Triple Win Property Management Blog | Second Nature

What is Rent Guarantee Insurance? Limitations & Top Providers

Ah, rent. It's the financial fuel that keeps rental properties rolling. But what happens when that fuel line gets clogged? Even if a resident comes with a great payment history and credit, life happens. Maybe it’s a job loss, an economic slump, or even identity theft – whatever the reason, most property managers will experience lapsed rent payments at some point. For property managers, stalled rent means your clients’ property is suddenly a financial risk rather than the asset it should be. Enter a new(ish) solution that provides a safety net for property managers and owners: rent guarantee insurance. Think of it as a stopgap for your investors in case of missed rent, leaving them financially secure while you can take your next steps thoughtfully. Rent guarantee insurance is an owner benefit that many savvy property managers have begun to include in their suite of services to entice new investor clients. So, let's break down the rent guarantee magic. In this blog post, we'll be your tour guide through the maze and answer questions like: What is rent guarantee insurance, and why should you care? What does this type of insurance cover? When should you offer it? What are the limitations or risks of rent guarantee insurance? Who are the top providers of rent guarantee insurance in the U.S.? This service is all about reducing risk for owners, which is a massive value proposition for any property management company to offer their clients. We’ll also talk about some measures you can take to protect residents (and, therefore, owners) beforerent delinquency becomes an issue. We’re all about helping customers reduce risk. Here’s a great way to do it. What is rent guarantee insurance? Rent guarantee insurance is a type of insurance policy designed to protect property owners from financial loss caused by resident rent default. Essentially, it acts as a safety net, stepping in to cover missed rent payments for a predetermined period if a renter fails to fulfill their lease obligations. Think of it as a financial backstop, ensuring a property’s rental income remains stable even when a tenant falls into arrears. Let's break it down with an example: You may have a resident who passes your credit check and other screening with flying colors. But then, they experience identity theft and have their assets frozen for a certain period of time. Rent guarantee insurance would help to cover the unpaid rent while they’re getting back on their feet. In this case, it can help them stay where they are while they get their financial accounts restored – and protect your clients’ cash flow over that time. In other scenarios, the outcome may not be quite as sunny (fully restored and still a resident!). Let’s say there’s an economic downturn, and one of your residents loses their job. While no one wants to evict a resident, you may find your hands tied. With rent guarantee insurance, you can offer your owners the peace of mind that they won’t lose money during the eviction process. Providing services like this can set you apart from other property management companies and help drive leads. How does rent guarantee insurance work, and who needs it? Rent guarantee insurance is a benefit for property owners and is one option that property managers can offer their clients as part of a suite of services. It also can provide peace of mind to property managers, knowing their investors won’t be paying out of pocket if a renter stops paying. Here’s how it works: An insurance company offers coverage for a monthly premium. As a property manager or owner, you can pay that yourself or build it into the rental cost. Then, if a renter ever stops paying rent for nearly any reason, you can file a claim with the insurance company and get that missed rent paid while the resident is still delinquent. Rent guarantee insurance isn't a one-size-fits-all magic button for every property manager and owner. It’s most explicitly valuable for property owners who: Have new or unproven tenants: For first-time renters or those with limited rental history, the risk of default can be higher. Own multiple properties: Managing numerous rentals comes with a higher exposure to potential tenant issues. Rent guarantee insurance distributes that risk. Own high-value properties: The financial impact of missed rent can be particularly painful for owners of expensive properties. Rent guarantee insurance acts as a financial shock absorber. But rent guarantee insurance can be a good idea for anyone, depending on their risk appetite. Why is rent guarantee insurance important? Rent guarantee insurance can be a critical way to protect your clients’ – and therefore your – financial stability. For a monthly (or yearly) premium, you can ensure peace of mind in case a resident has a significant life change, moves out suddenly, or simply fails to pay rent consistently. This type of insurance can also take care of the hassle of following up with residents who have stopped paying and even starting the eviction process. Whether or not you opt for rent guarantee insurance, one of the best ways to ensure you’re protected is to focus on protecting your residents’ ability to pay rent. At Second Nature, we provide support for this through our Resident Benefits Package. Our identity protection feature ensures that if residents are ever the victim of identity theft, their missed rent payments are covered. Credit building helps ensure residents build financial security, and our renter’s insurance program helps cover other liabilities on the property side, including loss of rental income in covered scenarios. What does the rent insurance guarantee typically cover? Rent guarantee insurance is solely focused on protecting property owners from loss of income if a resident falls behind or defaults on rent payments. Since rent is the primary pipeline of income for a real estate investor, this is critical coverage if that kind of loss happens. Property owner’s insurance covers damage to a property but not loss of rent. That’s why this type of insurance is unique. Rent guarantee insurance won’t cover certain scenarios, like if there is a failure on the property owner’s sign to comply with a lease or keep the property habitable. A Note About Eviction Protection: Some services that offer rent guarantee insurance also include eviction protection, but not all do. Eviction protection specifically covers the costs of an eviction. Rent guarantee insurance may not involve an eviction at all (for example, in the case of identity theft, the resident may just suspend payments for one or two months while their finances are restored). Or, eviction costs may not be included in the rent guarantee policy. Property managers can include both rent guarantee insurance and eviction protection in their suite of owner services. Limitations of rent guarantee insurance Of course, rent guarantee insurance has its limitations, just like any type of insurance. Here are a few of the limitations to consider before you decide to pay for this coverage. Not all residents will be approved: Insurers do just as much due diligence as you do. They likely will refuse to cover a tenant with a history of defaulting on payments or a low credit score, etc. They may have different standards than you have established for your PMC. Insurance may take time to kick in: Most rent guarantee policies will kick in after a full month or more of non-payment. You may be on the hook for this. However, you may be able to use the security deposit to cover this, depending on local regulations and your lease agreement. Premiums can be pricey: Rent guarantee insurance can cost around 5-7% of your annual rent payments. Of course, you can find ways to fold this added cost into residents’ monthly rent payments, but you will need to be conscious of whether this tarts pricing you out of the market. You may promise more than you can deliver: Always be careful when marketing a service as a “guarantee.” We’ve seen property managers get in trouble when they can’t deliver on a “guarantee.” You may let down owners, or you may even get in trouble from a regulatory standpoint. Nothing is 100% guaranteed, even (or especially!) with insurance. Another risk? Thinking you can offer this yourself without an insurance license. Recently, a property manager in Texas got dinged by the Texas Department of Insurance for offering things like “pet guarantees” and “rent guarantees” without being licensed to offer insurance. That’s why it’s important to use a real insurance provider when you decide to offer rent guarantee insurance. And that leads us to our next section: The best providers for this service right now. Best rent guarantee insurance providers Here are the top rent guarantee insurance carriers available right now. 1. Steady Rent Steady Rent is geared specifically for property managers in the single-family rental space. They help property managers provide risk protection to their investors – you help them protect their rental properties, all while improving your bottom line. They provide two services: rent advance and an owner benefits package. Rent advance provides up to 12 months of rent payments upfront, regardless of resident payment. Property managers also receive their fees upfront. This is only available for investors working with property managers who are already partnered with Steady, and the property must meet certain requirements. Steady’s benefit package allows owners to access the Rent Advances, as well as rent protection of up to two months of rental payments if a tenant defaults. 2. TheGuarantors TheGuarantors focuses on rent guarantor insurance along with innovative risk management solutions for property owners, renters, brokers, and property managers. The company’s promise to residents is that they can help them get into a property they want but might not otherwise be accepted for. For investors and property managers, the promise is to reduce risk and strengthen their bottom line. They offer rent coverage, deposit coverage, and renters insurance. The fees are paid for by residents, so it adds no cost for investors or property managers. The company also says it will step in to help work with residents who have stopped paying rent. The downside is that some residents say the insurance comes at too high a price, and the user experience is not as good as comparable services. 3. Nomad Nomad is another single family property management software company that focuses on a rent guarantee. Their team also helps manage the details of marketing, screening, leasing, and any issues that arise with rent payments. The service is more applicable to self-managing landlords who need support in each step of the leasing process. The way Nomad’s process works is they manage the lease for you and pay you rent on time every month. For larger or more established property management companies, this won’t be the ideal solution as it likely won’t be flexible enough to your needs. 4. Home365 Home365 is a property management solutions company in the same vein as Nomad. They offer a “one rate” to the owner that covers rent guarantee, leasing and renewal fees, eviction fees, repairs and maintenance fees, and tenant turnover costs. They guarantee 12 months of full rent every year, with a rate subject to a deductible per incident. They have a platform for property managers and investors and a separate platform that helps residents find homes that are a good fit. 5. SureVestor SureVestor is a "landlord insurance" brand that helps cover unexpected costs for property owners. They partner with property managers to give a discounted price on their services. Their full coverage includes Scheer Landlord Protection Insurance, which covers malicious damage up to $35,000, loss of rent coverage, eviction costs, sheriff fees, legal expenses, etc. They also offer $1M liability coverage for property managers, up to $100,000 in tenant liability coverage, and a security deposit alternative service. 6. Tenantcube Tenantcube is a property management software solution that includes a rent guarantee in its package of services. They provide a rental management platform that helps support tenant screening, automated rent collection, lease templates, and management software. Their rent guarantee will make up payments when a tenant stops paying up until the tenant vacates the property. You can rely on coverage for up to one year or $60,000 in covered rent. They also support reimbursement of eviction legal fees up to $1,500 and malicious damage protection up to $10,000. Tenantcube is generally a good solution for more self-managing landlords who need support managing their properties – rather than established property management companies that need a more sophisticated solution. 7. World Insurance World Insurance’s rent guarantee covers renters if they involuntarily lose their jobs or otherwise can’t pay rent on time. They provide up to $60,000 of guaranteed rent as well as damage protection of up to $10,000 and eviction cost coverage. This service is geared towards renters themselves, and there are fairly high standards for who will be accepted. Approval can take a long time. 8. Insurent Insurent is a lease guarantor company available in some parts of the U.S., including New York, New Jersey, California, and a few other states. Renters can use the service to get approval in homes they otherwise would not qualify for, as long as they meet certain criteria like creditworthiness, employment, etc. For property managers and investors, it can support filling a property more quickly with residents who seem like good renters but might need a little extra coverage or a guarantor. This might include people like first-time renters who need to build a rental history. 9. Rent Rescue Rent Rescue is an arm of Next Wave Insurance Service. They reimburse rental owners for up to six months of lost rental income due to nonpays, including skips or eviction, and up to three months if the default is due to a court order, military deployment, or death of a sole tenant. It is available in most states. The idea of Rent Rescue is to close the gap between the moment that a resident stops paying rent and when you can finally resolve the issue. It’s a rent default insurance to help keep your cash flowing during this period. They also provide up to $1,000 in legal expenses to pursue eviction.

January 3, 2024

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Property manager handing new residents the keys to their new home

What is Security Deposit Insurance? Pros and Cons [+Best Providers]

Security deposits are an industry standard for property management. But new innovations are helping reduce some of the traditional pain points associated with security deposits. Here’s the thing; For property managers and investors, security deposits provide critical protection from financial fallout if the rental property is damaged. For renters, though, paying a security deposit upfront can pose a prohibitive cost, and an expensive security deposit can make it harder for the property manager to fill vacancies. Enter security deposit insurance – a modern solution that's reshaping rental agreements. We’re diving into everything you need to know about security deposit insurance: how it's different from the traditional security deposit, the pros and cons, and the scoop on the best providers out there. So, whether you're a seasoned property management business owner or just getting started, we’ve got you covered. (And that was an insurance pun.) What is security deposit insurance? Security Deposit Insurance is a coverage that residents purchase, which covers potential damages or unpaid rent during their lease period. Instead of paying a hefty upfront cash deposit, residents pay a fee for this insurance, which typically costs a fraction of the traditional deposit amount. For example, imagine a tenant moving into a home where the usual security deposit is $1,000. With security deposit insurance, instead of paying this amount upfront, the tenant might pay an insurance fee of $50 each month for a 12-month lease. This fee provides coverage to the owner for the duration of the lease, similar to a standard deposit, but at a lower cost to the tenant. This system not only eases the financial burden for tenants but also provides property managers and owners with coverage against potential lease violations, making it a potentially attractive option for both parties. What is the difference between a traditional deposit and security deposit insurance? A traditional security deposit is a lump sum paid by the resident to the owner (or held by the property manager) at the beginning of the lease. It’s often the cost of one month’s rent or another negotiated amount. The security deposit acts as a safeguard for the property manager in case of any damage to the property by the end of the tenancy. If there is significant damage, the property manager and owner can withhold refunding the deposit, depending on local and state laws that govern the use of security deposits. Security deposit insurance, on the other hand, gives residents a way to avoid paying that large lump sum at the beginning of their lease. Instead, they can pay for insurance. Like any insurance policy, they pay a monthly premium for coverage. The premium will be considerably less than a one-time security deposit. When a resident has security deposit insurance, their property manager can file a claim to the insurance company over things like lost rent or damages. The resident doesn’t get any of their monthly payments back at move out. Let’s go over some of the pros and cons of security deposit insurance. Related: How to Write a Security Deposit Return Letter + Free Template What are the benefits of security deposit insurance? Security deposit insurance provides benefits to renters, property managers (or a landlord), and property owners. Here are a few of the top benefits. 1. Reduces the upfront cost of move-in and protects residents' ability to pay rent We’ll just say it plainly: Moving is a huge, stressful life event that costs a LOT of money. One of the major costs of moving into a new rental home is the traditional security deposit. Renters may be paying two times or more the amount of monthly rent just to sign a lease. Security deposit insurance solves that upfront-cost challenge by providing a service at a much lower monthly cost. From the property management perspective, that means residents can keep more of their money to ensure they pay rent on time, and they may be happier to cover other fees like pet deposit fees, a resident benefits package fee, etc. 2. Helps reduce vacancies Because security deposit insurance removes one of the biggest financial barriers to signing a new lease, it can be a great way to reduce a property’s time on the market. By advertising that you accept security deposit alternatives like insurance, you can differentiate your properties on listings and fill them more quickly. 3. Covers unpaid rent This is one of the best benefits for property managers and owners. Traditional security deposits typically can’t be used until the end of a tenancy. But with security deposit insurance, property managers can file a claim over unpaid rent. The insurance typically will cover this. Some states allow property managers to cover missed rent payments with a security deposit, but some do not. If you’re in one of the states that don’t, you may want to consider allowing security deposit insurance. 4. Claims can be made at any time during the lease Like the coverage for unpaid rent, security deposit insurance can cover claims at any time throughout a resident’s lease. You don’t necessarily have to wait to be reimbursed for damage. What are the drawbacks of security deposit insurance? Of course, there are a few risks to security deposit insurance and reasons you may not want to make it an option for your residents. Here are some of the cons of security deposit insurance. 1. Not all claims will be accepted When you, as the property manager, submit a claim for coverage of unpaid rent or property damage, the insurance company may not decide to cover it. Each claim is evaluated at the time of loss to determine if coverage is applicable. Things like normal wear and tear are not covered. Plus, you’re not the one who gets to make the final decision. 2. Not all insurance providers or products are reliable This is true particularly because the industry itself is a newer innovation. Residents may pay monthly premiums but then find the coverage is not all that great. All of us have probably had some kind of experience like this with other types of insurance, too. Some claims aren’t covered, and some insurance companies promise a lot and deliver very little. 3. Residents are on the hook for monthly payments Generally, security deposit insurance is cheaper than a cash security deposit. But if the lease is long-term, the monthly payments may end up being more expensive than just paying a lump sum at the beginning of the lease. For property managers, you want to consider if it’s ideal for your residents to have an additional monthly fee they’re responsible for on top of rent. 4. It can be a hassle Nobody likes submitting or following up on insurance claims. It’s a hassle! The process is often clunky and slow and requires a lot of management. It may take weeks or months to get paid for a claim. Property managers may also need to put time and energy into educating residents or clients about how the security deposit insurance works and the differences in their options. (Or you could show them this article!) Best security deposit insurance providers Security deposit insurance is fairly new to the SFR property management world. Here are three of the best security deposit insurance products on the market right now. 1. LeaseLock LeaseLock is the category leader in this particular security deposit alternative space. In October 2023, the company surpassed $9 billion in insured leases. LeaseLock offers a modern solution in security deposit insurance, replacing traditional cash deposits with a unique insurance model. Their insurance coverage provides property managers with protection while easing the upfront financial burden for residents. The monthly cost to the resident is generally around $30, with $5,000 in coverage for unpaid rent and damage. 2. Obligo Obligo was launched in New York and helps property managers reduce their risks while making security deposits more affordable for renters. Residents pay a small monthly fee for the service while Obligo sets up secure billing authorization between property managers and the resident. The property manager is then authorized to charge the resident for damages up to a pre-set maximum. It’s essentially the same as the type of pre-authorization hold that a hotel might place on a guest’s credit card. Residents won’t be charged unless they cause damage or miss rent, and they will only be charged up to a certain amount. Some residents will not qualify for Obligo’s services, depending on credit rating, etc. The company has a high trust rating on Trustpilot. 3. Rhino Rhino offers a slightly less straightforward insurance model but is a leading solution in security deposit alternatives. Through a surety bond model, their service provides robust protection for property owners while significantly reducing move-in costs for residents. Rhino is sued in over two million homes in the U.S. and claims to save renters over 90% on moving costs. Some former customers complain about unreliable costs and being on the hook for claims. Final thoughts Security deposit insurance is reshaping the rental landscape, offering benefits for both residents and property managers. Providers like LeaseLock, Rhino, and Obligo are at the forefront of this change, providing innovative solutions that ease financial burdens and streamline rental transactions. As the industry evolves, these services may become a new standard in property management. The goal is to make life easier for renters, owners, and property managers. At Second Nature, our goal is the same. We help property managers provide the best residential services and solutions, all while building opportunities for ancillary revenue. We provide a package with solutions like renters insurance, credit reporting, and resident rewards, all built to help protect a resident’s financial stability and reduce risk to your property management company. Plus, it’s completely handled for you, so your team can focus on what they do best: manage your properties.

December 21, 2023

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Pet Screening 101: How Top Property Managers Do It

Pet screening: it’s a big part of a property manager’s responsibilities, but – as any PM will say – it can also be a major headache. More residents have pets now than ever before. According to the 2023-2024 American Pet Products Association’s (APPA) National Pet Owner Survey, 66% of U.S. households own a pet. That means property managers are dealing with pets more often than not. On the flip side, investor clients may be reticent to allow pets on their properties. The result? It can be tough to fill vacancies in properties where pets aren’t allowed or the screening standards are too restrictive. So, how do you handle these situations? How do you push for more pet-friendly policies if you need to fill vacancies? How do you protect yourself and your investors from risk? In this article, we’re sharing the best advice we’ve gotten about pet screening, why it’s important to do it well, the steps to a good pet screening process, and a pet screening checklist. What is pet screening? Pet screening is the thorough evaluation of a prospective tenant's pet before approving their lease application. Essentially, it’s a pet background check. It's not just about keeping furry friends out of your pristine property; it's about minimizing risks, following any service animal requirements and ensuring you are protected from any potential damage. A thoughtful pet screening process allows you to delve into the true compatibility between a pet, its owner, and your rental property – and to ensure you’re prepared for any associated risks. A note about assistance animals: It’s important to distinguish that we’re talking about pets not assistance animals. If you’re dealing with an assistance animal, you should not have the word “pet” anywhere on the lease. This may sound odd to laypeople, but an assistance animal is legally considered a disability device, not a pet. Assistance animals include service animals, emotional support animals, etc. How you deal with assistance animals – both service and support – is guided by your local laws. Property managers should familiarize themselves with the Fair Housing Act, specifically the FHEO-2020-01 Assistance Animals Notice from HUD, for guidance on assistance animals. These animals are regulated through guidance by the ADA and ESA. But for animals that are simply there as beloved pets, you need to set up your own standards for pet screening – and understand where reasonable accommodation must be made. Why is pet screening important? Properly setting expectations and standards for pets – and screening any new pets at the home you manage – creates a number of benefits for you, the resident, and the investor. Here’s why it’s so important: Property protection One of the primary reasons for pet screening is to protect the property from potential damage. Pets can sometimes cause significant wear and tear beyond the usual scope, like scratched floors, damaged fixtures, or stained carpets. By conducting a thorough pet screening, property managers can assess the risk each pet poses to the property. This process often involves checking the pet’s breed, size, temperament, and history of behavior. Understanding these factors helps in making informed decisions about whether to permit the pet and setting appropriate pet deposits or pet rent to cover potential damages. Neighborhood comfort and safety Ensuring the safety and comfort of your residents – and their impact on the neighborhood – is a top priority, and pet screening plays a crucial role in this. Some pets may pose a safety risk, especially if they have a history of aggression. By screening pets, property managers can prevent potentially dangerous situations, ensuring that you don’t end up having to deal with complaints or legal repercussions. Other pets may simply be a nuisance. Excessive barking in the backyard can bring noise complaints, etc. Risk mitigation Pet screening is a proactive measure to mitigate various risks associated with allowing pets on the property. These risks include potential legal liabilities in case of pet-related incidents, such as bites or property damage. Having a detailed pet policy and screening process in place can protect the property management company from legal disputes and financial losses. Moreover, it ensures that pet owners are responsible and aware of their obligations, which include taking care of their pets. Incorporating a comprehensive pet screening process not only safeguards the physical property but also contributes to the overall well-being and safety of the home, neighbors, etc. Related: How to Write a Pet Violation Letter to Tenants + Free Template How to conduct a pet screening According to Victoria Cowart, Director of Education and Outreach at PetScreening.com, the most important factor in your pet screening process is consistency. “The best policies are the ones consistently applied,” Cowart says. “That’s the greatest challenge I see in the industry.” Here are the steps to a successful pet screening process. 1. Document all pet rules and regulations Start with establishing the rules on your properties. Remember, you should be consistent in how those rules are applied across all of your portfolio, so don't make a rule unless you’re willing to enforce it equally. Make sure that all prospective residents are clear on the rules, restrictions, and fees associated with pet ownership. Do you charge a pet fee like a pet deposit fee? Make that clear from the start. 2. Have the right tools at your disposal While the pet screening process is very precise and should be taken seriously, you can also use tools and third-party services to help make it easier. PetScreening.com is one pet screening service that supports property managers in pet screening. Instead of leaving you with all the decisions to make, Pet Screening does it all for you. They have an in-depth questionnaire and screening process. In the end, they provide you with a FIDO score that assesses everything you need to know about the pet. 3. Provide a pet screening application For any prospective residents who are pet owners, the next step is to have them start the application process. This is the key part of the pet screening process. When outlining the content of your pet screening application, Cowart says to focus on two pillars: liability and responsibility. Liability will focus on the animal’s history. Responsibility is more like a “tenant screening” that will focus on the owner’s habits. “You need to know how much the resident is doing to ensure their pet doesn’t have an adverse impact on the rental and on the community,” says Cowart. “Are they picking up after their animal? Do they walk them on a leash? Do they take them to the vet regularly?” The application should include pet profile details like: Age Height and weight Breed/type of pet Medical history Spayed/Neutered Length of ownership Housetraining status History of obedience training Behavioral issues Vaccination status (and proof of vaccination) Previous history of aggression Veterinarian information (See our full checklist below for more.) Many property managers focus on breed restrictions, but the evidence shows that breed is less of a factor in a pet’s behavior than you might think. The animal’s history and the owner’s behavior are more important to look for red flags of whether a dog is aggressive or not. Breed or weight questions should always include greater context. 4. Conduct a pet interview Not all property managers will feel the need to do this. However, having a member of your team meet the animal in person may be something your investor-clients want or that you feel helps establish a better relationship and limit liability. This is also more common in apartment complexes or multifamily housing. For single-family property managers, the pet interview isn’t necessarily as important. However, if you do conduct a pet interview, it’s important to confirm that the pet you’re meeting matches the description in the application. Pay attention to how well it listens, how it approaches you, and whether it shows any signs of aggression. 5. Ensure you are complying with all laws Before approving or denying a pet, do a final check to make sure you’re following all local, state, and federal laws. This is most important when considering assistance animals. Even homes with a no-pet policy will often need to accept assistance animals. 6. Include pet rules in the lease You should have a pet addendum ready for your lease signing. Walk the new residents through these. They shouldn’t be surprised by anything if you follow Step 1 and are clear with them on rules and fees from the beginning. If you require a pet security deposit, that should be given at this time as well. 7. Make sure pets are covered through insurance A big reason people deny pets is because they feel unsure about the risks and they don’t have a way of addressing them. That’s what insurance is for, but here’s the rub: A lot of pet owner policies exclude a lot of breeds, which can limit the number of residents you can approve at your properties. At Second Nature, we provide a renter’s insurance program that covers dog bits for all dog breeds. It’s one of the few programs on the market that doesn’t include breed restrictions. Second Nature’s renter’s insurance program (a part of our Resident Benefits Package) covers all breeds that the property manager approves. What are the benefits? Residents with household pets have stronger lease retention than residents without pets as a group. Furthermore, residents with aggressive breed dogs have a higher lease retention than residents in general. Fewer properties are available to those residents because most people are saying no to their pets. You can be the one who says yes – and gets a happier resident who wants to stay longer and be a responsible pet owner. With the right coverage, you can: allow more residents to apply reduce vacancy costs fill homes faster have a stronger lease retention over time increase opportunities for ancillary revenue. It’s a win for the pet owner, a win for you, and a win for your clients. Pet screening checklist Here’s a brief checklist to help you keep track of what you need to know about pets. Share this with prospective residents to help them prepare what they’ll need. Pet Resume: Include your pet’s breed, age, weight, and a brief description of their temperament. Mention any training your pet has received, especially obedience or socialization training. Vaccination and Health Records: Provide up-to-date vaccination records. Include any regular flea, tick, and worm prevention treatments. Spay/Neuter Confirmation: If applicable, provide documentation confirming your pet is spayed or neutered. Behavioral Information: Disclose any known behavioral issues and the steps you’re taking to address them. Include information about your pet’s typical behavior around people and other animals. References: Provide references from previous landlords or neighbors, especially if you’ve lived in a rental with your pet before. A letter from a veterinarian attesting to your pet’s good health and behavior can also be helpful. Pet License: Show proof of a current pet license, if required by local laws. Pet Insurance: Consider obtaining pet insurance that covers any damages your pet might cause. Second Nature provides this as part of a Resident Benefits Package. Residents can opt into the coverage or provide their own. Photos of Your Pet: Include recent photographs of your pet for easy identification. Agreement to Rules and Regulations: Acknowledge and agree to any pet policies or rules set by the property management. Final thoughts Pet screening doesn’t have to be a major headache. With the right tools and a standardized process, you can make it easier on your team and easier on prospective residents. The goal, after all, is to find residents who will care well for their pet and the property – and hopefully stay for the long term. At Second Nature, we provide extensive pet coverage in our Resident Benefits Package. The goal is to reduce liability for you and make it easier to accept good pets, regardless of their breed. Rest easy knowing you and your residents are covered.

December 20, 2023

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How to Build a Lead Generation Engine for a Property Management Company

Navigating the world of property management can often feel like a high-wire balancing act, particularly when it comes to property management lead generation. But fear not! The path to success becomes clear when you understand your target market, communicate effectively, and employ savvy lead-generation strategies. More good news: We know a guy who happens to be an expert in scaling up residential property management companies – Jeremy Pound, CEO of RentScale. We reached out to Jeremy to talk about the ins and outs of how to approach successful customer acquisition strategies for residential property managers. In this article, he’ll help guide us through key steps, providing actionable insights to help you attract and secure your ideal property management clients. Let's turn those potential leads into lucrative opportunities! Meet the Expert: Jeremy Pound, CEO of RentScale Jeremy Pound is the CEO of RentScale, the largest sales consulting and coaching company in the residential property management industry. They’ve trained over 400 companies on how to successfully grow their property management business by becoming “new customer machines.” He is also the publisher of Strategic PM - The Magazine for Property Management Entrepreneurs and Executives. 1. Define your ideal target market Not every prospect is a fit. And the key to growth is targeting the right people with your marketing strategies. When first starting out, a property manager might focus on pure hustle and price. But eventually, that’s no way to scale for profitability. (On that subject, Pound recommends the excellent management book, “What Got You Here Won’t Get You There,” by Marshall Goldsmith.) “Something I talk about all the time is that the opposite of ideal fit client is a misfit,” says Pound. “You want to work hard to avoid those misfits, which means you need to label the right-fit clients, know who they are, and describe them. That's the best way to grow: not just getting more net clients, but getting better and better quality clients.” In short, build high-quality leads by defining your ideal customer. Pound outlines the specific types of property management investor clients: Experienced investors: “There are different types of experienced property owners. Are you going after those who value risk aversion and peace of mind? Maybe you're charging a little more and adding more ancillary services, but you're protecting them from all the things that can go wrong. Or are you going after really aggressive risk-takers who are looking to optimize every dollar possible?” Accidental landlords: “Are you built to serve accidental landlords? Oftentimes homeowners move on, they move up, or they downsize, and they look to keep their very valuable properties as rental properties.” Working professionals: “Maybe you’re going after working professionals, such as high earners who are building a portfolio as property investors. They got the real-estate investing bug, they know that maybe they don't want to pull their money into 401K and index funds, and so they're actually using new property to build a portfolio for retirement.” Out-of-town investors: “Are you really built to serve out-of-town real estate investors? There are a lot of people, myself included, trying to build a diversified national portfolio of single-family rentals, and [some PMCs] are really built to serve that person because they need somebody local who's an expert and understands that local market. Once you define your ideal customer, which is the most important step, everything comes from there, Pound says. 2. Clarify how you are built to serve those clients best According to Pound, the simplest next step is to build your processes and procedures around that target ideal client. “Everything we do should be a story around why all of our policies, our pricing, our procedures are all built to best serve that client,” he says. “I like to call this ‘avoiding the commodity tax.’ If you go out and spend money on advertising, or if you're buying new leads, or you're trying to spend money on SEO as if you're just a commodity and you've got nothing exciting to say – no sharp story, no compelling positioning – then you're basically paying the commodity tax.” “You're going to have to buy all these leads, and most of those people are not going to buy from you,” he continues. “You might be buying 10 leads to close one deal, or you might be spending a bunch of money on advertising that's just going over everybody's head. Nobody's paying attention to it because it's not exciting.” This brings us to the next strategy… 3. Use dog whistle language Pound emphasizes that what catches our attention is the uncommon, the novel, and the specific. Our marketing should cultivate that specificity. Here’s how: “A term that we like to use around here is Dog Whistle Language,” Pound says. “If you know a dog whistle, only a dog can hear it. So when you know who your client is, it allows you to speak Dog Whistle Language – their language.” “I always try to enter the conversation that's already happening in their mind. If we have a very specific client, we know the problems that they're trying to solve, we know the frustrations they have and the goals they have. So let's just enter the conversation that's already happening in their mind! That’s going to make your content marketing less expensive and way more effective, and it's going to make your sales process even better.” “If we can say what our prospects are already thinking, but we can say it better with more clarity, then they're going to key into that.” Ask yourself: What are they already thinking? What is the problem they're trying to solve? What are the frustrations they have? Then, describe it even better than they can, says Pound: “That has been proven to create trust, to create authority. and to make them remember you.” 4. Understand demand generation vs. demand fulfillment “We want all our clients generating demand for their service,” Pound says. Demand fulfillment is “just going out and buying pay-per-click ads because people are already searching for your product.” This is a commodity-based approach. Let’s say something needs a new roof. They’re just going to type “roofer Boca Raton.” Pounds says that’s demand fulfillment: “You're just fulfilling the demand that's there, right? You're just hoping to get lucky. You're spending as much money as possible and just showing up.” Instead, Pound says, “Demand generation might be going out and talking to people about how if they've had any storm damage, they might be able to get their roof replaced through their insurance.” “There's a lot of examples of this in property management,” Pound says, “especially when you're going out, and you're teaching people to invest in real estate – actually going out there and creating the market for your product. It's more sophisticated, but it's way more profitable, and you have way more control over that than just sitting around and playing the demand fulfillment game.” Pound gives an example of a PMC going after high-net-worth individuals. “Let’s say you’re in Florida, where Publix is headquartered, you might be going after all the executives at Publix. You’re basically saying, ‘Look, there are other ways to pay for your kids' education. There are better ways to save for retirement. You can live a better life if you get involved in real estate investing.’” That’s demand generation. 5. The Buyer’s Pyramid: Have campaigns for each level of the buyer’s journey Source: "The Ultimate Sales Machine" by Chet Holmes ‍ Time to get into the Buyer’s Pyramid. The top 3% are in the demand fulfillment mindset. They know what they need, they’re searching for the service or product, and they’re ready to buy. Then there’s 7% that are loosely open or becoming open to the idea of needing a product or service. As Pound says, “Maybe they're kind of frustrated with their property manager, but they're not so frustrated yet that they're ready to go search on Google.” That’s the moment to hit them with direct mail, email marketing, cold calling, or messaging that enters the conversation that’s already happening in their mind. Pound says to aim to say what they were thinking better than they can say it. Then they may move up into the 3% who are ready to make a decision. Below that is 30% of the potential market that isn’t aware of the existence of your product. They may be renting their homes or about to sell and simply don’t know that property management services exist. Then there's another 30% of the market that just misunderstands. Pound elaborates: “Maybe they’ve been self-managing forever, and they think that property managers just take a piece of the pie rather than make the pie bigger.” “Really good property managers explain to their prospects that they don't just take a piece of the pie,” Pound says. “Really good property managers actually expand the pie. They get more money for the property either by being able to charge more through marketing or reduce vacancy and turnover – and therefore, they're able to actually reduce all the losses that you would have from a rental property.” In the end, you can focus on each of those separate types of prospects and build campaigns that speak directly to them. 6. Track the numbers and optimize: Unit Acquisition Cost & ACV To optimize your acquisitions, it’s key to understand your numbers. That’s obvious, but how do you do it, and what are the most important numbers to track? Pound points to unit acquisition costs (UAC), customer lifetime value, and annual contract value (ACV). “We have monthly recurring revenue for months and months, if not years and years,” Pound says. “So you have to understand some of these numbers.” Unit Acquisition Costs (UAC): “How much does it cost you to acquire a door?” Annual Contract Value (ACV): “How much does each customer bring me annually?” Customer Lifetime Value (CLV): “How much does each customer bring me over their entire lifecycle as my client?” Pound breaks down how CLV affects your judgment on UAC. If a customer stays with you for five years and you're making $200 a month, their lifetime value is going to be $12,000. “You start to understand that you're willing to invest a little bit more than you thought to acquire that customer,” Pound says. This brings us to…. 7. Build the list and lower your costs You want to be always building your list of potential clients and client referrals. “Think about that buyer's pyramid,” Pound says. “Think about attracting and courting those people that are lower in the pyramid before they're ready to buy. We can actually acquire those people for pennies on the dollar versus the really high expense of going after Google pay-per-click or buying leads.” “Let’s say one day, a major life or business event will happen that will turn a prospect into a buyer today. Instead of having to go to Google to look for you, where you have to spend $17 per click, they already look to you for advice and help because you’ve courted them over time. When the life or business event happens, they’re ready to buy from us.” 8. Sweat equity or check equity It takes investment to create clients. In the end, Pound says, that investment decision comes down to: “sweat equity or check equity.” Sweat equity = time spent Check equity = money spent “Some entrepreneurs and business owners have more time than money, and they're going to want to spend money on advertising that works,” Pound says. “On the other hand, some entrepreneurs or property management owners have more time than money, and they're going to want to invest their time.” Sweat equity could look like: Networking with referral partners Direct outreach (outbound) to investors Calling FSBOs Partnerships Facebook Groups Forums Hosting events or going where the investors are Social Media (LinkedIn, Twitter, YouTube, FB, Bigger Pockets) Organic online marketing Search Engine Optimization (SEO) Webinars Check equity could look like: Direct mail Digital marketing (Google ads/PPC, YouTube, LinkedIn, Bigger Pockets, FB) Radio and TV Pay-per-lead Outdoor Hosting premium events with recognized speakers Final Thoughts In the end, getting qualified leads and new business is all about targeting and positioning. As Pound says, “The punchline at the end of the day is: If you’re going to spend money and time, you might as well be positioned. You might as well have the right language – the dog whistle – so you can get more out of every ounce of your sweat equity or every penny of your check equity.” For more insights from leaders like Jeremy, check out our Triple Win Podcast for residential property managers. Or, here are a few places to keep reading about growing your PMC: How to Create a Property Management Business Plan [Free Template] 15 Strategies to Grow Your Property Management Business Marketing Ideas for Property Management Companies

December 12, 2023

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Security Deposit Alternatives for Property Managers and Residents

A security deposit is a one-time, refundable payment made by a tenant before moving into your single-family rental home. It acts as financial insurance against potential damages, unpaid rent, or cleaning fees incurred during their tenancy. Security deposits are large sums of money, and constantly change hands in the single-family rental (SFR) community. Traditional security deposits are standard in the industry but aren’t ideal for everyone. They can typically cost over the first month’s rent for residents and can be a hassle to manage for property managers and investors. If you’re familiar with our Triple Win approach and resident benefits, you won’t be surprised to learn there’s a different way. Security deposit alternatives typically allow tenants to pay their security deposit in installment payments instead of a lump sum before their occupancy of a rental property. Continue reading to find out more about the different types of security deposit alternatives, their cost, and their pros and cons to help you choose the one that works best for you. Related: How to Write a Security Deposit Return Letter + Free Template Types of Security Deposit Alternatives Security deposit alternatives can be achieved through pure insurance, surety bonds, ACH authorization, or an in-house program. Property managers may choose these types of alternatives because they aim to lower the barrier to rental for residents. As a result, this lower barrier increases the ROI for the owner and boosts the PMC’s bottom line. These options, however, are not a one-size strategy. They can vary based on the business size, strategy, and state and local laws. In addition, there are several different ways to apply. For example, insurance, surety bonds through a bond company, and ACH authorization are all available through third-party vendors, which are increasing in popularity. Next, we’ll walk through each of these security deposit alternatives. Pure insurance This is exactly what it sounds like. Instead of a deposit covering potential damages, the resident takes out a policy with an insurance company to cover any damages. The resident pays a small premium, and on move-out, the policy covers any damage to the property up to a certain amount. Pure insurance is great for the resident, who pays a premium and then bears no financial responsibility for damages after move-out. Inherent in that approach, however, is a flaw that makes the pure insurance play tough to buy into as the industry's future. It doesn't incentivize the resident to take care of the property, as they won't owe any additional money for any damage they cause. This flaw leads to higher premiums, leaving insurance as a less effective way to keep costs down. Surety bond The surety bond business model is not new. Still, it's become more popular as vendors have modernized the enrollment experience thanks to over $150M of VC investment into the category. Surety bonds are agreements between two parties managed by a third party, known as the surety. In the case of property management, the contract is between you as the property manager and the resident. It states that the resident agrees not to damage the property and agrees to cover damages should they be responsible. In case of a contract breach at the end of the lease, the surety pays out the sum required to the property manager, then bills the resident the cost of the damages. Surety bonds attempt to incentivize the resident to take care of the property, which is more than a pure insurance program will do, but there's not a definitive set of evidence yet that this is highly effective. It's still a challenge to educate some residents that this isn't an installment plan or insurance product. In many cases, that falls on the property management team. Another concern with the surety bond model is the post-move-out collection results. The majority of damages due from the resident never get collected, which leaves the model with potential recourse ahead: Vendors figure out how to collect a higher percentage Vendors increase monthly pricing Vendors expand into other, more profitable products Less reliable claims payouts Layoffs or other financial controls More investment was requested for more runway The jury is still out on whether surety bonds have the unit economics to win the category. ACH authorization The ACH (Automatic Clearing House) authorization is a popular alternative. It mirrors the method hotels have used for years to compensate for incidentals and applies it to long-term rentals. Residents permit a financial institution to directly draft money up to a certain amount to cover damages and draw from your bank account. The ACH authorization does check the box of incentivizing proper treatment of the home, and the vast majority of money due from claims is collected. So far, this method seems to be getting the best results in post-move-out collections. A fair critique is not 100% of residents qualify for this, and the ones that don't must pay a traditional deposit, so it isn’t a complete solution in some people’s minds. In-house program Todd Ortscheid, CEO of Revolution Rental Management, built his alternative program in-house. Ortscheid spoke on this topic in an episode of Triple Win LIVE in February. “We offer the resident two different options. You can either pay the security deposit amount based on your [application] score, or the alternative is you can pay a monthly security deposit waiver fee,” says Ortscheid. “What the waiver fee is doing is buying you the privilege of not having to pay a security deposit upfront.” Ortscheid clarifies that his implementation of this program is neither insurance nor a refundable installment towards a security deposit. However, there is debate among other PMs and their attorneys about what compliance risks there could be here. Some property managers also struggle to get comfortable with the financial liability. Related: Benefits of Property Management Outsourcing Services When deciding to outsource or DIY, we recommend considering three things: How much of a difference can scale make now? Over time? How large is the skill or expertise gap here? Over time? Is this the best investment of my time? Will it be later? Security Deposit Alternative Companies and What They Offer The traditional security deposit is the OG of rental insurance, a reliable one-time payment typically equal to one month's rent. It works like a financial handshake between the resident and property manager/owner, acting as a safety net for unpaid rent or damages beyond normal wear and tear. While it carries no monthly cost for residents and offers full refunds for responsible renters, it also doesn't offer revenue sharing for investors or the flexibility of newer alternatives. Here's what to expect from a traditional security deposit product, and the baseline we'll be comparing alternatives to: Model: Traditional Up-front cost to resident: Equal to established cash deposit Monthly cost to resident: None Unpaid rent & damage coverage: Equal to established cash deposit Revenue share with property investor? N/A Payments refundable to resident? Yes Resident held accountable for funds? N/A We reached out to Peter Lohmann, co-founder and CEO of RL Property Management, to get the rundown on security dispositive alternative products. Here are some of the most popular security deposit alternative services, the type of product they offer, and the pros and cons of each. Note: The major downside for most of these security deposit alternative products is that they focus on multi-family rental (MFR) communities rather than single-family rentals (SFR). Most also have nonrefundable fees. 1. LeaseLock LeaseLock is a popular security deposit alternative program. Here’s how they stack up: Model: Lease Insurance Up-front cost to resident: None Monthly cost to resident: $29 for standard plan Unpaid rent & damage coverage: $5,000 for standard plan Revenue share with property investor? No Payments refundable to resident? No Resident held accountable for funds? Yes but Lease Lock says they don’t pursue 2. Obligo Obligo is a billing authorization alternative to security deposits. Here’s how they stack up: Model: Bill Authorization Up-front cost to resident: First year’s total fee (variable) Monthly cost to resident: None Unpaid rent & damage coverage: Equal to established cash deposit Revenue share with property investor? No Payments refundable to resident? No Resident held accountable for funds? Yes 3. Rhino Rhino offers the surety bond model for security deposit alternatives. Here’s how they stack up: Model: Surety Bond (non-pooled) Up-front cost to resident: None Monthly cost to resident: Variable Unpaid rent & damage coverage: Equal to established cash deposit Revenue share with property investor? Yes, if over 10K units Payments refundable to resident? No Resident held accountable for funds? Yes, but Rhino says they don’t always pursue 4. TheGuarantors, Jetty, and SureDeposit These three companies – The Guarantors, Jetty, and SureDeposit – all offer an alternative to security deposits in the form of a surety bond. Here’s how they stack up: Model: Surety Bond (pooled) Up-front cost to resident: 17.5% of month’s rent Monthly cost to resident: None Unpaid rent & damage coverage: Equal to established cash deposit Revenue share with property investor? No Payments refundable to resident? No Resident held accountable for funds? Yes The Cost of a Security Deposit Alternative Security deposit alternatives costs don’t necessarily save money for the resident, but they offer a choice that many residents prefer – not giving up a big chunk of cash right at the start. In general, the cost structure for security deposit alternative companies is either a low monthly fee or an annual fee. For most PMs, you can include the cost in a Resident Benefits Package, or it’s billed directly to them by a vendor. The cost can depend on the property's value, the rent and deposit amount, the resident’s credit, etc. Fees are calculated based on the amount of rent, amount of deposit, credit score of the renter, and the value of the client. Security deposit alternative fees can often be as low as 5% of rent. So, for a rent of $1500 a month, a resident might pay: $75 per month (5%). In some larger apartment communities, residents may pay even less – typically $8-$30 per month. Advantages of Security Deposit Alternatives The concept of a security deposit alternative is that it helps lower the barrier of entry for residents who may not want to put down a massive one-time chunk of cash – and it helps protect the investor by filling vacancies more quickly, and incentivizing good care of the property. Here’s a breakdown of more specific advantages. 1. Avoid large deposits for residents Ortscheid says: “When I first started doing this, my assumption was the only people who will take this are the people with the worst scores. “What we actually found was our very first person who signed up for it was someone with an 800+ credit score. He was the CEO of a publicly traded company and had millions in the bank. So I asked why he took the waiver option, and he said, ‘I would rather pay monthly than give you a big chunk of my money.'” 2. Get more options All of these programs can be relatively simple to administer and offer choice to the resident. They can choose options and payment methods like credit cards, ACH, etc. According to Ortscheid: “About 70% of the people we rent to now select the security deposit waiver option.” Giving residents more options helps them feel more secure and in control and boosts their satisfaction overall. 3. Reduce vacancies Perhaps the investor sees the most significant win from security deposit alternatives. And, given the PM’s fiduciary responsibility to the investor, an investor win is usually a win for you. The biggest thing here is the attractiveness of the program to the resident. A security deposit alternative is something you can and should advertise in your listings. It adds a differentiating factor to your listing that moves the needle for many prospective residents, which helps keep your days-on-market low. Revolution Rental Management has been sitting at an average of about ten days on the market over the last year. And as we all know, minimal vacancy equals increased ROI for investors. 4. Get fewer damage claims at move-out Additionally, some property managers claim the lack of a deposit drives fewer damage claims at move-out. This reduction in claims helps to protect the investor’s assets more than a deposit does. Again, this may seem counterintuitive, but Birdy Properties reports this scenario playing out since they moved away from security deposits two and a half years ago. “There is this philosophy out there from residents. Most people believe ‘you’re not going to give me my money back. And since I’m not getting my money back, I’m not going to clean up too well because if I do all that work, you’ll still keep my money anyway. Well, now, you were nice enough to let me move in and not have to give you all this money. Everything has gone well, and now it’s time for me to leave and I can recognize that if I don’t leave the property in good shape, I’m going to have to pay for it.’” “We’ve watched the numbers,” continued Birdy. “We have seen a reduction in overall move-out claims. What it’s costing to turn a property over has gone dramatically down, and we have almost eliminated the turnover cost to the owner. That is the most vulnerable time for us as property managers because that’s when the investor decides if they want to keep this asset any longer.” The speed with which Birdy Properties can roll in another resident with minimal costs keeps the property investors happy, which prevents the PM from losing inventory while maintaining great service and relationships with the client. This great relationship comes from a service residents love, so it all works together to benefit every party. Best practices are developing that will drive triple-win experiences. Disadvantages of Security Deposit Alternatives Of course, there are also disadvantages to security deposit alternative services. These issues may affect your residents' overall experience or your investor's satisfaction with their margins. Before signing up for any alternative security deposit product, you need to be sure you know what you’re getting into. Do your research and ask questions to evaluate things like: what happens if a resident ends their lease early; what damages are owed after move-out and who pays them; how to dispute charges; monthly or yearly fee obligations; etc. Here are a few disadvantages to keep in mind. 1. Payments are not refundable While the advantage to residents is that they don't have to pay it all right away, the disadvantage is that they won't be refunded for their payments. 2. Disputes may be more difficult to resolve Since security deposit alternative programs involve a third party, you must involve another agreement with the lease and contracting stage. If there is an eventual dispute, it may be tough to get it resolved. Residents may not be held accountable in the way you and your investor need. Or, from the resident side, they may not get the service they want. 3. Security deposit alternatives don't save money Some products may seem like they're advertising dollars saved. But ultimately, these alternatives aren't intended to save money. They simply help residents keep money in their savings for a longer period of time, rather than making one big deposit all at once. Despite these disadvantages, we've seen security deposit alternatives pick up in popularity recently. As long as residents, investors, and PMCs know exactly what is and isn't promised, it can be a benefit to everyone involved. ‍ How 1,000+ Professional Management Companies Create Triple Win Experiences Security deposit alternatives are an innovative solution that solves problems for residents, investors, and property managers. For residents: A quality alternative lowers the barrier for residents and gives them more choice and agency in the rental process. For investors: A quality alternative can boost your listings’ marketability and reduce vacancy costs. For property managers: A quality alternative with more relevance for residents and investors – creates new value with an opportunity to monetize and eliminate the administrative pains of traditional deposits. That’s what we call a triple win! Learn more about how we create resident experiences that people pay and stay for – and share your trips and tricks in our Facebook Group!

December 1, 2023

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Property manager meeting with future tenants

10 Strategies to Become a Successful Single-Family Property Management Business

Navigating the world of Single-Family Property Management requires a blend of industry know-how, proactive strategies, and a keen understanding of both investors and residents. What is a single-family property management business? At its core, the business revolves around managing standalone properties for individual property investors, ensuring the rental property is maintained, tenanted, and profitable. But how do you optimize for success in this space? In this post, we'll uncover 10 pivotal strategies to elevate your single-family property management business, from staying updated on industry trends to streamlining your operations for maximum efficiency. Related: Best Property Management Podcasts 1. Keep up with the trends in Single-Family Property Management The dynamic landscape of single-family property management is constantly innovating and growing in response to various economic, technological, and societal factors. Property managers in the single-family space (vs. multifamily properties or even commercial real estate) also tend to be entrepreneurial, innovative, and adaptive. It’s what we love about this community! But some "trends" have staying power, and the key to long-term success is identifying those and adapting your services to the modern consumer. Over the past decade or so, the way we do commerce and services has been upended by technology and the convenience economy. The same is true in property management. In the words of Jonathan Cook at Revolution Rental 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.” So, let’s look at several trends that have emerged that are shaping the industry’s direction. The Convenience Economy: Sometimes we call this "the Amazon effect." Consumers and residents alike are looking for the easy button. They're looking for everything from online rental listings they can scroll from their couch to online rent payment services that make paying as easy as the click of a button. Technological Advancements: Today, property managers are leveraging technology more than ever. From smart home systems that enhance resident experience to advanced, AI property management software that streamlines operations, staying abreast with technological trends is crucial. The key to staying on top of these transformations is to ask the right questions. Pay attention to general business trends. What are consumers demanding? What is new in technology that you could adapt to your business strategy? Running a property management business is just that: a business endeavor. Keep your eyes sharp on trends in commerce and get involved in the conversation of how that affects good property management. 2. Understand your ideal investors in single-family property management When diving into professional property management, just like any other business, it's essential to identify your ideal customer profile (ICP) early on. You will get so much further by "niche-ing down" than spreading your company too thin. What kind of property and client are you ideally set up for or prepared to work with? Once you define your target audience, you can then be ruthless in saying no to anyone who falls outside that definition. Here are a few ways to explore the various dimensions of property investor clients: Level of Experience: Property investors are not all created equal. Individuals get into property ownership for different reasons. You can see experiences ranging from an accidental landlord who never intended to be an investor all the way to a sophisticated or institutional investor, and every shade of the spectrum in between. It's very difficult to build a business that serves all customers across all levels of sophistication. They'll have different needs for how much education they need, how they want you to handle things, and how they want pricing to work. Property Types: You should also define what type of property you want to manage, which will help you assess if a new investor is a fit or not. We're assuming since you're reading this that you're interested in single-family rentals. But within that category, there is still so much variation. Are you looking to manage luxury homes with higher rent, lower demand, and longer vacancies? Are you more interested in workforce housing with more demand and lower rents? Or maybe you're a specialist in Section 8 housing. Whether Class A, B, or C housing, it's very hard to specialize in all property types. Sure, all SFR homes are unique, but it's key to identify the general characteristics of the homes you'd like to manage (or already excel in managing). Then, you and your team are dealing with more consistent situations. Compatibility Fit: You also need to make sure the investor as an investor fits with your approach. And we don't just mean personalities. Have a list of questions that help define what type of investor you can work with. In his podcast Owner Occupied, Peter Lohmann (co-founder & CEO of RL Property Management) talks to Marc Cunningham (President and Owner of Grace Property Management & Real Estate) about their lists, which include questions like: 1) Is the investor financially stable? 2) Is the investor emotionally stable? 3) Are they realistic in expectations? 4) Are they willing to trust us as the expert? Cunningham says his company can manage any property if the owner is right. Define what's important to you and stick to your guns. As Lohmann says in the podcast, "The easiest way to deal with a horrible owner client is to never onboard them in the first place." The goal is to filter out the people who are not a fit before you get into a contract with them. "When you're first starting out in this business, you chase everything," Cunningham says. "But as you grow and become successful, you need to slide that bar on your 'yes' and 'no' and start saying no." In short, nailing the definition of what type of investor and property you want to work with will help you find the right clients and ultimately succeed with them. You're not saying yes to every person who is looking for property management; you're looking for a specific type of customer. 3. Make sure your rental application requirements are clear Are you getting applicants who don't end up being a fit for your properties? It's possible the requirements are not clear on the listing or application. Is your advertising penetrating where it's going to reach qualified residents? Do potential applicants know what credit score they need, income requirements, and more? Of course, how you advertise and where varies widely by the market in your area. Some property managers say they would never use Craigslist, and others swear by it. Understand the market in your area and make it clear from your listings what is required to be accepted as a renter. You'll save everyone frustration with transparency and clarity. 4. Simplify rent collection and accounting processes You know the old saying, "Time is money.” It's particularly true in the rental property management game. Think about it: Every hour you spend chasing down a rent check or struggling with complex accounting software is an hour taken away from growing your business, networking, or improving other operational aspects. Simplifying your rent collection means introducing online payments, setting up auto-pay options, and even mobile payment methods. Modern residents love the ease of digital transactions. Making their lives easier often equates to faster, on-time payments and a heightened sense of trust. One way to simplify rent collection is to incentivize on-time rent payments. Second Nature’s Resident Benefits Package does just that by offering credit reporting and rental rewards to ensure that residents receive value for paying on time. As the property manager, it’s work off your plate! It's also a good idea to standardize your rent collection and use tools to support your team. New tech services like Colleen.ai and EliseAI can fully automate your rent collection communications. As for accounting, streamlined property management software solutions can auto-generate reports, offer real-time financial insights, and make tax season a breeze. By embracing these upgrades, you’re not just benefiting internally by saving time and resources – you’re showing current and potential residents that you value efficiency and are in tune with modern conveniences. The result? Higher resident satisfaction, a more enticing pitch to potential property investors, and an overall smoother business operation poised for growth. 5. Prevent vacancies with effective resident communication and engagement activities Remember when you first fell in love with your favorite coffee shop or that little bookstore around the corner? It wasn't just about the coffee or the books—it was the overall experience, the atmosphere, and the feeling of being recognized and valued. The same principle applies to a residential property management company. Resident communication isn't just about sending rent reminders or maintenance updates. It's about cultivating a relationship. Providing resident benefits, gifts, support services, and timely communication go a long way to showing residents you care about their home. Engagement programs like loyalty rewards or recognizing special occasions can also be game-changers. Looking for more inspiration on resident retention? Dive deeper into our resident retention ideas article to explore various strategies that will help keep your properties filled and your community thriving. 6. Automate single-family property management workflows Ever find yourself drowning in spreadsheets, buried under a to-do list a mile long, or juggling multiple software platforms? Surely we all have! The solution? Breathe easier with property management automation. The beauty of running a full-service property management firm in the 2020s is that there's likely a tool or system for nearly every task in property management, from rent collection to resident communication. Our best single family property management software article is a treasure trove of tools and platforms designed specifically for property managers. By implementing these solutions, you can automate repetitive tasks, reduce human errors, and free up time to focus on more value-driven aspects of your business. Think about it: a streamlined application and screening process, automated rent reminders, and digital maintenance requests—all working like clockwork without your constant intervention. Beyond the tools themselves, consider the integration possibilities. When your property management company software talks seamlessly with your accounting system or marketing platform, the result is a cohesive and efficient workflow. Need more insights into the power of automation? Dive into our in-depth automation-related articles to discover how you can revolutionize your day-to-day operations. 7. Invest in regular rental inspections Investing in regular rental property inspections isn't just about ensuring your property is in good shape—it's also a strategic move to bolster the relationship with your residents and maintain the value of your client’s investment. Here's the deal: Consistent inspections offer a proactive approach to property maintenance. They can catch small maintenance issues before they balloon into costly repairs. Got a minor leak? Catch it early, and you're saving both money and potential damage to a resident's belongings. But it's not all about damage control. Regular check-ins also send a clear message to your residents: you care about their well-being and the condition of the property they call home. It's an opportunity to foster open communication, showing residents that their feedback is valued. Moreover, well-maintained properties tend to attract and retain quality residents. Those who know their property manager is on top of things will likely stay longer and treat the property with respect. Plus, when it's time to find a new resident, you've got a spotless track record of upkeep to show off. In short, consider inspections as a small investment now that can yield big returns in resident satisfaction, property value, and overall peace of mind. 8. Create a referral program to increase your portfolio Word of mouth? It's powerful. And in the property management game, it's gold. Imagine this: your current clients, satisfied with your stellar services, singing your praises to friends, family, and colleagues. Now, what if you could incentivize that process? Enter the referral program. Happy real estate investors are your best brand ambassadors. They've experienced firsthand the quality of your management, and their endorsement carries weight. So, why not reward them for bringing in new business? A referral program can do just that. Start by offering incentives. For your investor clients, perhaps it's a discounted management fee for a month. The point is to offer something tangible that'll get folks talking and referring. But there's more to it than just the direct business benefits. A referral program demonstrates that you value the relationships you've built. It tells your clients that their trust and loyalty don't go unnoticed. Lastly, an added bonus: with every successful referral, you not only grow your portfolio but also create a network of investors who are invested in your success. It's a win-win, driving growth for your business while strengthening the bond with your current clientele. 9. Find new investment properties and pitch them to your current clients You're already managing a portfolio of properties for your investors, ensuring they get solid returns and have few hassles. But here's the question: What if you could amplify those returns for them and simultaneously grow your business? Actively seeking out new investment properties is more than just scouting real estate; it's an art of opportunity. By identifying lucrative properties that align with your investors' strategies, you're essentially providing them with golden opportunities on a platter. And guess who they'll want managing these new assets? That's right, you. When you present these potential investments to your current clients, it accomplishes a few things. Firstly, it reinforces your role as a trusted partner in their financial journey, showing them that you're proactive and always on the lookout for ways to amplify their wealth and boost their cash flow. It's not just about maintaining what they have; it's about growing it. Secondly, every new property they acquire based on your pitch naturally expands your management portfolio. This approach helps scale your business, fostering client trust and loyalty along the way. Remember, in the property management world, being static isn't an option. By constantly seeking growth opportunities for your clients, you're also carving out a pathway for your own business's expansion. 10. Invest in marketing activities for short vacancy cycles Imagine a prime property in a stellar location, decked out with all the bells and whistles...sitting vacant. The eerie silence echoing in those empty halls isn't just the sound of missed opportunities – it's also the sound of revenue trickling away. Maybe that was a little dramatic. But the real estate game is as much about visibility and appeal as it is about bricks and mortar. The quicker you can get a property off the market and into the hands of a reliable resident, the better for everyone involved. This is where strategic marketing steps in. Investing in a robust property management marketing strategy does more than just showcase a property; it strategically positions it in front of the right eyes. With targeted campaigns, engaging visuals, and compelling copy, you can ensure your property doesn’t get lost in the sea of listings. Use social media, virtual tours, and local advertising to create a buzz. Moreover, effective marketing helps paint a lifestyle. When potential residents can visualize themselves in a space, they're more likely to take the leap. By consistently shortening vacancy cycles through effective marketing, you not only ensure a steady revenue stream but also enhance your reputation as a go-to property manager who gets results. In essence, marketing isn't an expense; it's a pivotal investment. It's the bridge that connects empty properties with eager residents, ensuring your business always stays on the move. Increase revenue from your SFR property management business with Second Nature Optimizing your single-family property management business is not a one-size-fits-all solution. From engaging with the right investors to fine-tuning marketing endeavors, the path to success is paved with multifaceted, dynamic approaches. But the key to it all is creating a better experience: for residents, investors, and your property management team. That’s why, at Second Nature, we’ve built a Resident Benefits Package that supports SFR property management businesses. Each benefit is designed to meet resident needs and investor priorities while taking work off your team’s plate. In the dynamic world of SFR property management, adaptability and efficiency are kings. With Second Nature by your side, you’re not just keeping pace with the industry; you’re setting the benchmark. So, as you work towards crafting a business that stands tall and resonates in the market, remember: Your success is our second nature.

October 31, 2023

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Announcement: On-Demand Pest Control Added to RBP

Your resident benefits package from Second Nature just got stronger. We’re excited to announce the addition of On-Demand Pest Control, a convenient service for residents courtesy of our brand-new partnership with Pest Share. What is On-Demand Pest Control? On-Demand Pest Control is a service made available to residents through their RBP that allows them to request pest control services when needed, allowing for quick response and convenient timing instead of routine sprays. Treatment and coordination costs are included for all covered claims, so you can rest assured that you're getting the best possible service. How Does On-Demand Pest Control Work? The process is simple and easy, and is managed for you by Second Nature. Residents submit a request for pest control services through pest.residentforms.com and Pest Share assigns a service provider that will communicate directly with the resident in order to schedule service time. How Much Does On-Demand Pest Control Cost? As mentioned, the cost for these services are built directly into the RBP, so there is no bill for you or the resident. It’s simple, easy, and on-demand for the resident, and it’s a useful service you can provide them without adding admin hours. It also helps protect the assets of the investor, as residents are more likely to request pest control services when they aren’t concerned about footing a bill. It’s a triple win. Residents don't have to worry about the lease saying who is responsible for pest control, it's already built-in for them. It's an easy button. - Brian Phelt, Forefront Property Management What Pests Are Covered? Pests that are often a resident's responsibility that PMs offer on-demand coverage for include bed bugs, fleas, ticks, mites, and cockroaches. Coverage can extend to other pests as well, and Pest Share offers different packaged coverages with certain packages that allow for customization to account for regional differences in common infestation problems. What about pests that aren’t covered? Pests that are not covered under the on-demand pest control service within the RBP can still be requested by the resident through the same process. The only difference is that the resident will be responsible for payment to the service provider themselves. Ready to add on-demand pest control to your resident benefits package? Get a demo today!

October 11, 2023

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How Resident Benefits Packages Benefit Owners and Investors

In today's competitive property market, ensuring a standout resident experience isn't just a nicety—it's a necessity. Enter the Resident Benefits Package, an innovative tool embraced by savvy property management companies to elevate the living experience for residents. But the advantages aren't limited to just happy residents. For property owners and investors, these packages can translate into tangible, profitable outcomes. From reducing overall costs to bolstering a property's reputation and value on the market, the strategic deployment of a Resident Benefits Package can directly contribute to a stronger return on investment for owners. In this article, we'll delve into the top ways that a Resident Benefits Program not only benefits residents but also significantly boosts the bottom line for property owners. Why focusing on resident experience is the key to success At Second Nature, we’ve seen that when residents win, investors also win. Here’s why: Resident retention is key to winning in real estate investing. And the cost of resident turnover is increasing. In rental management, expenses are up, and the cost of turning a property has almost doubled in four years. Hard materials and labor costs have gone up precipitously. With rent also increasing, it means greater lost revenue while a home sits vacant. At the same time, the market from the owner’s side is getting more competitive. The pandemic days of properties getting snapped up within hours are no longer. The demand has cooled, and it's taking longer to fill properties, and it’s more expensive with each turnover. What does all this mean? Resident retention is increasingly important. Studies continue to show that resident retention and lease renewal is influenced by renter satisfaction. But creating an excellent resident experience is HARD. There are hundreds of experience-critical moments happening over the course of a long-term customer journey, and each of them poses its own unique challenges and opportunities. That’s where the Resident Benefits Package comes in. An RBP is a collection of innovative solutions to some of the most persistent problems in resident experience. A Resident Benefits Package is an answer to the question: How do we make an experience so good that residents never want to leave? By packaging solutions that improve resident satisfaction, the RBP also drives results for investors. The Second Nature RBP includes the following services: Group Rate Internet Filter Delivery Service Identity Protection Resident Credit Building Renters Insurance Program Resident Rewards Move-in Concierge On-Demand Pest Control Let’s dive into how each of these services leads to better outcomes for property owners. The value of a Resident Benefits Package for property owners While the Resident Benefits Package is a resident-facing product, the benefits extend beyond residents to generate value for property managers and property owners, too. It’s a Triple Win. Here are six of the top benefits to owners of implementing an RBP. 1. Drives resident retention A Resident Benefits Package (RBP) isn’t just a set of perks—it's a holistic approach to improving the living experience of residents, ensuring they stay longer in your property. By focusing on resident experience, property managers can earn better returns on investment for their investor clients – because of resident retention. Here's how each feature of your RBP impacts retention: Group Rate Internet: 98% of residents are already paying for internet service in their homes. By integrating internet into their lease, you can offer gigabit speeds at a lower price than they could access otherwise. Plus, with no equipment fees, setup charges, or other costs, their overall savings are significant. A dedicated phone support line means no more waiting on hold, and because internet is integrated into the lease, they pay right alongside their rent and don't have to juggle yet another monthly bill. All of this adds up to a significant resident experience improvement. Air Filter Delivery Service: The National Rental Home Council (NRHC) found that a filter delivery subscription reduced HVAC-related work orders by 38%. Reducing 38% of no-air calls in hot summers and cold winters means reducing 38% of negative experiences that could make residents want to move. Also, average savings of $177 per year on energy bills alone more than pays for the program cost. Clean air being as easy as opening the front door helps residents breathe easy and stay healthy. Happier, healthier residents make for healthy investments, too. Resident Identity Protection: Identity theft actually passed home burglary in 2021 and continues to rise. In an age where identity theft is a pressing concern, offering residents an identity protection service is a critical way to keep them safe. Advanced AI technology actually monitors the dark web and helps prevent issues before they occur. A $1M policy and a team of restoration specialists are there to keep good residents protected from a bad situation turning into delinquency or even eviction. In short, it protects residents’ ability to pay rent and support a long-term lease. Resident Credit Building: This service actively helps residents improve their financial health. Our credit building program is shown to save residents hundreds to thousands per year on car payments and credit cards. Plus, renewing residents can get back reporting up to 24 months at no extra cost, which puts even more incentive on renewing. Renters Insurance Program: OK, so there’s insurance, then there’s triple win-surance. Our purpose-built master policy covers property damage and legal liability but also coverage for residents' personal belongings. There are even unique coverages not often found in retail policies, like rental income loss in the event a covered peril leads to rent concession. And residents get the benefit of bulk pricing, saving a few dollars off the average premium. If residents want to get their own policy, our program monitors any 3rd party policies so there are no lapses in coverage. Closing that compliance gap means eliminating risk and exposure for you and your property. Resident Rewards Program: Second Nature’s rewards program incentivizes positive behavior like timely rent payments. Just by paying rent on time, residents avoid late fees and earn $150+ in gift cards and rewards points. Instead of feeling like rent is a drain, now they are building and earning. Move-In Concierge: Property managers know an important insight: Within the first 60 days of renting, barring a life event, many residents have already decided whether they will renew or not. That’s why move-in and the first few weeks are so critical to retention. By offering a move-in concierge service, you're easing this transition. This service can assist with utilities, internet, TV, and more, making the move smoother and setting a positive tone right from the start. On-Demand Pest Control: A comfortable living space is one free of pests. But preventive sprays are really a luxury, not an ROI. On-Demand Pest Control eliminates disruptive, big expenses – and brings fast, quality service to stop infestations at one-third the cost of preventive sprays. This high-value approach ensures responsibilities are transparent and accounted for so owners don’t get stuck with bills that shouldn’t be their responsibility. In essence, every feature of the RBP is carefully chosen to add value to the resident's experience. When residents perceive value, feel protected, and benefit financially, they're much more likely to renew their lease, underscoring the importance of a comprehensive RBP in property management. 2. Reduces costs Yep, you heard us correctly! Integrating a resident benefits program is an effective way to reduce investor costs over the long run. For residents, the benefits of the RBP save them money over their alternatives. Here's how it works in terms of cost reduction: Lower turnover costs: With added benefits that cater to residents, turnovers become less frequent. The cost of finding new tenants – think advertising, showings, and screening – can quickly add up, not to mention potential lost revenue from vacant units. An RBP can keep existing residents happy and more likely to renew, thereby minimizing these costs. Maintenance savings: One of the most cost-saving pillars of the Second Nature RBP? Our Filter Delivery Service. The average cost of HVAC repairs has increased by nearly 50% year over year. Preventing emergency maintenance issues has never been more important. An HVAC filter delivery subscription can cut costs up to $300 per property per year and reduce HVAC maintenance requests by nearly 40%. Emergency expense savings: Services like on-demand pest control ensure residents get transparency and cover their lease responsibility, so owners don’t get stuck with a bill they aren’t supposed to. Reduced premiums: With a renters insurance program that ensures 100% compliance, many investors are able to get a discounted rate because there’s less risk of expenses falling on their policy. 3. Increases on-time payments On-time and early rent payments are critical to the overall success of your financial investment in property. A Resident Benefits Package is a tool to increase the resident behavior you want to see – starting with consistent, timely payments. For example, by implementing a rewards program for early or on-time rent payments, property managers tap into a powerful motivational tool. While late fees provide an important incentive, a carrot approach helps drive the best outcome for everyone. Everyone appreciates acknowledgment for their timely actions, and residents are no exception. The prospect of earning rewards serves as a tangible incentive for current residents to ensure each month’s rent is paid promptly. Rent day becomes rewards day. Of course, on-time rent payments don't just benefit property investors, they can also bolster the credit profiles of residents. With a credit building program built into an RBP, each punctual payment is reported to credit bureaus, allowing residents to progressively build or enhance their credit scores. Knowing that their timely payments contribute to their financial well-being provides residents with another compelling reason to always pay on schedule. The savings residents get on rewards, auto loans, credit card interest, etc., makes it easier for them to be able to afford rental payments – and increases – over time. Credit reporting protects both the residents and property owners. 4. Protects your assets Let’s jump into a story for a minute. A landlord we know onboarded a new resident last year and asked that resident to show proof of insurance before they moved in. All good to go, they signed the lease and moved in. The problem? The policy later lapsed. After that date, there was a house fire. Fortunately, no one was injured, but the home was a total loss. A triple-lose situation of the biggest proportions – for the resident, the property manager, and the property owner. Maybe you know people who have been through similar situations. Or maybe you have yourself. That’s why the Second Nature Benefits Package includes a renters insurance program that ensures 100% compliance. We specifically designed it to generate triple-win protection. The program includes a master policy that residents can opt into or requires them to carry their own insurance policy. 96.3% of Second Nature residents are enrolled in a master policy or the custom HO4 we offer in our program. 3.7% of residents bring their own approved policy. In addition, our renter’s insurance includes protections for the property owner, like Rental Income Loss protection. Another benefit is that you can generally get a discount on your own property insurance if this kind of program is in place. Wins all around. 5. Improves financial value Real estate is obviously an asset. But consider this, too: The asset to a rental property owner is your revenue from the property. Sure, real estate itself can appreciate, but you can also look at it a different way – your residents’ income and ability to pay rent is also an asset you want to protect. That’s where identity protection comes in. In 2021, cybersecurity threats passed home burglary in the level of risk it poses to Americans. In 2021, one in eight Americans were victims of identity fraud, equaling up to $52 billion in losses. Identity theft has a massive impact on people’s financial security and their ability to pay rent. Our $1 million identity protection, with proactive dark web monitoring, is there to protect your residents and keep you from having to penalize or even evict a resident who is affected at no fault of their own. Another bonus: Residents at your properties have peace of mind. 6. Increases ROI A Resident Benefits Package focuses on the most streamlined ways to get residents products and services that make leasing rewarding, effortless, and predictable. Bundling services together in a benefits package results in substantial cost and time savings compared to procuring each service individually. A bundled approach minimizes administrative burdens and streamlines processes, further reducing operational costs. The savings generated from this efficient approach can be passed on to the residents, thus boosting the property's value and, consequently, the investor's ROI. An example of this is on-demand pest control. Pest control is often buried in lease agreements and is unclear. Some agreements cover preventive sprays (which are expensive!), but less than 20% of issues are dealt with through those services. It’s a luxury cost that some people will want to pay for, but it’s certainly not an ROI proposition. An RBP with on-demand pest control, on the other hand, protects the investor for 50-70% lower cost. Residents get the kind of pest control they really need – on-demand – so when they have an actual issue, they can immediately file a claim. This prevents issues from escalating into bigger issues and infestations – situations where the cost too often falls on the investor. Costs are lower, residents are happier, and your properties and financials are safer. These services also manage compliance for you. Different states have different laws regarding who is responsible for pests, the resident or the investor. Pest control services through an RBP will ensure you are always in compliance. Why RBPs are essential to Triple Win rental experiences A Resident Benefits Package isn't just a compilation of services – it's a holistic approach to property management services that replaces negative resident experiences with positive ones. For property investors, the advantages are clear: cost savings, increased retention, timely payments, protected assets, and an elevated return on investment. Beyond the numbers, it’s about cultivating a relationship where residents feel valued, supported, and eager to stay. As the landscape of property management evolves, those who prioritize resident experience are looking at long-term returns on those investments. A peek into the future: An innovative and parallel service that property managers can provide is an Investor Benefits Package (IBP)™️. The IBP should provide an investor experience platform™️ that unlocks scalable product and service customization, digitized onboarding, accounting policy automation, and more. Learn more at the link.

October 10, 2023

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9 Ways to Improve Your Resident Experience

Resident experience is the sum total of interactions and experiences a resident has with their property manager and the rental property itself – from the initial lease signing to the eventual move-out and all the day-to-day living moments in between. It encompasses everything from the quality of services provided, like timely maintenance and communication, to the overall livability and enjoyment of the property. In essence, it's how a resident perceives their rental journey in its entirety. Excellent resident experience management is the mark of a top-tier property management company. It boosts resident retention, satisfaction, and outcomes. In this article, we delve into nine actionable ways to enhance the resident experience in your single-family rental properties, fostering stronger relationships and, ultimately, achieving greater success in property management. Read the full report! If you haven’t already heard, we recently published our first-ever State of Resident Experience Report, which explores resident experience management: the pivotal touchpoints between a resident and a property manager. The report draws fresh insights from the SFR property management industry and explores the three top factors impacting resident experience right now. 1. A Seamless move-in experience Ah, the move-in process – the start of a beautiful friendship between the resident and the property manager. It's a bit like a first date – you're setting impressions that could make or break the relationship. A seamless move-in experience is your chance to roll out the red carpet for your new residents, showing them they've made the right choice (and have definitely swiped right on the best property around). And guess what? A resident who's had a great move-in experience is a happier one. Happier residents stay longer, pay on time, take care of the property, and make positive recommendations. Resident experience examples: How to build a perfect resident move-in experience Here's how to ensure your move-in experience hits all the right notes. Clear Communication: Provide detailed information about the new home and move-in process, including key collection, utility setup, and property rules. Who's handling utilities? Where's the best pizza joint nearby? Share all the important details. Welcome Packet: Roll out the resident red carpet with a welcome packet. Not only does it have all the must-know info, but it also says, "Hey, we're glad you're here." Include essential information such as garbage collection days, rules, important contact numbers, and a neighborhood guide. Property Readiness: Nothing dampens spirits like a flickering light on the first day. Ensure the property is thoroughly cleaned, all appliances are working, and any previous damages are repaired before the move-in date. Efficient Paperwork: Let's face it, nobody loves paperwork. Make it painless with easy online forms and digital sign-offs. Personal Touch: A little welcome gift can go a long way. It's like saying, "Welcome home, neighbor. We're going to rock this thing." Second Nature’s Resident Benefits Package includes a Move-in Concierge to ensure the process is seamless and personal. 2. Responsive communication In the symphony of successful property management, responsive communication is your melody. It's the backbone of a harmonious resident experience, and when done right, it can elevate your property management status from “forgettable” to “virtuoso.” The sooner you respond to your resident’s queries or concerns, the more they'll feel valued. And a valued resident is a happier resident. Remember, good communication isn’t just about speed—it’s about clarity too. It's like being a great tour guide in the bustling city of property management—clear, informative, and always ready to help. Ways to improve communication with your residents Let's explore some best practices: Multiple Channels: Embrace the digital age! Offer various communication channels like emails, text messages, phone calls, and even a resident portal. Variety is the spice of life, right? Be Proactive: Don’t wait for your residents to reach out with issues. Regularly check in and ask if they need anything. Set Expectations: Be clear about your communication protocols. Let your residents know when and how they can reach you and when they can expect a response. No one likes to be left on read! Listen Actively: When your residents speak, lend them your ears! Show understanding and work collaboratively towards solutions. It's a two-way street, after all. Be Respectful: Always communicate with respect and professionalism. Treat your residents the way you’d want to be treated – it’s the golden rule, even in property management! 3. Better maintenance services with quick response times Think of maintenance services as the superheroes of the property management world. When done right, they swoop in to save the day, ensuring minor issues don't escalate into supervillain-sized problems. Quick response times? That's your superhero's super speed. The quicker the response, the happier your resident, and the safer the day. How to improve maintenance services and response times Here's how to get your property management cape (sorry) flapping in the wind: 24/7 Maintenance Line: Offer a dedicated line for maintenance requests. To belabor our superhero analogy, it’s like having a bat signal for your tenants – they know help is just a call away. Online Reporting: Make it easy for tenants to report issues. An online system can keep things organized and ensures no request gets lost in the shuffle. Prompt Follow-up: Act swiftly on maintenance requests. Even if you can't fix the issue immediately, acknowledging the request and providing a timeline can ease the resident's mind. Regular Inspections: Regular property inspections can help you catch potential issues before they become major headaches. It's all about that ounce of prevention! Trusted Vendors: Work with reliable and professional vendors who provide quality work in a timely manner. They're your sidekicks in maintaining property harmony. 4. Resident surveys and active feedback gathering Resident surveys and feedback gathering are your property's annual check-up, a key health indicator for your relationship with residents. These invaluable tools allow you to take the pulse of resident satisfaction, uncover hidden issues, and celebrate what's working well. When residents see their feedback being valued and acted upon, it creates a sense of involvement and community, enhancing their overall living experience and driving resident retention. Importantly, active feedback gathering shows your residents that their voices matter. It instills a sense of ownership and care that can often lead to better property care and longer tenancies. How to turn resident feedback into a better resident experience Here are some ways to champion feedback in your property management: Regular Surveys: Don't just wait for the annual survey. Keep the feedback coming in regularly, like a monthly check-in or a quick poll after a service call. It's like catching up over a virtual cup of coffee – relaxed and informative. Feedback Boxes: Consider setting up a digital feedback box where residents can drop their thoughts, ideas, or concerns anonymously. Think of it as your modern suggestion box. Act on Feedback: Here's the real deal – taking action. Show your residents that their feedback isn't just being heard, it's being actioned. 5. Resident rewards Resident Rewards are a huge factor in resident retention and satisfaction. Rewards make residents feel appreciated and have proven to incentivize habits like on-time payments and better care for the property. Perks like this can significantly boost resident satisfaction, increase lease renewals, and even stimulate referrals. It's a win-win all around! For multifamily and apartment community managers, that might look like community-focused programs. For single-family property managers, we’ve got some other tips. Second Nature’s Resident Benefits Package includes a robust resident rewards program. How to improve the resident experience with resident rewards Here's how you can sprinkle some rewarding magic into your resident experience: On-Time Rent Rewards: Create a system that rewards residents for consistently paying their rent on time. It could be a small discount or a gift card to a local coffee shop. Longevity Rewards: Celebrate lease renewals or long-term residents. A gift, a discount, or even a personalized note can make your residents feel valued for their loyalty. Referral Rewards: Turn your residents into ambassadors! Offer a discount or a bonus for any referral they make that signs a lease. Surprise Rewards: Keep the excitement alive with occasional surprise rewards. It could be as simple as a movie ticket or a voucher for a free car wash. 6. Incentive programs Incentive programs are the next level of resident engagement that professional PMs offer. They can positively influence resident behavior, promote a sense of belonging, and even enhance your property's appeal to prospective residents. When residents feel that their good habits (like timely rent payments) are being recognized or they're being offered valuable services (like credit reporting or identity protection), it builds loyalty and satisfaction. It's like saying, "We're in this together, and we've got your back!" How incentive programs can boost the resident experience Here's how to serve up a great menu of incentives for your residents: Credit Reporting: Offer a program that reports timely rent payments to credit bureaus. It's a win-win: they pay their rent on time, and they build their credit! Identity Protection: In a world where digital safety is paramount, offering identity protection services can be a powerful incentive. It's like providing an invisible, protective bubble around your residents. Rent Discount for Referrals: Encourage residents to become your ambassadors. Offer a rent discount or a gift for successful referrals. It's like having your very own fan club. Early Payment Incentives: Reward residents who pay their rent well before the due date. It could be a small discount or a token gift, but it makes them feel appreciated. Rewards for Green Habits: Encourage residents to adopt environmentally friendly habits, like recycling or energy conservation, and offer incentives for their green efforts. This can really help in SFR when you don’t have the same level of control as PMs managing an apartment building. 7. Support tools Support services work behind the scenes, often unnoticed, but they play a crucial role in streamlining the resident experience. From filter delivery subscriptions to online payments, these services add a layer of convenience and assurance for your residents. Integrating support services into your property management strategy can not only elevate resident satisfaction but also reduce your workload. It's like having a friendly assistant who's always ready to lend a hand, both to you and your residents. How to create support services that add convenience to your resident experience Here are a few ways you can amplify your resident experience through support services: Filter delivery subscription: Offering a filter delivery service for your residents ensures their HVAC system is always protected. It reduces your maintenance issues and costs and ensures they have a safe living environment. Second Nature’s filter delivery reduces resident and PM costs by hundreds of dollars a year. Internet service: 98% of residents are already paying for internet service. By providing it right alongside your lease, you can decrease costs for your residents and simplify their lives. Group Rate Internet provides gigabit-speed service at a lower price than residents can get on their own, saving them money on something they're already paying for. Online rent payment: Providing an easy-to-use online portal to process and automate rent payments and lease renewals adds a layer of convenience for you and your residents. Maintenance request portal: An online system for maintenance requests helps keep track of issues and ensures timely response. It's like having a 24/7 maintenance desk at their fingertips. Digital notifications: Use email or SMS notifications to keep residents updated about important things like maintenance schedules, community events, or changes in property rules. Proptech solutions can help with digital support. Resident portal: A comprehensive resident experience platform where tenants can access services, find information, and connect with management can significantly enhance the overall resident experience. 8. Concierge services Concierge services are the above-and-beyond offerings that can truly set your property apart from the rest. This personalized attention can transform the often stressful processes into a smooth and enjoyable experience. How concierge services help with resident experience Here are some other examples of concierge services: Move-in Concierge: Who doesn’t want a personal assistant during the often chaotic time of moving? A move-in concierge helps with utility setup and pricing comparisons and provides local area information. Learn more about Second Nature’s Move-in Concierge in our Resident Benefits Package. Cleaning Services: Offering access to trusted cleaning services, whether for regular use or during the move-out process, can be a huge convenience. Maintenance Scheduling: A service to help residents schedule routine maintenance can keep their homes running smoothly without them having to worry about coordination. 9. Insurance While, as a property manager, you carry insurance for the physical property, it's equally important for your residents to have renters insurance. Your coverage protects your owners' real estate investment. Renters insurance protects residents’ personal belongings and covers them for liability, and it's a small investment for significant protection. Plus, in case of a mishap, it can help the recovery process go much more smoothly. Resident experience examples: How to leverage a renter’s insurance program Here's how you can integrate insurance into your resident experience: Educate Residents: Make sure your residents understand the importance of renter's insurance, what it covers, and what it doesn't. This is critical information that every renter should know. Insurance Requirements in Lease: Include a clause about renter's insurance in your lease agreement. This helps to set the expectation right from the start. Annual Reminders: Send out annual reminders for policy renewals. It's a small step, but it ensures continuous protection for your residents. Renter’s Insurance Program: While most property managers require insurance, less than half of renters maintain coverage. Second Nature has developed a renters insurance program that has 100% compliance and leaves residents – and you – with the coverage they need. How Second Nature improves resident experience Resident experience – those pivotal touchpoints between a resident and a property manager – can significantly shape the success of a single-family rental home. At Second Nature, we’ve built our entire company on the idea that resident experience can change the game in property management. Our Resident Benefits Package wraps up each of these strategies into an all-in-one resource for property management companies. It saves money for you and your residents and delivers the best in convenience and resident experience. Learn more about the Resident Benefits Package or read our State of Resident Experience Report.

July 18, 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 single-family 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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Types of Tenant Issues and How to Deal With Them

Successfully managing rental properties is no small feat, especially when you consider the countless tenant problems that can arise. As a property manager, it's essential to approach these challenges not with a mindset of blame, but with a proactive and productive strategy aimed at fostering positive behaviors. Today we’ll explore the most common types of challenging situations with tenants, from late payments to lease violations, and offer practical solutions for each. By understanding these issues and how to address them effectively, property managers can create a harmonious living environment that benefits residents, investors, and the property management business, achieving the all-important Triple Win. Here’s how we’ve seen professional property managers approach difficult situations and turn them into wins. 8 types of tenant problems Success for a property manager (PM) means creating and delivering the best experiences for 1) residents, 2) investors, and 3) property managers – a Triple Win. The Triple Win means finding solutions that benefit everyone. In that vein, some property managers approach resident issues as a behavior that can be changed. They ask, “What are the behaviors and habits that I want to prevent, and the ones that I want to encourage?” Often the root cause is addressable and the behavior changeable. So, first, it’s important to identify those common problem behaviors and then learn how to prevent them. Partial payments, late payments, and nonpayments Can we get an amen? Late payment is probably the most common complaint among property managers since on-time rent payments are critical to managing your business. In aiming for a triple win, on-time payments are one of the top needs for property managers and investors. Residents may have any number of reasons why they might struggle to pay rent on time. Here are some of the most common reasons we’ve heard from PMs for why residents have late rent or unpaid rent: The resident’s paycheck comes after the month’s rent is due. There are financial products coming to the industry that allow residents to split rent payments and pay back a third party before the month’s end for less than the cost of a late fee. Also, some PMs are providing financial literacy and education resources through partners like Operation Hope. Residents are stuck sending checks in the mail. Most PMs are now leveraging tech platforms that can make payments easy-breezy. The issue may be more a matter of encouraging more residents to use it. Some accounting platforms are tricky to use. The more convenient your accounting platform interface is, the more residents are likely to use it. It’s possible a resident had a large, unexpected medical bill or other expense. You can set up systems to help them stay in communication with you about payments and set up payment plans for late fees if they miss. Some PMs are even allowing residents to access their security deposits and switch to a monthly alternative instead. It’s always possible that they simply don’t have the income to pay the rent. PMs know this is a risk, and many focus on implementing better financial tools for their resident screening process. Property damage Another common issue is rental property damage. Most residents take care of the property. After all, it’s where they live! But we’ve all seen residents whose footprint goes beyond normal wear and tear, whether it’s due to negligence, abuse, unapproved changes, or DIY projects gone wrong. Again, we’ve learned from innovative property managers that the best approach is to proactively create an environment where residents are motivated to take great care of the property. They ask themselves: How do we make it easier to take care of the property than not? Think of it as putting the cookies on the bottom shelf. How do PMs get this done? Often, through a resident benefits package (RBP). A resident benefits package rewards residents for taking care of the property. A good package includes things like air filter subscriptions, credit support, and great insurance. After all, when changing air filters is as easy as opening the front door, it gets done more often. When getting proper insurance coverage is as easy as signing the lease, it means fewer residents fall out of compliance. Lease violations Lease violations put everyone at risk. Here are a couple of examples: Unauthorized occupants and animals – i.e., people or pets that didn't go through the proper screening and approval process. Unexpected roommates or pets can become liability risks or cause revenue loss if the resident should be paying pet fees, etc. HOA violations – i.e., breaking the agreements made with the homeowners association. Most single-family rentals are subject to some kind of HOA. Violations may relate to poor maintenance of the lawn, noise violations, or other "bad neighbor" behavior as the HOA codifies it. Illegal sublets Subletting may fall under HOA violations or other issues. One particularly controversial type of subleasing is Airbnb or other short-term rentals. Some cities and districts ban these kinds of rentals. Property managers are often experts on local regulations around rentals and help communicate local and state laws with their residents. A legal advisor also goes a long way toward helping build a clause in the lease agreement. Excessive complaints Reasonable complaints from residents help PMs stay on top of issues on their properties. Broken AC? They’ll let you know. Gas leak? You depend on them to tell you if something is amiss! But there’s a flip side to resident complaints, too - unreasonable complaints. These are the phone calls that wake you up in the middle of the night over something you’ve already resolved. Or the complaint about something out of your control. Or maybe just incessant contact about little things that the resident could easily address themselves. Maintenance issues Maintenance issues are a frequent challenge for property managers. Whether it's a leaky faucet, a malfunctioning HVAC system, or more significant structural problems, addressing maintenance requests promptly is crucial for tenant satisfaction and property upkeep. Delays in handling these issues can lead to tenant frustration and potential property damage. To manage maintenance issues effectively, establish a clear process for tenants to report any problems. Use a reliable online portal where residents can submit requests and track their status. Regularly scheduled maintenance checks can help prevent issues from becoming emergencies. Additionally, fostering good communication and ensuring tenants know what to expect can build trust and satisfaction. Security deposit disputes Security deposit disputes are a common source of tension between property managers and tenants. Disagreements often arise over the amount of the deposit to be returned, usually due to differing opinions on what constitutes normal wear and tear versus damage. To minimize disputes, conduct thorough move-in and move-out inspections with detailed documentation, including photos and videos. Provide tenants with a clear list of guidelines on what’s considered normal wear and tear and what isn’t. Transparency and good communication are key to ensuring tenants understand the conditions under which deductions could be made. By being upfront and maintaining detailed records, you can reduce the likelihood of disputes and ensure a smoother transition when tenants move out. Noise problems Noise complaints are another frequent issue in property management. Excessive noise can disrupt the peace and quiet of neighbors, leading to dissatisfaction and conflicts. To handle noise problems, include clear noise policies in your lease agreements (such as quiet hours) and communicate these policies to all tenants upon move-in. Address complaints promptly by investigating the source and discussing the issue with the offending tenant. Additionally, consider implementing soundproofing measures in your properties to reduce noise transmission and create a more comfortable living environment for all residents. Related: How to Write a Noise Complaint Letter to Tenant How to avoid tenant problems and issues as a property manager Before we talk about strategies to build good habits among your tenants, we’ll also touch on some practical tips to deal with difficult tenant issues– whether you’re looking to avoid the experience altogether or if you’re already facing major obstacles. Ensure you have a robust applicant vetting process Obviously, one of the best ways to deal with tenant difficulties is to avoid them in the first place. That might sound like a cheat of an answer, but any property manager will list this as one of the most important factors to success. Every applicant should be given the same requirements in a tenant screening process, to avoid any discrimination and protect yourself, the applicant, and your investor. You should include a background check for criminal history and run credit checks into credit reports, proof of income, and references from past employers and if applicable, previous landlords. Make sure you're aware of tenant rights laws in your area and take care not to discriminate. Related: Tenant Screening Checklist: Free Template and Form Example Keep written records of everything Leaving a paper trail helps protect your job and your assets. If you’re a property manager, it helps build trust with the investors; if you’re an investor, it helps keep you legally protected and the trust of your other tenants. Call law enforcement when dealing with lawbreakers Don’t try to deal with lawbreaking alone. Call police or community officers to help you deal with illegal activity. Keep your leases updated and bring up details when needed Make sure that you and your attorney are regularly updating the terms of your standard lease and rental agreements. This helps to avoid any legal issues or additional expenses. Reminding tenants of the details of the lease can help calm them down and establish clear boundaries around what they can and can‘t ask for. Follow an eviction process if necessary No one wants an eviction. But if your tenants are putting you and other residents at risk, or breaking the terms of the lease, it’s time to consider giving them an eviction notice. Start with a written notice. Make sure you consult with a legal advisor to avoid an eviction lawsuit. Be sure you understand local ordinances around eviction. Stay familiar with local laws and regulations And, of course, all property management companies should stay up-to-date with their local laws and regulations. These differ widely from city to city and state to state, and are critical to staying safe, avoiding penalties, and providing fair service to every tenant. How to turn challenging tenant situations into happy residents These are helpful tips, but I’m sure you’re all nodding along like, “Yes, but this is the bare minimum!” After all, these steps are reactive. The Triple Win mindset is proactive. In addition to following the best practices above, Triple Win PMs ask: How can we make the resident experience so good that they want to stay, pay, and play by the rules? Here are some of the best tips we’ve learned from years in the industry. Resident Benefits Package One of the most practical solutions we’ve seen is providing a robust Resident Benefits Package that delivers on what your residents need. Benefits are extremely important to residents in single-family properties. In fact, a recent study found that 22% of residents planned to move to a rental with more appealing amenities better suited to their needs than where they currently lived. PMs attract the right residents and encourage the best behaviors with amenities and benefits. A resident benefits package can boost the resident experience and help influence resident behavior. The next tips can be included in an RBP or separated out on their own. Create an incentive program that rewards residents for good habits like on-time payments Our resident benefits include monthly rental rewards for residents who pay their rent on time. Property managers are also able to create custom incentives to reward on-time renewal decisions, prompt survey replies, and more. It's a rewards platform for residents, but an incentive platform for PMs. This is the definition of a triple win! Support residents in building credit Credit-building tools are another incentive for residents to pay on time – but it goes even further by actively supporting residents in their financial stability. Our credit building program automatically reports on-time payments to the credit bureaus, which has increased resident scores by as much as 20-40+ points. Provide easy-to-use tech tools to support their experience An online portal can make everything easier – from paying rent on time, making timely maintenance requests, and checking important rental unit information. Build ease into property care tasks like air filter changes PMs are increasingly ensuring that things like air filters are taken care of automatically. Our resident benefits package includes regular filter shipments, which reduce heating and cooling costs by up to 15% and reduce HVAC work orders by up to 38%. Provide a move-in concierge Make your job easier with a move-in concierge service included in your resident benefits package. Residents turn four phone calls into one, and get their utilities and home services set up at their new address conveniently. When it’s that easy, it gets done more often. When there’s an experienced person helping, it also eliminates more mistakes. Provide failsafe insurance coverage The master policy included in RBP allows property managers to submit damage claims directly and immediately. And over 95% of residents choose it due to the competitive pricing, coverage, and convenience of just signing their lease. Our insurance program turns 41% lease compliance into 100% compliance. These are just a few examples of how property managers are using benefits to encourage the best resident behavior. In fact, at Second Nature, we built every feature based on feedback from professional PMs who have explored how to turn problems into a Triple Win experience. Why a professional property manager is critical to managing difficult tenant issues All of this is made possible with a professional property manager. What differentiates the pros from a “commodity property manager?" Commodity property management is built on the belief that property management is just a basic service of collecting rent and handling maintenance – a support function. This competitive approach is resigned to differentiating from old approaches by being a little bit cheaper. It’s a zero-sum game with winners and losers. And it leaves problem behaviors from residents unaddressed until after the fact. Professional property managers are getting proactive about building Triple Win experiences, built on the belief that property management is positioned as a strategic function for creating value. It’s generative. More property managers are asking how to grow the pie, so everyone gets bigger slices, and everyone wins. By stacking aligned, experiential value over time, it creates business relationships residents, investors, and team members want to stay for. How the Second Nature RBP helps in managing “tenant problems” and making residents happy In the end, even most inexperienced managers typically know what's supposed to happen – i.e., rent on time, change filters, maintain insurance, etc. But the best property managers know not just what’s supposed to happen, they know how to make it happen. There are all kinds of exciting innovative approaches out there, and professional property managers are leading the way. We believe it will be the dedicated, passionate professionals who innovate and solve old problems in new ways. Learn more about how Second Nature partners with professional PMs on Resident Services that drive Triple Win outcomes.

June 28, 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. Related: Free Property Management Agreement Template 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. Related: How to Write a Pet Violation Letter to Tenants + Free Template 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 Renters 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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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 single family property management software that investors can operate themselves, and the need for a basic property management service in the future rapidly declines. Not surprisingly, the key to success in the future is to provide something better than a basic property management service. This is where the Triple Win comes in by providing real tangible value to all parties to create an experience that cannot be matched by old-school companies and software. The Triple Win is important because companies that fail to evolve with this changing industry will be left behind and eventually go out of business. Creating a Triple Win is a fool-proof way to ensure the evolution of your business. How do I create a Triple Win? Pt. 1. The investor JWB Real Estate Capital was one of the first property management companies to identify the long-term value of the Triple Win. The business is built around the idea of helping real estate investors achieve the highest possible ROI, and it does this by creating a Triple Win that keeps ROI high for investors via low vacancy rates and other costs. This concept has led to a number of practices that help achieve that goal including some that actually subtract from JWB’s short-term profit. One of these is the long-term lease, which cuts the income JWB receives from tenant placement fees pretty dramatically. However, this creates a lot of value for the investor, whose vacancy and tenant placement costs are much lower. JWB also works closely with their clients to create a detailed plan for real estate investment that’s designed to maximize the investor’s ROI. It’s a property management company, but a lot more than property management is going on here. That’s the key. It’s this excellent experience JWB provides that drives business from long-term investors, which adds sustainability to the business model. It’s differentiated and it creates unique value, so the short-term profit decrease is offset by the growth and retention of clients that understand the benefits of working with JWB can’t be matched by any old run-of-the-mill PM business. Auben Realty has built their literal company structure around experiences that create a Triple Win. They employ Investor Experience Managers and Resident Experience Managers to enable clear communication and quick action on the needs of both other parties. Again, this is differentiated and creates unique value that an investor won’t typically realize from a scaled company that is still operating with a basic service. Creating a Triple Win for the investor is about creating value. Ask yourself right now, “what am I doing to help my clients achieve maximum ROI?” and, “what am I doing to make communication as easy as possible and streamline the real estate investment experience for my clients?” The value they perceive from you simply managing their properties is dying, so you need to create value beyond that in order to build a business that’s worth the cost to employ. Pt. 2. The resident So what about the resident side of this? Recall that JWB’s long-term lease decreases vacancy costs for investors. Vacancy doesn’t just create costs though, it’s unrealized profit if nobody is paying rent. So vacancy, not surprisingly, is the number one thing your investors want to avoid, meaning resident retention becomes a priority. This is why resident experience has become a key term in property management. The best way to decrease vacancy is to provide a resident experience so great they don’t want to leave the property. "So traditional property management, we’re focused on the investor. That’s our client. The resident pays rent. If you don’t pay rent, we’ll find someone else who can. We wanted to kind of think outside the box there and say ‘okay, the resident is important in investing because if we can decrease vacancy and reduce turnover and keep the residents happy, they’ll stay in our properties for long periods of time and ultimately increase the investor’s return as well.’” - Auben Realty CEO Phil Vera Providing an exceptional resident experience is challenging, but this is really where property management companies can differentiate themselves and create something that commoditization can’t touch. You can’t really commoditize an experience, and a devoted team of property managers that can create such an experience for residents will decrease vacancy rates to a point where investors have no choice but to work with a professional PM if they want to maximize ROI. The industry-leading method for resident experience is RBP by Second Nature. Ancillary income programs like RBP can help create a fantastic resident experience by offering real valueIt takes all the work out of creating and managing a great resident experience. RBP is a suite of services that property managers can purchase and add to a rental agreement for the express purpose of creating that unmatched experience. Every single one of these services is managed externally for you by Second Nature. You don’t have to do anything. It’s so simple to implement, it’s not even plug-and-play. It’s just... plug. Resident Services within RBP by Second Nature include things like Rental Rewards, which make residents feel valued by management and also incentivizes on-time rent payment for the investor. Programs like identity protection and credit building are great tools that many residents wouldn’t otherwise have access to. Even one-call utility setup creates a great resident experience, as getting all the utilities working for a property can certainly be a hassle, and efforts to make settling into their new home easier are rarely lost on residents. Pt. 3. The property manager Happy residents and happy investors lead to happy property managers. RBP creates a great resident experience that ladders up to the investor’s experience, all of which benefits the PM in the end. That’s the Triple Win in a nutshell. The PM is focused on the needs of the client and the resident, and everybody wins as a result. This is the future of property management. External pressures on the industry have made it so. Creating a Triple Win creates value that can’t be realized in any way other than working with a professional property manager. That’s how you escape the grasp of commoditization and technological innovation, and companies that don’t orient themselves towards a Triple Win will be left behind.

May 18, 2023

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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?

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.” Related: Property Management Laws and Regulations by State 4. Falling Out of Compliance with Laws and Regulations & Screening Tenants “I live and operate in California, and it seems like California has a new law every day for resident rights,” says Catalano.”Property managers have an obligation to themselves, their teams, their clients, and their residents to stay up to date with the ever-evolving laws and industry regulations in their state.” And unfortunately, as everyone knows, rapidly changing fair housing laws get complicated really fast. “To make this situation even more complicated, in addition to the statewide ordinances, there are local ordinances as well that supersede the state ones,” says Catalano. “So, for example, you have to stay on top of knowing that while there is a statewide rent control in California, certain areas in Silicon Valley have a different rent control.” Knowing that lease and eviction law changes are fluid, Catalano believes it helps to think of them as living, breathing organisms that are continually changing and growing. In addition, Catalano recommends that you should review all state and local laws and regulations on at least a monthly basis. And while leases and property management agreements don’t need to be updated monthly, they should be combed through on a regular basis to be sure they are all compliant. Understand the laws around background checks, credit checks, and discrimination when screening tenants, etc. “Updating your lease agreements is tedious and can sometimes be monetarily expensive. You may even have to pay an attorney to do it. But at the end of the day, you really have to do it. Believe it or not, we’ve had a few situations, especially in California, when we have acquired a company and when we have looked at the leases have found as many as four items in there that are actually illegal.”’ “It’s not easy to be perfectly compliant with how many laws and regulations there are, how quickly they change, and how different they are from place to place, but it is important if you don’t want to get sued. While lawsuits from renters are generally frivolous, they’re happening more and more, and it’s not something you want to open yourself up to.” Related: Property Management Startup Checklist 5. Making or Keeping a Bad Hire “Right now, hiring is probably one of the most difficult aspects of this business, and can be one of the biggest mistakes property managers make. There are a lot of hurdles to finding and placing the right people for every job.” “In California, if you want to be a property manager, you have to be licensed, which is also the case in other states as well. With a lack of viable candidates, however, many unlicensed people are doing property management duties that require licensing. As a company owner hiring unlicensed employees, you could get in some serious trouble with the Real Estate Commission,” says Catalano. “So have a strategy for finding the right employees for your company. Start by confirming that they have the required licensing. Next, make sure that they have the right personality for the job that they're hired to do. We use a company called Culture Index to help us determine if there is a good fit. The company uses personality analytics to determine if the job candidate will be in the right position, whether or not they have the skills to be a leader, and answers personality trait questions like ‘are they ambitious and will they follow directions accurately?’ This Culture Index has really helped us with hiring and making sure that we have the best person in the right position for them. In addition to implementing a hiring strategy, Catalano says that it is important to understand your end goals for each department and the overall company structure to hire the right workers correctly. “You should have an org chart, even if you only have six employees. The chart should visually outline, ‘Who's doing what?’, ‘Who reports to who?’ and ‘Are they in the right position?’ When you are hiring, you need to know if the position is departmental, portfolio, or hybrid. Both you and new hires will want to know the plan moving forward to attain more growth, and I think that’s a big pitfall. Having this org chart will keep you from hiring the wrong person or guide you on how you want to run the business,” says Catalano. “Having an org chart and hiring strategy really ties back to knowing your financials and metrics. Understanding how many doors are being managed per full-time employee and how to structure around the best servicing that door count is the best way to optimize your business for success. I know that these strategies work because I think the average in the industry right now is about 50-60 doors per FTE and at PURE, we're sitting at about 115. You can get to well over 100 iIf you're more efficient, maybe 150 iIf the technology gets a little bit better. We think we can get to 200 eventually. So that's how we look at it. How are you structuring your business to get the best and most efficient organization?”

May 17, 2023

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