and everybody benefits. So you've got this powerful, aligned transformative effect in the business. Everybody going the same direction, everybody impacted in a positive way. When you think about this, it's like, "Hey, when you structure a new fee or a new program or what have you, it's really keeping in mind, 'How do we do this in such a way that it elevates the experience for everyone, and that that story is all lined up, the incentives are all lined up.'" Listen, I'm not telling you this is the only way to do things. Some of you may be saying like, "Of course, it's obvious this would be the way you would do things." But for some property managers, it isn't. For some property managers, there are questions like, "Well, hey, I make so much on maintenance. Do I really want to prevent maintenance?" That's really just a question of how do you want to align your value. Meaning if, yes, you make money from reactive maintenance, maybe there's a benefit here that you can say, "Hey, I'm monetizing all that reactive maintenance." But for property owners, we know that's no good and for residents, that's no good as well. So while it may be a win here, it's a single win and it's a double L, right? Preventive maintenance means a win for the resident, it means a win for the owner, and it means prevented work for your team and you can monetize your preventive maintenance. So it's still a win for your bottom line as well. That's really the takeaway: This lens that we're talking about seeing the world through. Once you put this lens on, it's like you can never see anything the same way again. Just like glasses change your view of the world, or a microscope or a telescope give you a different view of something that you're looking at, so does the triple win lens. Hope this video is helpful. Would love your feedback. Shoot me a comment, email, wherever you're seeing this. Would love to hear your stories of triple wins or how you structured things or what you implemented in order to create a triple win and transform your property management business. With that, until next time, keep rocking. See you.

February 16, 2023

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Property Management FAQs About Resident Retention

Resident retention is one of the best ways for property management companies to drive greater success for their business and their clients. Residents who stay longer ensure consistent revenue, often take better care of the property, and help make planning more predictable. But resident retention can be a moving target. In a recent Buildium survey, 36% of single-family rental residents said they were on the fence about renewing their lease in the coming year. We’ve talked a lot here about resident retention and ideas for building long-term success with residents. Today, we want to do something a little different. We decided to ask a property management expert about her experiences with building resident retention, and we’re sharing our Q&A with her here. ‍ Key Learning Objectives: Recent trends and data on resident retention How retention strategies can save money Best ideas for setting up a resident retention program: What works and doesn’t work How to calculate resident retention rates ‍ Meet the Expert: Melissa Gillispie, Director of Leasing & Property Management at JWB Real Estate Capital Melissa started her career with JWB in 2013 and is currently the Director of Property Management. She is the licensed real estate broker for JWB and plays an integral role that has led JWB to manage over 4,900 single-family homes in Jacksonville FL, being the largest local rental management company in Northeast FL. Under her purview, JWB has delivered over 26 million dollars in cash flow to its current clients through exceptional management services. Melissa also sits on the Board for NARPM Northeast FL as the Membership Co-Chair. She won the 2022 NARPM Rocky Maxwell award for dedicated service and contribution to NARPM. She is married to her husband of 14 years and has three sons aged 11, 9, and 6. When she is not working, she can be found at the football and soccer fields cheering her sons on! Why should property managers pay attention to resident retention rates? Can you share some recent data or trends about resident retention? Melissa: Resident retention is a direct reflection of your customer experience. If people enjoy working with you, they'll stay. If they don't, they won't. We use resident retention as a key benchmark for measuring our customer service. In our market, we renew 72% of our leases annually. A standard PM benchmark historically is that about a 70% renewal rate for residents is a huge success. Some factors currently impacting retention include the housing market, higher interest rates, and tax/insurance cost increases. These factors make buying harder, which drives more rental retention. On the flip side, due to rising costs for investor clients, rent rates are climbing to keep up with those costs – which can be a big objection to overcome with residents. Swallowing the pill of a $150-$200 increase in rent can be tough for a resident on a fixed income. That makes their experience with us even more important. If they don't enjoy the experience, they most certainly won't agree to that level of rent increase. Related: How to write a rent increase letter. How can resident retention strategies save property managers money? Melissa: Residents who stay longer-term tend to make on-time payments more often, take better care of the home, and reduce vacancy costs/leasing burdens. These benefits lead to better rent collection and increased management fee collection, happier clients with lower turn costs, and a lower market-to-move-in or days-on-market metric for leasing because their inventory continues to be reasonable and controlled. What are some of the best ideas to set up a resident retention program? Melissa: Reach out early and often! We start reaching out to residents six months before their lease expires. Make the reason for that initial touch point just to "check in" – because it’s about relationships! People like to feel valued. Get creative with incentives for long-term leases! We offer all kinds of crazy resident incentives. We even bought a resident their very own bounce house when the client's homeowners insurance made the resident remove their large trampoline. Identify the real roadblock or concern, and do everything in your power to listen and solve it. Listen to any real complaints. If there are maintenance issues, solve them. If there are communication concerns, address them. Residents want to know that when they voice a real concern, you hear them and work hard to partner with them to fix it! What are some ideas for PMs who are struggling with resident retention? What have you seen work well? What doesn’t work? Melissa: The best advice I can give is this: Communication and expectations are KEY. Start to work for the renewal on Day 1 of the original lease term, and consider how you can increase your communications. Be transparent. Be open to feedback. See retention as a bottom-line revenue driver. See retention as a benchmark for how residents are experiencing your company. Set a budget for creative incentives, and then encourage your team to USE THAT MONEY UP! The more "dopamine hits" you can give for those feel-good connection moments, the better! I think creativity is understated in property management. We focus so much on difficult interactions. How can we increase the positive ones? Who doesn't love to feel celebrated, seen, valued, appreciated, and considered? Do you recommend using property management software or tools to help improve resident retention? What are some of the best options? Melissa: Automation is key as you scale your business. We manage around 5,000 doors, and without the ability to send email and text blasts, etc., we'd struggle to achieve the high touchpoint mentality we have. I think the larger your business, the more important these tools become. You can only grow at the pace at which your business can efficiently scale without having to continually add more staff. Text Magic is a low-cost solution for texting, call fire is a great option for mass-dialing and automated phone messaging. Any PM software has great reporting capability to build out mail merge lists. It doesn't have to be expensive to make it happen! How do you calculate resident retention rates? What’s a good average retention rate, and what factors impact retention? We look at leases ending as an opportunity, and our resident retention is how many of those leases ending in a calendar year we convert to extend their lease term. Executed / Opportunities = Renewal Rate. A good average retention rate is anything 70% or better. That number has been our benchmark for success for 17 years of business. Factors that impact retention include how much owners are involved in setting rent rates, the housing market, the rental market, demand, experience, etc. We haven’t seen retention rates vary significantly by location, such as states vs. cities vs. rural areas. Improve Resident Retention Rate with Second Nature RBP Time and again, we’ve heard that one of the most important factors to resident retention is resident experience. It’s such a natural connection it almost goes without saying. As Melissa said, “If people enjoy working with you, they'll stay. If they don't, they won't.” In recent years, one of the more effective innovations in resident experience is the Resident Benefits Package (RBP). Second Nature’s RBP was designed to create an easy win for SFR property managers. We developed each feature as a direct response to a pain point in resident experience and property management – but that often fell out of the scope of property management companies’ bandwidth or expertise. To learn more about driving resident retention with a custom RBP, get in touch with us!

February 16, 2023

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What is the Triple Win Leadership Council? | RBP by Second Nature

Building an aligned future where every home is professionally managed. ‍ Disclaimer: Everything you see here is a living draft of the TWLC vision. This outline should be seen as a starting point, and we want to invite you to co-create what this really becomes. The initial TWLC commitment is for Phase 1 only. You can decide what your involvement looks like after July's In-Person Design Summit. ‍ WHO IS ON THE TRIPLE WIN LEADERSHIP COUNCIL? Trusted Property Managers. Key opinion leaders, entrepreneurs, and exceptional operators in the industry. Forward-thinking Leaders. Passionate about thinking differently, creatively, and pushing industry norms in innovative ways. Philosophically Aligned. Believers in the Triple Win approach, making property management better for residents, investors, and teams. WHAT ARE THE PURPOSE AND VISION? The Triple Win Leadership Council (TWLC) empowers property management professionals to build a future where every home is professionally managed, to the benefit of residents, investors, and teams. The TWLC will act as pioneers and stewards, so that the gap between outcomes and experiences professionals create is further distanced from those accidental landlords can create on their own. This makes professional management more attractive to more people and forces a choice instead of a comparison. Three guiding questions: - How do we build an experience so good, residents never want to leave? - How do we build an experience so good, investors never want to sell? - How do we build an experience so good, talent wants to grow in this industry? HOW WILL THE TWLC INFLUENCE CHANGE? The TWLC will set the "P.A.C.E." for positive, sustainable industry change through: - Shaping innovative Products - Spotlighting success with the Triple Win Property Management Awards - Co-creating conversation-inspiring Content - Transformational, connective Events CALENDAR & COMMITMENTS Phase 1: Formation DECEMBER 14, 2022: 60-MINUTE VIRTUAL KICK-OFF CALL FEBRUARY, 2023: 2-HR QUARTERLY STRATEGY SESSION MAY, 2023: 2-HR QUARTERLY STRATEGY SESSION JULY, 2023: IN-PERSON DESIGN SUMMIT (LOCATION TBD) Phase 2: Develop AUGUST, 2023: We will define this together. Phase 3: Scale To apply for TWLC Membership, click here. Apply Today If you would like further information or to ask questions directly, please contact: Laura MacMinn, Triple Win Event Coordinator, Second Nature Email: lmacminn@secondnature.com

November 17, 2022

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Property Management and The Experience Economy

What is an experience economy and why is it relevant to single family rental property management? There are 3 questions driving the future of value creation in professional property management. How do we create an experience so good, residents never want to leave? How do we create an experience so good, investors never want to sell? How do we create an experience so good, talent wants to be in this business forever? The word experience is key. Whoever creates the best experiences will create the most economic value as the service side of property management becomes commoditized. In Joe Pine’s book, The Experience Economy, he reveals a critical insight that transcends real estate to other industries. It’s about the staging of value creation through the lens of commoditization and customization. In today’s highly competitive world, companies often focus solely on process improvement, optimization, cost-cutting, and driving efficiencies. While these are critical to remain competitive and improve margins, they are the playbook of a game that ends with operating a low-margin commoditized business. Some business leaders even talk about their industries being commoditized as a badge of honor. Interestingly enough, that thinking is self-fulfilling; by not focusing on creating higher-value offerings, they are riding the train to commoditization.History contains many examples of innovations so groundbreaking they captivated people and led the way for economic prosperity. Artificial light, telecommunications, automobiles, to name a few. While these were all once higher-margin innovative offerings and the most attractive businesses to be in, they have grown to be stale and competitive industries, forced to compete on price, leading to lower profits and company value relative to size. For example, Ford and GM, once praised as innovators in manufacturing goods, are now in a sea of competition and worth a mere 0.4x revenue at the time of this writing. The Experience Economy dives into these macroeconomic trends and shows the change over time in their Progression of Economic Value chart. The macroeconomic trends demonstrate how we have gone from extracting commodities to making goods to delivering services to, finally, staging experiences as the current primary driver of economic growth. One of the many great examples included in the book is the staging around birthday party: A birthday party at home that consisted of a cake and celebration requires the commodities, flour, sugar, butter etc.. to make at a cost of <$0.10. Then companies began offering “cake mix” which was more convenient that cost $1.00, followed by bakeries making the whole cake as a service for $15, and now, people outsource the whole birthday party to a venue like Dave & Busters or a party planner. There’s a party, invitations, custom napkins, entertainment, and yes, a cake is part of it. So someone can be in the pennies for cake materials business, the quarters for cake mix product business, dollars for a fully-made cake, or thousands of dollars for a full birthday or wedding or celebration event experience. That’s the commoditization to customization journey. Many property managers have correctly said, “We’re in the service business.” However, looking at where the most economic value will be created, today’s industry leaders have already started the shift to “We’re in the experience business.” They’re seeing different opportunities, which lead them to different choices that yield different results, and they find themselves in differentiated businesses. Professional property management is fast approaching a “hotelification” phase, where premium amenities and hospitality-grade service are creating a rental experience so good that more people choose the rental experience for longer periods of time. Hotel staff are called upon to enhance the experience of a proposal, an anniversary, a birthday celebration. And the great ones answer and emotionally connect. They are “moment-makers'' who create enduring loyalty, allowing them to drive more economic value. Consider how many of life’s meaningful and memorable moments are created at home. But how many people can name the owner of the apartment they lived in as easily as the hotel that elevated that special moment? So what are property management leaders doing today, and talking about doing tomorrow to create the #1 resident experience? The occupied experience is being defined by the “Resident Benefits Package”. From conference events like IMN, to NARPM, to PM XChange and PM Grow, it is hard to find an agenda that doesn’t include it. It’s a hot topic. Property managers and service providers have figured out how to turn persistent problems into a suite of proactive solutions that residents will pay for. Some of these services have been amenitized, like 24/7 maintenance coordination, vetted vendor networks, home-buying assistance, multiple payment options, and more that have become standard practice in professional firms. But there’s also a list of emergent ancillary services that are making their way from initial adoption to the definitive standard in the professional management experience. Move-in Concierge - Getting utilities and home services set up is a hassle for residents. Instead of 4 phone calls to get water, energy, internet, and TV services set up after researching who services the address, now residents can make one phone call and speak to a concierge who has looked up the discounts and promotions available and can confidently guide them through the process. In the future, this service likely expands to moving itself, deals on furniture with offers to assemble it, coordinated home cleaning, and landscaping. Air Filter Delivery - HVAC has been the #1 maintenance line item in SFR in most markets, second to plumbing in more temperate markets. And it has been a persistent problem of getting residents to change their filters on time. A 2020 HVAC Data Study that looked at over 7,900 SFRs in 4 markets, over an 18 month period, showed a 38% reduction when comparing a scheduled filter delivery program over the status quo of leaving a stack at move-in or hoping the resident remembers to go to the store. Every 2-3 months, residents are getting a box on their doorstep, where convenience makes it easier to do the right thing than to forget or ignore the responsibility entirely. Credit Building - every month that residents are paying rent on time, they get the benefit of that activity contributing to their credit file. A Goldman Sachs study showed a 42 point average increase in credit scores over 4 months. The credit bureaus also allow for up to 24 months at the same address to be back-reported which can provide a meaningful boost. Property managers are able to incentivize on-time rent payment and help residents build their credit over the course of their lease. Rewards - Residents are used to getting points and rewards for their loyalty with hotels, airlines, their credit cards… why not on their largest monthly expense? And while a rewards platform offers residents a unique benefit and savings on both everyday and luxury items, it is an incentive platform for the property manager. Rewards points allocated for on time payments, timely renewals, and ticky-tack maintenance like flipping a circuit breaker or resetting a GFI outlet mean more of the resident behaviors property managers want. Leveraging it for concessions and leasing incentives also means savings over cash offers, or higher perceived value at the same cash expense. Washer/Dryer Rental - Some properties may have these appliances installed or the residents come with their own, but we’ve seen the impact on prospective applicants choosing homes due the convenience of having the washer/dryer available. Smart Home - From thermostats to keyless entry to water leak detectors and more, there is hardware and technology alike growing more popular each year. Not only are they appreciated by residents, but they provide critical operational efficiencies to the management team. In addition to these, there are many more innovations that are going to dramatically improve the experience of renting and raise the bar on what’s expected. The companies that architect the best experiences will be the market leaders and capture the most upside in this future economic environment. We constantly are asking ourselves, what might the professional property management industry look like in 2030? The shift from transactional services to transformational experiences is one of the surest bets on the table. The big winners will be the players who embrace the new discipline of experience design. We believe the future belongs to the professionals, the trusted, the innovative… the people dedicated to changing the way people live forever.

October 25, 2022

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A CEO's Thoughts on the Evolution of the Property Management Industry

Keeping one eye down the road is critical in a changing industry. ‍ Matt Whitaker, CEO of Evernest, was kind enough to join us on The Triple Win podcast and share some interesting insights about the future of the property management industry. Whitaker has been a CEO since 2008 and has no shortage of experience managing a major player in the industry. His company is rapidly approaching 5,000 doors managed and now exists in 13 markets including Birmingham, Detroit, Nashville, and Atlanta. One of the topics of discussion between Whitaker and host Andrew Smallwood was the increasing polarization within the PM industry. Now, polarization as a word typically has a negative connotation to it, but it’s not necessarily a bad thing for the professional property manager in this case. ‍ Boutique vs. Scaled “I see the property management industry breaking into two worlds. I do believe there is still a place for the boutique manager in the future,” said Whitaker, who noted that some people may disagree with this assessment. But the personal relationships, nimbleness, and communication offered by a small-scale handful-of-doors property manager is hard for a large company to replicate. Not everything can be scaled efficiently and the value created by the smaller business’ ability to do those things well will continue to create opportunities for boutique property managers to thrive. “On the opposite end of that spectrum, I think there are going to be platform businesses that provide value to investors in other ways. So the boutique manager is the partner and the platform business, let’s call it, is going to provide an ecosystem of everything from property management, perhaps brokerage, perhaps maintenance, all these other verticals that are driving value for their clients.” Whitaker continued, “What I would be afraid of is getting caught somewhere in the middle, where you’ve got a big enough company that you don’t know all your clients, but you don’t have a big enough company that you can drive scale and give your clients and customers the benefit of that scale." Scale is certainly where Evernest is headed if it’s not already there, and Whitaker’s prediction is based largely on how companies like his and companies on the opposite side of the size spectrum create value for clients in two very different ways. This is the concept of differentiation, which is not achieved by the companies “in the middle.” Those companies are simply not going to be able to offer anything in the market that somebody else isn’t doing better. The spectrum Whitaker discusses can be warped to some degree, and some companies are attempting to do that by scaling aspects of the business, like personal relationships, that have not traditionally been scalable (see Auben Realty’s Pod System). But a general understanding of how a good property management company creates value for its investors and clients would lead you to the conclusion that, barring a major disruption, Whitaker’s polarization prediction is probably going to be right. “Begin with The End in Mind,” as Stephen Covey once said, is a concept that always applies in business, but is especially relevant now in the property management industry. Having a defined vision for your company can help you set meaningful goals and stick to them. Knowing what space in the industry you want to be occupying in five years can protect you from “getting caught somewhere in the middle.”

September 9, 2022

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Second Nature CEO Thad Tarkington Talks Company Culture

Thad joins hosts Matthew Whitaker and Spencer Sutton on 300 to 3,000's PM Veteran Series to discuss the fantastic culture he's created here at Second Nature.

June 29, 2022

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Why You Should Host Quarterly Zoom Calls with Your Investors

Three veteran property managers who have implemented quarterly video calls with their clients. They speak to exactly how and why they operate these, and the specific value it creates for their companies. In late 2019, Real-Time Leasing CEO Deb Newell launched a new communication initiative aimed at building a better investor experience. The concept was simple but effective: a regularly cadenced zoom meeting with all their investors. “We invite all of our owners and we basically do a ‘state of the union’, a state of our company,” says Newell. “You pull back the curtain, you’re really showing them what’s going on behind the scenes and inviting them to have a little bit more information as to what the day to day may be.” Other PMs have since recognized the value of disclosing the innards of the business to investors, including Bryan Jenkins of AHI Properties and Karen Jordan of HBR Rentals, all of which appeared on a panel at PMLX with Newell to break down how they run these calls. What is the goal?‍ These investor zoom calls have one main goal, which is to keep the investor informed about and engaged in the processes of how their asset is being managed. When it was pioneered by Deb Newell, CEO of Real-Time Leasing and professional property management consultant, the intent was to provide such a thoroughly informative session that investors would leave feeling like they’re being kept in the loop and their questions and concerns were heard. This has proven more than successful for Newell and Real-Time Leasing, as well as other companies that have adopted the practice. It’s an obvious win for the investor, but the resulting relationship development with clients is also a big win for property managers. In the new age of property management, where lifetime value has supplanted immediate cash flow as the PM’s north star, making efforts to keep investors in the loop helps build a relationship that contributes to said lifetime value. Newell notes that a lot of investors think that the only time they hear from their management company is when there is a problem. That can really strain the client relationship, but it’s such an easy thing to fix and doing so will usually come as a surprise to the investor. Many probably aren’t expecting to be this informed. Their experience with old school PM companies would give them no reason to. “We’ve heard nothing but positive things about it. They were amazed that we did it in the first place,” said Newell. Bryan Jenkins of AHI Properties, part of the PURE Property Management family, has seen similar positive reviews after adopting the quarterly zoom call concept. “We've had nothing but positive feedback on the two that we've done this year. I've got clients that have properties in multiple states with multiple managers. And their comment is always no one else is doing this. And they're just blown away that it's proactive versus reactive.” How do you run them? Newell recommends doing these meetings quarterly and generally tries to provide investors a holistic view of the company’s status and the performance of the assets it manages. “The idea was to say ‘hey, we’re just going to tell you exactly what’s going on in the company, how well we’re doing, how well rent has been received, what our percentage of occupancy is, what our percentage of delinquency is, that way they felt more engaged.” Newell typically lays out an agenda that features a run through of all those things. “That usually lasts about 45 minutes, and we do open it up for questions. So we’ll have somebody monitoring chat . . . they can definitely ask questions during the chat, then at the end we open it up, let everybody unmute and ask questions.” Jenkins and AHI take a slightly different approach, electing to focus on the strategy for AHI’s decision-making and making sure their clients have a good understanding of why they’re doing what they’re doing. “We want to have our clients understand the why, why we’re doing certain things, why we’re deploying certain systems. They don’t need to understand the how, it’s the ‘why’ portion of it.” Jenkins hits on an important point, which is that it’s worth identifying what’s important to your clients and focusing exclusively on that. You could probably talk about what you’re doing as a company and why for hours, but whittling down to what’s most important to the clients can result in a more streamlined and efficient meeting that loses fewer people over the course of it. “We're explaining why we're doing things, how we're doing it for their benefit, and we focus on the triple win. We even talked about on our last call that we're looking for a win for the owner, the resident, and the manager and once we focus everything through that lens, it's easy. And we're also focused on the education of our owners and educating them on the way that we want them to think as investors.” Jenkins, Jordan, and Newell break their meetings up into segments, each with time allotted to different speakers within the company. Karen Jordan of HBR Rentals remarks that this helps clients put faces to names and build a more direct relationship with employees beyond just company execs. “I loved that they can put a face to a name because a lot of our owners have only met myself. So they haven't met the team. So to see the face of who's our maintenance coordinator, who's the Resident Experience Manager, to really get to know them, I think it really helps them,” said Jordan. Creating a Triple Win The extra communication with investors Newell, Jordan, and Jenkins are striving to create is another great example of how property managers are realigning their business toward lifetime value via triple wins. The benefit to the investor of being in the know and feeling like their questions are addressed is obvious. On your side as the PM, this is a great opportunity to forge a strong relationship with your clients, but it’s more than that too. Regular communication with clients also gives you an opportunity to teach. Investors may not understand everything you’re doing, why, or how your long-time priorities have shifted as a triple-win driven property manager. Jenkins focusing on “the why” provides powerful insights to investors on this exact question. As a property manager, you’re trying to provide value that investors can’t easily replicate themselves or with the assistance of technology. These quarterly calls are great opportunities to ensure your clients understand exactly what value it is you’re creating for them. When investors and property managers are on the same page about the future of property management, creating a great resident experience is even easier. That's a triple win.

May 19, 2022

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A Sales Person's Review of Giftology by John Ruhlin

When I was first introduced to the book Giftology by John Ruhlin during a Second Nature sales kick-off a few years back, I didn’t really know what to expect. Andrew Smallwood and Scott Stollwerk wanted the team to read the book so that we could gain a better understanding of the impact of being intentional with gifting. I didn’t realize then how much this book would change me. Giftology is all about strategic and intentional gifting - gifting with a purpose. This book aims to change the way we look at giving gifts. Too often gifting is seen as something habitual and unintentional. But Giftology really provokes you to think about how we can turn a gift into not just something we give….but to really make it into a lasting moment. The book talks about strategic business gifting as well and how we can stop giving gifts to clients and prospects that are meaningless, have our logo on them, and have very little thought or intentionality behind them. The goal with strategic business gifting is to turn a prospect into an active loyalist. Meaning, they love your business so much that they’ll be a huge advocate for the business and will naturally talk about it with others without prompting. When I think back to Andrew’s introduction, I see exactly how Giftology fits with the way we do business at Second Nature. We are all about making a positive and lasting impact. We always ask ourselves how can we be better? How can we up our game and standards, and truly stand out from other organizations? Giftology fits in with each one of our core values at Second Nature. Relentlessly Resourceful: How can we be better at gifting? Especially at trade shows. Can we have intentional swag versus the standard items people typically grab and then forget about right away? Drama Free Zone: Giving a gift shouldn’t be about us…it should be about the recipient. How will they feel receiving something so thoughtful? Bias Towards Action: How can we use strategic gifting to not only gain clients but active loyalists? Performance Mindset: Strategic gifting helps close business. Humility In All That We Do: It takes a lot to truly take ourselves out of the gifting picture and learn about the recipient so that the gift serves its intended purpose. Integrity First: We need to think about the gift and thoughtfully consider what our purpose is for sending it. Will the recipient feel valued? Shatter the Status Quo: Nothing goes further with a client than a super thoughtful gift John Ruhlin’s book has really made me think about the ways I select and give impactful gifts, and has helped me to understand the true power of making a gift into a lasting moment. Have you read Giftology yet? Or have you received a gift that’s made an impact on you? Let me know what you think in the comments below!

May 19, 2022

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