The Old Way: A Transactional Approach to Resident Experience

In contrast to the “old way” oriented around properties, the next few decades of SFR property management will be customer-oriented. Whoever creates the best resident experiences will create the most economic value as the service side of property management becomes commoditized. 

Property managers have begun to ask: “How do I create an experience so good residents never want to leave?”

According to Chenoa Stark, Property Manager at American Leasing and Management, “The better experience we can make with the tenants, the more they choose us over competitors. Think about Starbucks. It’s essentially the same cup of coffee as McDonald’s. But it’s the experience that Starbucks gives you. We want to provide the experience that residents gravitate to.” 

At Second Nature, we call this the concept of the Triple Win. The triple win is a strategic function that maximizes customer lifetime value. The shift in consumer behavior and expectations has driven this new approach to PM strategy, where professional property managers drive triple-win outcomes and experiences at every touchpoint.

What is the Triple Win?

A Win for Residents:

• For residents, convenience isn’t a luxury; it’s an expectation. Property Managers in 2024 aim to transform the resident experience, making life easier and more convenient for residents throughout their journey.

A Win for Investors

• Professional property managers create value for investors by finding, placing, and keeping residents who pay on time and take excellent care of the property.

A Win for Property Managers

• For property managers, convenience isn’t a luxury; it’s a strategy. When residents feel totally taken care of, they don’t want to leave. And when residents stay, pay, and cooperate, investors want to keep investing. Ultimately, this makes property management more valuable.

How Resident Expectations are Changing

“The average age of our resident and investor base is younger. Because of that, we’re seeing a huge culture shift in the housing space,” says Phil Vera, CEO of Paragon PM.

Digital transformation and changing demographics have forever altered resident expectations. Again, a desire for better experiences and amenities drives 13-22% of residents to look for a new property.

Residents don't thank you when the water heater is working, when the air conditioner runs all summer long, or when you communicate with them swiftly. They expect it. And now, many residents are willing to pay a premium for ease, convenience, and a more hospitable experience.

According to Eric Wetherington, VP of Strategic Initiatives at PURE Property Management: “The younger generations we’re dealing with in property management, they want convenience, they want experiences, and they want things to be simple. And they’re willing to pay to have things taken care of for them.”

“No matter what our residents are paying each month, the #1 thing they look for is ease and convenience. They don’t want complicated instructions; they want simple, right now, contact-free. Everything we do – from showings to move-in to the experience after move-in – is all designed for that expectation,” says DD Lee, Director of Institutional Client Relations at PURE Property Management.

How Property Managers are Innovating in Response

Property managers today are focused on driving lifetime value instead of transactional value. They’re looking for ways to generate wins for the resident, investors, and their own companies – the Triple Win. Whoever creates the best resident experiences will create the most economic value across the board. 

The key is to ask:

How do we create experiences so good that…

• Residents never want to leave?
• Investors never want to sell?
• Talent wants to be in this business forever?

Many property managers have correctly said, “We're in the service business.” However, looking at where the most economic value will be created, today's industry leaders are shifting to “We're in the experience business.” They see different opportunities for themselves and their team members, leading them to different choices that yield different results. The result? They will find themselves in differentiated businesses.

“Property managers who are on the cutting edge realize that by focusing on the resident experience, they will earn better returns on investment for their investor clients,” says Gregg Cohen, Co-founder of JWB Real Estate Companies.

Property managers are building holistic experiences – from application to move-out – that make residents feel totally taken care of. 

The “Amazon” vs. “Disney” Approach

As property managers drive fresh experiences that residents will “pay and stay for,” we’re seeing a few different approaches rise to the forefront. Let’s look at the two extremes of the experience spectrum and the healthy debate in the industry on whether one, the other, or both will win.

The “Amazon Approach”

Amazon is all about the mass market and scale. The goal for consumers is convenience, speed, and budget. You never talk to a person; everything just works. Of course, this approach is still laser-focused on what the customer wants: It just happens to be that the customer’s priority is ease, speed, and efficiency.  

You can see the mindset in Amazon’s various brand slogans:

• Amazon Echo: “Always ready, connected, and fast. JUST ASK.”
• Amazon Drive: “Your digital content, wherever you are.”
• Kindle: “Buy Once. Read Everywhere.”

Target, Walmart, and Starbucks are other examples of customer-facing strategy that values ease, speed, and convenience.

The "Disney Approach"

Disney’s approach is much more high-touch, human, and engaging. They are focused on creating the “WOW” moment for their customers, one that feels unique and special. Just check out the three major Disney Park slogans:

• Disneyland: “The Happiest Place on Earth” 
• Walt Disney World: “The Most Magical Place on Earth”
• Overall Disney Parks: “Where Dreams Come True”

Other examples of the “Disney Approach” include luxury brands and experiences like Saks, Four Seasons Hotels, etc. 

Which is the Best?

The approach that a property management business chooses depends on its niche, its client base, and its goals. For most, it isn’t about a choice between “Amazon” or “Disney” – it’s about knowing when to apply each strategy.

Some property managers say, “Be Saks with the investors and Target with the residents.” But consider this advice from Jonathan Cook, “I do not believe every property manager can be the best solution for every client. Trying to do so will spread the business so thin that it will eventually overwhelm your team, or you will fail in your promises.”

Rather, Jordan Muela, CEO of LeadSimple, says PMs should be asking: “What are the selective areas where we can make one decision that solves many other decisions? Contrasting that against something ‘Imagineered’ or exciting feels like a false dichotomy. You’re solving for different things.” 

Here are a few easy wins that deliver both the efficiency and the “Wow”:

• Curating a branded move-in experience with a gift, hand-written note, and Resident Benefits Guide.
• Quick video updates to deliver just-in-time information memorably.
• Move-in concierge services that help residents set up all their utilities without any of the hassles.

A fully managed Resident Benefits Package is the most straightforward strategy to bring both “Amazon” convenience and “Disney” VIP together for your residents and investors. We’ll highlight the reasons why shortly.

What’s IN a Resident Benefits Package?

Second Nature pioneered the only fully managed resident benefits package on the market. The Second Nature RBP includes several services that residents have been proven to pay for and stay for. 

Those services include highlights like:

• Filter Delivery Service
• Identity Protection
• Resident Credit Building
• Renters Insurance
• Resident Rewards Programs
• Movie-In Concierge

What makes these features so effective for the resident experience? They solve real problems and create real convenience where residents say they need it. Let’s explore just why each of these highlighted features makes such a big impact on the Triple Win: resident happiness, investor satisfaction, and property management success. 

How a FILTER DELIVERY SERVICE Impacts Residents and Investors

One of the most common causes of HVAC maintenance requests is residents’ failure to change air filters on time. The innovative solution? Filter Delivery Service

Filter delivery solves pain points for both residents and investors in a few different ways:

Cost

The average cost of HVAC repairs has increased by 48.7% year over year. An air filter delivery subscription can cut costs up to $250-$300 per property per year.

Labor

Second Nature’s filter delivery service results in a 38% reduction in total HVAC ticket requests.

Energy

Filter delivery is saving residents $14.82 per month in energy costs.

Health

The World Health Organization has ranked indoor air quality as the #1 environmental health issue. Americans spend 90% of their time indoors and most of that at home – but indoor air quality can be up to 5X worse than outdoor air quality. 

Why IDENTITY PROTECTION Matters for Residents

In 2021, digital theft surpassed home burglary incidents for the first time. With identity protection backed by AIG and monitored through IBM’s Watson, residents get automatic peace of mind. Protecting a resident’s finances and ability to pay rent is a win for the investor, too.

Consider these statistics:

• Home burglary is now less of a security risk than identity theft. 
• In 2021, identity theft reports went up 26% to a record high, while the home burglary rate decreased.
• One in eight Americans were victims of identity fraud in 2021, equaling up to $52 billion in losses and an average loss per victim of $1,238. 
• With the average single-family rental housing 1.8 adults, that’s an identity fraud cost of $27/month.

How CREDIT BUILDING is Becoming a Must-Have

The digital economy is driving innovation in credit reporting. Consumers can build credit by paying for a digital subscription like Netflix – so why shouldn’t they get credit for paying their largest monthly expense? The RBP credit reporting program reports on-time rent payments to all three credit bureaus. Residents build credit and are incentivized to pay on time.  

The chart shows the kind of impact that credit reporting can have on the total cost of major payments like a mortgage, car loan, and credit card. You can see the original values on the left and the new values for a resident whose on-time payments are being reported to credit bureaus. The outcome is significant savings for residents.

Here are some key trends in credit reporting as part of a resident benefits package:

• 67% of residents would choose homes with Rent Reporting over other equivalent homes.
• 26% of residents whose payments were reported decreased late payments.
• But only 17% of property management companies offer Rent Reporting.

How a RENTER’S INSURANCE PROGRAM Protects Residents, Investors, and PMCs

As part of an RBP, property managers can offer price-competitive insurance coverage that applies to all their residents with one basic group rate. You can implement it during lease renewals and with new residents. These programs provide quality coverage for the investor and resident and add no extra hassle to the property manager.

What about pet coverage?

Professional property managers want to be pet friendly and are offering guarantees that allow residents choice and investors protection. But many policies offered to property managers don’t include dog bite coverage. And those that do usually have breed restrictions. In fact, dog bite was over 1/3 of all of State Farm’s losses in a recent study, and the risks of limited coverage are increasing. 

RESIDENT REWARDS PROGRAM

Rewards are a powerful way to incentivize on-time rent payments, as well. You can build the cost into your resident’s monthly payments so that you and the resident only see benefits. You and the investor get an increase in on-time payments, and for the resident, rent day is now rewards day. 

While multifamily professionals might create a community app or community events on-site, single-family PMs can focus on gifts and value adds.

Gifts can include things like:

• $30 gift card for national and local businesses
• $25 restaurant card
• $40 rewards cash on rent day each month rent is paid on time 
• And more

MOVE-IN CONCIERGE

Setting up utilities can be a massive headache for a new resident. Residents aren’t sure who to call and who provides utilities and home services like Internet and TV for their new address. More, the research for discounts/promotions/coupons available takes more time. Most times, the process is clunky, with friction that gets in the way of it getting 100% done. And it is too easy to overlook fine print in the lease about installing satellite dishes.

Move-in Concierge changes all of that for professional property managers. In one phone call, residents find out what their best options are and can even get help simplifying setup. An experienced concierge confidently guides multiple people every day to properly set up their utilities.