Blog | Andrew Smallwood (3)

Why is Resident Experience Important?

Have you heard? We just published our first-ever State of Resident Experience Report! The report draws fresh insights from the SFR property management industry and explores the three top factors impacting resident experience right now. Download the report to see the results! In the meantime, today we’re getting started with a related topic: Why is resident experience so important? Resident Experience is the cumulative effect of all interactions and engagements between a resident and a property management company throughout their leasing lifecycle. It encompasses every touchpoint, from the initial viewing and leasing process all the way to maintenance services, communication, amenities, and lease renewal. In many ways, the resident experience is the heart of professional property management, encapsulating the quality of living provided beyond just a physical living space. In this article, we will: Explore the paramount importance of resident experience to property management Outline how it can directly impact factors like retention rates, profitability, and reputation Share insights from leaders in the single-family rental property management industry Buckle up as we delve into the power of stellar resident experience – and how it’s becoming a strategic imperative in the current real estate landscape. Here are 8 ways resident experience management can make a difference for residents, investors, and property management companies. 1. Improves Retention Rates Retention rates, or the ability to keep residents renewing their leases year after year, are a key metric of success for any property management operation. High retention rates mean stable revenue and reduced costs associated with vacancies, marketing for new residents, and turnover maintenance. But what fuels high retention rates? The answer is an exceptional resident experience. When residents feel heard and valued, they’re a lot more likely to renew their leases. This positive resident engagement is just as important in single-family rentals as it is in multifamily apartment communities, where it often gets more attention. In essence, the resident experience is your tool to turn the transient nature of renting into a long-term relationship. It's not just about providing a day-to-day place to live; it's about designing a product and service that residents will pay for and stay for. A truly positive resident experience can convert short-term leases into long-term homes, making it a strategic focus for effective property management. “I think ten years ago, property managers were only concerned with collecting rent and keeping tenants from doing damage to properties. It was a much more adversarial relationship than it is today. Today, the best PMs know that resident experience is vital to minimizing vacancy and creating a resident that strives to be a higher quality tenant.” - Jonathan Cook, Business Development Manager, Revolution Rental Management 2. Reduces Vacancy Costs One of the most substantial costs that property managers (and their investor clients) face is the cost of vacancy. Each day a property remains unoccupied equates to lost revenue. Not to mention the additional expenses associated with marketing the property, move-out costs, screening new residents, prepping the move-in process, and preparing the unit for occupancy again. When you add it all up, the costs can be quite significant. This is basically the flip side of the coin of “resident retention.” Good resident experience → Resident retention → Reduced vacancy costs. A positive resident experience can act as a powerful retention tool, encouraging residents to renew their leases and reducing the churn that leads to vacancies. “We’ve really started to notice that the better experience we can make with the tenants, the more they want to come to us as opposed to our competitors. It's all about experience. We’ve held onto this idea that we want to provide the experience that residents gravitate to.” - Chenoa Stark, Property Manager at American Leasing and Management After all, happy residents can become your advocates. They are likely to spread the word about their experience, drawing in potential new residents. By delivering an exceptional resident experience, you're offering them just that, making your property stand out in a crowded market. 3. Increases Profitability “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 company and their investor clients.” - Gregg Cohen, Co-Founder of JWB Real Estate Companies. A compelling resident experience is a secret weapon for driving profitability in property management. It's like a strategic chess move that not only strengthens your relationship with residents but also contributes to your bottom line in several key ways. Reduced Acquisition Costs: We’ve already discussed how, by keeping your current residents happy and renewing, acquisition and move-in costs are drastically reduced. Increased Ancillary Revenue Opportunities: A positive resident experience can open the door to various ancillary income opportunities with strategic pricing. Services like an RBP can boost your profitability while simultaneously improving the resident experience. Word-of-Mouth Marketing: Satisfied residents are your best brand ambassadors. They can spread positive word-of-mouth about your property, attracting new prospects and reducing marketing expenses. Operational Efficiency: Elements that enhance the resident experience, such as digital communication portals or automated maintenance requests, also lead to operational efficiencies. These improvements can streamline and automate processes, saving time and reducing costs. In essence, a robust resident experience strategy is not just about resident satisfaction; it's a profitability powerhouse. It allows property managers to attract and retain residents more cost-effectively, uncover new revenue opportunities, and operate more efficiently, all of which positively impact the bottom line. 4. Boosts Reputation In the age of online reviews and social media, reputation is everything, especially in the property management industry. A strong, positive reputation can be one of your most valuable assets, attracting potential residents and providing a competitive edge in the market. The cornerstone of a great reputation? You know the answer already: An exceptional resident experience. When residents have positive interactions with your property management team, they're more likely to share their experiences. These shared experiences, whether through word-of-mouth or online reviews, contribute significantly to your company's reputation. Positive reviews can attract new residents looking for a new home, reducing the time and cost of filling vacancies. They also provide a form of social proof, assuring prospective residents that they're making a good choice by choosing your property. Furthermore, a stellar reputation can strengthen relationships with investors, vendors, and other stakeholders. It can lead to new business opportunities and partnerships, further boosting profitability. In essence, cultivating a superior resident experience is like planting the seeds of a robust, positive reputation. As you nurture these experiences, your reputation can grow, reaping benefits in terms of resident attraction and retention, stakeholder relationships, and overall business growth. 5. Simplifies Rent Collection Rent collection is a critical component of property management, and any strategy that can streamline and improve the efficiency of rent collection is worth its weight in gold. That's where a stellar living experience comes into play. Satisfied residents are generally more cooperative and timely in fulfilling their financial obligations, including paying rent. Positive relationships between residents and property managers foster a sense of mutual respect and understanding, which can go a long way in ensuring smooth rent collection. The resident experience also extends to tools and incentives for on-time rent payments. For instance, an easy-to-use online portal for rent payment can lead to faster, more reliable rent payments. One of the best ways to ensure on-time payments is by providing incentives in a Resident Benefits Package (RBP). An RBP can provide credit reporting for on-time payments, resident rewards for early payments, and more. A great resident experience doesn't just make residents happier; it makes the fundamental aspect of rent collection easier and more efficient. It's a testament to the idea that good relationships make good business sense. 6. Reduces Maintenance Issues Maintenance is a significant part of property management, and it can be a substantial cost center. However, by offering a superior resident experience, you can reduce the frequency and severity of these issues. Residents who feel taken care of are more likely to reciprocate those feelings towards the property. A positive resident experience can also foster better communication between residents and management. Residents are more likely to report minor maintenance issues promptly before they escalate into major, costly repairs. For instance, a leaky faucet reported and repaired promptly will cost much less than ignoring it until extensive water damage occurs. Again, one of the best ways to boost resident satisfaction and reduce maintenance costs is to provide a Resident Benefits Package. At Second Nature, our RBP provides things like scheduled filter delivery to ensure air filters are changed on time and reduce HVAC costs. The mantra is simple – take care of your residents, and they'll take care of your property. 7. Creates Satisfied Investors Property owners are investors who seek returns on their investments and the preservation of their properties' value. A vital element to achieving this is through offering an exceptional resident experience. When residents are satisfied, they tend to stay longer, pay rent on time, and take better care of the property. This leads to consistent income, reduced expenses, and fewer maintenance issues — all key elements for maintaining a property's value and ensuring strong returns. And remember: properties known for their superior resident experience tend to attract quality residents faster, reducing costly vacancy periods. They're also more resilient against market fluctuations, preserving investors' returns. Property investors value professional property management that focuses on resident experience because it signifies competent handling of their investment. It displays a forward-thinking approach that aligns with today's renter expectations. It leads to a virtuous cycle of high-quality tenancies, stable returns, and preserved property value – a “triple win” for residents, PMCs, and investors. “When you're giving that great experience to your residents, you're also giving that great experience to your owners. They have less lost vacancy, they have more care and more respect given to their property, and that's going to protect their assets. That shift in the industry is already happening, and those that are able to make that pivot quickly are going to be able to level themselves up and really get ahead of the curve.” - Kelli Segretto, Property Management Inc. 8. Builds Competitive Advantage “As the operator of a business, how can I get from something transactional to something transformative – so that people are getting something from me that they aren’t getting from most other businesses.” - Jordan Muela, CEO of LeadSimple In today's competitive property management landscape, offering an exceptional resident experience is not just a perk, it's a differentiator. It's what sets a property management company apart in a crowded market and makes it a preferred choice for residents. A positive resident experience leads to higher resident retention, reducing vacancy rates and the costs associated with acquiring new residents. It allows property managers to maintain steady rental income, creating a solid financial foundation that competitors might struggle to match. In a nutshell, a commitment to providing an exceptional resident experience can provide a significant competitive advantage for all the reasons listed above – positioning a property management company as a leader in the field. How Second Nature Helps Optimize Resident Experience Second Nature built a product based on the idea that creating a world-class resident experience could make a difference in profitability and value for residents, property managers, and property owners. We designed a fully managed all-in-one Resident Benefits Package that does just that. The RBP provides benefits, incentives, and concierge services that residents want to pay for and stay for. It drives up value for everyone involved and delivers a unique and elevated experience. “A resident benefits package – you hear people call it the easy button. That’s because it is essentially all of these different services and all of these different, valuable add-ons for your residents that are done for you.” - Kelli Segretto, Property Management Inc. Learn more about the Second Nature RBP, or dig into our 2023 State of Resident Experience Report.

July 18, 2023

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Mastering Lease Management for Your Property Management Company

In the dynamic world of residential property management, mastering the art of lease management is more than just a strategic business move; it's the cornerstone of cultivating strong, trusting relationships between investors, property managers, and residents. After all, at the heart of every lease agreement is something profoundly personal: a person's home. Lease management extends far beyond the realm of contracts, finances, and legal compliance. Yes, these elements are undeniably crucial, but effective lease management is also about understanding and respecting the unique needs, expectations, and concerns of the people we serve. It's about combining professional acumen with empathy, maintaining a human touch in an industry that can often seem dominated by numbers and legal jargon. In this article, we have three experts who know what that’s all about. With them, we'll explore the lease management process, focusing not only on the technical aspects but also on the human elements that can make all the difference. We'll delve into why a compassionate approach to lease management can lead to better resident relationships, improved resident retention, and, ultimately, a more successful and rewarding property management experience. So, whether you're a seasoned property manager or just starting your journey, there's something here for you. Let's get started. (Or, if you prefer listening over reading, you can hear our full discussion on the Triple Win Podcast!) Meet the Experts Melissa Gillispie JWB Property Management Director of Leasing & Property Management Located in Florida - 5,600+ Doors Under Management David Galant Pathway Properties, LLC Owner / Principal Real Estate Broker (Licensed Broker in Utah & California) Licensed Continuing Education Instructor Utah Division of Real Estate Most recently, with Atlas Real Estate as a Regional Director Located in Utah - 50 Doors Under Management - started up 3.5 months ago Kristin Leet One Focus Property Management Leasing Agent - Boots on the Ground North Central Pennsylvania - 600 Doors Under Management Understanding Lease Management: What It Is Lease management is the process of overseeing and controlling all aspects of lease agreements between a landlord and tenant – or, in the language that we prefer to use here at Second Nature – the investor and resident. It includes tasks such as drafting lease agreements, screening potential tenants, handling rent collection, managing lease renewals, and maintaining clear communication lines between all parties involved. Effective lease management ensures a seamless experience for both residents and property owners, aiding in resident retention and maximizing rental income for your investors. Understanding Lease Management: Why it Matters Our panel has tons of advice on tactics, KPIs, and processes for effective lease management. But first, they say, it’s important to establish why it matters to get it right. “When you think about housing, it’s a basic human need,” Melissa says. “That’s the human element. Obviously, we lean on automation and technology to support us, but I think that as things have changed in our industry – and this generation of renters has changed – so must our processes evolve in order to meet the needs of the people that we serve and to impact our local communities.” David adds: “One of the basic human needs is shelter. Another way to look at it is some of the most stressful events in your life are death, divorce, and moving. So we’re dealing with high-stress situations. To be fair to the owners, to the prospective residents, and to your team, the lease management process needs to be efficient, organized, and systematized.” According to Kristin, that’s part of achieving a Triple Win: “A guiding principle is helping qualified tenants find a place that is safe, affordable, and something that they can be proud of. I’m also making sure that I’m doing my due diligence to our clients so they’re getting the best return. We want to give everyone involved an experience that's worthwhile and makes them want to continue to do business with us.” Steps in the Lease Management Process So, with a lease agreement established and prepared, let’s get to the meat of the conversation: each step of the lease management process. We’ll talk through the process and share insights from our panel on each 1. Preparing the Property Before listing a rental property, ensure it's in excellent condition to attract potential residents. This may include repairs, painting, professional cleaning, or upgrading certain features. “We have what's called our JWB Livability standards,” Melissa says. “Does this home meet our company standards? If it doesn't, then we need to make sure we're addressing those things. The more that you invest on the front end in making sure that a property is showing in an amazing way you're going to get that back with a resident who is proud of the place, going to take care of it and lead to a hopefully long-term resident.” 2. Marketing the Property Effectively advertise your property on appropriate platforms to reach your target audience. Quality photos, detailed descriptions, and highlighting of key features can help attract potential tenants. Kristin describes how important the details are here: “Are your pictures fantastic? Are there clear pictures of each room? I get comments all the time from people who say they love that you can get a feel of the property from our ads, just from the pictures or video. Video is such a powerful tool.” 3. Property Tours Hosting property tours is an integral part of the lease management process. It's an opportunity for potential residents to view the property firsthand and for you to showcase the property's best features. This is where your best sales skills come in. Kristin talks about how this is the chance to be the face of your brand. “I'm the one they see in the beginning, I'm the face that welcomes you in, makes you love the place. It’s so important to be positive and create this sense of home and comfort because the rest of it can be more stressful.” Melissa emphasizes that the property tour is the time to “warm it up. Our leasing agents are the ones who can draw people in and get people to open up and tell them what they're really looking for.” 4. Tenant Screening and Selection Next, you’ll conduct thorough background checks, credit checks, and rental history reviews on potential residents. This helps ensure you select reliable residents who will care for the property and meet their financial obligations. This is an intense part of the process for the potential residents. Kristin explains: “It’s meaty. We're going to ask for every single piece of information, and then we're going to let them know if they’re approved. As aggressive as that can sound, it's up to me to basically say, ‘Listen, we know it's a lot, but it's a lot because it's worth it.’” 5. Lease Signing Once a tenant is selected, you’ll conduct a lease signing meeting. Review the lease terms, answer any questions, and have all parties sign the lease agreement. It’s important to be transparent about the terms of the lease beforehand and ensure that residents feel comfortable and understand what they’re signing. Kristin again: “We have a very transparent website. Our leases are on there, so people can actually read the lease before they even come to us.” 6. Lease Renewals Monitor lease end dates and communicate with residents in advance about renewal options. Offering incentives or showing appreciation can encourage lease renewals and increase resident retention. Melissa explains that their company aims for long-term leases for a triple win: “A long-term lease is that security for the client, and it also locks in rental rates for the resident. It comes back to that triple win concept: the resident wins because they're not subject to significant rent increases based on the market every single year. It's great for the client because they have a little more assurance of long-term occupancy. And then we win because we hit our goals! And we all love to hit our goals.” Leveraging Technology for Lease Management Of course, one of the best tools at a property manager’s disposal for lease management is technology. Property management software and other digital solutions can streamline, automate, and simplify nearly every aspect of the lease management process. Especially since the 2020 pandemic, technology and automation have taken over in the industry. “That change [to digital] was inevitable,” David says, “but Covid really accelerated it. People were starting to dip their toes in the water with video tours and better pictures, and better online presence. And then Covid just forced that change.” Our panel shared some of their insights on the best places to leverage that tech to make your process the best it can be. Self-showings “Almost every company I've ever spoken with at this point does some level of self-showing,” Melissa said. “We use Tenant Turner and CodeBox,” David said. “And then leases are put in and automated through Buildium, which we use as our software suite.” Property management software We’ve written a lot about the best property management software, property management accounting software, and property management automation, so we won’t get in-depth about it here. The market has dozens of excellent solutions, and property managers are fantastic at sharing their knowledge. The software helps support client management, maintenance workflows, payment processes, resident relationships, and more. Virtual assistants Virtual assistants have grown as a major solution in the property management space. Especially in single-family rentals, jobs can be spread out across large geographic regions, and virtual assistants make it possible to serve those regions equally. Plus, they help PMCs maintain objectivity when it comes to the leasing process. Kristin explains the value of a virtual assistant: “So we have one dedicated person here at the company that does our applications, and the reason why we do that is that it eliminates any kind of discrimination. She is a virtual assistant, she does not meet with people in person. It eliminates her having a personal opinion while she's scoring the application. She has contact with them via email and things like that.” Digital solutions and video Digital marketing and video tours or social media posts are one of the leading ways to capture attention and serve potential residents. “I get in front of a camera with a tripod,” Kristin says. “I introduce myself and talk about the company that I'm from. I tell them what the address is, I give them a whole walkthrough tour, and I do an outro. When it’s over, they know what our website is, they know how to apply, they know how to book a tour.” “That personal touch right there helps get people in the door. It's not catfishing someone into believing that a property is any more than what it actually is because they're going to see it. It’s really presenting a property for what it is in the best way possible.” Best Practices for Effective Lease Management Melissa, David, and Kristin shared some of their top tips for building a better lease management process. Deliver digital content and contactless engagement The modern renter is looking for faster, more convenient, and, of course, contactless. “Renters more and more want contactless, like you get when you DoorDash something or order on Amazon and all of that – that’s the new norm,” David says. “The consumer is expecting a thorough, interactive, high-quality experience with digital solutions and online content.” Be flexible and responsive “Remote work has increased migration to different markets in different states,” David says. “Time zones have become blurred. Customers want responsiveness outside of normal Monday through Friday 8 a.m. to 5 p.m. business hours for inquiries on vacant properties.” He adds, “I think the pace of the leasing process has increased in terms of the speed. We're dealing with a more informed consumer. They want more information upfront, they want it quickly, and they want to make a quicker decision. There's a feeling that the pace is faster.” “I think that's the new norm, and I don't think that's necessarily a bad thing. It causes people to up their game and be better. And I think it benefits the property management ecosystem.” Stick to your criteria There are laws guiding leasing standards, and it’s critical that your criteria are fair and apply consistently. “Our criteria are firm,” Kristin says. “Every single applicant goes through the same criteria and same processes, and we don't deviate from that. We don't take your personal situation into account or make exceptions for people.” “Sure, you can customize and meet people where they're at,” Melissa says. “But there has to be some level of: what is the standard you are setting? Because ultimately, you want to treat people the same. And I think with leasing specifically, we are obligated to.” Clearly define workflows and process All three of our panelists describe clearly defined processes and roles within their company for the leasing process. Leasing agents provide that first touch and personalization; then you may have a virtual assistant or leasing assistant who helps follow up and get applications in; then it may go to a supervisor who approves the application, all the way back to the leasing agent who sends the lease out. “We use a process for every single thing that we do,” Kristin says. “If we follow it correctly from start to finish, there's not a point where anyone can say: ‘You didn't approve me because of this.’” Follow up on feedback David explains that asking for feedback is key to their leasing process. “We reach out to prospective residents that toured but haven't moved forward, and we ask them, ‘What did you see? Do you have any feedback on the property? We're very direct because it will help us market the property better.” “One thing we do in our department meeting with our leasing team every week is to have a structure for them to talk through any feedback they received from showings the previous week,” Melissa says. “Then we take immediate action on that feedback when needed. I think you get to make changes and actually improve when you ask for feedback.” Pay attention to pricing “You need to understand where your price is at,” David says. “Is it reflective of the market? Before we engage with an owner prior to a vacancy, we actually put together a spreadsheet that's almost like a rental analysis appraisal. And we'll have subject properties, we'll have adjustments, and we’ll make a recommendation.” If a property isn’t selling, evaluating price fit is a key step. “We have what's called a 10-day rule,” Kristin says. “If it's on the market for 10 days and we haven't gotten an application, we drop the rent. It's an expectation that we set with the owners when we put the property on the market: Is it better to take less rent, or is it better to just leave your property vacant? And nine times out of 10, they want to get the rent.” “One thing that's cool is we have rent escalations built into our lease agreements,” Melissa says. “And so even if we have to make a rent reduction while it's on the market in order to really drive in more leads and get it to move, we're then building in an escalation so that hopefully, by the end of that lease term, we sign long-term leases.” Focus on customer service “Since Covid, there seems to be a more consistent customer service experience across the industry,” David says. “Everyone's voice is amplified, especially the consumer. Their vote counts, thanks to things like Yelp, Google reviews, etc. They can really hurt or help your company's brand.” Balance tech with a human touch “There's one specific part of the leasing management process I think takes the most time,” David says, “and that's between the property tour and getting the application complete. Everything else is pretty automated. But getting that person over the hump to make a decision requires a human touch and follow-up. That's a big commitment. It takes the most amount of time, and you’ve got to be present.” “Ultimately, everybody needs to feel safe and secure with where they are,” Kristin says. “If we can get them on board with starting to get comfortable with technology right from the beginning, it helps eliminate hurdles that they have getting through the process and getting them into the place that they want to call home. But it takes that human touch.” Perfect your KPIs The last step, but what Melissa says could be the most important step: Analyzing the data with KPIs. “We lean heavily on data in our office,” Melissa says, “and I think it's really important as a professional property manager that we all have something that tracks and measures how we're doing compared to the industry, our peers, and benchmarking even against ourselves year over year.” Melissa says they use data to track conversion at every stage: from lead to showing schedule, showing scheduled to showing completed, showing completed to application submitted, and application submitted to application approved. “This is a benchmark against ourselves to help understand if there's any cyclicality to leasing, which I think there is. We track those metrics to say, What's in our pipeline at any point, and then how are we converting from each to the next?” David adds that in addition to seeing annual seasonality, it helps to see daily trends. “It’s not only the time of year, but are they looking more on the weekend or in the evening, or on a Wednesday?” A few other favorite KPIs from our panel: “Market to Move-in” - the time from when a home hits the market to the time someone moves in Time from viewing to application submittal Time from application submittal to turnover Clicks and engagement with ads Application count Average lease term Final Thoughts: Focusing on the Triple Win In the end, the most successful leasing process will focus on driving maximum comfort and value for your client, your residents, and your team. “We’re basing our leasing process on the Triple Win philosophy,” David says. “You're matching a resident with their home, you're helping them out, they're getting sheltered, they're happy, they're comfortable. If you do it right, you’re minimizing their stress. “You're also stabilizing the property or the asset and securing income for the owner. “And finally, it’s a win for your team and your company because you have a satisfied resident, a satisfied owner, and you're building goodwill for your business from these positive interactions.” Learn more about our study on what’s making residents happy in 2023.

July 11, 2023

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Property Management FAQs about Resident Experience

Resident expectations are changing. In today’s “experience economy,” residents and consumers alike are looking for experiences that make them feel taken care of, bring more ease into their lives, and set businesses apart. With these changes in mind, property management companies are developing innovative strategies to build better resident experiences – experiences residents will pay and stay for. Today we’re sharing a Q&A about the resident experience with Melissa Gillispie, the Director of Leasing & Property Management at JWB Real Estate Capital. Here’s what you’ll find in the article. ‍ Key Learning Objectives: Core tenants of resident experience Steps to improve resident experience How improving resident experience can save money for property managers Resident experience examples that have worked Resident experience examples that haven’t worked How to monitor resident experience Meet the Expert: Melissa Gillispie, Director of Leasing & Property Management at JWB Real Estate Capital Melissa started her career with JWB in 2013 and is currently the Director of Property Management. She is the licensed real estate broker for JWB and plays an integral role that has led JWB to manage over 4,900 single-family homes in Jacksonville FL, being the largest local rental management company in Northeast FL. Under her purview, JWB has delivered over 26 million dollars in cash flow to its current clients through exceptional management services. Melissa also sits on the Board for NARPM Northeast FL as the Membership Co-Chair. She won the 2022 NARPM Rocky Maxwell award for dedicated service and contribution to NARPM. She is married to her husband of 14 years and has three sons aged 11, 9, and 6. When she is not working, she can be found at the football and soccer fields cheering her sons on! Related: State of Resident Experience Study Why should property managers pay attention to the resident experience? What steps can property managers take to improve the resident experience? Happy residents stay longer, take better care of the home, and provide better long-term stability and return on investment for clients. They also spread the good word locally and refer more renters to you. And happy residents are usually nicer, leading to happier staff! Residents (and customers in general) are increasingly driven by instant gratification. They expect immediate communication, results, and benefit. Due to this, we have to increase our speed to outcome for them and set great expectations so that we can "under promise and over deliver" – one of our JWB core values! Some key steps to improving resident experience include: A great lease signing experience with impeccable expectation setting. If everyone knows from day one, who is responsible for what, we can avoid tough conversations down the road. Timely communication. Knowing the type of communication each resident prefers. We have a field in our system called "preferred contact method" – if it is via phone, pick up the phone. If it is text, text away. It helps the resident feel like you're willing to customize their experience. Answer the phone! Like any place open for business, you need to be reachable during office hours. Solve their maintenance issues. Make it easy for them to report those issues to you. If I had to give just one: Clear communication is EVERYTHING. Clear expectations, timely responses, and thoughtful and respectful interactions make us a professional industry vs. a mom-and-pop one. How can improving the resident experience save property managers money? Do you recommend hiring a dedicated resident experience specialist, resident manager, or separate team? Improved experience saves TIME. Time is money. Fewer tough conversations, supervisor calls, upset people impacting employee satisfaction, etc. Great experience leads to retention, which saves money and increases revenue for the business. I think the idea of a dedicated specialist or team is great in theory, but many places want to scale back on staffing (employees are expensive!). I also think that putting the responsibility on one person/group of people in the organization is a mistake to some degree. This limits creativity and reach. At JWB, our approach is that it is every teammate’s responsibility to dedicate effort and time to a great client/resident experience. This allows a wide range of ideas to generate and gives the feeling of impact and satisfaction to every teammate for their contribution. Do you recommend using software or tools to help improve resident retention? Here are some of the best tools we’ve used. Automation: Implementing things that don't require a ton of person-hours will allow you to scale your business at a lower cost. The automation/technology investment is worth it in the long run. The Resident Benefits Package (RBP) by Second Nature: DO IT! Find a mail fulfillment house in your city and rely on them to send mass communications via snail mail. Partner with local businesses for discount codes. Text Magic and Call Fire are great automation tools for communication via phone and text. What are examples of resident experience initiatives that have proved effective? On the flip side, what doesn’t work? Residents need to see the value in any initiative. Knowing your audience/clientele and what matters most to them is important. Is it time savings? Money saving? RBP from Second Nature has been a game-changer. It meets a real need and serves a purpose. We also do a monthly resident newsletter. We send out automatic happy birthday emails to every resident on their birthday (we have been able to automate this completely, so 0 time for staff and 100% feel-good for residents). We do "get to know your city" marketing for new residents with mural maps, restaurants and grocery stores near them, etc. We include a magnet at move-in on their fridge with our contact information and after-hours information. These all create moments that show care and concern, and we sprinkle in love for our city. When you miss the mark on providing value or miss the need the resident actually has, that experience moment may fall flat. So we constantly focus on who our residents are and what will fill their cups. How do you monitor or measure the resident experience? We love surveys! We have maintenance and resident net promoter score (NPS) surveys. Every time a work order closes, the resident receives a survey to give feedback on the experience. We review that weekly. For positive surveys, we ask for reviews. Supervisors reach out for low scores to see how we can improve. For the NPS surveys: If they leave a high score, we ask for a positive review on one of our online platforms (Google, Facebook, BBB). If they leave a low score, supervisors seek feedback to improve. The key is DOING SOMETHING with the information you receive; otherwise, there is no value. Don't just let a low score come through and then do nothing. Reaching out shows the resident you pay attention, value the feedback, and want to improve. Reviews online are also a good way to gauge experience. Take those with a grain of salt, however. People are much more likely to leave a bad review than a good one, so it is a lot of work to win here! We ask for positive reviews anytime we have a great interaction with a resident – a phone call where we solve a problem, an email where they say thank you, or anytime someone pays on time or renews their lease – we ask. You don't get positive reviews you don't ask for! How do you use the information you receive in resident feedback or surveys? There is value to it. You can gather a lot of good information and start to identify trends in the data. We can pinpoint areas as a team to improve and celebrate the things we do well. I do think you have to take some of the responses with a grain of salt. You can't make everyone happy even when you try. View it as information to help make decisions vs. the end-all-be-all to measure your worth as a company. We survey on maintenance every time a work order closes, and we get about a 3-5% completion rate. For the NPS surveys, we survey 60 days after move-in and then every six months. We get a 10% completion rate on those. What questions should you ask if you are considering a resident experience survey? What’s a good sample size for a survey? Are there other tips and tricks to keep in mind? For our NPS survey, it is one question: “How likely are you to refer your friends and family to rent from us?” They score us 1-10, and then we allow an open text response field that is optional if they have more to say. For the maintenance surveys, we ask: “On a scale of 1-5, how satisfied were you with 1. the work order submission process; 2. Your maintenance coordinator, 3. The vendor who performed the work, 4. The amount of time it took to complete the work; 5. The overall experience?” Each star scale also allows for open-text responses (again, not required). I think a good sample size is when at least ¼ of your customers have had the opportunity to review. Until that point, the results seem to be all over the place. We track results monthly, quarterly, and annually, as well as by the property manager and maintenance coordinator, work order category, and property type (multi-family, single-family, condo, townhome, etc.). All of this helps us put together a comprehensive picture of where we stack up against ourselves over time. I think it is important to benchmark against yourself. Each business runs in a unique way, so I get less caught up in how other people are doing compared to me and more caught up in how I am doing compared to myself/my business three, six, or 12 months prior. Perspective is important when you are being vulnerable and asking for feedback! Easily Manage and Improving Resident Experience With Second Nature RBP As Melissa mentioned, the Resident Benefits Package (RBP) by Second Nature goes a long way to creating premier resident experiences. And as the country’s only fully managed RBP, it doesn’t take up your team’s time or bandwidth. We designed the RBP to solve headaches for property managers and help them deliver world-class resident experiences that delight residents and build long-term retention. Happy residents = happy clients = happy PMC teams. A triple win! At Second Nature, we’re all about building experiences that residents will pay for and stay for.

June 28, 2023

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How to Create Self-Service Tenant Onboarding Workflows

A tenant self-service onboarding workflow is a system that enables new residents to complete the onboarding process by themselves using online portals, automated communication workflows, and chatbots, with minimal involvement from property management teams. Why automate? Automation can provide smaller property management companies with an edge by streamlining processes, improving communication with residents, and reducing manual workloads. By leveraging tech tools such as property management software, online portals, and automated workflows, smaller companies can increase efficiency, provide better customer experiences, and compete with larger players in the industry. Implementing tech is especially important – let’s actually say it’s imperative – in today's digital age, where residents expect instant communication and online access to property information. By embracing tech solutions, smaller property management companies can not only keep up with industry trends but also stay ahead of the competition. Today we are talking with a leader in property management who has also been an early adopter of some of the most innovative new AI and tech solutions for the property management industry – Wolfgang Croskey. Wolfgang shares some of the best ways to automate your resident onboarding process and how to avoid pitfalls along the way. Key Learning Objectives: Do I need to implement self-service workflows for resident onboarding? What are the greatest benefits of implementing this automated process? What are the pitfalls of tech and automation in resident onboarding? How do I create self-service onboarding workflows? Meet the Expert: Wolfgang Croskey, Founder & President of How’s My Rental Wolfgang Croskey has been working in real estate since he was a little kid. From stuffing envelopes, unclogging toilets, and serving notices to creating leases, he has touched on all aspects of property management. He is a well-respected member of NARPM, a servant leader to his community, and, to top it all off, a father of 6. Wolf has been a board member and president of the Pittsburg Chamber of Commerce, where he is currently the CEO, providing leadership and direction to the Chamber in their daily activities. He is also the Founder of How's My Rental, a site-awareness servicing California landlords as well as the founder of The Perfect Tenant, a Master Leasing Company. A Note on Language: At Second Nature, we prefer the term “residents” over “tenants.” It’s our belief that focusing on the people in every interaction helps us to create better, more valuable, and more profitable business strategies in the long run. Property management is all about focusing on what residents and investors – human beings – want and need! But through this article, you’ll see us use both “tenants” and “residents” due to the fact that many parts of our industry are very technical and require accurate terminology. Why should you implement tenant self-service onboarding workflows? Tenant, or – as we prefer to say here at Second Nature – resident onboarding is an essential aspect of property management. But as any PM will tell you, it can be time-consuming and resource-intensive. That's why a resident self-service onboarding workflow can be a game-changer for property managers. By providing residents with online self-service portals, automated communication workflows, and chatbots, self-service onboarding workflows can reduce the need for manual work, streamline the onboarding process, and improve tenant experiences. According to Croskey, property managers across the country are adopting self-service workflows and automation – but there’s still a lot of room for growth. “There is a growing trend towards adopting self-service onboarding workflows in the property management industry, driven by the numerous benefits they provide, such as reduced manual work, faster lease execution, and improved resident experience,” Croskey says. “However, there may be some pushback from property managers who are hesitant to adopt new technology or concerned about potential security risks. Addressing these concerns through education and demonstrating the benefits of automation can help encourage wider adoption.” As we’ve mentioned before, Croskey has called automation the “great equalizer.” How? According to Croskey, “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.” Are there disadvantages to adopting more automation? Croskey says there are areas of vulnerability for PMCs looking to automate their processes more deeply. The issue? Not having those processes right in the first place. Croskey says he’s seen many property managers assume that AI is going to fix their problems. “The reality is, if you don't have your policies, procedures, and processes in place, there is no tool on earth that's going to be able to save your bacon,” says Croskey. “Look at McDonald’s: At one point, some team had to roll up their sleeves and make the process of how to build the Big Mac. And 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. It's still the same nasty hamburger.” With a chuckle, Croskey continues: “A lot of times, myself included, we try to find technologies that can help us avoid that initial work. You’ve got to roll up your sleeves, and you’ve got to get through that.” How to create tenant self-service onboarding workflows So, let’s say you’ve accepted that building self-service workflows gives massive advantages to your PMC. And let’s say you’ve established your processes in a way you’re confident is efficient, legal, etc. Now how do you create the automation to help new residents help themselves? Here’s what Croskey advises, in his own words. To create a resident self-service onboarding workflow, property managers should consider the following steps: Select Software: “To optimize your property management process, it's crucial to select software that offers robust onboarding automation features such as online applications, tenant screening, and digital lease signing.” Integrate Workflows: “Ensure the workflow is tailored to your needs and seamlessly integrates with your existing accounting, maintenance, and communication platforms.” Implement Data Security: “It's equally important to implement stringent data security protocols to safeguard resident information during the onboarding process.” Equip Resident with Resources: “Finally, equip residents with the necessary resources to familiarize themselves with the self-service workflow and provide comprehensive training to your team to ensure a smooth transition.” With those steps in place, let’s look at some of the specific aspects of the onboarding process that property managers can start with when building self-service tools. Virtual tours Croskey explains that AI-powered chatbots can provide virtual property tours – answering questions, and offering additional information to potential residents in real-time. Here’s how it works: Prospective tenants can access an online customer portal or chatbot that offers virtual tours of the property. They can interact with the chatbot to select a specific unit or area of the property they want to tour. The chatbot or other AI tech can then use VR or AR technology to provide a 360-degree view of the selected area. Prospective tenants can move around and explore the space as if they were physically there. The chatbot can also provide additional information about the property, such as floor plans, rental rates, and amenities. Rental application Nearly all automated property management solutions can provide automated rental applications. Here are some tips on how to ensure you’re deploying it effectively: Provide residents with an online portal where they can submit their rental applications and supporting documents electronically. This can include personal information, employment history, rental history, and financial statements. Use automated workflows to guide residents through the application process and send notifications when additional information or documents are required. Implement electronic signature software to enable residents to sign and submit rental agreements and other legal documents online. Integrate the rental application process into your property management software to streamline the process and reduce manual workloads. Beyond that, Croskey explains that “Chatbots can guide residents through the online application process, answering questions and providing support as needed.” Tenant verification Property managers can make tenant verification self-service by implementing tenant verification software into their property management system. These software solutions will help by: Leveraging an online portal where residents can submit their information and documents for verification, including rental history, employment verification, and credit checks. Using chatbots or automated workflows to guide residents through the process, answer questions, and provide them with updates on the status of their applications. Implementing secure authentication measures to ensure only authorized individuals can access and submit sensitive information. Lease negotiation Here are some steps to make lease negotiation automated or self-service: Property managers can create an online lease agreement platform accessible to residents via a unique login and password. The platform can provide residents with the ability to view and select available properties and rental units, along with the associated lease terms and rental rates. Residents can submit a lease application online, which can include information such as their employment history, income, and rental history. The platform can automatically screen the application, verifying information such as credit score, employment status, and income. Once the application is approved, the resident can negotiate lease terms such as the lease duration, rental rate, and security deposit directly with the property manager via the online platform. The online platform can use AI to generate a lease agreement that reflects the negotiated terms, which can be reviewed and signed by the tenant and property manager online. Property services onboarding Getting residents set up with all the services, utility connections, etc. that they need can be a hassle for everyone. You can end up answering several calls and questions, while they may spend hours on the phone trying to identify what they need and how to get it. Self-service onboarding can make a huge difference. One example is Second Nature’s Movie-In Concierge, part of our full-service Resident Benefits Package. 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. We’ve also automated filter delivery to ensure residents replace filters on time, which saves them roughly $15 per month in HVAC fees. Document management Property managers can make document management self-service by providing tenants with an online portal where they can access, upload, and sign documents. Here are some steps to make document management self-service: Property managers can create an online portal accessible to residents via a unique login and password. Set up permissions so residents can upload documents such as lease agreements, rental applications, and move-in checklists to the online portal. Property managers can upload documents such as rental payment receipts, notices, and lease addendums to the online portal. The online portal can provide residents with the ability to digitally sign documents, eliminating the need for paper-based signatures. Property managers can use automated workflows to track document submissions, ensure that all documents are complete, and send reminders to tenants who have outstanding documents. The online portal can be integrated with the property management software, ensuring all documents are properly filed and easily accessible. Croskey adds that “AI can help organize, store, and retrieve documents related to the onboarding process, streamlining the experience for both property managers and residents.” Resident communication Here are some steps to automate resident communication and ensure residents can help themselves to the info they need. Property managers can create an online portal that can provide residents with information about their lease, rent payments, and property services, as well as the ability to submit service requests and communicate with the property manager. Chatbots or other AI tools can provide instant communication to residents during the onboarding process, answering questions and addressing concerns efficiently. Property managers can use automated workflows to send reminders to residents about rent payments, lease renewals, and move-in/move-out procedures. The portal can provide residents with the ability to report maintenance issues, request repairs, and track the status of their requests. Property managers can use automated workflows to manage and track service requests, assign tasks to maintenance staff, and ensure the timely completion of service requests. The portal can provide residents with access to a knowledge base or FAQs, where they can find answers to common questions about their lease and the property. Maintenance coordination AI and chatbots can help coordinate move-in inspections, maintenance requests, and repairs, ensuring a smooth transition for new residents. The best way to do this is to implement a maintenance management system that integrates via an API with the resident communication platform. Property managers can provide new residents with access to the online portal, where they can submit maintenance requests and track the status of their requests. The portal can include a list of frequently requested maintenance tasks and allow residents to select the task and provide details about the issue. You can use an automated workflow to assign maintenance tasks to the appropriate staff member, schedule the task, and notify the resident of the scheduled date and time. The maintenance staff can update the status of the task on the portal, allowing the resident to track the progress of the repair. You can use data analytics to identify recurring maintenance issues and proactively address them before they become larger problems. Finally, you can provide residents with the ability to rate and provide feedback on the maintenance staff's performance, allowing property managers to continuously improve their service. What are some of the best tools for implementing self-service onboarding workflows? Several automation tools have emerged as industry leaders in resident onboarding. The best tool for your property management business will depend on your specific needs and requirements, says Croskey. He recommends looking into some of the more popular options online, including: AppFolio: AppFolio is a comprehensive property management software that offers automated tenant onboarding, including online applications, screening, and lease signing. Buildium: Buildium provides an end-to-end resident onboarding solution, including application management, tenant screening, and electronic lease signing. LeadSimple: LeadSimple provides a process-oriented solution to onboarding a tenant. By using reactive templated emails, tenants have the ability to select options and then drive the process along. What does the future of self-service onboarding look like? We asked Croskey, and he answered: As technology advances, self-service onboarding workflows can become even smarter by: Personalized onboarding experiences: AI can analyze resident data to tailor the onboarding process based on individual preferences and requirements. Integration with IoT devices: The onboarding process can be integrated with smart home devices, enabling residents to set up utilities, internet, or other services through voice assistants or other IoT interfaces. Enhanced data security: Advanced encryption and AI-driven security measures can better protect resident data during the onboarding process. Automated compliance checks: AI can automatically verify that leases and other documents comply with local, state, and federal regulations, reducing the risk of legal issues. Final thoughts: Just get started! Croskey says the key is to start learning how to use automation and AI now – and make sure you provide your team with the training and support they need. “My recommendation is just to get started and try these new tools,” he says. “And as you grow more confident, make sure to do your team justice by providing them training and providing them opportunities to learn how to use these tools as well. It’s not fair to say, ‘Okay, starting tomorrow, we're using this brand new tool, have a nice day.’ Really focus on some training.” You can learn more by listening to our podcast with Wolfgang: Everything You Need to Know about Practical AI for Property Management. We’re keeping our fingers on the pulse of this space – stay tuned for more!

June 28, 2023

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Property Management Fees: Opportunities for Growth

If you’re familiar with Second Nature, you know that supporting SFR property managers in building triple win experiences is our focus. So today, we’re taking on the thorny topic of property management fees within SFR property management companies. And we’re turning to one of the leading industry educators on the subject: Todd Ortscheid, owner of PM Assist. Here’s what we’ll cover in this article. Key Learning Objectives: How to structure your property management fees for growth The benefits and challenges of charging property management fees How you can use fees to add value for yourself, your clients, and your residents How to introduce fees without turning clients off Examples of property management fees you might not be employing (yet) Meet the Expert: Todd Ortscheid Todd spent 14 years as an airline pilot – an industry known for capitalizing on fee structures as a growth strategy. He took over his father’s property management company after the 2008 real estate crash and eventually tripled the company’s number of doors. As the co-owner of PM Assist, he offers training and counsel on finding new ways to increase company revenue, process automation, and profit per unit. Todd is a true entrepreneur and creative thinker, with ideas that challenge the status quo and may even ruffle some feathers. But Todd’s strategies have proven to help grow property management companies, and we’re thrilled to share his insights. Related: State of Resident Experience Study What Property Management Fees Are Standard? You should be seeing income on anything you’re spending money on as well. Anything you want to do to create more value for residents or investors? You should charge a fee for that so your company can stay competitive and your employees can get paid. Here are a few examples to get you started. Inspection & Maintenance Fees How much time are you spending on periodic property inspections? How much money are you spending on maintenance costs? How valuable is your staff's time? Todd says, “You have to be charging for this. Don't just include maintenance requests and inspections as part of your monthly management fee.” Marketing Fees Todd says, “I'm sure a lot of you are probably in markets where Zillow started charging you to put your listings on their website. And I've heard a lot of property managers say it's just a cost we're absorbing. Don't do that. Pass on that cost. Call it a marketing fee or the Zillow fee or whatever you want to make sure you're making money on that. Never pay for your own property management costs – come up with some way to cover all of these costs that you have for your business.” Insurance Risk Mitigation Fees If your investor doesn’t have insurance, you are often the one who will suffer. Todd advises charging a fee if your investor doesn’t send a policy within 30 days. “Tell them, ‘This new fee will be charged as a mitigation fee for the additional risk we have.’ You will not believe how quickly people will send you their insurance policies if you do this. We only charged a nominal fee. But a flood of emails came in after I sent out that notice to owners. So this isn't about making more money. For the most part, it's about influencing behavior and ensuring you get the insurance policies you need.” Account Creation Fees As a property manager, you can charge a set fee to investors to create an account with your company. This fee may or may not cover various other costs such as any related property inspection requirements or tenant communications. Recurring Management Fees Recurring (typically monthly) property management fees are extremely common in the industry, and will be built into the initial contract signed between the investor and the property management company. The amount can be based on a flat fee structure, or tied to a percentage of the monthly rent collected. Vendor Screening Fees It’s a hassle to use vendors outside your usual network. “If you have property owners who want to use their vendor instead of your preferred vendors, that creates more work for you.” If you charge a flat fee, they’ll likely drop it, and you’ve saved yourself that extra work. If they want to keep their vendors and pay the fee, at least you’re getting paid for that extra work.” Rent Protection Fees or Eviction Fee A huge area of value for investors is protecting them from unwanted risk. Investors have to deal with concerns about evictions, lost rental income, and more. Property management companies can take on that risk for a fee. You can say you’ll cover missed rent if the investor pays a monthly fee. The win for PMCs is that the risk is often low, and you can often control it (controlling for on-time rent due by charging late rent fees, for example). You get the fee, and you will rarely have to take the hit on the month’s rent. The win for investors is they don’t have to worry about it at all. Contract resiliation fees For investors that terminate the property management contract prematurely, you can charge an early termination fee, the amount of which will vary depending on the contract's terms. The fee may cover a month or more of management fees. Resident Fees Todd emphasizes that the real moneymaker is resident fees. Plus, charging fees for unwanted behaviors – like late rent, paper leases, failure to change HVAC filters, etc. – can help drive better behavior. Todd uses examples like Security deposit processing fee Leasing fee or a lease amendment fee Paper lease setup fee Lease renewal fee Late fee Special programs fee “Of course, the resident benefit package is the big one. This is a way for you to provide additional services to your residents and make some money off of it.” What Are the Factors that Influence Property Management Fees? Ultimately, the fees you charge should reflect your operational reality, and can vary depending on a range of factors: Property location: Properties located in areas with higher operational expenses may incur higher management fees compared to those in other regions. Property condition: The condition of the property, and whether it is new or renovated, affects maintenance requirements and thus can influence management costs. Property size: The size of the rental property directly influences the workload of the property manager, with larger properties typically incurring higher fees. Scope of services: The range of services provided by the property management company significantly impacts the fees charged. Basic services like rent collection command lower fees, while comprehensive management services covering rent collection, vacancy filling, repairs, evictions, and financial record-keeping for taxes entail higher costs. How Should Property Managers Structure Fees? Real estate investors often focus on determining what fair or typical property management pricing should be. A general rental property management fee includes collecting the month’s rent, following up on arrears, organizing property maintenance and repairs, and keeping abreast of legal requirements. That’s the baseline. But the growth is in what you do on top of that baseline. Todd breaks down pricing like this: “Only 40% of your revenue should come from your property management fee. 60% of our revenue is not management-fee related. If most of your money comes from your management fee, you're doing it wrong. That's not going to last very long.” And here’s the difference those added fees can make to your bottom line: “According to recent numbers from Profit Coach, the average PM company gets about $170 a month in revenue. $170 per door per month. I just looked at the profit coach dashboard for my company, and over the last 12 months, we have averaged $320 per unit per month.” The nugget in there is that the market should determine your base property management fee. But that often cheats PMCs, giving property managers extra work without fairly compensating them for the additional time, effort and cost. You can – and, according to Todd, you should – be charging for that extra work and extra value that you provide as a professional. Note: Todd emphasizes that ALL fees should be communicated upfront during the onboarding process and lease agreement. Fees aren’t about tricky pricing or hidden markups. They’re about charging for value and driving behavior. What Are the Benefits and Challenges of Charging Property Management Fees? Let’s look at some of the pros and cons of charging additional fees for your additional property management services. Benefit 1: More Revenue = Better Service Todd points out that you can't really provide the level of service that you want if you don't have enough revenue coming in. “We've got to be able to provide fantastic service, and the only way you can do that is with revenue. You have to start looking at this as something that you have to do. Your clients and your residents are suffering if you don't.” It’s a fantasy to think we can offer premium service without paying for the resources they cost us. Benefit 2: More Revenue = Happier Employees Your team deserves to be paid for their work, especially if it’s extra work caused by a difficult resident or investor. Fees help reduce workload because they discourage behaviors that add to busy work. But more on that in the next section. Todd says: “Property management company owners talk to me all the time about how they can't afford to pay higher wages in the current market. The reason you can't take better care of your employees is that you're struggling to get by just on a basic management fee. Charging fees for what your services are worth is the only way you’re going to be able to provide competitive wages and benefits.” Benefit 3: Charging for Service Drives Better Habits According to Todd, fees drive behavior. Your investors and residents will respond to fees in a way they may not respond to anything else. For example, home warranties are a huge hassle for everyone. If you want to discourage investors from using a warranty company, simply charge a fee for anyone that does. On the resident side, an example is late payment fees. If you communicate from the start that late payments will draw a fee – you’ll notice how payments come in on time much more often. Benefit 4: Greater Profits This one speaks for itself. But here’s what Todd says: “Never pay for your own cost of running your business. This isn't a charity. Every single expense in your company should be tied to some income you're going to make.” Challenge 1: Will Investors Be Turned Off by Fees? In the long run, if you’re charging fees for premium services, you can provide a better outcome for investors. But how can you get them on board with this concept? Todd says it’s all in the language we use. “People don't understand that the management fee is really a rent collection fee. We shouldn't call it a management fee because it makes it sound like everything we do is included, which is of course, crazy. There's so much that can't be looped into that one thing. We should call it a rent collection fee because that's really what it is. You've got to get your mindset right on this stuff. Don't be afraid of it.” Challenge 2: Regulations (AKA: Always Talk to Your Attorney First) Regulations vary across regions, so rental property managers must be familiar with local laws. You may not be allowed to charge fees for certain types of services. But you can almost always categorize a service within an administrative fee. But discussing any fees and contracts with your attorney before implementing them in the real world is key. Oh, and you should charge for your legal fees! How Do Fees Help Property Managers Add Value and Create a Positive Resident Experience? The additional fees generated by delivering new and higher service levels are a reflection of a positive, resident-focused experience. In fact, such additional services are exactly what can set professionals apart from amateurs. Instead of letting increasing competition cut your legs from under you, Todd advises finding ways to generate value that the amateur property managers or real estate agents-turned-property-managers can’t compete with. And, of course, charge for that value. “I always tell people that I don't like to say no to clients or residents,” Todd says. “Instead, I like to say, ‘Sure, we're happy to do that. And this is how much that costs.’ You just want to be careful and ensure you’re actually doing things that the owners will find valuable. Charging fees allows a property management company to offer premium services and benefits they couldn’t if they didn’t have that extra revenue. It’s a perspective shift, but Todd believes we need to start viewing fees as a generative, value-driving approach to property management. How Can I Use Fees to Generate Ancillary Income? In the end, you might think of fees as a burden that will drive away investors, but the truth is the exact opposite. Fees help you drive more premium value for both your investors and your residents – and support your business and employees at the same time. At Second Nature, that’s what we call a Triple Win. We aim to help property management companies drive Triple Wins like this all the time. We do it through the value proposition of a Resident Benefits Package. An RBP offers value to investors by delivering a full-service resident experience. And, yes, that’s something property managers charge a fee for! Since it’s fully managed by our team, you can basically plug it in and let it drive value for you, your investors, and your residents. Fee FAQs Q: What is included in the property management fee? Property management fees typically cover a range of services, which vary from company to company. Sample inclusions: inspection & maintenance fees marketing fees insurance risk mitigation fees account creation fees recurring management fees vendor screening fees rent protection fees or eviction fee contract resiliation fees security deposit processing fee leasing fee or a lease amendment fee paper lease setup fee lease renewal fee late fee special programs fee Q: What is the average property management fee? The average property management fee varies according to region and state, as well as from company to company. In addition, these fees are largely dependent on the value, responsibilities, and services the property manager brings to the table. Generally, they amount to a fixed percentage of collected rent, as opposed to a flat fee.

June 28, 2023

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Kristin Johnson Founder & CEO of TripleTie

15 Best Property Management Accounting Software in 2024

Property management accounting is a specialized branch of accounting that deals specifically with the financial management of rental properties. Property management accounting includes tracking rental income, managing expenses, handling tenant deposits, and producing financial reports. It helps property managers maintain accurate and comprehensive financial records for each property they manage. In today's complex real estate landscape, managing single-family rental properties can be a daunting task, especially when it comes to accounting and finance management. Understanding property management accounting, as well as the best property management accounting software to support it, can make this task significantly easier. In this article, we're talking to a property management accounting expert. We’ll delve into the best property management accounting software available in 2023, and we’ll help you choose the right software that fits your property management needs. We'll also address frequently asked questions about property management accounting software, including aspects like ease of use, integrations, pricing, and support. In general, property management accounting software serves to alleviate the time and effort that might be required to manage finances manually. It can also help plan for expenses, foresee any cash flow issues, and make better-informed financial issues. And perhaps most importantly, it helps property managers stay in compliance with requirements around tax calculations and reporting. Note that there are two key components of property management accounting: corporate and trust accounting. Corporate accounting involves the financial transactions and record keeping of the property management company itself and is generally the same kind of accounting you’d do with any business or corporation. This might include the company's operational expenses, income, taxes, payroll, etc. Trust accounting, on the other hand, is unique. It concerns the financial management of clients' funds held by the property management company. This can include tenant rents, security deposits, and funds reserved for property maintenance or repairs. It's crucial to keep these funds separate and accurately tracked to comply with legal requirements and maintain transparency with property owners. Because of the unique nature of bookkeeping with trust accounting – and its relevance for property managers – we’re mostly focusing today on trust accounting, or software that can manage both corporate and trust accounting. So, whether you're new to property management or an experienced professional looking to upgrade your software, this article has something for everyone. Let's get started! Meet the Expert: Kristin Johnson, Founder & CEO of TripleTie Kristin Johnson founded and leads the property management accounting solution TripleTie, which is designed to help property management companies manage and conduct accurate trust accounting. Related: Best Single Family Property Management Software Best Property Management Accounting Software Let’s go over some of the best property management accounting software solutions in 2023. After that, we’ll also share an extensive FAQ that we had with Johnson about the ins and outs of property management accounting. Before diving into our list, we asked Johnson what good property management software should include. “Having the ability to work within one system is huge,” she says. “Rather than having to parse out, for example, I do my screening over here, and I do my maintenance over here. Instead, you have it all integrated and built-in, and the system talks well with itself. You’re not having to import and export so much data. That’s crucial.” She gives an example of a time when she was using a platform that didn’t have that capability. “When we were working in New Mexico, we had to charge sales tax on services. So our management fees, our RBP, all of those things had to have sales tax added onto them. Our software at the time didn't have a function built where I could say, ‘This item is taxable, and this is the tax rate.’ I had to manually create recurring bills on every single one of those fees. And then, every year, when the state updated the sales tax rate, I had to go and update thousands of recurring bills. It was a nightmare!” So, as we go through the list, keep in mind that different software has various degrees of customization, open APIs, etc. Cost is a big consideration, but looking for an all-in-one is also important. 1. Rentvine Johnson’s top recommendation for accounting software is Rentvine. “Rentvine is really dialed in on trust accounting,” Johnson says. “There’s no need for a lot of the workarounds that we see in some of the other trust accounting providers. At its core, it’s a true trust accounting platform, and then the beauty and usability are built on top of that piece.” Rentvine is deeply customizable for property management tools and needs, with the ability to build your unique owner statements, custom management fees, custom late fees, etc. “The other thing I love about Rentvine is that it does have an open API,” Johnson says. “So if you did want to integrate with an external maintenance company, for example, you can get a seamless integration through the API.” Pros: User-friendly design with an intuitive dashboard that simplifies property management and accounting tasks. RentVine's accounting system is robust and includes automatic rent collection, workflows, real-time expense tracking, and detailed financial reporting. Features like online tenant portals, CRM, maintenance request management, and built-in messaging make tenant communication more streamlined. Cons: Some users have noted that the mobile app lacks some of the desktop version's features. While RentVine offers excellent features, the platform may be more expensive compared to other options, especially for smaller property portfolios. 2. AppFolio AppFolio is an extremely popular property management platform that works well for both residential and commercial property management. It has a modern and intuitive interface but can be pricey with add-ons and complex to use. What we like about AppFolio is the reporting ability, automation (late fees, smart bill entry, etc.), utility management features, etc. The drawbacks include the price and, as Johnson points out, it’s not as customizable as she would want for an accounting piece. “It is not a super strong accounting platform and does require a lot of workarounds,” Johnson says. However, if you’re willing to use a few workarounds and you like AppFolio for the other key features, it does have a solid accounting platform. Pros: AppFolio provides a comprehensive suite of accounting tools that include automated invoicing, ACH and online payments, financial reporting, and bank reconciliation. It offers a CRM with excellent resident and owner portals for transparent communication, metrics, and easy access to financial data. AppFolio supports both corporate and trust accounting, which is important for regulatory compliance. Cons: AppFolio is not as customizable as other software options and may require workarounds. While AppFolio is feature-rich, it has a steeper learning curve which may be challenging for less tech-savvy users. Pricing is based on a per-unit model, which could make it expensive for managers with a smaller number of properties. 3. Buildium Buildium is a comprehensive property management software designed to simplify all facets of property management, including robust accounting features. It provides seamless handling of all property-related transactions, from tracking rent payments and vendor bills to handling maintenance costs and fees. The software also supports both corporate and trust accounting, ensuring legal compliance and transparency. Pros: User-friendly interface with a strong emphasis on accounting. Automatic bank reconciliation, making it easy to manage multiple accounts. Robust reporting, including balance sheets, cash flow, and income statements. Cons: The learning curve can be steep for those new to property management software. Advanced key features may require premium plans, which could be costly for small businesses. 4. Yardi Breeze Yardi Breeze is a cloud-based property management software ideal for smaller-scale PMCs. The platform offers a robust suite of tools, including strong property management accounting capabilities. Pros: Yardi Breeze provides in-depth financial reporting and accounting features, from tracking rent collection and expenses to generating financial statements. It has a user-friendly interface and offers automated invoice processing and bank reconciliation, simplifying accounting tasks. It supports both corporate and trust accounting, crucial for legal compliance and transparency. Cons: The software is feature-rich, which may result in a steep learning curve for those unfamiliar with property management software. Some users have reported that customer service response times can be slow. Its comprehensive features come at a higher price point compared to other options in the market, which may be a barrier for smaller businesses. 5. Hemlane Hemlane is a cloud-based property management solution designed for small to midsize businesses, with a focus on facilitating the relationship between property owners and managers, residents, and service professionals. Pros: Hemlane's accounting features are comprehensive, providing the ability to track income and expenses, automate rent collection, and generate financial reports. It supports both corporate and trust accounting, helping property managers maintain compliance and transparency. User-friendly and intuitive interface, which is a big plus for those new to property management software. Cons: While it has a good range of features, some users report that it lacks the depth of more comprehensive management systems. Some users have reported occasional system slowdowns and bugs. Limited customer support hours can make it challenging for businesses that operate outside of these times. 6. TenantCloud TenantCloud is a cloud-based property management software solution suitable for landlords and property managers of all sizes. It offers a wide array of features, including a dedicated accounting module. Pros: TenantCloud’s accounting features allow users to track income and expenses, send invoices, collect online payments, and generate financial reports. Its intuitive interface and ease of use are especially appealing for those new to property management software. TenantCloud supports both corporate and trust accounting, facilitating legal compliance and transparency. Cons: Some users report that the system can be slow and occasionally glitchy. While its basic features are on a free plan, advanced accounting functionalities come with paid plans, which might be a drawback for small businesses. Some users have reported that the customer service could be more responsive and supportive. 7. Rent Manager Rent Manager is a versatile property management software solution that provides a wealth of features tailored to property managers, including accounting. Pros: Rent Manager's accounting features are comprehensive, enabling users to track income and expenses, automate invoicing, and payment processing, and produce detailed financial reports. The software offers both corporate and trust accounting, ensuring compliance and providing transparent financial management. Rent Manager's open API allows for integration with numerous other software solutions, making it a flexible choice. Cons: Some users find Rent Manager's extensive features a bit overwhelming, leading to a steeper learning curve. The cost can be high for small businesses or those with fewer units, as pricing is based on the number of units managed. While Rent Manager offers comprehensive support, there are some reports of slower response times. 8. Propertyware Propertyware is a cloud-based, end-to-end property management software that offers a range of features, including a strong accounting suite. They offer custom fields and automation for PMs, real estate investors, and residents. Pros: Propertyware’s accounting module is quite comprehensive, allowing users to track income and expenses, handle online payments, and generate detailed and customized financial reports. It supports both corporate and trust accounting, important for maintaining transparency and legal compliance. It includes an “owner portal” and maintenance request management features. Cons: The initial setup can be complex to get right, and there can be a steep learning curve for those new to property management software. The pricing is not ideal for smaller PMCs with fewer than 250 rental properties. 9. Rentec Direct Rentec Direct is a web-based property management software designed for “landlords” and property managers, offering a wide variety of features, including an extensive accounting system. Pros: Rentec Direct's accounting tools provide capabilities for tracking income and expenses, automating rent collection, and producing in-depth financial reports. It supports both corporate and trust accounting, helping ensure legal compliance and transparency. Features like owner portals, work order management, tenant screening, and SMSM services. Cons: The product and interface are older and less intuitive than others on the market. The reporting feature, while robust, may require some time to understand and use effectively. Some users have reported that the system can be slow at times, particularly during peak usage hours. 10. DoorLoop DoorLoop is a property management software designed to streamline the management process for property managers with all sizes of portfolios. It comes with a robust accounting suite, among other features. Pros: DoorLoop's accounting features are extensive, allowing for the tracking of income and expenses, rent collection, and generation of financial reports. It supports both corporate and trust accounting, ensuring legal compliance and providing transparent financial management. The software has a user-friendly interface, making it an attractive choice for users with varying levels of tech proficiency. Cons: While DoorLoop offers many features, it may take some time to get used to all of its capabilities, and it is less customizable than other options. Some users have reported occasional system slowdowns and bugs. The cost could be high for those managing a smaller number of properties as the pricing is based on the number of units managed. Honorable Mentions The list above is not intended to be exhaustive, but we did want to make a brief mention of a few other software applications for property managers that incorporate some accounting features: RealPage RealPage provides a technology platform rather than a software application per se, with the aim of enabling “real estate owners and managers to change how people experience and use rental space." ResMan Tagline: “ResMan’s industry-leading property management platform helps multifamily and affordable housing managers operate more efficiently and deliver higher rates of return to investors.” Entrata Tagline: “The operating system built to help you focus on residents, not technology.” A Note on Other Accounting Software While this article focuses on software tailored to property management accounting, it's worth mentioning general accounting solutions like QuickBooks online. QuickBooks, a well-known accounting software, is versatile and can be effectively used in a variety of industries, including the real estate business. It offers robust features like tracking income and expenses, invoicing, and generating detailed financial reports. However, because it's not specifically designed for property management, it may lack specialized features like tenant and lease tracking or lease management, maintenance requests, or property-specific reporting. That's why it didn't make our main list, but for some property managers, especially those managing a small number of units, it might serve their needs adequately. FAQ: Property Management Accounting At Second Nature, we’ve been in the SFR property management space for a long time. We gathered up some of the most burning questions property managers ask about property management accounting. Kristin Johnson helped us answer them. What accounting should I use for property management business? Kristin Johnson: The type of account property managers need is a true trust account – which very few banks actually offer. Many local banks or even big ones like Chase and Wells Fargo will give you a checking account and then label it a trust account. That is NOT a trust account. In normal bank accounts, you have $250K of FDIC insurance. A trust account has FDIC insurance per owner that has funds in the account. So they each have $250K of FDIC insurance. The only bank that I’m positive offers true trust accounts is Enterprise. How should you report rent in property management accounting? Kristin Johnson: If a tenant pays early, it's considered prepaid rent. It needs to stay booked as prepaid rent until it gets actually booked against the rent charge, and only then should the funds be made available to the owner. I know that some property managers use it to pay bills. But technically, it’s a liability until it's actually earned, so it should not be used to pay bills, and it should not be distributed to the owner. Those are funds that belong to the renters until there's an actual rent charge booked against them. That's piece number one to understand. Then, getting to the end-of-year side of it, the IRS does lay out that prepaid rent is taxable in the year that it is collected. So it should be reported as part of the 1099 income. What is the purpose of clearing accounts in property management? Kristin Johnson: The clearing account really serves as an intermediary while the security deposit funds are essentially in transit. When we're getting ready to move out a tenant, those funds get released from the holding account, and it goes into the clearing account where we are booking, say, cleaning against it or whatever move-out charges need to go against it before we do a final distribution to the tenant. So it's just kind of a quick intermediary place where it sits very temporarily before the security deposit gets released and then distributed. Who is responsible for sales tax in property management? Kristin Johnson: Well, it depends on the function of the sales tax. There are a couple of different instances where sales tax comes into place. For example, New Mexico is a sales-tax-on-services state. Everybody is responsible for sales tax, meaning if it's a management fee, the owner is responsible for the sales tax. If it's a tenant fee, the tenant is responsible for paying the sales tax. Ultimately, the PM is responsible for gathering that sales tax and remitting it to the state. There are some states where rent is taxable. Similarly, in those states, the owner is ultimately responsible for the sales tax. But many times, the PM will collect the sales tax from the tenant and pay it to the state on the owner's behalf. A lot of times, what we'll see is, for example, the rent may be a thousand dollars, and the state says we need 7% of that. So you would tack an additional 7% onto the rent. The tenant would pay the thousand dollars plus the 7%, which would come into a liability or holding account on the ledger. Then a lot of times, the PM would pay that to the state on behalf of the owner. What should be the frequency of record keeping in property management? Kristin Johnson: “Money in should be accounted for immediately as received. States will usually dictate how quickly receipts have to be deposited, but our recommendation is that they always get deposited same day with the bank or as soon as practical thereafter. As far as record-keeping to the owner goes, most states actually mandate that at least monthly reporting happens to the owner. Certainly, in trust accounting, record keeping should be looked at daily, weekly, and monthly to make sure that it's staying in line. Soft reconciliation should be happening at least weekly, if not daily, to ensure that all of the money is fully accounted for and that you're not going to have any issues when you're closing out the end of the month. Why would a property management firm use classes in accounting software? Kristin Johnson: Classes could be done by various categorizations: single family, multifamily, commercial – in other words, the type of property that you're managing if you wanted to keep records that way. We always used classes in our company because we were in seven markets, and so we would use classes per market. If I wanted to track my Farmington location or my Denver location, or my Charlotte location, I had all of my income and expenses broken down in classes by location. It could be location, it could be property class type, really whatever kind of granular level you want to dive down and break out could be done by classes. Do PMs set up owners as vendors in accounting software? Kristin Johnson: If you're working in a true property management software, owners will be set up as owners, and you would do owner distributions to them as owners. It's possible that if someone's not using a trust accounting platform – if they're using something like QuickBooks – then probably yes, you would have them set up as vendors. But if you're managing a true trust accounting software, I don't ever recommend setting up owners as vendors. It kind of convolutes end-of-year reporting. You have to issue 1099s to your owners, and you have to issue 1099s to vendors. If you have them set up both as an owner and as a vendor, you're theoretically sending out two different 1099s – which wouldn’t necessarily be proper. How much should a property management company spend on accounting? Kristin Johnson: Accounting is one thing in property management that you don't want to skimp on. The most important function of a property manager is to be a good steward of other people's money. I don't know that there's a range, but I will say that it very well may end up being your largest expense. But worth the money. Conclusion The software you choose for property management accounting can significantly streamline your operations and contribute to the growth and success of your business. Each option has its strengths and potential drawbacks, so it's vital to select a solution that fits your unique needs and portfolio size. By equipping yourself with the right tools, you can streamline your accounting processes, ensure accuracy and compliance, and ultimately, drive your property management business toward greater success. If you want to get more input on your property management software, check out our Triple Win PM Community on Facebook. Or, see more of our studies on property management best practices and services like our Resident Benefits Package.

June 27, 2023

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Pet Policy For Renters: Best Practices for Property Managers

Did you know that well over half of U.S. households (66%) own a pet? But, according to the Humane Society of the United States, problems finding and keeping rental housing is a leading reason that dogs and cats end up in shelters. Building a pet policy for renters is an important decision for property management companies. Promoting a pet-friendly listing can be a fantastic way to fill units more quickly – and retain good residents over time. Pet owners are less likely to leave a good pet-friendly home. So, how can you build pet-friendly policies that create a welcoming space for pet owners but protect your business and your property investor’s assets? We sat down with an expert on the topic: Victoria Cowart from PetScreening. We asked her about the key components of an effective pet policy, how to dial in on protective restrictions, how to structure a lease agreement, and more. Read on to learn with us about best practices when building a pet policy for renters. Meet the Expert: Victoria Cowart, CPM, NAAEI Faculty, PetScreening’s Director of Education and Outreach With an early start as a leasing agent, Victoria Cowart built her career in the industry managing apartment communities and a diverse portfolio. Thanks to her years of management experience, Cowart is now a property management instructor and graduate of both the NAAEI Advance Facilitator Training and the NAA Lyceum Program. She has served in the NAA as President of local and state affiliates, the Regional VP for Region IV, and chaired four committees. She joined PetScreening over two years ago and says she has found her “joy zone” there, focused on education, legislation, and sales. Standard pet policy and rules We started by asking Cowart to talk about the key components of an effective pet policy. Her rule #1? Consistency. “The best policies are the ones consistently applied,” Cowart says. When building a pet policy, property managers need to be decisive and apply the rules fairly and consistently – and in compliance with the law – with every unit. With that in mind, a pet policy should have standard rules and statements, including: Pet Restrictions: Any breed or other restrictions Pet Requirements: Licenses, vaccinations, leashing, etc. Pet Charges: How to charge for pets in a fair way Tenant Responsibilities: What is the resident responsible for? Pet Agreement: How to get it all written down and stay compliant Cowart warns not to make easy assumptions about each of these pet policy components. To build a pet-friendly, safe environment, you need to carefully asses what risk means to you, to your investors, and to your residents. “Of course, there’s risk bringing pets into your rentals,” Cowart says. “Bites, property damage, etc. But many companies want to add arbitrary rules thinking it will dial back their risk. For example, breed and weight restrictions, if you’re relying only on that, are very arbitrary without context. If you do want to include breed or weight restrictions, rely on that in combination with other factors. Alone it is insufficient. In combination with other data points and information, it does have relevance.” So, let’s dig a little deeper into each of the key steps in building a strong and resident-friendly pet policy. Components of an effective pet policy for residents A Forbes study found that 85% of dog owners and 76% of cat owners consider their pets to be part of the family. Animals contribute to mental, emotional, and physical health and can be one of the best parts of life. But, of course, pets also introduce risk. A new kitten can do some serious damage to a home, or a frightened dog off-leash could potentially bite a neighbor. That’s where your pet policy comes in. An effective pet policy can support residents with furry family members, minimize your exposure to risk, boost your ancillary income, protect your investors’ assets, and even help increase your occupancy rate. Cowart helped us break down the individual components of an effective pet policy for renters. Pet Restrictions The first thing you need to do is consider and document any restrictions around pets allowed on your properties. This includes considering a no pet policy. Cowart strongly opposes a no pet policy for a multitude of reasons, many of which we’ve discussed here. But let’s say you are going to allow some pets. You can start with what types of animals you’ll allow. Most property managers will stick to the typical domesticated animals like dogs, cats, birds, hamsters, fish, etc. State or federal laws will prohibit certain animals – obvious ones like leopards or tigers and perhaps less obvious ones like ferrets, hedgehogs, monkeys, or even turtles in some states. Breed and weight restrictions Many property management companies also impose breed restrictions and weight restrictions for pet dogs, as Cowart mentioned. But Cowart encourages PMCs to consider that, without more context, those restrictions aren’t sufficient – they may disqualify perfectly safe dogs with good residents and may not protect you from unusually aggressive or problem animals that fit within your weight and breed limits. In fact, a 2022 study published in the journal Science found that breed only accounts for 9% of the variation in dog behavior. The rest is determined by factors such as environment, owner behavior, training, socialization, and more. Behavior restrictions Cowart recommends basing restrictions on a much more holistic view of each individual pet. At PetScreening, they use a proprietary scoring system called the FIDO Score that uses over 35 distinct data points to evaluate the risk any type of animal or pet poses for a home. The scoring system involves 23 questions and then runs it through an algorithm to score a dog from 1 (the lowest) to 5 (the highest). These scores are based on the animal’s unique profile. Then, you can make decisions based on the unique animal’s profile. Cowart says, “No company should welcome a one- or two-paw FIDO-rated pet into their community without thoroughly analyzing the pet profile as to why they scored this. I personally recommend to clients that if an animal has ever bitten a person, they should not welcome that pet into a rental. Should they bite someone again, it could be said you knew or should have known they posed a risk.” Pet Requirements The next part of your policy should include what is required for any pets on your property. This might include a certain level of FIDO score or similar rating. That’s up to individual property management companies. They should definitely include requirements such as: Proof of up-to-date vaccinations Requirements to wear collars with ID tags Municipal license receipt Number of pets Types of pets Etc. ‍ It’s important to be familiar with any requirements mandated by your state or local laws, as well. Pet Insurance Nine out of 10 professional property managers require residents to carry insurance on the lease, but only 41% of residents maintain compliant coverage. Insurance is key to protecting your residents and your properties in the event of an issue. Dog bite insurance losses alone cost $882 million in the US in 2021. According to the CDC, over 4.5 million Americans are bitten each year by dogs. 800,000 of them require medical attention, and over 1,000 per day require emergency care. And yet, many insurers don’t cover certain breeds, like pit bulls or Rottweilers, despite the fact that breed plays little role in behavior, as we’ve discussed. To take matters into their own hands, many property management companies are turning to a Resident Benefits Package that includes a renter’s insurance program. At Second Nature, our renter’s insurance program has 100% compliance – and we cover all dog breeds with no exceptions. Pet Fees Allowing pets at your properties is also a great way to drive ancillary income. Deposit fees or monthly fees – called pet rent – can help hedge your risk and protect you, the resident, and your investor. So, what’s the best way to set up your pet fees? “Number one, know the laws in your area,” Cowart says. “Municipalities and states have certain regulations. For example, one state recently passed a law where their pet rents could not exceed $35 a month, and the pet deposit was limited to $300. One or two states may have rules like that, so the first thing is always to know the laws where you are conducting business.” Once you’ve got your local ordinances straight, Cowart says she is an advocate of installing a pet entry fee and a monthly pet rent fee vs. charging a pet deposit. This protects you in case of needed evictions or other unfortunate circumstances. “You don’t want to be constrained to having a pet deposit only applicable to pet damage on the property,” Cowart says. “Meanwhile, this person is evicted and owes you thousands of dollars of rent, and you have to give back the pet deposit if it’s not pet-specific damage.” Instead, Cowart says, include the “pet deposit” in your regular security deposit. “I would suggest if you want a pet deposit, just increase your base deposit and don’t call it a pet deposit. You don’t want to be out money just because you've delineated the deposit for a particular use.” Tenant Responsibilities Cowart says that at PetScreening, they ask 23 questions across several categories. For example, three of the questions are on bite history alone. But the main breakdown of these questions is to sort out liability and responsibility. Liability has to do with what we’ve covered above – bite history, risk, etc. Responsibility has to do with, according to Cowart, “how your potential resident, as a pet owner, is going to ensure that their pet doesn’t have an adverse impact on the rental property or the community. Cowart recommends asking questions like: Will they pick up after their animal? Will they walk the animal on a leash? Do they take the animal for routine veterinary care? Is it up to date on its vaccinations? Your pet policy should clearly define and outline the responsibilities on the part of the resident. Cowart says, “Identify core responsibilities that you expect from the owners: keeping them under control, leashing, never outside unattended, basic vaccinations up to date, etc.” “Most often, the problems aren’t with the animals, they’re with the owners,” Cowart says. “If you have a Belgian Malinois, and you think you just have a skinny German Shepard, you are wrong. If they’re some sort of herding animal and they’re used to having a whole communal group that they’re nipping the heels of, but now they’re in an apartment. Now they don’t have that job, and they’re feeling unemployed, and so they’re going to find a job.” In short, pet owners need to be responsible for ensuring their animal’s behavior is safe. Pet Agreement or Pet Addendum You should absolutely incorporate a pet agreement in your lease. You want to put all of this work we’ve discussed in writing. Include all the fees, restrictions, violation penalties, etc. The pet section of your lease should be included in all leases because anyone could become a pet owner at any time. When it comes to a pet agreement, Cowart’s strongest advice is to follow the best practices of your local property management association, apartment association, etc. “Make sure you’re educated on the laws in your area,” Cowart says. “Associations involved in property management in your area – NAA, NARPM, AHMA – can help educate you on what you need to know.” The biggest area of risk and confusion for the lease agreement is assistance animals. Let’s take a whole section to examine assistance animals. What about assistance animals? The restrictions we’ve discussed above, and charges, etc. – most do not apply when it comes to assistance animals. Fair housing laws apply strictly to assistance animals. Cowart’s most important piece of advice? “First and foremost, understand what Assistance Animals are because that’s the biggest area of confusion for property managers. What you can or can’t do, what you can charge owners, and what you require they do before you admit them to the community. There is a massive difference, by law.” There are two types of assistance animals: service animals and support animals. Service animals and support animals or emotional support animals are handled totally differently under the Fair Housing Act. An assistance animal is NOT classified as a pet. Cowart emphasizes that you should never have an assistance animal owner sign off on anything with the word “pet” in it because it’s not a pet, it’s a disability device. “I facilitate a 45-minute session on this alone,” Cowart says. “Property managers should look at the FHEO-2020-01 Assistance Animal’s notice for additional information on HUD’s guidance.” Tools to help manage your pet policy It can be daunting to take on the challenge of simultaneously managing risk and creating a welcoming environment for residents with pets. But with the right approach – and the right tools – property managers are creating pet-friendly rental policies that protect both their business and their investor’s assets. PetScreening.com, where Victoria Cowart is a leading educator, provides a holistic approach to preparing your properties for pets. Their proprietary FIDO scoring helps take the guesswork out of assessing risk and revenue. And here at Second Nature, we provide a fully managed Resident Benefits Package that provides services your residents want and need without adding a burden to your team. We focus on creating an experience so good that residents never want to leave. Our RBP includes one of the country’s most robust pet policies in our Renter’s Insurance Program. The policy is friendly to all breeds and supports responsible residents who want to find a warm home for their furry family members. At the same time, the insurance ensures that you and your investor are covered in case of any risk event. Have thoughts or questions about building a pet-friendly, risk-intelligent pet policy? Share them in our Triple Win Community.

June 20, 2023

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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

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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. 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

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Investor Benefits Package™️ IBP™️

An Investor Benefits Package™️ (IBP) in property management is a suite of products, services, and benefits offered by property management companies to property investors. Just like a resident benefits package is a way to drive value for residents, investors, and property managers, the IBP is an innovative approach to property management that focuses on driving value for an investors assets and turning that value into profit for the property management company. In this article, we’ll dig into the different features that an Investor Benefits Package can include, and how those benefit not just investors, but property managers and residents, too. What is an investor benefits package (IBP)? As stated above, an investor benefits package (IBP) is a comprehensive suite of services that offer property investors higher quality property management, stability, and profit. An IBP typically includes concierge-level services beyond basic property management – such as property insurance policy, eviction guarantees, rent guarantees, maintenance plans, asset performance reports, etc. These services are aimed at maximizing the investor’s assets, stability and convenience, profitability, and peace of mind in managing their properties. The first step to outlining an IBP is to define what your basic management fee means and covers. If the answer is, it’s collecting rent, handling maintenance, and general communication – does that include maintenance coordination or is that a separate fee? Does it include asset reporting or is that an additional service? In your management agreement, define what the management fee is, what it covers, and how much it is. An IBP can be an effective tool for articulating the new and differentiated things that an investor wouldn’t be able to do on their own and that you are offering beyond basic property management. Articulate your unique and differentiated services (IBP) and use that as a tool for positioning and charge for what it’s worth. What’s included in an investor benefits package? An investor benefits package should includes a range of solutions to help deliver consistency, insight, and asset protection to a property owner’s portfolio. After all, professional property managers don’t have to be functional managers of a home – they can be strategic partners in the management of financial assets. You might hear services similar to the IBP called an “owner benefit package,” but at Second Nature, we believe that the “investor” term is useful in encouraging a longer term mindset, and emphasizes the economic value professional property management can bring. According to Eric Wetherington, VP of Strategic Initiatives at PURE Property Management: “As property managers, we need to think more like asset managers. This client made an investment, and we should be guiding that client through managing that investment, not just collecting rent.” To build and manage a winning IBP, property managers need an investor experience platform™️ that unlocks scalable product and service customization, digitized onboarding, accounting policy automation, and more. Here are some of the most valuable services that property managers can offer through an innovative Investor Benefits Package. Property Insurance Program Similar to offering a renters insurance program through an RBP in the lease agreement, property management companies can offer an insurance plan to investors to cut costs and ensure the safety of their assets. Most management agreements will include the requirement that the investor carries insurance on the property and that the property manager is additionally insured. But what if you as the property manager could help manage that for the investor – at scale? Property Insurance for investors should have dynamic pricing based on individual investors’s property portfolio and needs. The benefit beyond flexibility is the savings they’ll see on their premiums while also getting insurance that’s tailored to the needs of their specific property class. At Second Nature, we work primarily with single-family rental properties and small multi-family residences. Property Insurance Programs can bring scale that will drive economic value for the investor over what they could get retail on their own. They’d still have the option to go get their own insurance that meets requirements, but they can pay you a small fee to manage it for them. Rent Guarantee An IBP can include a number of financial guarantees to protect property investors and drive ancillary revenue for PMCs. A rent guarantee, or rent protection, ensures a consistent rental income to investors by protecting them against resident defaults or non-payment of rent. If a resident fails to pay rent, the property management company covers the unpaid amount and takes necessary steps for eviction or collection, providing financial security and minimizing the risk for property owners. Rent guarantees work for professional property management companies that have enough properties to balance the loss of rent if a resident doesn’t pay. The risk is low and the additional profit from fees for this guarantee can have a very high ROI, while driving satisfaction and stability for the investor. Plus, if you’re using services in an RBP to help incentivize on-time rent payments, you’ll rarely find yourself out in the cold. Eviction Protection Guarantee An eviction protection guarantee also goes beyond the normal scope of property management services and can be used as a secondary source of revenue. Eviction Protection is a service provided by property management companies to property investors that offers additional security and financial protection in the event of an eviction. Under this guarantee, the property management company assumes the costs associated with the eviction process, including legal fees and court expenses. It helps alleviate the financial burden on property investors and provides peace of mind by ensuring that they are safeguarded against potential losses resulting from resident evictions. The eviction guarantee helps protect property owners from the complexities and potential costs associated with evictions, ensuring a smooth and efficient resolution to tenant-related issues. Pet Guarantees & Other Guarantees A pet guarantee is a service offered by property management companies to property investors that aims to address any potential issues related to allowing pets in rental properties. It typically involves implementing policies and procedures to ensure responsible pet ownership, such as thorough pet screening, pet agreements, and collecting additional pet deposits or fees. The pet guarantee may also include services like pet damage insurance or assistance with pet-related issues during the lease term. It provides property investors with a framework to accommodate residents with pets while minimizing risks and maintaining the condition of the property. For many residents, finding a pet-friendly apartment increases retention and profitability. They’re willing to stay longer and pay more for a pet-friendly place. And–get this–pet damage is less likely to happen than damage from kids! It’s not a huge risk to the asset, but can provide a big benefit in terms of satisfied, longer-term residents. Maintenance Plan Home warranties are a four-letter word for property managers. They’re a massive headache to deal with, and yet there’s high demand for them among property investors. Because of that, most property mangers charge a fee for home warranties, for each they have to file. Imagine if there was a world where home warranties weren’t needed. Here’s the thing: Professional property managers already have the vendor network and the know-how to coordinate maintenance jobs. What they don’t usually have is a product that’s priced to give the investor the experience they want. Let’s say right now an investor is paying $50 a month for a cheap home warranty. The warranty only covers 40% of issues and it creates all these extra people and friction in the middle. For anything moderately significant that goes wrong with a property, PMCs generally must contact the investor for permission to get work done. It’s all a massive hassle and loses time in maintenance requests that leaves residents frustrated. What if there was a product that cost, say, $150 to $200 a month but it actually covered everything? Instead of having sudden expenses and emergencies, this maintenance plan smooths out the experience and makes it more predictable for the investor. For PMs, it means taking initiative on fixes without waiting for approval. Imagine a world where you didn’t have to get owner approvals for 95% of maintenance issues – because they’re already budgeted for and already paid for. For residents, it means better maintenance, faster. Another Triple Win! Asset Performance Reports Another piece that focuses on property managers as asset managers. Think about any investment app, like RobinHood, Acorns, etc. You can log into those app any time, 24/7, and see how your stock and investments are performing. In most investment classes, you can see in realtime how your assets are performing. Why shouldn’t property investors have that as well? An IBP can include exactly that: a dashboard or online portal that shows investors regular reports on how their property is doing. They could get updates on the value of their home over time, the home price appreciation, rent price over time, and project rent growth, typically maintenance costs and how they’re doing against that, and more. Resident Benefits Package Another piece to include in your IBP is to highlight the benefits of your resident benefits package to your investors. Explain how features like a filter delivery program protect their assets and reduce HVAC repair costs. Show how a renters insurance program can ensure coverage and protection. Give numbers on how credit reporting incentivizes on-time rental payments and helps ensure financially stable renters. Explain how a movie-in concierge saves both time, headache, and money. Each of the pillars of an RBP are critical to encouraging better resident behavior, increasing renter retention and lease renewal rates, reducing vacancies, and more – all primary goals for a property investor. A note about Rent Advance Programs There’s been due buzz about “Rent Advance” offerings, though many advise caution when approaching this financial product. It works in some ways like cash advance programs, which can satisfy urgent needs, but not be more valuable for anyone long term. The way it works is PMs offer to send a year of rent upfront to the investor in a big chunk, and collect monthly from the resident. The investor typically pays a 5-10% premium on the advance, which can be their entire expected return. So the question becomes, where do they put that cash to get a better return instead? Another thing to think about is who would actually use this product? Investors who don’t have enough cash on-hand? How does that benefit anyone in the long run? What happens when there’s a big maintenance bill later? Does this encourage better decisions and practices by the investor? To date, there’s been pretty low adoption of this program, which is another sign it may not be hugely beneficial to everyone involved. But plenty of innovations start that way, evolve, and find traction. One case where it might be a value generator is if an investor is looking to take a cash advance and put it toward a down payment for another house. That would benefit the property manager as well, promising more business, and the PM could offer a lower rate for getting more properties to make the financing more attractive than hard money loans or other alternatives. The jury is still out here, it’s an interesting one to track. How can investors and property managers benefit from an investor benefits package™️? Investors and property managers can benefit from an investor benefits package in several ways. They’re also great for residents in the sense they build more stability and quality into the renting process. Here are just some of the benefits of an IBP. Enhanced investor attraction An investor benefits package provides incentives and advantages that can attract more investors. Financial guarantees and protections against the risks associated with evictions or late payments can increase stability, while services like a maintenance plan can ensure premium care of their property assets without increasing their workload. By offering attractive perks, property managers can differentiate their offerings and generate greater investor interest. Increased investor retention Both IBPs and RBPs help build loyalty with residents and investors. By fostering a strong relationship and demonstrating ongoing value, property managers can build trust and loyalty among investors, and retain them over the long term. IBPs help establish the stability, transparency, and asset growth for a real estate investment that an investor hopes to achieve. Improved property performance An investor benefits package can also contribute to improved property performance. For example, by offering discounted property management fees or access to professional services at reduced rates, property managers can help investors optimize their returns and reduce costs. Additionally, incentives such as rent guarantees or eviction protection can mitigate risk for investors and attract more capital to the property. Streamlined communication and transparency A well-designed investor benefits package facilitates effective communication and promotes transparency between property managers and investors. This can involve regular reporting on financial performance, property updates, and the sharing of relevant market insights. Transparent and consistent communication builds trust and confidence among investors, fostering a positive and long-lasting relationship. Competitive advantage A comprehensive investor benefits package can give property managers a competitive edge in the market. When investors have access to exclusive benefits and advantages, they are more likely to choose a property managed by a company that offers a compelling package – and to recommend them to others. Say hello to increased investment inflow and a stronger market position for your PMC. Should you make an investor benefits package mandatory? The first thing most property managers ask us when we’re talking about an RBP or an IBP is: Should I make this mandatory for all investors or do I make it a flexible opt-in/opt-out program? Unlike RBPs, where best practices are more proven and established, different PMs are taking different approaches with their IBPs. Some have a mandatory level of service set at a flat price. Others may say they’re fine offering a base level of service without these differentiated products, giving investors the choice to simply pay a baseline management fee and to opt out of the IBP premium service. Some may offer a baseline to all investors and then give them the chance to opt in for premium IBP services. There are a lot of ways to do it. With the RBP, we’ve found that making it mandatory does not generate nearly as much pushback as people expect – and can be a strong value add overall. Final thoughts about an investor benefits package The Investor Benefits Package is an innovative way to generate ancillary income and create more value for investors and residents. Similar to Second Nature’s premier Resident Benefits Package, the IBP can deliver high-quality service for investor experience – and help create a triple win for investors, residents, and property management companies. The IBP reinforces the value of a professional property management company for investors and helps differentiate you from the crowd. Stay tuned to learn more about the latest in the IBP space, or learn more about how a resident benefits package can launch a whole new level of value for your PMC.

May 23, 2023

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Resident Experience Management: How 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 a 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 2023 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 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 in to the experience after they move in is all revolved around design for that expectation.” How to Improve Resident Experience 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 2023 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. Resident Experience Ideas and Examples 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 resident experience ideas 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 helps deliver what “totally taken care of” feels like. Which is exactly what residents are looking for. 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 - “Comannder’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. Building a Resident Experience Strategy with Second Nature 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 2023 – 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 2023.

May 18, 2023

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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

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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 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

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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

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Should your RBP Rollout be Mandatory or Optional? | Second Nature

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

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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.” 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

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Benefits of Outsourcing Property Management Services

Property management services have changed in leaps and bounds over the past 5-10 years. And property management outsourcing services have grown along with it. While the traditional approach to property management simply provided the basics – maintenance, rent collection, etc. – entrepreneurial PMs saw a massive gap in that value proposition and have transformed the real estate industry. Now, property management services are increasingly seen as a way to generate value for residents, real estate investors, and property management companies. PMCs are delivering resident benefits like credit reporting, renter’s insurance programs, pet guarantees, and more. And each of these services acts as a value add for everyone involved. But that can also add extra burden and cost to your property management business when your team is already spread thin. One of the best ways to offer value without overextending your team is to outsource some of those PM services to PropTech products, contractors, or a fully managed solution. Today we’re going to talk about this option in more detail. Whether you’re just getting started in property management or a seasoned pro, we hope you’ll find something here to help. Key Learning Objectives: What is outsourced property management? What services add the most value to the resident experience? What property management services are most easily outsourced? What are the costs associated with outsourcing PM services? What are the benefits of outsourcing PM services? What is outsourced property management? Outsourced property management refers to the practice of paying for a third-party company or product to handle certain tasks or operations for your property management company. This could include tasks such as tenant screening, resident benefits, renters insurance programs, rent collection, maintenance and repair coordination, lease enforcement, financial reporting, and more. Property management is in itself an outsourced service for real estate investors/property owners. Just as property owners often choose to outsource their property management to save time, reduce stress, and ensure they stay profitable – property management companies may outsource several of their services for the same reasons. Property management outsourcing services, whether PropTech products or fully managed solutions, allow property management companies to build efficiencies and focus on quality and growth. Outsourcing certain services can give residents more of what they need and investors more value for their dollar. What property management services can property management companies outsource? Advances in technology and innovation within the property management industry have given PMCs greater flexibility in terms of outsourcing key services. As a property manager, you may outsource for a range of reasons. Maybe you’re still building up your team and need cost-effective expertise in a certain area. Maybe you have core products you want to focus on and want certain services to take less of your time. Maybe your investors or residents are asking for out-of-scope services that you can offer for an additional fee. Overall, outsourced property management services can help PMCs save time, reduce stress, and maximize the profitability of their company. So, what are some of the most commonly outsourced property management services? They can be grouped into a few categories: A property management tech stack with property management software and integrations that enable all kinds of business operations. Maintenance and repair. Many PMs outsource things like plumbing, HVAC, and other contractor work. Resident benefits and ancillary services. Property managers often outsource value-driving products like an RBP and other services that investors want, and residents will pay for. Let’s dig into the services that might be included within each of those larger categories. Rent collection Third-party payment processing companies can handle the actual collection and processing of rent payments for the PMC. The property management company will provide the payment processing company with the necessary information and details about the residents and the property, including lease terms, payment due dates, and amounts owed. The process may involve various payment methods, such as online payments, credit card payments, ACH transfers, or other payment options. Some popular outsourcing solutions that help collect rent include Buildium, Propertyware, and AppFolio. Second Nature provides a fully managed service that helps ensure your residents pay rent on time. Repair and maintenance Many PMCs outsource repairs and property maintenance. We’ve spoken with experts like Bob Preston, who run their own maintenance companies separately as another source of income and an added value to their clients. When a property management company outsources repair and maintenance, it typically involves hiring third-party contractors or service providers to handle the actual repair, upkeep, and maintenance tasks required for the property. Outsourcing repair and maintenance can offer several benefits for property management companies. You can access a broader range of specialized skills and high-quality expertise, which may not be available in-house, and save time and resources by avoiding the need to recruit and manage in-house staff to handle repair and maintenance tasks. Marketing and advertising Marketing isn’t everyone’s strong suit, and that’s okay! When a property management company outsources marketing and advertising, it typically involves hiring a third-party marketing or advertising agency to handle the promotion and advertising of the rental properties. The agency will work closely with the PMC to develop a comprehensive marketing strategy that aligns with the property's unique selling points and target audience. The marketing agency may use a variety of advertising channels and mediums to promote the property, including social media marketing, search engine marketing, online advertising, email marketing, print advertising, and other marketing channels. They may also create engaging content and visuals, such as videos, images, and virtual tours, to showcase the property's features and amenities. Legal Most PMCs outsource their legal services to a third-party law firm or attorney to provide legal advice and representation on various matters related to the property or properties. Legal services that may be outsourced can include lease agreements, evictions, compliance with local and federal laws and regulations, dispute resolution, and other legal matters that may arise in the course of managing the property. Outsourcing legal services helps minimize legal risks and liabilities, ensure compliance with applicable laws and regulations, and protect the property investor’s interests. Accounts and finance Many PMCs outsource to an accounting firm or financial service provider to handle the financial management and reporting. The outsourced firm will work with you to manage financial records, provide financial reporting, and ensure compliance with accounting standards and regulations. The accounting and financial services that may be outsourced can include bookkeeping, financial statement preparation, tax planning and compliance, budgeting and forecasting, and other financial reporting and analysis. Overall, outsourcing accounts and finance can help property management companies to operate more effectively and efficiently and achieve their financial objectives while minimizing financial risks. Insurance PMCs often work with a third-party insurance broker or agent to provide insurance coverage and manage insurance-related issues for the property or properties. The insurance coverage that may be outsourced can include property insurance, liability insurance, workers' compensation insurance, and other types of insurance coverage that may be necessary or recommended for the property. Another way to outsource insurance is to find a service that provides a renters insurance program like Second Nature’s. Ensuring that residents have insurance coverage is a priority for 90% of property managers, but only 41% of residents maintain compliant coverage. At Second Nature, our renters insurance program has 100% compliance. You can learn more about our coverage and fully managed Resident Benefits Package in our 2023 Resident Experience Report. Safety and security Many PMCs outsource to a security company to provide safety and security services. The security company will work closely with the property management company to assess safety and security needs, design and implement safety and security protocols, and provide safety and security personnel and equipment as needed. Security services that may be outsourced can include security personnel, security systems and equipment, safety training and education, emergency response planning and execution, and other safety and security-related services. What are the costs associated with outsourcing PM services The cost for a PMC to outsource some property management services can vary depending on a number of factors, such as the scope of services required, the complexity of the work, the location of the service provider, and the level of expertise required. Some service providers may charge a flat fee, while others may charge an hourly rate or a percentage of the property's rental income. The cost for outsourcing property management services can range from as low at $1 per property per month to much as hundreds of thousands of dollars annually, depending on whether it’s a full-service tech solution, simple maintenance services, a Resident Benefits Package, etc. It's important to note that while outsourcing property management services can come with a cost, it can also provide benefits such as increased efficiency, reduced workload, and access to specialized expertise. Before outsourcing any services, it's important to carefully consider the potential costs and benefits and to choose a service provider that offers high-quality services at a reasonable price. How outsourcing property management services benefits you Outsourcing property management services can have a massive impact on your return on investment per door and per client. Outsourcing also helps with scaling when you can’t afford to run every service in-house. With the ability to outsource, you can offer more value to your clients without skyrocketing your operating costs. You can also drive secondary sources of revenue through outsourcing. Not convinced? Let’s go over some of the real-life benefits we’ve seen PMCs leverage with outsourcing select services. Cost savings Outsourcing property management services can save property management companies significant costs associated with hiring and managing in-house staff, as well as investing in technology and infrastructure. Outsourcing can also help to minimize overhead costs, such as office space, equipment, and supplies. Let’s think even bigger. Outsourcing value-generating services like a Resident Benefits Package has multiple benefits: boosting resident satisfaction, incentivizing on-time payments, and reducing vacancy rates. Talk about a cost-saving win! Increased efficiency We’ve seen PMCs use outsourcing to streamline their operations, reduce administrative property management tasks, and increase productivity. This can free up time and resources for property management companies to focus on core business functions and strategic planning. Instead of using your own team for time-consuming tasks, you can outsource them. Access to expertise Outsourcing property management services allows PMCs to access specialized expertise and skills that may not be available in-house. This can include legal, accounting, marketing, and maintenance expertise, among others. Outsourcing can also provide access to the latest technology and software, which can improve efficiency and effectiveness. Better risk management Property management inherently involves risk. You’re managing people’s lives on the one hand (residents) and investments on the other (owners/investors). Outsourcing can help better manage risks associated with property management, such as legal liabilities, compliance issues, and safety and security concerns. This can help to protect your company from financial and reputational damage. Improved resident satisfaction You can more seamlessly and reliably improve resident satisfaction by providing better maintenance and repair services, more efficient rent collection, and faster response times to tenant concerns and requests. This can help to increase tenant retention and attract new tenants. Higher employee satisfaction Outsourcing services to a third party is a direct way to impact your employees’ satisfaction. How? Outsourcing helps reduce workload, gives access to better training and development, improves working conditions, and provides a better work-life balance. Often, outsourcing means that your employees get to focus on the core functions that they love instead of getting bogged down in tasks they don’t love or don’t feel equipped for. How thousands of PMCs are outsourcing services for better resident experiences Property management companies are always looking for new ways to generate value for themselves, their residents, and their investors. One of the quickest ways to scale and increase return on investment can be outsourcing property management services. At Second Nature, we’ve pioneered the first-ever fully managed Resident Benefits Package in order to support PMCs with just that goal. Our RBP provides services that residents are proven to pay and stay for – and our team manages every part of the process so property managers can focus on strategy, growth, or work-life balance. We’ve helped thousands of property managers transform their services and their operations with a customized RBP providing services they couldn’t do alone. Our goal is to make property management easier for PMs, residents, and investors – and drive value that benefits all three. We call it the Triple Win.

May 17, 2023

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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

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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

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