Triple Win Property Management Blog

How to Reduce HVAC Maintenance Costs Data Study

For SFR property managers, HVAC maintenance costs can be a massive drag on your monthly expenses, but HVAC efficiency is critical to resident's safety, health, and overall experience. Not to mention the longevity of the properties you manage. Can property managers reduce HVAC maintenance costs and extend the life of their HVAC systems? Welcome to our latest in-depth analysis, "How to Reduce HVAC Maintenance Costs.” Our analysis comes from a collaborative study by the National Rental Home Council and Second Nature. The study examined the effectiveness of Second Nature’s filter delivery program in preventing HVAC-related work orders for SFR portfolios. As we delve into the study, you'll discover fresh insights that can help you make your HVAC system not only more efficient but also more cost-effective. Gain an understanding of preventative measures and strategic practices to lower your maintenance expenditure and prolong your HVAC system’s lifespan. Tune in and save your investor’s money, your team’s time, and your resident’s comfort. That’s what we call a Triple Win! Impact of Optimized HVAC Filter Delivery Service on Maintenance Costs The National Rental Home Council conducted an 18-month study in partnership with Second Nature, analyzing 7,700+ SFR units to evaluate the effectiveness of Second Nature’s Filter Delivery Service. The data was sourced from Property Meld and Service Titan. Filter Delivery is one of the major pillars of Second Nature’s first-of-its-kind Resident Benefits Package. Filter delivery service helps maintain the lifespan of your HVAC system and boost energy efficiency. This reduces the need for maintenance services and the average cost of energy bills and increases the air quality of your homes. Here’s how the study worked – and the findings on the total impact for property managers, residents, and investors. HVAC Study - Methods The study analyzed data for the frequency of resident HVAC service requests as a percentage of total units, with and without HVAC filter delivery. The frequency of tickets with and without delivery services was used to determine the overall reduction in HVAC problems and service requests. The study was conducted over 18 months, surveying 7,772 units. Filters that required complete change-out were delivered every 60-90 days and date-stamped. Each filter delivery contains graphic instructions to help the resident make the swap themselves. In addition to sending the filters, Second Nature sent residents emails with tracking info and more information on safe installation. Second Nature also provides property managers with lease language and marketing language for listings and applications and renewal notices. The property management company’s name and logo are stamped on the box with messaging about energy savings. HVAC Study - Overall Findings Include 38% Reduction in HVAC Ticket Requests The study found that for those units that had filter delivery service, there was a total reduction of nearly 40% of HVAC ticket requests. Across four separate operators, the percentage decrease in HVAC ticket requests ranged from 31%, 37%, 42%, and 50%. Here’s a breakdown of cost reduction in two major cities from the study: Atlanta: 79% cost reduction Memphis: 32% cost reduction Other observations and conclusions: The EPA states that changing filters regularly results in a 5-15% reduction in monthly heating and cooling bills. All operators from the study enroll residents as part of a Resident Benefits package that saved residents money and delivers superior convenience to retail alternatives. The Resident Benefits Package by Second Nature yields an average of $156 per year in gross profit per home before operational costs. All four operators from the study enrolled 85-100% of eligible leases and renewals over the 18-month period. Tips to Reduce HVAC Maintenance Costs for Property Managers HVAC service costs are increasing year over year. But the right package of services and maintenance plan can help reduce those costs. For property managers who don’t have a Resident Benefits Package to do the work for them, we do have some general tips on how to reduce HVAC maintenance costs with regular maintenance. These tips are best practices across the board for maintaining a top-notch heating and AC maintenance plan and are helpful even if you do have filter delivery as part of your suite of resident services. Of course, an RBP with filter delivery supports most of these already. 1. Regular Filter Changes This is obvious, considering the topic we’re covering! Dirty filters can restrict air flow, causing your HVAC system to work harder than necessary. Regular filter changes can improve system efficiency and reduce wear and tear. They also improve indoor air quality, which contributes to a healthier environment for occupants. Refreshing filters on a regular cadence is critical for both maintaining an efficient HVAC system and protecting your resident’s health. By implementing automated filter delivery by Second Nature, you can rest easy that your residents aren’t falling behind on this critical task. Regular filter changes also reduce the need for maintenance visits and cut down on any replacement costs or labor costs. 2. Schedule Preventative Maintenance & Tune-Ups Routine maintenance is the first and one of the most essential steps toward reducing HVAC repair costs. Annual maintenance is standard, but regular check-ups ensure that the system is running efficiently and any potential issues are identified before they become costly repairs. This can include cleaning the air filters, duct cleaning, checking for refrigerant leaks, and ensuring all components, like the compressor, condenser coils, evaporator coil, blower motor, capacitor, fan motor, drain line, heat exchanger, heat pump – the list goes on and on! – are in good working condition. Most property managers conduct seasonal maintenance to check the air conditioning, refrigerants, etc., before summer or give a tune-up to the heating before winter. Filter delivery is the simplest way to automate preventive care for your resident’s HVAC systems. Simply turn it on, and Second Nature does the work for you! 3. Invest in High-Efficiency HVAC System Investing in high-efficiency HVAC units might require more upfront costs, but they pay off in the long run. These heating and AC units use less energy, reduce operational costs, and tend to require fewer repairs over their lifespan. They also provide a comfortable environment for occupants, increasing property value. Filter delivery helps protect the lifespan of your high-efficiency units by preventing avoidable damage. The average costs of a high-efficiency heating or air conditioning system make sense for the return on investment. 4. Install Proper Insulation Insufficient insulation can cause the HVAC system to overwork, leading to higher maintenance costs and reduced system lifespan. By ensuring your property is well insulated, you can help maintain indoor temperatures for your heating and air conditioner and reduce the strain on your heating and AC system. 5. Use Programmable Thermostats Programmable thermostats allow for more precise control over temperature settings and scheduling. This can greatly reduce the burden on the HVAC system by avoiding unnecessary heating or cooling during off-peak hours or when the property is unoccupied. HVAC professionals can help with installation and maintenance, or you can train your team. There are so many moving parts with heating and cooling systems, and having a programmable thermostat can reduce the complexity significantly. 6. Consider Ductless Systems If feasible, consider using ductless HVAC systems. A new system like this can provide more direct heating and cooling without the energy loss associated with ductwork. This can reduce energy costs and result in less strain on the system, reducing maintenance needs. 7. Train Maintenance Staff for HVAC Service Proper training enables your maintenance team to identify and solve minor problems before they escalate – or before a resident tries to DIY it! A well-trained HVAC technician can also ensure that the system is correctly installed, operated, and maintained, thus extending its lifespan and reducing maintenance costs. You may not need to hire an HVAC contractor as often if your team knows how to handle day-to-day issues. Of course, engaging a filter delivery service can help take a ton of the day-to-day work burden off your staff. Second Nature ensures your residents have fresh filters exactly when they’re needed. No more schlepping out for repair service calls every month. There will always be occasions when an HVAC expert or replacement parts are needed, but you can reduce tune-up costs and visits with good training on your own team. 8. Deploy Energy Management Systems An energy management system can help monitor HVAC performance and identify areas for energy-saving opportunities. HVAC companies provide these at various price points. These systems provide real-time feedback, enabling property managers to make immediate adjustments that improve efficiency and save money. 9. Opt for Longer Warranties While purchasing new HVAC equipment, consider opting for longer warranties. This small investment can cover many future HVAC repairs, saving you from unexpected maintenance costs down the line. Again, using a filter delivery service works in tandem with longer warranties, too. Your systems will last longer, and the longer warranty will continue to cover any issues that do come up down the line. 10. Tenant Education Lastly, educate your tenants about the correct use of the HVAC system. This can include setting reasonable temperature limits and explaining how to properly use programmable thermostats. Well-informed tenants can play a significant role in reducing unnecessary strain on the HVAC system. A key part of Second Nature’s RBP is providing property managers with marketing and educational materials for their residents. We help you communicate to them the value of safe and effective HVAC systems. Again, we’re taking the work off your plate and making HVAC maintenance as easy as second nature! Final Thoughts on HVAC Maintenance Efficient HVAC management not only reduces costs but also fosters a comfortable living environment for residents. Each of the strategies outlined above contributes to these twin goals in its own unique way. The best news, though? Execution of these measures can be significantly enhanced with the aid of a resident benefits package. As the HVAC Study outline above shows, you can cut HVAC ticket requests by up to 50% with a filter delivery service. That means savings for you, your residents, and your property investor. In fact, a well-designed resident benefits package can support and streamline the implementation of many cost-saving property management strategies and reduce the need for emergency services. Ultimately, the smart combination of the tips provided above and a supportive resident benefits package is an excellent approach to reducing HVAC maintenance costs for property managers. The resulting cost savings, increased system longevity, and enhanced resident satisfaction make this a worthwhile investment.

June 12, 2023

Read more

How to Design An Effective And Adopted Ancillary Revenue Program

Ancillary revenue programs like resident benefits packages have really hit their stride in the property management industry. Many property managers get into the industry in the first place because it’s a great way to start building secondary income. The work rewards creativity and innovation in terms of revenue streams and value-generating services. And that’s exactly what ancillary revenue is all about. We sat down with some of the best innovators in the business to talk about what makes an ancillary revenue program effective, how to make them sustainable in the long-term, how to incorporate revenue management, and how to know which ones can work for your business. What is Ancillary Revenue? First, let’s get down to brass tacks. Ancillary revenue is any additional source of income generated by a property that is not directly related to its primary function or purpose. In property management, property managers offer additional services to generate additional income for themselves and their client investors beyond the rent or lease payments they receive from residents. Most of us are familiar with ancillary revenue streams like those used in the airline industry or hotel industry. Companies may charge for early check-in, late check-out, in-flight entertainment, wifi etc. But what many of these programs miss is the opportunity to generate value without nickel-and-diming people. Examples of ancillary revenue in property management can include things like pet fees, renter’s insurance programs, management fees, and more. These compound to boost your total revenue alongside adding value for residents and investors. In some ways, you can think of it like an upsell, but it's really about value generation and finding a way to diversify revenue streams. By diversifying their revenue streams, property managers can increase their income and offset some of the costs associated with maintaining the property. How to Design an Effect Ancillary Revenue Stream “There is one characteristic that is the most important, and that is that you have to believe in it,” says Steve Pardon, Head Broker at JMAX Property Management. “If you believe that there is a benefit to doing it, then you’re good. If you don’t, then it’s hard to sell.” Pardon hits on the most important question any time you’re adding cost to your residents: Does it really create a benefit? All ancillary income programs are theoretically beneficial to the PM, as it directly affects the bottom line, but add-on services that don’t create a benefit for the resident can have long-term consequences as a result of dissatisfaction. Most ancillary revenue opportunities today are operated as part of a resident benefits package built into your business model. Pardon has rolled out an RBP to his residents, but took a very measured and analytical approach to ensure that everything his residents were paying for created value for them. Pardon summarizes his thorough process for determining value with "you have to believe in what you're charging people for." JMAX operates in the Roanoke, Virginia area, and Pardon considers the nature of his specific area when deciding what he believes in charing people for, noting that he feels certain programs work better or worse in his rural market than they would in an more dense market like an Atlanta Residents rarely object to paying for services they find value in, which is why an RBP built with the principles Pardon describes above can be so successful. “You can make anything mandatory, but if it doesn’t create value for the residents, you’re going to pay the price down the line,” says Paul Mauk of Invitation Homes. You can read about resident pushback to RBP here. Good ancillary services can come in many different shapes and sizes, and not all are part of a third-party managed RBP, although that certainly is a proven way of adding them. HomeRiver Group, for example, sends each and every resident in a HomeRiver group managed home a holiday gift. “One thing that we're getting ready to do right now is our holiday gift to the residents, which is another win-win,” says HomeRiver Group CDO Andrew Propst. “We find local companies like restaurants or movie theaters, or the year movie theaters were closed, we were looking at maybe doing some bowling alleys. We buy a bunch of gift cards at a discount. We put it in a nice little letter and we send it out to the tenants. They get $50 in value, we paid $25 for that. And you know we make a pretty good spread, and we spread Christmas and holiday cheer. And, you know, we get good Google reviews. It makes some money. We help local businesses. It's a big one.” Paul Mauk of Invitation Homes notes that ancillary services that don’t directly drive profit can still be hyper-effective as long term initiatives if they contribute to asset protection and low turnover rates in properties. “I think the type of initiatives that we're having success with are those things that provide for enhanced leasing lifestyle for our tenants or residents,” says Mauk. “And that's all often driven via survey and input from residents. So instead of us pretending that we know every potential amenity they would like, we’re actually reaching out to them and asking them what the value proposition would be from their perspective.” “And then one of the additional things would be, you know, items that aren’t necessarily potentially revenue drivers for us, but items that help us relative to asset preservation. So things that may be very specific and required within the lease, if we can find ways in which to make it an easier process for our residents, we can enhance our offering, enhance the experience for them, and increase the length of stay that we see from our residents.” This is a point that can’t be made enough, that minimizing turnover is the most important thing for property management companies. Your client is the investor and your product to the investor is the resident who lives in the property. The more time a resident lives there, the better ROI for the owner, which means better client retention for you and more potential for referrals. That’s why the resident experience aspect of ancillary services is so critical, even more so than the additional funds they can procure. We can talk about ancillary services for days but the successful adoption of your program will always hinge primarily on one question: Does it create value for the resident? Hence why JMAX Head Broker Steve Pardon weighs so heavily whether or not he believes he can offer a service in good faith. Ancillary Revenue Examples Let’s look at some examples of the best ancillary revenue ideas in property management right now. The services with an asterisk (*) are all available in Second Nature’s fully-managed Resident Benefits Package. Filter Delivery Service* Air filters delivery is a premium service for residents that automates air filter delivery to all your properties on a set schedule. Filter delivery simplifies the process for residents and ensures timely replacement at a low cost. HVAC repair costs have increased by 48.7% year over year, and an air filter delivery subscription can cut costs up to $300 per year. At Second Nature, we’ve seen our filter delivery service result in a 38% reduction fo total HVAC ticket requests, and save residents $14.82 per month in energy costs. Resident Rewards Program* Rewards aren’t just a perk for residents – they’re a powerful way to incentivize on-time rent payments. Talk about a win! Residents receive rewards such as discounts to local businesses when they pay rent on time. You and your investors see an increase in on-time payments, and residents now see rent day as rewards day. Credit-Building* Rent is one of the most significant regular payments any of us make. Why not report that to build credit? That’s what property managers are doing as a benefit to residents and another innovative incentive to on-time rent payments. A study by TransUnion found that 67% of residents would choose homes with rent reporting over other equivalent homes. Credit building supports your residents, helps attract financially responsible applicants, and encourages residents to pay rent on time. Move-In Concierge* Any time we move, one of the biggest headaches is setting up utilities. One great ancillary revenue stream is to provide a move-in concierge. At Second Nature, we manage this for you. Our move-in concierge helps residents with their best options int he area and can help simplify setup. In one phone call, residents get what they need. Identity Protection* Did you know that identify theft is a larger security risk today than home burglary? One in eight Americans were victims of identity fraud in 2021, equaling up to $52 billion in losses. Identity protection gives residents peace of mine and protects them finacially – which also protects their abilty to pay rent. Related: How to Help Residents Use Their Identity Protection Services During a Data Breach Renters Insurance* A quality renters insurance program will allow residents to keep current coverage if they wish, but be automatically enrolled in the PMs program if they don't/don't have insurance. Good renter’s insurance will cover risks like all breeds of dogs, making renting from you a very attractive option. Did you know that 90% of professional property managers require residents to carry insurance on their lease? And yet only 41% maintain compliant coverage. At Second Nature, our renters insurance program has 100% compliance, protecting residents, investors, and the PMCs. Holiday Gift Program A holiday gift program helps residents feel seen, known, and remembered. Residents receive coupons or gift cards to local establishments as a wish of good cheer during the holiday season. Who doesn’t love a holiday gift? Security Deposit Alternatives We’ve seen security deposit alternatives proliferate in the last few years. Property management companies are choosing to offer other ways to cover financial liabilities for damages that do not require a huge payment at move-in, such as a surety bond or ACH authorization. Pest Control Many PMCs offer pest control services to residents to keep cockroaches, ants, etc., out of the property. PMs generate extra revenue while offering a massive benefit to residents, and asset protection for them and their investor. Pet Fees & Services With pet fees, you can because a universally pet-friendly company while still protecting yourself and your investor from risk. You offer the investor a guarantee that their property will be safe from pet damage and the resident pays you for this service. Home-Buying Assistance Programs Home-buying assistance helps boost resident experience and trust, while also investing in resident retention. Learn more about assistance programs for long-term residents looking to purchase a home. How Second Nature Helps Create Ancillary Revenue At Second Nature, we work with property management companies around the country to help them generate more value for their residents and additional revenue for their business through a Resident Benefits Package (RBP). The Second Nature RBP is a custom suite of benefits that elevates the resident experience while adding profit to your bottom line. An RBP is a powerful ancillary revenue strategy – and having one fully managed means that it doesn’t add any burden to your team. Generate more value for your investors, ease for your residents, and profit for your PMC with an RBP.

May 23, 2023

Read more

Property Management Strategies to Grow Your Business Without Burning Out

Are you tired of the challenges that come with managing properties? From dealing with difficult residents to handling maintenance issues, property management can often feel like an endless list of responsibilities instead of a strategic small business venture. Fear not! In this article, we’ll unveil a range of effective property management strategies to alleviate your property management woes and empower you to achieve smooth operations and maximize returns. Get ready to discover practical tips and proven techniques that will revolutionize the way you approach property management. Here are the top 15 property management growth strategies to expand your business without burning out. Say goodbye to stress and hello to efficient, hassle-free property management. 1. Set core values In the renowned book The 7 Habits of Highly Effective People, Dr. Stephen Covey outlines the second habit as: “Begin with the end in mind.” When building property management strategies, setting core values is the absolute foundation for everything else. We’ve spoken with hundreds of property management leaders, and all of them have reflected: Get your values right from the start. Your goals and growth come from that foundation. Kevin Hommel, COO of Memphis Turnkey Properties, puts it this way: “Anyone who encounters or interacts with your business needs to be able to feel your core values coming through when they meet with you, when they explore your company online, or if they talk to somebody else about you. You have to have your core values right there.” 2. Know your priorities The next step after outlining your values is to identify and document your priorities. For many of us, articulating core values or taking time to nail down priorities can feel like an important thing we’ll never get around to. The urgent tasks of managing a property portfolio often get in the way of important big-picture work. Many property managers find their teams spread too thin over too many tasks and responsibilities that really don’t impact their company’s bottom line. Or, maybe they’re focusing on too many areas, too many types of houses, etc. Setting priorities can help you niche down and then begin to see growth. Dan Sullivan and Dr. Benjamin Hardy have an upcoming book about this called “10X Is Easier Than 2X.” We had Dr. Hardy on our podcast to explain what the phrase means and how getting the right priorities can make all the difference in growth and burnout: “Whatever your goal might be,” Dr. Hardy says, “it's not the obstacles between you and the goal that stops you. It's that you have too many competing priorities. Eighty percent of everything you're doing right now and the people you're working with are a distraction from 10X.” In terms of rental property management, that means that as a leader, you have to be able to delegate priorities. And that, of course, means getting the right people on board, which leads us to our next point… 3. Get the right people on board To grow property management without burning out, it’s imperative that you get the right people on your team. The reason staffing makes such a difference goes beyond just having more hands. Your team answers the question “Who, not how” – another principle from Dr. Hardy in his book of the same name. Peter Lohmann, Co-founder & CEO of RL Property Management, explained this concept in conversation with Dr. Hardy on the Triple Win Podcast: “The concept from the book Who Not How is that you need to stop thinking about ‘HOW can I do this,’ which is kind of our default framework for clients coming to us with a problem. They’re thinking, ‘How can I get this done?’ But as a property manager, you need to reframe that and ask yourself, ‘WHO can help me with this? Who’s the expert?’” 4. Hire based on culture fit Onboarding the right people brings us back to our first tip: Find people who embrace your core values. Hommel says he focuses on hiring motivated people who buy into what he’s trying to achieve – rather than people who necessarily have all the property management experience. “You don't want to let anybody through a round of interviews that you wouldn't love to come in and go to bat with everybody. And then you have employee retention, which we know creates a lot of efficiencies. So, define what your core culture is. Define who you want to join you.” Whether the team has previous SFR management experience is less important than ensuring they have a triple win mindset. Look for team members who understand that proactively driving progress and success for others (residents, investors, teammates) is the best way to achieve progress and success for themselves. These people are more likely to be A-players and grow in your organization over time and can help you deliver what “totally taken care of” feels like. 5. Build strategies with your team One of the best solutions for burnout is simply ensuring that you and your team are on the same page. Assuming you’ve hired people who are a culture fit, who get what you’re trying to do, and who think creatively and resiliently – they should be involved in building your business strategies, too. They need to be in the conversation around managing a property portfolio. After all, it’s important to be able to trust your people. Lohmann says: “I would challenge everyone to step back from the need to know everything that’s going on and ask yourself, ‘Why?’ Why do I need to know this information if it's being handled? The need to ‘stay plugged in’ is not going to help you unlock growth for your company. Time to work on 10x opportunities instead.” 6. Find your property management niche Setting the right priorities also means focusing on what you’re best at. Being “all things to all real estate investors” may help you add a new property in the short term, but you risk slowed growth and burnout. Instead, a more effective property management strategy is to double down on your specific property management niche. On this topic, we spoke with Bob Preston, CEO of North County Property Group, CRMC. Preston shared how he quickly learned to go deep, not wide, with his business. The result? A booming property management services company with some of the best real estate in San Diego county. “When I was starting things out, I learned really, really quickly that sometimes less is more. In the early days, when I would take on anything, the worst properties were taking up 80% of our time.” Based on their location, they ended up focusing on a specific region within the county – high-value coastal properties in the north part of San Diego County. These properties only made up about 20% of his total doors, but they made up 80% of the profit margin. So, he started to carve out a niche. Preston says, “At that point in time, we started all of our messaging, positioning, outreach, and pitch to the higher end of the market. We may not be the cheapest, and that's okay. If you don't like that, don't come to our company.” Instead of shrinking their business, they have $550+ monthly revenue per home, expanded their services to include maintenance, and have had zero evictions. To grow property management, the key is to niche down, not go broad. 7. Create more value & charge accordingly Finding your niche and saying no to properties may seem counterintuitive. So does our next tip: When you start finding ways to add more value, charge for what it’s worth. Evalute your current services and consider whether you are charging a reasonable price for them. On this topic, we had Mike Krause, Partner at Atrium Management Company, weigh in: “We were always afraid of charging more fees and owners being turned off. So we stuck to the big three: renewal fees, leasing fees, and management fees. And that's kind of what we lived on for a while, so we were staying kind of just barely profitable.” Krause and his team decided it was time to take a risk and make some changes. Atrium built new programs like a resident benefits package, which created fantastic new value for residents and investors – and brought Atrium new revenue streams. The result? They had their biggest year ever and are now on track to double that in the coming year. Krause says: “We stopped being afraid to charge fees. We sat down and made a list of the fees we thought were valuable and what we wanted to charge, and we started charging more. And guess what? Not many people left. What we were afraid of – losing current owners or losing current management contracts or not winning new ones – just didn't happen.” When you start generating value beyond those core three fees, you can generate more revenue by monetizing those programs. Then you can reinvest in the business to bring more value to investors and residents. We like to say: There's no shame in making money in property management, the only shame is not putting it to good use. 8. Don’t be afraid to “fire” a client This is a question we see all the time. When you have a frustrating investor, do you just deal with it or cut them loose? While there are all kinds of nuances to that question, the long and short of it is that you can’t be afraid to get rid of a client. Bob Preston has experience “firing” investors and says it has contributed to his company’s ability to grow without draining his team. “I always try to save a client, but often it’s a small number of properties that are causing 80% of the problems – whether it’s an owner who likes to complain, who doesn't like to keep their investment property maintained, who drags their feet, who threatens to fire us, etc. For me, it's three strikes, and we're out.” Cutting difficult clients loose frees you up to focus on higher-value opportunities that don’t take away 80% of your resources. This brings us back to Dr. Benjamin Hardy. “You (have to) start saying no to the lesser goals. Then you start finding ways to get the opportunities at the level you want.” 9. Develop an excellent marketing strategy To develop the right marketing plan, you must apply all the skills we’ve discussed here. It means really digging into what works, what’s driving results with new clients – and getting rid of the rest. Hommel again: “One of the more important factors in driving revenue into the company is: How do I get new doors? Understanding your sources of marketing, what's effective marketing, and where are you wasting money. Where do you see fruits?” If you can drill down into the data and find which marketing messages, landing pages, blog posts, and campaigns drove your ideal client, you can start cutting out the messages that only bring in busywork or “bad” clients. This property management strategy ultimately helps your team by releasing them from any unproductive leads and focuses them on generating growth. 10. Use digital tools & AI solutions AI property management is growing and we have software tools that can make work so much easier for our teams. The current primary use of AI property management strategy is to automate workflows and repetitive tasks. AI solutions can seem daunting at first, but they are one of the best ways to take busy work off your team’s plate and let them focus on more strategic tasks that require human skills. AI and software solutions can help with processes like: Email marketing and communication Scheduling (with rules built in for your priorities and goals) Marketing listings Maintenance requests Rent payments tracking Etc. Automation tools are an incredible way to reduce burnout, increase productivity, and deliver better results. 11. Build SEO & social media strategies SEO and social media marketing are both strategies to grow your business without daily updating. Build your website and blog content with SEO practices in mind – or hire or contract an SEO expert to help optimize your website. If you’re already blogging, make sure to follow best practices in SEO so that your content actually draws new customers in. SEO can continue to organically grow your traffic – and your business. Social media is another great way to build your brand, influence, and client base without doing any aggressive marketing. Start growing your network in the property management industry and real estate world. Post things in property management that seem interesting to you and make them easily shareable. Follow best practices for social media, tag colleagues, and watch your following and your network grow. 12. Network with peers Networking is one of the best ways to grow your brand and your business – and for many, it’s fun! In property management, the network of professionals is an incredibly supportive community of tactical advice, generative solutions, and rigorous debate. We’ve seen so many companies grow simply through meeting with like-minded professionals and sharing ideas, strategies, and referrals. One great place to plug in is in various Facebook Groups, LinkedIn, and other social media. Wherever you are in the country, you can share questions, solutions, frustrations, and wins. Check out the Triple Win Property Managers Facebook Group for a thriving community of PMs. 13. Stay familiar with local businesses and listings SFR property management is all about local communities and regional reach. To grow without burning out, it’s critical for your property management company to have a good reputation in your community, and to be visible to property owners or anyone looking for property management solutions. Make sure your information is up to date in local business listings, and think about places to drive more visibility in your specific market niche. This connects with the point above about networking. The more your community knows you, the more leads you’ll see coming in without putting extra pressure on your team. 14. Improve current properties This might not seem like a growth strategy, but improving your current properties can do a world of good for your property management company’s reputation. Happy residents make referrals, as do happy investors. In your efforts to grow, you need to first ensure your foundation is strong. Visit your current properties and discuss with your team if there are any ways to improve the quality of resident experiences. The better the resident experience, the more easily you can leverage growth opportunities. 15. Invest in resident experience All of this leads to one thing: better resident experiences. Ultimately, growing your property management business without burning out your team is about providing winning experiences for residents. You do this by defining your business goals, carving your niche, building a high-quality team, and staying laser-focused on your priorities throughout. Starting with experiences residents pay for and stay for leads to better retention, which reduces turnover costs, which brings in more revenue – makes your business more attractive to investors and talent, and the virtuous cycle goes on. At Second Nature, we believe in the power of saying yes to what benefits you, your investors, and your residents – and cutting out anything else. That’s why we’ve built the first fully managed Resident Benefits Package. The RBP is the most powerful way to transform your resident experience, without adding a burden on your team or a cost to your investor. Talk about a Triple Win! Learn more about how property managers are building better resident experiences and turning it into profit.

May 23, 2023

Read more

14 Bizarre Items Found in Rental Properties | RBP by Second Nature

Disclaimer: We asked for the weirdest, the most bizarre, the most surprising… and property managers delivered. You may want to check over your shoulder before scrolling if you’re in a public coffee shop or you have little ones at home! Nobody can ever deny that property managers have some great stories. We asked around to find some of the weirdest, craziest, more preposterously bizarre stories of items left behind by residents to be discovered by property managers. We figured these would be weird. We were right. 14 Weird and Strange Things We Found After Move Out Get ready for bizarre! A grenade “A LIVE RPG (rocket propelled grenade). Seriously did not think it was active but called the bomb squad just to be safe. We shut down 10 blocks for an entire day” RBP>RPG (learn about our Resident Benefits Package) An entire car “A 1966 fox body Mustang. Engine and all. Who does that?” Fun fact: The 2000 comedy film starring Ashton Kutcher titled "Dude, Where's My Car" is actually based on this. A cannabis farm “Basement full of beautiful, huge, marijuana plants. Evicted for not paying the rent. They could have paid rent for a long time if they knew how to run their pot growing business 🤣” Never get high on your own supply An assassin kit? “My cleaning lady pulled the stove out and found a secret cabinet behind it. It had an uzi handgun, silencer, bump stock and other attachments. It was super creepy. I had the sheriff's office come get it.” Yeah that's a mob safe house you got there Farm life “A very angry rooster” You know, I really hate it when I forget my rooster Snakes! “Boa constrictor shedded skin under a couch. Where is the snake?!?!” Hopefully you burned down the house immediately just to be safe Pool pickles? “Pickles in the skimmer basket of a pool.” May not see a weirder one than this as long as olive Dead cats... “Dead cats in freezer and also had one that had white powder on everything in the apartment couldn’t see floor due to powder. They left everything they owned. They had Bed bugs. Took forever to get that cleaned. Broke 3 brand new vacuums. Just trying to clean it up after pulling all carpet. Also had a unit that had burnt aluminum foil all over the place from drugs gun shot holes and someone tried to drive through the apartment. So busted brick inside apartment.” Please park in the driveway, not the kitchen. Thank you for your understanding All their worldly possessions “A house full of furniture. No packing at all. Looked like they just left for work. All of the family items were left behind including all the china, crystal, silver, and linens in the DR. Only thing not left was a couple of TV's and a bed. Took a crew of 8 to empty the house in 6 hours and took 8 trips to haul off from the junk service. Amazing!” "I swear, Bob! This is the last time you are packing the car!" A placenta “Defrosted placenta” No comment More cats... “Dead/stuffed cat. We had fun with that one” Ever move to a new place and get the feeling you're missing something important? This resident did not get that feeling. ...and even more cats “17 cat urns” The only thing worse than this would be finding 18 cat urns Frog hatchery “I also had an entire pool of frog eggs. They hadn't hatched to tadpoles yet. And if you've never seen them, they look like long strings.” Figured we'd find some poles when we put this list together but was not expecting this type. NSFW "Dancer pole" And there it is Want to see the photos/more from the thread? Click here and join our free private Facebook group for property managers. ” Do you have one that would have made the list? Email alower@secondnature.com

May 23, 2023

Read more

Resident Experience Management Guide to Utilize PLatforms to Meet Expectations

Resident experience management is improving every resident touchpoint – from application to move-out – to drive an experience so good your residents never want to leave. Today, the role of the property manager is to proactively identify and meet residents’ needs, often before the resident knows they need it. It’s a new world, but it’s exciting, allowing enterprising PMs to stand out in a crowded industry. Solutions that drive value, like a resident benefits package or an investor benefits package, are taking the lead. At Second Nature, we build tools with those enterprising property managers leading the way, and we’ve put together a report on the latest trends and innovations in the space. In this article, we’re diving deep into how to improve the resident experience, why it matters, and the best practices in resident experience right now. For more details and insights from leading PMs, check out the 2024 State of Resident Experience Report. Why is Resident Experience Important? Related: State of Resident Experience Study The “experience economy” has changed both customer and resident expectations. Particularly after the pandemic, the modern consumer is accustomed to the ease of apps like Uber, Airbnb, and Amazon, and they respond to ease and convenience. The question that single-family and multifamily PMCs are asking now isn’t “What’s the most I can get out of residents for the least I can do?” Rather, it's: “How do I create an experience so good that residents never want to leave?” Property management companies are redefining resident experiences to improve occupancy rates and help residents, investors, and their companies get a win. Investing in resident experience management strategies is one of the most direct ways to yield a positive ROI and reduce turnover costs. According to DD Lee, owner of Skyline Properties Group in Atlanta: “The number one thing (our residents) look for is ease and convenience. They don't want complicated instructions. They just want simple; they want right now. They want contact-free; they don't want to talk to people. So everything we do, from showings to moving into the experience after they move in is all revolved around design for that expectation.” Related: How to Write a Noise Complaint Letter to Tenant How to Improve Resident Experience Management Resident experience management is about identifying every unique touchpoint along the resident’s journey – from application to move-out. Property managers are now expected to make each touchpoint painless and convenient. Our 2024 State of Resident Experience Report discusses changing consumer expectations and the key steps to resident satisfaction. Here, let’s expand on each key resident touchpoint where PMs can focus on improvement. Move-In Move-in is the perfect opportunity to design experiences that make new residents say, “Wow” – to make them feel delighted, welcome, and truly at home. Our guide explores some of the best innovations for cultivating a unique move-in experience. One of the best is to offer a Resident Benefits Package (RBP) that folds in services like a move-in concierge, insurance, incentives, and more. Rent Payments Second Nature’s RBP has a credit-building service that reports on-time payments to every credit bureau, giving value to residents and helping them become more financially stable. Another service is the resident rewards program, which incentivizes on-time payments and supports great residents. Maintenance Requests Using an online resident portal for real-time maintenance requests has become a baseline expectation. PMs are going beyond that to ensure they use preventative maintenance and deploying strategies to improve functionality. One such resident experience strategy is an air filter delivery service. Changing filters on time can reduce HVAC requests by 38%, saving the property manager and investor hundreds of dollars a year. Pet Registration Property managers can proactively offer pet registrations or guarantees and even use that as a form of ancillary income. You get the extra pet fees to drive income, the investor gets an assurance that they won’t suffer because of pet damage, and the resident gets to keep their pet! Resident Concierge Services Concierge services are a top way to provide a VIP experience. Second Nature’s RBP includes a move-in concierge who can confidently guide multiple people daily to set up their utilities properly. Residents don’t have to deal with the headache of setting up new utilities – instead, in one phone call, they find out their best options and can even get help simplifying setup. Renewal Process PMs can proactively set up the renewal process, so it’s as easy for the resident as a click of a button. Assuming each touchpoint along the way has anticipated and delivered on residents’ needs – and surpassed their expectations – lease renewal should be straightforward and quick. Resident Communication Property managers aiming to improve the resident experience have found creative ways to improve and streamline resident communication. Great communication is necessary, whether through digital apps and automation, social media, on-site messaging, proactive team members, etc. Move Out When a resident is moving out – whether they chose to move or are delinquent – property managers can help make the process as smooth as possible. Anticipating the resident’s needs, keeping communication open, and deploying motivated team members all help deliver the final touch for residents. The move-out experience is their last impression and can impact your referrals, reputation, etc. What Property Managers Can Do Using Resident Experience Platform Resident retention is a key success metric in the current economic climate. Keeping residents engaged and happy can go a long way to delivering a triple win: hitting your goals, their goals, and your investor’s goals. Our State of Resident Experience Report explores how resident experience management can deliver ROI, company growth, and happier investors. We also talk to several experts in the property management field to hear their best and most successful ideas. Here are a few key activities the resident experience platform enables you to improve the experience that residents will pay for and stay for. Post-maintenance surveys and follow-ups Quick complaint responses and preventive maintenance Pet-friendly property management and insurance Resident engagement programs like a recycling drive, helping minimize waste productions, sourcing local, etc. Prioritizing safety and security and engaging residents in a proactive way to achieve that Each of these strategies can be executed with the help of a resident experience management platform and helps deliver what “totally taken care of” feels like, which is exactly what residents are looking for. Resident Experience Management Tips: How to Handle Difficult Residents Every property manager we’ve talked to has dealt with difficult residents at some point in their career. The best property management strategies prevent many of these issues through better resident experiences. The right strategy can help incentivize residents to cooperate, keep a property well-maintained, and make on-time payments. When you are facing a difficult resident situation, here’s how leading property managers advise proceeding. Make sure service promises are fulfilled One of the most important things that sets professional PMs apart from hobbyists or amateur landlords is the delivery of promises. Because you have a team and a plan, you can ensure that what you promise is what residents get. Being courteous, kind, and professional A lot of this is about hiring the right people. Get your core values in place and ensure that anyone you hire is bought in on those values. Finding people that the rest of your team enjoys working with is also important. Cultivating an environment of courtesy and respect goes a long way to ensuring residents are treated fairly. By not taking it personally Improving the resident living experience is all about seeing the human at the other end. When unhappy or troublesome residents aren’t taken personally, it puts us in a better position to take reasonable, effective steps to deal with them. Professional PMs can approach challenging situations without judgment but with clear boundaries and proactive solutions. Delegating This comes back to having the right team in place. If you trust your team, you can delegate specific complex tasks to them without spending all your time on every issue. Peter Lohmann, CEO of RL Property Management, shared that he keeps a delegation cheat sheet printed out at his desk. The steps to successfully delegating are: Outline the vision - “Commander’s Intent.” Share resources. Describe your definition of done. Give a deadline or interval. Explain how and when they should keep you updated. Having paperwork to back your arguments Ensuring you have documentation of each issue with the resident is critical. Documenting interactions along the way helps protect you and your team. Setting and maintaining expectations Again, professional PMs know that setting and maintaining expectations is one of the top priorities for a happy and successful resident relationship. Knowing that today’s residents expect a certain level of convenience can put professional PMs ahead of the game. Utilizing Resident Experience Platforms Like Second Nature to Meet Expectations We’ve only scratched the surface of resident experience management and the innovative and exciting ways we’ve seen property managers change the game in that space. The next step might be to explore our Resident Benefits Package and why property managers love it. Or, if you’d like to learn more about property management trends for 2024 – and the changing state of resident experience – you can download our free State of Resident Experience Report. The in-depth report includes advice and insights from some of the most innovative property managers in the biz, data on resident expectations, and key trends for 2024.

May 18, 2023

Read more

Pricing Resident Benefits Packages Mistakes

The Resident Benefits Package (RBP) is one of the leading strategies in SFR property management today. It helps drive resident retention and satisfaction, increase profits for the property investor, and build better property management teams and workflows. A similar product is the Investor Benefits Package (IBP) which also drives value for residents, property managers, and investors. But there's one issue with RBPs and IPBs that many property managers get tripped up on: pricing. How do you choose how to charge for your Resident Benefits Package? How do you ensure you aren't lowballing yourself or pricing yourself out of the market? How do you market it to your residents and investors? How do you ensure a smooth rollout? It's not as complicated as you think. Andrew Smallwood of Second Nature breaks down the best way to price an RBP by sharing some simple insights most Property Managers may not have even considered. ‍ ‍ TRANSCRIPT Andrew Smallwood: Hello professional property managers. Andrew Smallwood here. And I just wanted to record a quick video because there's a common mistake being made and it's a painful mistake, it's a totally avoidable painful mistake, totally preventable, as it relates to pricing resident benefits packages. I'm going to use my other camera here just to draw out what I'm talking about here so that it's easy to see and understand. So here's the thing with resident benefit package pricing. There's basically two ways to go about pricing, and you know what I will show you is what we believe is the wrong way and what we believe is the best way. Now, the wrong way looks something like this. It's adding up the price of your various services that you use. Let's just say this continues on down the line and you've got, I don't know, $15 worth of stuff in your benefit package. And what a property manager says at this point is, "Hey, the margin that I want to make is 25%." And so they say, "I'm going to charge $20 to the resident so that I can make $5, which hits my margin target above my cost." And that's kind of the model. They're starting from what we would call a cost-built price. A cost-built price. I would argue that that's the wrong way to go about it because this is exactly what property owners do who say, "Hey, I've got a mortgage that's $1,000 a month, and I'm just going to say another $100 of expenses. I'm budgeting planning, blah, blah, blah, blah, blah. So I've got this $1,100 cost base and I'd like to be cash flowing $900 a month, and so I'm going to charge $2,000 in rent." Now, as crazy as today's market is, in SFR (single-family rentals), maybe they could get someone to go for that. But if the market is saying, "Hey, really the rent that you're going to get on that kind of home is $1,400," well listen, you can still be cash flowing, but it's not going to be the same. There might also be an investor who had it flipped the other way around. They may be saying, "Gosh, if I could just make a couple hundred bucks in cash flow, that would be amazing, because most people can't get that." But the reality is they could rent it for much more. And this is where you as the professional who has the expertise of what's going on in the market, you can come at things from a different place and you can build it from, "Hey, here's the market value. Here's what the market values this at today." And the way that works within RBP is you need an expert in a resident benefits package who also knows the market and what professional property managers are charging for the mix and services. That's something that Second Nature does. And ultimately you could say, "Hey, if you were piecing all these items together on your own as a resident you'd be paying $45 a month, but we're only going to charge you $29 a month." In certain markets that might be a price. So that's a great savings for the resident. And the pricing to the property manager might be $15.50 for the various services that are included. And so all of a sudden you've got this nice spread of $13.50, whereas somebody might have been undervaluing that at $5, or they might have been overvaluing it and saying, I just want to make 100% margin. Well, everyone would love to make 100% margin. But it's not the cost that determines the price. If you do that, you're going to get tremendous tenant pushback or you're going to be undervaluing the service that you're delivering. So building the market value, there's really a couple of keys of what goes into it. What's the mix of products that you have, the mix of services? How are you marketing and positioning it? And then finally, the service delivery: how are you delivering on those services in such a way that creates value? If you can maximize the mix of products that you have, the marketing and positioning and the delivery of those services, then you can maximize ultimately the market value of your RBP and end up with a great result. And create what we call as a triple win where residents are getting a great deal, property owners are seeing their assets protected and better retention and results, and you, the property manager and your team, are getting a great result as well. But you got to avoid this pricing trap of going from a place of cost and then arbitrarily choosing a margin that you'd like to make, because you may be undervaluing or overvaluing ultimately what the market will pay. If you'd like, Second Nature can help with this, whether you work with us or not. If you want to talk to somebody on the Second Nature team about what we're seeing for pricing in the market, what's working, what's the mix of products that property managers are using in your area and why? And ultimately, class A, B, C, your different portfolio mix, what's going to work across your portfolio and how you need to structure and deploy it? We can speak from a place of experience having helped over 1,000 companies do this, and if not in your area, then we can work with you to help you figure it out from a place of expertise. So, listen, whether you reach out to us or not, please spread the word about this so that people are thinking about it the right way and coming from a market value approach and not a cost-based approach. All right. I'm signing off. Just a quick video. Hope you guys enjoy it. Leave your feedback, I'd love to see a comment or email me. Let me know what you think of this, if you want us to do more videos like this. Thanks.

May 18, 2023

Read more

What is A Triple Win and How Do I Achieve One?

The Triple Win = long-term growth and success What is a Triple Win? A Triple Win is a simple but effective concept in property management in which everyone benefits. There are three parties that are involved in a property management transaction: The investor, who owns the property and is seeking a high return on investment. The property manager, who manages the property for the investor and is seeking to grow a successful business. And finally the resident, who lives in the property and is seeking a great living experience. A Triple Win is the concept of each party accomplishing all of these things at once. Solutions like Resident Benefits Package (RBP) and Investor Benefits Package (IBP) spring from this value-generating mindset. Why is it important? The Triple Win is a relatively new idea in the PM space, but it’s quickly becoming the cornerstone of industry-leading businesses. This is because property management as a whole is becoming commoditized. The service of managing properties is getting harder and harder to differentiate from other providers. This trend eventually ends in a state called “perfect competition”, where consumers (in this case investors) don’t perceive differences between the offerings of different companies and are likely to select the cheapest option. Throw in the growth of single family property management software that investors can operate themselves, and the need for a basic property management service in the future rapidly declines. Not surprisingly, the key to success in the future is to provide something better than a basic property management service. This is where the Triple Win comes in by providing real tangible value to all parties to create an experience that cannot be matched by old-school companies and software. The Triple Win is important because companies that fail to evolve with this changing industry will be left behind and eventually go out of business. Creating a Triple Win is a fool-proof way to ensure the evolution of your business. How do I create a Triple Win? Pt. 1. The investor JWB Real Estate Capital was one of the first property management companies to identify the long-term value of the Triple Win. The business is built around the idea of helping real estate investors achieve the highest possible ROI, and it does this by creating a Triple Win that keeps ROI high for investors via low vacancy rates and other costs. This concept has led to a number of practices that help achieve that goal including some that actually subtract from JWB’s short-term profit. One of these is the long-term lease, which cuts the income JWB receives from tenant placement fees pretty dramatically. However, this creates a lot of value for the investor, whose vacancy and tenant placement costs are much lower. JWB also works closely with their clients to create a detailed plan for real estate investment that’s designed to maximize the investor’s ROI. It’s a property management company, but a lot more than property management is going on here. That’s the key. It’s this excellent experience JWB provides that drives business from long-term investors, which adds sustainability to the business model. It’s differentiated and it creates unique value, so the short-term profit decrease is offset by the growth and retention of clients that understand the benefits of working with JWB can’t be matched by any old run-of-the-mill PM business. Auben Realty has built their literal company structure around experiences that create a Triple Win. They employ Investor Experience Managers and Resident Experience Managers to enable clear communication and quick action on the needs of both other parties. Again, this is differentiated and creates unique value that an investor won’t typically realize from a scaled company that is still operating with a basic service. Creating a Triple Win for the investor is about creating value. Ask yourself right now, “what am I doing to help my clients achieve maximum ROI?” and, “what am I doing to make communication as easy as possible and streamline the real estate investment experience for my clients?” The value they perceive from you simply managing their properties is dying, so you need to create value beyond that in order to build a business that’s worth the cost to employ. Pt. 2. The resident So what about the resident side of this? Recall that JWB’s long-term lease decreases vacancy costs for investors. Vacancy doesn’t just create costs though, it’s unrealized profit if nobody is paying rent. So vacancy, not surprisingly, is the number one thing your investors want to avoid, meaning resident retention becomes a priority. This is why resident experience has become a key term in property management. The best way to decrease vacancy is to provide a resident experience so great they don’t want to leave the property. "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.’” - Auben Realty CEO Phil Vera Providing an exceptional resident experience is challenging, but this is really where property management companies can differentiate themselves and create something that commoditization can’t touch. You can’t really commoditize an experience, and a devoted team of property managers that can create such an experience for residents will decrease vacancy rates to a point where investors have no choice but to work with a professional PM if they want to maximize ROI. The industry-leading method for resident experience is RBP by Second Nature. Ancillary income programs like RBP can help create a fantastic resident experience by offering real valueIt takes all the work out of creating and managing a great resident experience. RBP is a suite of services that property managers can purchase and add to a rental agreement for the express purpose of creating that unmatched experience. Every single one of these services is managed externally for you by Second Nature. You don’t have to do anything. It’s so simple to implement, it’s not even plug-and-play. It’s just... plug. Resident Services within RBP by Second Nature include things like Rental Rewards, which make residents feel valued by management and also incentivizes on-time rent payment for the investor. Programs like identity protection and credit building are great tools that many residents wouldn’t otherwise have access to. Even one-call utility setup creates a great resident experience, as getting all the utilities working for a property can certainly be a hassle, and efforts to make settling into their new home easier are rarely lost on residents. Pt. 3. The property manager Happy residents and happy investors lead to happy property managers. RBP creates a great resident experience that ladders up to the investor’s experience, all of which benefits the PM in the end. That’s the Triple Win in a nutshell. The PM is focused on the needs of the client and the resident, and everybody wins as a result. This is the future of property management. External pressures on the industry have made it so. Creating a Triple Win creates value that can’t be realized in any way other than working with a professional property manager. That’s how you escape the grasp of commoditization and technological innovation, and companies that don’t orient themselves towards a Triple Win will be left behind.

May 18, 2023

Read more

Don’t Fear Pushback When Implementing An RBP

Pushback from residents and investors is a common fear when rolling out a resident benefits package, but there is no need to fear. ‍ With resident benefits packages and investor benefits packages being still a relatively new concept in property management, it’s understandable to have some concerns about implementing them. The chief among these is typically resident pushback, which tracks logically with the concept “people don’t like being charged for stuff.” Fearing pushback or a negative response when adding costs to a resident is understandable, but with RBP by Second Nature, pushback is rarely observed in practice. Value Creation Reduces Pushback ‍1 out of 80 residents objected to West USA's RBP rollout Second Nature Head of Sales Bob Hansen, during a workshop at NARPM’s national conference in Kansas City, touched on how infrequently his clients experience pushback during rollout. “For those of you that are a little hesitant about rolling it out or unsure. I recall Director of Property Management at West USA Realty Dave Pruitt talked about rolling out his Resident Benefits Package on a podcast. He rolled it out to people real quick and I think of 80 people, one person pushed back.” That one person did not renew their lease as a result, but Pruitt filled the property with a willing renter a day after and never looked back. Resident pushback proves to be minimal because the programs you’re implementing are creating value. People generally don’t mind paying for things they deem worth the money. Thus, a big key to a successful rollout is making sure what you’re providing is a value add for the resident. Revolution Rental Management CEO Todd Ortscheid elaborated on the concept further, saying “If you're providing a tangible benefit to someone, or even sometimes an intangible benefit, you know, we talked about 24/7 maintenance hotlines, and those sorts of things. These are all real benefits that people aren't able to get from someone else, and they're willing to pay for it.” Communication Is Key Effectively communicating these benefits also plays a big role in an effective and well-received rollout. There is a saying in marketing that “perception equals reality.” Really all that means is that the consumer’s perception of your product or service is what matters far more than the actual characteristics of it. Now, ideally, those things match, but poor marketing efforts and bad PR can create a negative perception of a worthwhile offering. For example, a package of benefits for a renter that adds value which exceeds what the renter pays for it is the reality of a resident benefits package, but the perception could be “more stuff I have to pay for.” This is why communication is key. Being transparent about what these programs are and why they’re helpful can help the perception match the reality, making onboarding much easier. The same is true for your clients, who may have fears of the additional costs putting off potential residents. These programs protect their asset and create a positive experience that actually helps retain residents. It quite literally makes them more money. The benefits dramatically outweigh the costs and the value created for both resident and investor is undeniable. Communicating this is key. Long-time PM Jennifer Stoops, who is the Vice President of Corporate Development at PURE Property Management, notes her decisive action at rollout that resulted in very little negative perception and pushback on her company’s RBP. “So we communicate with everybody first. We like to send information out to all our clients who are really excited about just letting them know what's going on. We updated our website, we updated right before you apply on our application, we updated any FAQs, everywhere that we had any information about applying, leasing from us anything at all, it was all put there. And we made a big deal out of it, because it was a value add.” The only real concern a property manager should have when considering rolling out a resident benefits package is what could happen if they don’t. In due time, a resident benefits package will be standard across an industry that is increasingly focused on resident retention. “So if tenants are moving around one management company to another, and you're the company who doesn't offer this, that's actually the thing that you should be afraid of, you know, thinking about being afraid of benefit packages, you don't want to be the one company who's not offering these things that are now becoming standard," says Ortscheid. "If that's what tenants are expecting to see, you know, all three, that's actually a problem.”

May 18, 2023

Read more

Should your RBP Rollout be Mandatory or Optional?

Is a mandatory resident benefits package (RBP) rollout right for your property management company? Let’s say you’ve set up a resident benefits package and you’re ready to start rolling this thing out, but you’re not sure whether to make it mandatory for all of your properties or give residents the option to participate in it. A mandatory rollout would result in more doors adopting it, but you fear the possibility of dissatisfied residents being forced to participate in it. Property managers also have to decide this when considering investor benefits packages (IBP). It’s a tough call, one that Second Nature’s Head of Sales and former property manager Bob Hansen is here to weigh in on. Key Learning Objectives: Why mandatory resident benefits packages work How to roll out a mandatory RBP Benefits of a mandatory RBP Challenges of an optional RBP What other property management companies are doing Benefits of Mandatory RBP Rollout Hansen and the Second Nature team recommend mandatory rollouts, and they do so for pretty simple reasons. Hansen is quick to note that while “mandatory” may scare some property managers, it shouldn't. Here are some of the benefits he has seen. You’re giving residents something they want “You have to look at the value that a resident benefits package brings to the investor and the resident, not just you as the property manager,” says Hansen. Hansen hits on a key point here about resident benefits packages: They’re desirable to the residents. RBPs are crafted specifically to address problems that residents want resolved. THey make life easier, and give residents incredible value, like credit building, identity protection, rewards, and more. Making these benefits clear to the resident allows an RBP to be adopted easier. Sure, there will be the occasional individual who is an exception, but very rarely is any pushback experienced on mandatory rollouts because the programs are creating value for the residents. Put simply, residents consider an RBP worth the increase in monthly cost. Mandatory rollouts make things easier on everyone “I think conceptually in [a property manager’s] mind, they think it’s not going to work out. But then when they do roll it out, they’re quite surprised at how easy it was,” Hansen says. Once you can internalize the idea that adding a Resident Benefits Package is not an inconvenience in the eyes of nearly every resident, it becomes an incredibly simple decision to install one at each home you manage without worrying about negative perception of the addition. The cost to the business is simply not what you may fear it to be, and making it mandatory allows you to roll it out to the maximum number of doors and the whole process is much more streamlined and easy to manage. You’ll accomplish it more quickly with a mandatory rollout, and see the benefits starting rolling in faster. Investors will have happier residents, and you’ll have better results. Residents rarely give pushback Hansen touched on how little headache resident pushback to mandatory rollout has actually created for Second Nature clients. “For those of you that are a little hesitant about rolling it out or unsure: I recall Dave Pruitt, Director of Property Management at West USA Realty, talked about rolling out his Resident Benefits Package on a podcast. He rolled it out to people real quick and I think of 80 people, one person pushed back.” That one person did not renew their lease as a result, but Pruitt filled the property with a willing renter a day after and never looked back. Challenges of Optional RBP Rollout The primary challenge of an optional RBP is that optional rollouts create unnecessary headaches. Exceptions leads to workarounds which lead to mistakes. “From running operations in a large management company myself in the past, if you’re making exceptions, you’re bound to mess something up. If you’re locking it in as mandatory, it’s a lot easier to manage from the property management side,” says Hansen. Constantly accounting for what services are on and what services are off for which properties creates a load of extra work – that frankly does not result in a payoff worth the lift. Generally the perceived benefit of making your rollout optional is that residents will be happier if given a choice. But rarely if ever do property managers see satisfaction go up when they give residents an option – and it can even go down. In the end, Hansen recommends sticking to a mandatory rollout. Residents end up happier, investors see better retention, and your team gets less headaches. If you’re looking to learn more about how to ensure a smooth RBP rollout, check out our interview on that exact topic.

May 18, 2023

Read more

5 Property Management Mistakes that make you a Bad Property Manager

We all make mistakes. But when in comes to property management mistakes, the consequences can be tremendous. Property managers balance so many moving pieces, and fixing even the smallest mistakes or bad habits can make a huge difference to your resident experience and your business growth. From hiring people who aren’t a good fit to letting tenant screenings slide, there are plenty of predictable characteristics of what some might call a bad property manager. But it’s not always as straightforward as it seems. So, we decided to seek out an expert on property management who could talk to us about how property managers can avoid the most common property management mistakes. Meet the Expert: Michael Catalano Michael Catalano is a lifer in the industry and has unique insights as a founding partner of PURE Property Management. We asked him for the five most common mistakes made by property managers are and he delivered. ‍Michael Catalano is co-founder and general partner of Silicon Valley-based PURE Property Management, the fastest growing profitable residential property management and technology company in the U.S. As a second-generation property manager with over 25 years of experience running, growing, and acquiring property management companies, Catalano is an industry insider looking to transform the traditionally cumbersome and complex process of managing properties. PURE acquires hyperlocal property management companies and invests in their people, processes, and technology to achieve market leadership in their location. 1. Mismanaging Trust Accounting “One of the biggest mistakes I see newer property owners make is not actively managing and understanding their trust accounting,” says Catalano. “Trust accounting discrepancies can do more than jeopardize your bottom line. Depending on the state you live in, big shortages can put you out of business or even in jail.” The key to avoiding any discrepancies is to have the right people in place. Trust accounting in rental property management requires a more specialized understanding of the industry than a traditional CPA often has. The accountant you hire needs to have a deep knowledge of how money fluidly moves through all stakeholders, specifically in the property management industry - residents, property investors, and vendors. They need to keep accurate and up-to-date accounting so that you always know what your resources are. While shortages do come up occasionally, even with the most well-run companies, knowing and troubleshooting to find the problem right away will help avoid bigger discrepancies later. “Every owner should be monitoring trust accounts with their CPA at least monthly, and for some states, it is a licensing requirement. In these states, if you have a negative in a trust account, you will lose your license and can also be fined or jailed. Shortages in a trust account usually occur when money from a client has been placed in the wrong client account, commingling funds. As soon as you commingle, you break the law in most states.” Catalano really stresses the importance of getting this right the first time and offers two important suggestions: “Number one, put someone in place that understands this. Fortunately, there are now many accountants and firms that specialize in trust accounting. You can find the best for you by talking to your colleagues and checking references before hiring. The second is to conduct a self-audit every other year. Take the time and spend the money to hire a professional auditor to audit your trust accounting and make sure that all the accounts are balanced and in order. It may cost about $5,000, but that is considerably less expensive than having it wrong,” emphasizes Catalano. ‍ 2. Dropping the Ball on Forecasting and Financial Analysis “It is very important to have a sufficient understanding of your everyday and future finances by budgeting and forecasting, which is critical to running any successful business. I’ve seen some property management companies miss this important step,” says Catalano. Underdeveloped financial analysis can leave a lot of money on the table and become a costly mistake in property management services. Catalano is quick to note how some basic budgeting and bookkeeping refinement have quickly increased the margins and cash flow of many of the companies that have joined the PURE Property Management family, and this modification is generally something that every company can very easily do on their own. “In addition to budgeting and forecasting, it is important to have an understanding of your KPIs and metrics as well. I feel like a lot of companies in our industry could do a better job of tracking so that every day they can answer critical questions about the financial position of their business – ‘What’s my revenue per door?’ and ‘Who is bringing in revenue and why and what am I paying them?’” Catalano offers this advice to help ensure you’re keeping up with finances appropriately: “You should always be prepared to sell your company, even if you have absolutely no plans whatsoever. Because when you operate at that level, you will have the best control and understanding of your overall finances. By watching your revenue and expenses on a daily basis, you will always have a pulse on the health of your business.” 3. Failing to Complete Workflow Implementation “While property management is not a particularly tech-savvy industry, we’ve seen more changes over the last three or so years than in the previous 30. There are now single-point technology solutions for the most time-intensive tasks within the workflow process innovated to increase efficiency. But the implementation remains challenging,” says Catalano. “I’ve noticed that in this industry, when you decide on a new process or workflow that you would like to implement, I see a lot of incomplete implementation. Every new process requires employee training, which means extra time away from daily responsibilities, but it helps, in the end, to actually sit down and hold a class on how to operate the new technology or workflow. The technology only delivers optimal efficiencies if the users know how to wield them appropriately. So you need to think critically about how much technology to implement and what it means to your current and future workflows.” Catalano says that as the industry has embraced technology at an increasing rate, the companies that have leveraged that change most successfully are the ones that made the proper investment in educating their teams. Technology can help with communication, streamlining workflow around property maintenance issues, leasing, move in, renewals, rent payments, tracking late rent or other late fees, security deposit, etc. Part of the challenge of technology implementation, according to Catalano, is the lack of an end-to-end technology solution that completes the entire workflow process within one system. “Right now, company owners are trying to piece together too many technology platforms on their own,” adds the professional property management veteran. “That’s the hard part because, in this industry, the different technologies do not truly connect. While some property management tech solutions are labeled as APIs, generally they aren’t true APIs because they don’t talk to each other.” The lack of integration Catalano touches on here makes heavy reliance on a large amount of software a hazardous venture. Not only do employees need to learn to be efficient with all of them, especially in smaller companies, but because they are not interconnected, there’s a lot of manual data transfer. “Right now, a property management API is like a CSV file, where you're downloading and then importing that CSV file in the new platform. In order to implement an entire workflow process, property managers use seven to 10 different platforms for all the different processes. Moving from one tech process to the next, we’re asking our property managers or leasing agents or maintenance coordinators to remember what they did in one platform and literally hand type that information in the next platform. As you can imagine, things get lost in translation, and then you have a problem.” 4. Falling Out of Compliance with Laws and Regulations & Screening Tenants “I live and operate in California, and it seems like California has a new law every day for resident rights,” says Catalano.”Property managers have an obligation to themselves, their teams, their clients, and their residents to stay up to date with the ever-evolving laws and industry regulations in their state.” And unfortunately, as everyone knows, rapidly changing fair housing laws get complicated really fast. “To make this situation even more complicated, in addition to the statewide ordinances, there are local ordinances as well that supersede the state ones,” says Catalano. “So, for example, you have to stay on top of knowing that while there is a statewide rent control in California, certain areas in Silicon Valley have a different rent control.” Knowing that lease and eviction law changes are fluid, Catalano believes it helps to think of them as living, breathing organisms that are continually changing and growing. In addition, Catalano recommends that you should review all state and local laws and regulations on at least a monthly basis. And while leases and property management agreements don’t need to be updated monthly, they should be combed through on a regular basis to be sure they are all compliant. Understand the laws around background checks, credit checks, and discrimination when screening tenants, etc. “Updating your lease agreements is tedious and can sometimes be monetarily expensive. You may even have to pay an attorney to do it. But at the end of the day, you really have to do it. Believe it or not, we’ve had a few situations, especially in California, when we have acquired a company and when we have looked at the leases have found as many as four items in there that are actually illegal.”’ “It’s not easy to be perfectly compliant with how many laws and regulations there are, how quickly they change, and how different they are from place to place, but it is important if you don’t want to get sued. While lawsuits from renters are generally frivolous, they’re happening more and more, and it’s not something you want to open yourself up to.” Related: Property Management Startup Checklist 5. Making or Keeping a Bad Hire “Right now, hiring is probably one of the most difficult aspects of this business, and can be one of the biggest mistakes property managers make. There are a lot of hurdles to finding and placing the right people for every job.” “In California, if you want to be a property manager, you have to be licensed, which is also the case in other states as well. With a lack of viable candidates, however, many unlicensed people are doing property management duties that require licensing. As a company owner hiring unlicensed employees, you could get in some serious trouble with the Real Estate Commission,” says Catalano. “So have a strategy for finding the right employees for your company. Start by confirming that they have the required licensing. Next, make sure that they have the right personality for the job that they're hired to do. We use a company called Culture Index to help us determine if there is a good fit. The company uses personality analytics to determine if the job candidate will be in the right position, whether or not they have the skills to be a leader, and answers personality trait questions like ‘are they ambitious and will they follow directions accurately?’ This Culture Index has really helped us with hiring and making sure that we have the best person in the right position for them. In addition to implementing a hiring strategy, Catalano says that it is important to understand your end goals for each department and the overall company structure to hire the right workers correctly. “You should have an org chart, even if you only have six employees. The chart should visually outline, ‘Who's doing what?’, ‘Who reports to who?’ and ‘Are they in the right position?’ When you are hiring, you need to know if the position is departmental, portfolio, or hybrid. Both you and new hires will want to know the plan moving forward to attain more growth, and I think that’s a big pitfall. Having this org chart will keep you from hiring the wrong person or guide you on how you want to run the business,” says Catalano. “Having an org chart and hiring strategy really ties back to knowing your financials and metrics. Understanding how many doors are being managed per full-time employee and how to structure around the best servicing that door count is the best way to optimize your business for success. I know that these strategies work because I think the average in the industry right now is about 50-60 doors per FTE and at PURE, we're sitting at about 115. You can get to well over 100 iIf you're more efficient, maybe 150 iIf the technology gets a little bit better. We think we can get to 200 eventually. So that's how we look at it. How are you structuring your business to get the best and most efficient organization?”

May 17, 2023

Read more

How Property Managers Can Address An Evolving Industry

“PropTech companies are making the mechanics of property management easy – rent collection, maintenance, screening, the day-to-day mechanics of property management. Thirty years ago, that’s what a property manager did. Now though, when it comes to things like benefits packages, pet guarantees, and rent guarantees with security deposit alternatives – these are all things you can’t do with software. Software doesn’t solve this problem, especially for landlords trying to manage their own smaller-scale properties. The fact that we manage a lot of properties as opposed to just being a software solution, we can offer much more value.” - Revolution Rental Management CEO Todd Ortscheid ‍The basics of property management, that is collecting rent, conducting maintenance, and listing and filling properties, have never been easier. The wave of investment into the industry in the form of proptech companies, as described above by Ortscheid, has stimulated this change. This is a good thing in some respects, but it also poses new challenges for PMCs. As technology makes property management’s core competencies easier, the need for an owner to hire someone to do those core competencies decreases. The service is being commoditized, which is to say that the ability to differentiate your business simply by being proficient at those core competencies is approaching zero.This creates a need for property managers to offer something beyond the core competencies, to offer something that can’t be easily replicated by technology or the accidental landlord using that technology. Thus, the focus for the property manager has changed. Good property management is no longer just taking on screening, renting, maintenance, and so on for the client. Good property management is now about maximizing the investor’s ROI via innovative value-creation programs that technology cannot duplicate.‍ "So the advent of resident benefits packages really grew out of that. There was just more demand to be something more. This took property managers from being just a kind of a lackey to really being the professionals, to understand the laws, to understand who protects our clients and income streams.” - Formatic Property Management CEO Matthew Tandy‍ So how do you as a property manager offer something more in order to protect your clients and their income streams? You start upstream with the resident. ‍“The experience of the tenant is paramount in this industry. Our product is tenants. It's not all the systems. It's not all the organization. Our product to the homeowner is the tenant. Now we can go into psychological studies about making tenants happy and how they treat products better and treat the properties better, but you can have that conversation just from a logical standpoint with your homeowner. Let's talk about the resident experience in your property. And if we give them the best experience possible, they're going to feel appreciative of this address and of you as a landlord, and of us as a property manager. The better experience you can give them, the more likely they are to take better care of your property, pay you on time, stay in your property, and lower your vacancy costs. It's like a literal triple win in this case.” - RevUp Consultant Jonathan Cook ‍Obviously, the resident is the source of the monthly income for the investor, so protecting that income stream and maximizing ROI from it means protecting the resident’s interests. You need them to stay. Making the property and the rental experience as good as possible for the resident incentivizes them to stay, and less turnover means less lost vacancy and turnover costs to the property’s owner. A winning experience for the resident becomes a winning experience for your clients. Property managers have gotten ahead of the curve in the evolving market by redefining the resident’s role in the business. They’re not just a necessity anymore. They’re an opportunity to install a resident experience program that creates value for investors that the investors don’t have the capacity to create themselves. This committed evolution from a service provider to an experience provider is making all the difference for America’s top PMCs. Related: State of Resident Experience Study ‍ Four Keys to A Successful Resident Experience Platform 1. Create value This is the single most important part of an ancillary income program. Ancillary services are not just money grabs. Treating them as that will have undesirable long-term consequences. To be sure, there is money to be made for you as the property manager, but unless you’re also creating a desirable situation for residents, you’re not helping your clients, which threatens the long-term viability of your business. Vision is important here. Creating that undeniable value for your residents is the origin point of this entire strategy. It is the cornerstone without which the whole thing crumbles. There’s a long list of pretty easily accessible programs that are proving to be welcomed by residents, including things like air filter delivery, credit-reporting tools, security deposit alternatives, resident rewards, gifting programs, home-buying assistance, and more. 2. Convenience Residents perceive value in a number of different ways, but one of the big ones, especially in modern America, is through convenience. ‍ “What I'm seeing from our residents, whether they're paying $3,000 a month in rent or $1,000 a month in rent, the number one thing that they look for is ease and convenience. They don't want complicated instructions. They just want simple, they want right now. They want contact free, they don't want to talk to people. That's what our residents want. So everything we do from showings to moving into the experience after they move in is all revolved around design for that expectation.” - Skyline Properties Broker DD Lee ‍Delivering convenience really means making the obligations of the resident as easy as possible to fulfill. The resident is required by the lease to pay rent, they’re required by the lease to keep their air filter changed, they’re required by the lease to have renters insurance. A great resident experience doesn’t require a huge dog and pony show. Just making these basic things as easy as possible will thrill residents, especially considering how common negative perceptions of property managers can be. 3. Protect the asset Certain convenience programs for residents can also serve to create value for the investors by protecting their asset. Services like filter delivery and comprehensive auto-enroll renters insurance help minimize maintenance and the risk of charges coming back to the client. Studies actually show that filter delivery service decreases the number of HVAC maintenance tickets. This is not only a convenient service for residents, eliminating their need to go to the store and buy a filter, but it also extends the life of the HVAC system, which is one of the most expensive things in a home to replace. 4. It all adds up When you can create a ton of value for your residents, you can keep those residents in the properties. When you can show your clients that you can not only rent their properties, but rent them to residents who will stick around and take care of the property, while also providing services that make taking care of the property easy, you’re offering them more than technology can create. That’s how you differentiate your business in the modern era.

May 17, 2023

Read more

10 Hiring Tips For Recruiters in Property Management Companies

It’s not always so easy to build a property management team, and property management hiring tips can be hard to come by. Professional property management is a complex industry with endless responsibilities, nuanced roles, and lots of stakeholders’ priorities to balance. Putting together a dream team – the kind of team that just makes things work, delivers happy residents, and makes workflows feel seamless – it’s hard! So, we sat down with an expert in just this subject. He’s perfected the art of finding and hiring the right people – the kind of people who can become your property management dream team. An organization is its people, and few companies in the property management industry have internalized this idea more than Evernest. Whitaker sat down with Second Nature to talk through some of the key things he wants in an employee and how he goes about identifying which candidates have them and which do not. Ready to hire the best property management team? Let’s dive into Whitaker’s top property management hiring tips. Meet the Expert: Matthew Whitaker, CEO of Evernest Matthew Whitaker has developed and refined his hiring process over years of experience in real estate as a property management firm CEO. Evernest is a nationwide SFR company based out of Birmingham, Alabama. Evernest manages around 6,000 doors and continues to scale its business and grow its team at an impressive rate. CEO and founder Matthew Whitaker has been constantly adjusting and reevaluating his hiring process, and it has resulted in one of the most comprehensive talent acquisition procedures in the property management game. 1. Hire Based On Characteristics Over “Qualifications” Whitaker’s biggest insight, which he’s developed over years in the property management industry, is that there is a lot more to hiring the right people than simply hiring qualified people. The concept of hiring the most qualified candidate seems like it’s pretty straightforward. But if you start to pull it apart, many of us have hired candidates who seem “qualified” on paper but who end up being a poor fit with the company. “Who you are matters almost as much as what you’ve done,” Whitaker says. “And as employees rise up through your business, you need to be confident you’ve hired someone who is bought in and is wired for the challenges that come with that.” Whitaker says their investment in identifying personal characteristics has helped separate their best candidates from the rest of the pack. Be clear with property management recruiters about all the characteristics you’re looking for. 2. Define What a Qualified Candidate Looks Like for You Evernest hires with a well-rounded definition of “most qualified” – with defined characteristics and experiences they’re looking for. Those descriptions might not be the first things you think of, but it’s helped them with resident retention and growth. For example, instead of just seeking candidates with “property management experience,” they’re looking for candidates who can handle failure well, who have shown resilience, and who match their company culture. (More on each of those later!) As a heavily scaled company, Whitaker recognizes that you’re not going to hit on 100% of hires, but going a little deeper than just career experience can up that number as much as reasonably possible. Clearly defining your ideal candidate can help with referrals, as well, since you can describe to others who you’re looking for. 3. Develop Interview Questions that Reveal Important Traits The next step is to outline interview questions in your screening process that can identify the qualifications and characteristics you defined in Step 1. What does that type of person look like? What kind of life experience would they have that built their skills? How have they exhibited the traits that you need in the past? Give them a scenario they might experience while on your team and ask how they would respond. Carefully evaluate if their responses align with the candidate profile you created. 4. Look For Resilient People Resiliency is the trait that really stands out to Whitaker for the property management space. After all, single-family property management, in particular, requires people who can stick with it when things get tough. SFR property management is tricky because properties are spread out over larger regions, residents may have very diverse needs, and the properties themselves may have very diverse problems or requirements. Evernest always looks to hire resilient people who can handle the ups and downs and surprises of the job. Look for any red flags of people who aren’t willing to go the extra mile. Whitaker is adamant that resilience is among the most important traits a property manager can have and a great indicator of their potential success in the company. “One of the things about a property manager is the fact that all you do is deal in the world of problems,” Whitaker says. “If you didn’t have problems, there wouldn't be a role for property managers. So they have to get used to dealing with problems all day and being able to bounce from problem to problem.” 5. Consider Candidates’ Personal Experiences, Even Beyond Real Estate Whitaker says that resiliency is legitimately a skill you can identify in the interview process and one that you can design interview questions around. While it may be challenging to uncover in a conversational setting, Whitaker likes to work through the personal experience of a candidate. The key is asking the right questions. He asks about potential major life events that have challenged their resolve, which he believes can forge resiliency in a person. “Sometimes [people who have had major life events] make the best team members because they realize that things aren’t unicorns and rainbows,” Whitaker says. 6. Find Out How They Deal With Failure Another key part of the interview process – and identifying resilient people – is to find out how they’ve historically dealt with failure in their life. Whitaker believes that someone who has dealt with adversity and failures and come out the other side is automatically going to be better suited to rental property management. He says, “Whether it’s a huge disappointment they’ve had, a business failure, or a failure in maybe a job, [those experiences] sometimes turn them into somebody that’s very resilient. Some of our best team members actually meet that profile, and I’ve thought that for a long time.” 7. Use a Culture Index to Find a Fit for Your Team Whitaker and Evernest have proven how important cultural fit can be in such a demanding industry. They use a tool called the Culture Index to test for traits like resiliency, and Whitaker says the tool has really gone a long way for Evernest and the success rate of its hiring process. With Evernest hiring at scale, Whitaker believes it has helped them get the right people in the right seats at a higher rate, which results in losing fewer people out the back door. “We buy into the idea that Culture Index can help us identify someone’s unique personality or wiring and that. As a result, they have more success when they are put into the right positions on the team,” Whitaker says. Culture Index is a data-driven personality testing tool and the weapon of choice for Evernest. It’s part of their refined hiring process that they refer to as “The Grinder,” which features four interviews, the third of which assesses cultural fit. It’s one of the keys to finding the right property manager. 8. Use a Personality-Testing Tool The Culture Index is just one example of hiring procedures that help to identify personality traits. Companies can use any kind of personality-testing tool to ensure not just that someone is a culture fit but that they’re being hired for the right role on the team. Whitaker shares: One of our biggest "aha" moments around personality and natural wiring is when we moved a team member out of accounting here in Alabama and moved him to Little Rock to run our market there. This guy was an excellent operator in Birmingham. He had all the "i's" dotted and "t's" crossed. No stone unturned. When he moved to Little Rock, we expected him to grow the business. We kept waiting and waiting on it to happen, but it never did. But he was still dang good at executing. Later, when we profiled him, we learned that he is a "Craftsman," which basically means he is a detail-oriented, highly introverted person. So of course he wasn’t out there growing the business. We later moved a "Trailblazer" into the role, which is a highly relational, highly autonomous person, and she KILLED it. She grew the business and it almost doubled in size. The Craftsman came back to Birmingham to run our accounting department and has been incredibly successful. He continues: “Since we’ve gotten into personality profiling, we’ve certainly gotten a lot more intentional about putting the right people in the right places, and I feel like we’ve been a lot more successful doing that.” Failing to invest in a more refined hiring process that features components such as personality testing is cited by Whitaker as one of the mistakes he made early on that other PMs have the opportunity to avoid. 9. Be Smart About Promotions Whitaker notes that early on, a less refined and consistent approach opened Evernest up to being a victim of the Peter Principle. The Peter Principle is the all-too-common practice of promoting employees into jobs they aren’t cut out for – based on their success in their previous role. “We would use our hiring process to hire middle-level and upper-level management,” Whitaker says. “But then when we would go to hire frontline people, we would just basically skip through the process and hire people. These are the people that are going to move up into the middle management, so not being consistent at the frontline level led to people getting into the company that probably should not have been there.” From the very start, you need to think about hiring people you can eventually promote. 10. Don’t Assume You Can Hire from Multi-Family Property Management Whitaker says that perhaps the biggest hiring mistake he sees in single-family rental management is poorly-vetted cross-hiring between property management industries, from residential to commercial properties, or SFR and MFR. He specifically points to single-family homes and property management companies hiring multi-family managers who are unprepared for the transition. And it’s a much tougher transition than it may seem, with differences in property owners, property types, maintenance issues, rent collection practices, property management services, etc. “The skillset doesn’t easily translate because a full-time multifamily manager has been working on-site at a property,” says Whitaker. The communication and logistical demands of single-family are quite a bit different than multifamily complexes, where every issue that arises is right in front of you. “When you add multiple real estate investments and then the logistics of single-family, it becomes a much more complicated business,” says Whitaker. “If you’re going to pull from the multifamily industry, you’re going to have to make sure that you’re hiring some of the best and brightest from that industry because, again, dealing with 300 homes and 50 investors is way more complicated than a 300-unit apartment community all together with one investor.” Transitioning a property manager from a multifamily business to a single-family has a number of logistical roadblocks. You need to know more about a candidate than how successful they were to feel confident they're up to the challenge. ‍ That doesn’t mean that cross-hiring is impossible, and Whitaker clarifies that Evernest has done so successfully. But the bottom line is that a diligent and robust hiring approach like Evernest’s is important to identify whether a person is up to the transition. Final Thoughts Building a good property management team is a complex process, but it doesn’t have to be overwhelming. The key to creating your dream team is to outline a robust hiring process and know exactly what makes a candidate successful in SFR property management. At Second Nature, we work with thousands of residential property managers around the country and have helped ensure PMCs have the tools they need to retain their best talent. Get more insights like these from Matt by listening to our Triple Win Podcast, or check out more from our blog.

May 11, 2023

Read more

What Is a Long-Term Lease? How to Win with Long-Term Property Management

Today we’re diving into all the nuances of the long-term lease, the pros and cons, and why engaging long-term property management can build a win for you, your residents, and your investor clients. Related: State of Resident Experience Study What is a long-term lease? A long-term lease is a lease agreement that lasts longer than the standard in an industry. In commercial real estate, long-term rentals could be ten years or more. In single-family homes, a long-term lease could be anything more than one year. Long-term leases have the benefit of locking in payment for however long the lease lasts. It benefits property managers by guaranteeing cash flow and reducing vacancy, though with less frequent lease renewals, you may not be able to increase the price as often as you feel you need. The concept of a long-term lease agreement may spark some preconceived notions among professional property managers. Locking a new tenant into their rental agreement for two-plus years seems like something of a gamble where you bet on the quality of the resident and the value of the lease remaining high. While it’s true that this type of lease comes with some tradeoffs, many PMs don’t see the positives, which have begun to outweigh the risks in an evolving market. Benefits of a long-term lease A long-term residential lease can offer several benefits for residents, property managers, and owners. Let’s get into the details: Stability With a long-term lease, residents have the security of knowing that they can stay in their home for an extended period, often one or two years, without having to worry about the possibility of the owner deciding to sell the property or not renew their lease. This can be particularly important for families or individuals in single-family residences who want to establish roots in a community and avoid the hassle and expense of moving frequently. Predictable expenses With a long-term lease, residents know exactly what their rent will be for the duration of the lease, which can help them plan their budget and avoid any unexpected rent increases. Similarly, property managers and owners can count on a steady stream of rental income, which can help them plan their expenses and investments. Reduced vacancy rates A long-term lease can help property owners and PMCs reduce the vacancy rate of their properties by providing them with a stable, reliable resident who is committed to staying in the property for an extended period of time. This can save time and money that PMs would otherwise spend trying to find new residents and dealing with turnover. More responsible residents Long-term tenants lease are often more committed to taking care of the property and being responsible “tenants.” This can lead to fewer damages, less maintenance, and a better overall experience for both residents and property managers. Better creditworthiness A long-term lease can also help residents build their credit score by establishing a history of paying rent on time and staying in one place for an extended period. This can be a particularly useful perk for young adults or those who are just starting to build their credit history. With Second Nature’s Resident Benefits Package, they can receive the benefit of getting their on-time payments reported to credit bureaus. Overall, a long-term residential lease can offer a range of benefits and create a Triple Win for property managers, owners, and residents. However, it's essential to establish clear terms of the lease to ensure that it meets everyone’s needs and expectations. Liabilities of a long-term lease Of course, along with benefits, long-term lease liabilities exist as well. The primary drawback of long-term management is that you need to be more certain that the lease – and the resident – are the right fit for you and your investor. A few things to consider before starting with a long-term lease apartment or long-term lease house: Ensure you do a thorough background check and credit check for all renters Ensure the lease clearly outlines behavior that could lead to eviction Be prepared that it may be more difficult to transition a difficult resident out Account for the fact that you won’t be able to raise the rent as easily or quickly as with a short-term rental Long-term lease vs. short-term lease A residential long-term lease and a residential short-term lease differ primarily in their duration, with long-term leases generally lasting for a year or more and short-term leases lasting for less than a year. Below are some of the main differences between the two types of leases. Duration As mentioned above, the primary difference between a long-term and short-term lease is the length of the lease term. A long-term lease typically lasts for one or two years, while a short-term lease can be as short as a few weeks or as long as 11 months. Flexibility Short-term leases are generally more flexible than long-term leases, as they allow residents to move out relatively quickly if they need to. This can be useful for renters who are unsure about their future plans or who need to move frequently for work or other reasons. Long-term leases, on the other hand, provide more stability and predictability but can be less flexible if the resident needs to move out before the lease term is up. Rent amount The cons of short-term leases are they can be more expensive than long-term leases month-to-month, as owners or property managers can charge a premium for the flexibility they offer. Long-term leases generally have lower monthly rental rate, but residents are required to commit to paying that amount for the entire lease term. Renewal Long-term leases typically include a renewal clause, which allows residents to extend the lease term beyond the initial period. Short-term leases may or may not include a renewal option, and residents may need to negotiate with the PM or owner to extend the lease or agree to a new lease. Maintenance Long-term leases often place more responsibility on residents for maintaining the property, as they are expected to stay in the property for an extended period. Short-term leases, on the other hand, may include more maintenance services from the property management company, as they are more likely to have turnover between residents. Long-term lease examples A long-term residential lease typically refers to a lease agreement between a resident and an owner that lasts for a year or more. Below are some examples of long-term residential leases. One-year or two-year lease A one-year lease is the most common type of long-term residential lease. It lasts for a period of one year and requires the tenant to pay rent on a monthly basis. Two-year leases are less common but still fairly standard. Multi-year lease In some cases, owners may offer a lease agreement that lasts for three, four, or even five years. This type of lease provides residents with a high level of stability and predictability, but it may be less flexible than shorter-term lease options. Corporate lease Some companies may lease a property for their employees on a long-term basis, typically for several years. This type of lease often requires the company to pay the rent directly to the owner. Lease-to-own This type of long-term residential lease allows residents to rent a property for an extended period with the option to purchase the property at the end of the lease term. This can be a good option for residents who are not yet ready to purchase a home but want to establish roots in a community. How the long-term lease helps investors Gregg Cohen of PWB Properties is one of the property managers leading the charge on the long-term lease. PWB has positioned itself as a different kind of property management company, one that's focused on helping investors achieve their highest possible return on investment. "As with most things in life, if goals aren’t aligned, one party typically loses. In “normal” property management, this is an unfortunate truth as well. It’s a shame that so many potential investors who see the incredible opportunities for earning above-average risk-adjusted returns on investment passively in rental property investing are so fearful of a poor property manager and resident relationship that they give up on their investing journey before they even start. At JWB, we are not trying to be “better” at property management. We are DIFFERENT." ‍ JWB is successful because they have perfectly understood how to create a Triple Win in an environment that is increasingly demanding of a relationship-focused property management strategy. As a property management company that offers far more than just plain old management of properties, they've built a business model that is extremely attractive to investors, part of which includes the long-term lease. Note their 5-year case study below on the financial results for the investor of signing residents to long-term leases. The key takeaway is the dramatic decrease in fees paid by the investor. These numbers may scare you at first. JWB is willingly forfeiting profit from tenant placement fees, and quite a bit of it. Understanding the context of this decision is critical though, lest you end up playing catch-up with the rest of the industry over the next decade. JWB's commitment to their investors creates so much value that the growth of their business and retention of clients offsets the short-term profit decreases from this strategy. Property management strategies and business models built around short-term profit from things such as tenant placement fees will lose whatever staying power they're clinging to over the upcoming market cycle. Those types of companies will struggle to attract clients and many will eventually go out of business. JWB has proactively avoided being swallowed by the commoditization of the industry by offering something more personalized, relationship-driven, and value-creating. As mentioned, JWB is focused on long-term investors that intend on growing their portfolios, holding properties for at least a full real estate market cycle, which is typically 10 to 20 years, and are intending to create income via real estate investment over a long period of time. The returns for these investors are diminished by property vacancies, so note the vacancy percentage decrease with JWB's long-term model versus the high-turnover model. All of these benefits come together to provide clients with longer-term, goal-focused property management instead of short-term profit-focused property management, which is differentiating JWB right around the time that property management is becoming commoditized. It creates an enormous amount of opportunity to sign a large number of long-term clients by providing something that isn't otherwise available, creating a sustainable business model ready for consistent growth and prepared to sustain threats such as commoditization and do-it-yourself property management technology. The longer lease is just one element of this triple win, but it's a significant one. As the case study notes, the dramatic decrease in costs is very attractive to investors. However, the long-term lease only works if the residents are willing to sign such a lease. So let's make this double win into a Triple Win. How the long-term lease helps residents Uncertainty has been a big theme over the last two years, mostly as a result of the coronavirus pandemic throwing the SFR space into quite a predicament. PMs have certainly taken some hits as a result with eviction moratoriums, residents being furloughed, and other challenges. But residents are experiencing significant challenges of their own as a result of the uncertainty they’ve experienced within their jobs, their ability to pay rent, and the potential of changing rent. These are problems, but problems demand problem-solvers, and problem-solvers create solutions that end up differentiating their business. The long-term lease is proving to be that solution for many PM companies. The stability that it provides is proving to be a welcome sight for residents. Knowing where they will be in three years and exactly what their rent will be is valuable to residents who are fearful of a changing market, and the percentage of residents who see that value is continuing to increase. The result is one of the best resident retention tools out there. For the PM, this doesn’t mean that rent is stuck. Rent adjustments are still possible, but they’re baked into the lease from the start. This allows the PM to plan for a changing market while giving the resident notice of pending changes prior to them signing the lease. Residents are much less likely to react negatively to rent increases if they signed off on them before ever moving in. “Stability starts with helping them understand what their financial responsibilities are going to be years in advance. That’s where it starts and that’s a big reason why residents do like long-term leases.” People find value in knowing where they will be in 3 years. A long-term lease is a commitment for a resident, but it's one that JWB has found that many are willing to make. Implementing a long-term lease program isn’t for everyone, but it’s proving an effective method for creating a Triple Win by creating stability, something everyone is after in these uncertain times.

May 11, 2023

Read more

How Property Managers Can Automate Rent Collection

Automated rent collection is a system that enables property managers to collect rent payments from residents via electronic means such as online portals, direct debit, ACH, direct deposit bank transfers, or debit card/credit card payments. This simplifies the rent collection process, saves time, and minimizes errors associated with manual processes and payment reminders. It also provides residents with a convenient and secure way to make payments, leading to increased satisfaction and retention rates. In this article, we’ll talk about some of the best online rent payment systems, the best strategies to automate rent collection, and how to implement these strategies. We’ve got insights from Wolfgang Croskey, a leader in the industry. Today's Expert: Wolfgang Croskey, Founder & President of How’s My Rental What is automated rent collection? Automated rent collection leverages single-family property management software to streamline the process of receiving rent payments from residents. While traditionally, rent collection might involve paper checks or manual online payments, automated rent collection automates these steps, thus alleviating the issue of late rent payments. Residents can schedule recurring payments or make one-time payments (or partial payments) electronically through the software, allowing the software to automatically debit the designated bank account on the due date, eliminating the need for manual processing and the potential for missed payments or late fees. Best automated rent collection apps for property managers 1. SecondNature At Second Nature, our focus is on improving the lives of both residents and property managers. That's why we've designed digital solutions aimed at adding value and alleviating rent collection challenges for all parties involved. With our Resident Benefits Package, we offer a range of features designed to encourage timely rental payments and assist residents in bolstering their credit, safeguarding their identity, and maintaining financial stability. Learn more now 2. Buildium Buildium is a property management platform that provides a range of features, including online rent payments, payment processing, tenant communication, maintenance tracking, and financial reporting. While Buildium does not publicly disclose specific pricing information, its website indicates pricing is based on the number of units you manage. Learn more about Buildium 3. AppFolio AppFolio is a cloud-based property management software that offers online rent collection, security deposit, tenant screening, property inspections, and accounting/bookkeeping software features. AppFolio’s pricing structure is tiered, with the specific cost depending on the number of units you manage and the features you require. Learn more about AppFolio 4. Avail Avail is a cloud-based rent collection tool that allows PMs to automate rent, send rent reminders, track payments, and manage rental properties. The pricing for Avail depends on the number of units you manage, with increased discounts for larger portfolios. Learn more about Avail 5. Rentec Direct Rentec Direct is a software platform for property managers that offers features such as online rent payments, tenant screening, lease tracking, and maintenance management. Rentex Direct pricing scales with the number of units you manage, with economies of scale for larger portfolios. Learn more about Rentec Direct 6. Latchel Latchel is a cloud-based solution designed specifically for single-family home and small portfolio landlords. It offers functionality that automates and centralizes various aspects of single-family property management, including resident support, maintenance management, online rent collection, video-based troubleshooting, and a resident portal. Specific pricing details are available via a consultative process. Learn more about Latchel 7. DoorLoop DoorLoop is a cloud-based solution designed to cater to a variety of property types, including single-family homes and multi-tenant buildings. It offers tools to streamline property management tasks, including marketing and leasing units, screening and managing tenants, processing rent payments and managing leases, tracking maintenance requests and coordinating repairs, and generating financial reports for property owners. Pricing is tiered based on the features you require. Learn more about DoorLoop 8. YardiBreeze Yardi Breeze is a cloud-based solution offered by Yardi, a venerable company in the real estate and property management industry. The software offers features designed to streamline tasks typically encountered by landlords or property managers, including marketing and leasing vacant properties, screening and managing residents, processing rent payments and rental applications electronically, tracking maintenance requests and repairs, and generating financial reports for owners and real estate investors. For quotes, contact Yardi Breeze directly. Learn more about YardiBreeze 9. RentRedi RentRedi is a mobile-first property management software that allows landlords to collect rent payments online, screen tenants, and manage maintenance requests through a user-friendly app. RentRedi’s pricing structure is subscription-based and ranges from $12/month (paid annually) to 29.95/month (pay-as-you-go). Learn more about RentRedi Benefits of Automated Online Rent Collection Rent collection software offers a variety of benefits that are specific to SFR property management companies. After all, the impact of reducing workload and saving time adds up, especially when you need to devote so much of your energy to operations across a dispersed area. Here's a closer look at the advantages: Reduced workload and time savings Automating rent collection eliminates the need to chase individual payments, freeing up time for tasks that can be time-consuming, such as inspections or maintenance coordination. Fewer late payments With on-time automated payments, rental income (and therefore cash flow) becomes more predictable. This allows for better financial planning and budgeting for property maintenance, repairs, or unexpected expenses. Simplified accounting and record-keeping For property managers, autopay eliminates the need for manual rent collection processes and reduces the risk of late notifications or missed payments. Rent collection features also help streamline accounting processes by providing accurate and up-to-date records of rent payments. And of course, recurring payments can be set up to occur automatically, saving property managers time and reducing the need for follow-up with tenants. No more existential dread around rent time! Reduced risk of errors Manual processing of checks or cash can be error-prone. Automatic rent collection minimizes the risk of human error in recording payments, ensuring accurate financial records and avoiding potential miscommunications or disputes. Improved security Automated rent collection platforms typically use secure payment processing systems to safeguard sensitive financial information. This provides peace of mind for property managers and residents alike, as their payment data is protected from unauthorized access or fraud. Potential for scalability Even for smaller companies managing a few properties, automated rent collection lays a foundation for a more efficient system. As your portfolio grows, the automation remains in place, simplifying rent collection regardless of the number of properties you manage. In fact, Wolfgang Croskey says automation can level the playing field. “Technology is the great equalizer,” he says. “It allows us to compete with these nationwide companies and to provide not only the same level of service but to be able to pivot and adapt much quicker than those larger companies can. So for me, you're a smaller company, AI and Automation Tech is that equalizer that's going to allow you to shine just as well as these larger companies.” Related: 12 Tasks for Property Management Automation Enhanced resident communication and satisfaction For residents, recurring rent payments provide a convenient and hassle-free way to pay rent on time every month. It eliminates the need to remember to make a payment, reducing the risk of late fees and improving their credit score by building a consistent payment history. Property managers who are reporting rent payments to credit bureaus (such as TransUnion) as part of a Resident Benefits Package can use this as a massive incentive for residents to automate payments. Additionally, tenants can set up recurring payment options using their preferred payment method, making it easy and flexible for them to manage their finances. The other component of improving the resident experience is offering mobile app-based automatic payment methods. That’s why allowing residents to pay rent with Apple Pay or Google Pay is gaining popularity across the property management industry. Zelle is another payment service that can help with ACH payments without transaction fees. PayPal and Venmo are other mobile payment platforms. With these mobile payment apps, renters can pay their rent using their mobile devices. It’s a win for residents because they can easily make automatic payments on the go using their smartphones without the need for a physical wallet or a business day visit to a bank or property management office. Additionally, these mobile payment methods are highly secure, as they use biometric authentication to ensure the transaction is authorized by the account owner, minimizing the risk of fraud and identity theft. A note on credit card payments It’s important to note that some property management companies have experienced the rare but profoundly irritating (and costly) phenomenon of chargeback claims in relation to rental payments made by credit card. If you’re in the market for software that supports automated rent payments, this is an important issue that you should raise with the sales representative. Use Second Nature to Automate Rent Collection At Second Nature, we’ve built digital products around creating ease for residents and property managers – adding value and reducing headaches for everyone involved. Our Resident Benefits Package provides services that incentivize on-time rent payments and support residents in building credit, protecting their identity, and remaining financially sound. Rent doesn’t have to be stressful for everyone involved. In fact, using the right tools, rent collection can become as easy as – you guessed it – Second Nature. (We had to.)

May 3, 2023

Read more

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

Read more

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

Read more

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

Read more

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

Read more

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. 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 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

Read more

Triple Win Property Management Blog

Featured Blog

9 Ways to Improve Your Resident Experience

How to Reduce HVAC Maintenance Costs Data Study

How to Design An Effective And Adopted Ancillary Revenue Program

Property Management Strategies to Grow Your Business Without Burning Out

14 Bizarre Items Found in Rental Properties | RBP by Second Nature

Resident Experience Management Guide to Utilize PLatforms to Meet Expectations

Receive articles straight to your inbox

Pricing Resident Benefits Packages Mistakes

What is A Triple Win and How Do I Achieve One?

Don’t Fear Pushback When Implementing An RBP

Should your RBP Rollout be Mandatory or Optional?

5 Property Management Mistakes that make you a Bad Property Manager

How Property Managers Can Address An Evolving Industry

10 Hiring Tips For Recruiters in Property Management Companies

What Is a Long-Term Lease? How to Win with Long-Term Property Management

How Property Managers Can Automate Rent Collection

How to Structure a Property Management Company

Property Management Revenue: How Can Managers Increase Ancillary Revenue?

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

Property Management Referral Program: Create, Promote & Track Success

Top 20 Property Management KPIs to Track