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Triple Win Property Management Blog

How to Draft a “Notice to Vacate” Letter to Tenants [with free template]

Asking a resident to vacate a real estate property is often a delicate and challenging task for rental property managers. Whether due to lease expiration or lease violations, a “Notice to Vacate” requires sensitivity, clarity, and legal compliance. This article aims to guide you through the essential steps to ensure a smooth transition and protect your rights as a property manager, as well as the rights of the property owner. It's important to note that the terms "tenant" and "resident" may be used interchangeably throughout this article. We prefer the term “resident,” as this emphasizes the human nature of our relationships, as opposed to more transactional qualities. Depending on your jurisdiction, there might be specific legal distinctions, so always refer to the terminology used in your lease agreement and local laws. Understanding When a "Notice to Vacate" Letter Is Necessary Lease Expiration When a fixed-term lease reaches its end date and you do not intend to renew, a “Notice to Vacate” serves as a formal declaration to the tenant that they must vacate the property. This tenant notice is essential to set clear expectations and allow the tenant sufficient time to make alternative living arrangements. Month-to-month Lease Term In the case of a month-to-month tenancy, terminating the rental agreement requires proper notice in adherence to the timeline specified in the lease or local law. Typically, this ranges from a 30-day notice to a 60-day notice. A well-drafted notice ensures compliance with legal requirements and provides the tenant with a sufficient amount of time to vacate. Lease Violation If a tenant has committed a serious breach of the lease agreement, such as non-payment of rent, property damage, or illegal activities, issuing a “Notice to Vacate” is a necessary step in addressing the violation. This notice should clearly outline the breach and the consequences of failing to comply. Major Repairs/Renovations There are instances when major repairs or renovations are necessary, and the property must be vacated to ensure the work can be completed safely and efficiently. In such cases, providing a “Notice to Vacate” is crucial. This notice should detail the nature of the repairs or renovations, the expected timeline, and the reasons why vacating the property is necessary. This helps residents understand the urgency and necessity of the situation, while also allowing them adequate time to find alternative accommodation. State and Local Laws State and local laws play a critical role in determining the notice period and the grounds for issuing a "Notice to Vacate." For instance, in California, tenants must be provided with at least 30 days' notice for month-to-month agreements if they have lived in the property for less than a year, and 60 days' notice if they have resided there for more than a year. Additionally, California law imposes strict regulations regarding just cause for eviction, especially in rent-controlled areas. Understanding these regulations is essential to ensure that your notice complies with all legal requirements and avoids potential disputes or legal challenges. Key Considerations Before Drafting Your Letter Review Your Lease Agreement Before drafting your notice, thoroughly review the lease agreement. Pay close attention to the terms regarding notice periods, renewal options, and lease termination procedures. This ensures that your notice aligns with the agreed-upon terms and helps avoid potential disputes. State and Local Regulations Familiarize yourself with tenant laws in your jurisdiction, particularly those related to notice periods and grounds for eviction. Regulations can vary significantly, and understanding these rules is crucial to ensuring your notice is legally compliant. Documentation Gather all documentation pertaining to the tenancy, including the lease agreement, any violation notices, and communication records. Comprehensive records support your case if the tenant contests the notice or if legal action becomes necessary. Crafting a Clear and Compliant Notice to Vacate Letter Introduction Begin the letter by stating its purpose as a formal notification to vacate the premises. Identify the property by address and the tenant(s) by name. If applicable, reference the lease agreement to establish context and legitimacy. Vacate Date Clearly specify the last day the tenant has to vacate, ensuring that it aligns with the required notice period outlined in the lease or by law. Providing written notice of an exact move-out date avoids any ambiguity and sets a clear deadline. Reason for Termination (Optional) While not always required, briefly explaining the reason for termination can help maintain transparency. Whether it’s due to lease expiration, non-renewal, or lease violation, keep the explanation concise and professional, avoiding accusatory language. Next Steps Detail the process for returning keys, scheduling a final move-out inspection, and addressing the security deposit return. Include specific deadlines for these actions, as well as preferred methods of communication to facilitate a smooth transition. Additional Considerations for Specific Situations Non-renewal of Lease If the lease is not being renewed due to reasons such as property sale or personal use, briefly state the reason in the notice. This helps the tenant understand the broader context and may ease the transition. Lease Violation When addressing a lease violation, clearly identify the specific breach and potential consequences. Refer to relevant clauses in the lease agreement to substantiate your claims and provide a clear path forward. Eviction Process If the renter fails to vacate according to the designated time frame, outline the next steps, including the possibility of legal action. It’s advisable to seek legal guidance in eviction notice scenarios to ensure compliance with local eviction procedures and applicable state laws. Delivery Methods and Maintaining Records Delivery Methods Ensure that the notice is delivered using a method that provides documented proof of receipt. Options include: Hand-delivery: Obtain a signed receipt from the tenant. Certified mail: Use return receipt requested to confirm delivery. Other documented methods: Any method that provides verifiable proof of delivery. Maintaining Records Retain copies of the lease termination letter, delivery confirmation, and any relevant communication. Keeping thorough records is essential in case of disputes or legal proceedings. Additional Resources and Best Practices Contact Information Include contact information for further inquiries or dispute resolution. Providing a point of contact helps address tenant concerns and facilitates a smoother transition. Professionalism and Courtesy Maintain a professional and courteous demeanor throughout the process. This approach not only reflects well on you as a property manager but also helps mitigate tension and foster a more cooperative environment. Legal Counsel Consider seeking legal advice for complex situations or unfamiliar legal documents. Double-check with a legal professional in order to ensure that your actions comply with all relevant laws. Free Template for Notice to Vacate Letters To assist property managers in drafting a comprehensive and compliant notice, we’ve provided a template below. Note that this template is for informational purposes only, and it’s essential to consult with a legal professional to tailor the type of notice to your specific situation and jurisdiction. ``` [Your Name] [Your Address] [City, State, ZIP Code] [Email Address] [Phone Number] [Date] [Tenant’s Full Name] [Property/Rental Unit Address] [City, State, ZIP Code] RE: Notice to Vacate Dear [Tenant’s Name], This letter serves as formal notification that you are required to vacate the premises at [Property Address] by [Vacate Date]. This notice is given in accordance with the terms of the lease agreement dated [Lease Start Date], which specifies a [number of days]-day notice period for termination. [Optional: The reason for this notice is [brief explanation, e.g., lease expiration, non-renewal, lease violation].] Please ensure that all personal belongings are removed from the property by the vacate date. We will schedule a final move-out walk-through and inspection on [Proposed Inspection Date]. Additionally, please return all keys to [Specified Return Location] by [Key Return Deadline]. To facilitate the return of your security deposit, please provide your forwarding address at your earliest convenience. Should you have any questions or require further information, please contact me at [Your Contact Information]. Thank you for your cooperation. Sincerely, [Your Name] [Your Title, if applicable] ``` Conclusion Drafting a “Notice to Vacate” letter requires careful consideration, adherence to legal requirements, and a professional approach. By following the guidelines outlined in this blog post, property managers can ensure a smoother transition for all parties and protect their rights effectively. Remember, consulting with legal counsel for specific situations is always recommended to navigate the complexities of tenant relationships successfully. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

Calendar icon June 7, 2024

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Property Maintenance Guide for Property Managers

Property management maintenance is one of the most important parts of the resident experience. But it’s also costly and difficult to control. We’ve heard from hundreds of property managers that maintenance can be one of the most unpredictable parts of their job – and one of the biggest headaches for residents, property managers, and real estate investors. Triple headache! Of course, the unique frustrations and challenges of rental property maintenance also mean that an effective strategy can become one of the most outstanding differentiators for a property management company. So how do leading PMCs take their routine maintenance practices to the next level? How can PMCs turn that triple headache into a triple win? Here’s what we’ve learned from years of working with PMCs. What is property maintenance? Property maintenance is everything involved in ensuring your properties are in excellent shape and any issues are repaired in a timely manner. Property managers take responsibility for maintenance in most cases, and their tasks include both preventive and responsive maintenance. Property maintenance may include: Resident maintenance requests Servicing and repairing HVAC systems Pest control Landscaping Painting and repairs Maintenance is critical to the resident experience, to keeping a property fully functional, and to ensuring safety and quality of life. Failure to follow through on maintenance can result in serious consequences. Property managers must balance their residents' needs and their investors' goals. For example, what if an investor isn’t interested in putting a whole lot of maintenance or repairs into a specific property – but the resident wants a higher level of service? Another layer of complexity is the round-the-clock nature of maintenance tasks. You don’t know when a roof will spring a leak, an HVAC system will go haywire, or a dishwasher will give up the ghost. Property managers have to juggle on-call hours, after-hours, increasing work orders, and emergencies all the time. Benefits and challenges of property management maintenance That’s all easier said than done! Property management maintenance is uniquely challenging. It’s unpredictable, almost always urgent, and involves several stakeholders and fluctuating pricing. Bottom line: How do you build solutions that support your team, the resident, and your investor? Let's look at both the benefits and challenges of property management maintenance. Benefits of property management maintenance: Extending the life of properties and equipment Reduced costs Ensuring resident health and safety Boosting the resident experience with high-quality homes Avoiding liabilities and accidents Increasing property value Happier tenants! Challenges of property management maintenance: Prioritizing reactive and preventive maintenance Increased expenses and maintenance costs Delegating tasks to your team Managing resident expectations After-hours and emergency work is 24/7 Balancing investor's goals and resident's needs Examples of maintenance in property management Here are some top examples of property management maintenance company services for single-family homes. Spring property maintenance checklist: Check gutters and downspouts for blockages left over from the winter Check interior for any mold or mildew growth Start prepping landscaping for summer with new flowers or shrubs Summer property maintenance checklist: Clean window wells, gutters, and downspouts Find and fix any gaps in windows, doors, and walls (to keep out pests and ensure HVAC efficiency) Maintain yard and landscaping if that's within your responsibility Increase watering frequency Prune trees and any hazardous limbs Lawn care Check outdoor lighting Pressure wash and repair outdoor areas/decks Fall property maintenance checklist: Check the roof and exterior for leaks or repair needs Clean chimney for cold weather Clean gutters and downspouts again Prep landscaping for winter Remove dead leaves, branches, etc. Prep sprinkler system for winter Winter property maintenance checklist: Ensure roof is in good state for winter Check batteries in smoke and carbon monoxide detectors Ensure pipes, windows, and doors are insulated Cover and winterize outdoor areas, including pools and pipes What to look for in property maintenance workers? When property management companies consider hiring in-house maintenance workers or contracting with property maintenance services and technicians, there are several key qualifications and skills to look for. These not only ensure efficiency and quality in maintenance tasks but also contribute to the overall safety and longevity of the property. Here’s a checklist of what to look for: Experience in Managing Repairs: Look for a proven track record in handling a variety of repair tasks. This includes the ability to diagnose issues quickly and provide effective, long-lasting solutions. HVAC Systems Expertise: Essential knowledge in maintaining and repairing HVAC systems is crucial, given their complexity and how important they are to resident comfort. Boiler Maintenance Skills: Expertise in maintaining and repairing boilers, especially in regions with colder climates where heating systems are in constant use. Installation Abilities: Proficiency in installing various types of equipment—ranging from basic fixtures to complex machinery. Electrical and Plumbing Knowledge: A solid understanding of basic electrical and plumbing systems ensures that routine issues can be addressed promptly and safely. Certifications and Training: Relevant certifications or completed training courses in property maintenance or specific systems (like HVAC or electrical work) add credibility and assure competence. Problem-Solving Skills: The ability to think on their feet and creatively solve unexpected problems that arise during maintenance work is key. Communication Skills: Clear communication with property management team and tenants is essential, especially when coordinating repairs and addressing tenant concerns. Attention to Safety: A strong focus on safety protocols to prevent accidents or property damage, including adherence to all relevant regulations and guidelines. Customer Service Orientation: Since maintenance technicians often interact directly with residents, a friendly demeanor and strong customer service skills are important for maintaining tenant satisfaction. By ensuring that your property maintenance workers or contracted technicians meet these criteria, property management companies can maintain high standards in property upkeep, leading to satisfied tenants and well-maintained properties. What should an ideal property management maintenance solution have? We’ve spoken with leading property managers across the industry and collected some of their best tips for taking the puzzle of property maintenance and delivering next-level service and experiences. Here are three key steps they’ve shared for leveling up when it comes to property maintenance. 1. The right team Getting the right “who” is critical before addressing the “how.” We spoke to leading property management consultant Kevin Hommel about what he looks for in his property management team. He looks for people who are proactive, self-driven, and resilient in the face of complex problems. Maintenance is no exception. A self-driven team will always aim to be proactive rather than reactive. Hommel says: “I would rather find somebody who is going to come in and hustle – even if I have to teach them everything about property management – than find somebody who's a property management expert but has the wrong attitude. It's going to be a completely different experience.” The benefits of finding the right full-time or part-time team are twofold: First, you’ll produce better work and better service. Second, a trustworthy team helps you focus on bigger strategic opportunities. As a property management business owner, you should be free to focus on 10X opportunities rather than get bogged down in day-to-day tasks. Peter Lohmann, Co-founder & CEO of RL Property Management, says it this way: “In property management, a lot of us are in the habit of wanting to know what's going on at all times – every rental application, every maintenance request, works orders, every disbursement amount. But I would challenge everyone to step back from that and ask yourself, ‘Why?’ The need to ‘stay plugged in’ is not going to help you unlock growth for your company. Time to work on 10x opportunities instead.” By hiring a team you can trust, you’re setting your residents up for success. You know they’ll be taken care of, and you can focus on higher goals to improve your resident experience overall. 2. A clear process for managing requests After setting up your team – and before we get to the tools you can use to support them – we need to talk about the process. Every property manager we’ve spoken to is bullish when it comes to getting your processes right. Lohmann again: “(It’s important to) do things in a standard way throughout your business. The more exceptions and one-off arrangements you make with the property owner and tenants, the harder this becomes. Your priority should be to standardize all your contracts and operating procedures so you can innovate around a small number of core processes that apply to every unit you manage.” This is more than just having a maintenance checklist. The best way to build a process is to approach it from the lens of the resident experience. The most successful property managers set up maintenance processes by asking themselves what the resident wants and needs: What’s the easiest way for a resident to report an issue? In what way do residents like to communicate with me or hear from me? How can I best keep residents informed? How can I bring speed and convenience to residents? Using an experience lens to build or update property maintenance processes can help you see new opportunities. 3. The right tools and technology Automation and AI are some of the newest ways to support your team and improve functionality. No-code tools and app integrations help connect workflow, client management, communication, and task tracking. No-code tools are products that enable those of us with no coding experience to build digital solutions for every part of our workflow. Property managers can use no-code tools to design their websites, build online content, create email campaigns, or set up automated task tracking, communication, and more. In terms of property maintenance, PMCs can now use accounting platforms with native portals for maintenance requests or adopt maintenance solutions platforms like Meld. These solutions offer customizable automation where you can track tasks, deadlines, time, vendors, costs, and employee responsibilities. With just a few clicks, automation helps cut out manual work like: Creating a New Property Checklist every time you add a new door Populating data fields in your CRM Assigning the correct tasks to the correct people Sending an email to a property investor with updated information Sending maintenance reminders Tracking safety checks and code enforcement Etc. Property management software and partner solutions run the gaut. They can include features like: Tenant portals for maintenance requests and more 24/7 and after-hours call center services Accounting platforms Self-help video libraries and knowledgebase platforms Technology ultimately brings greater speed, convenience, and ease to you and your residents. 4. A resident benefits package Whether you’re already implementing automation or if that feels a long way off, we still haven’t addressed one of the best tools for boosting resident experience: the resident benefits package or RBP. An RBP is considered by many property managers as the most powerful, profitable step to impact the resident experience. And it is the only one that generates revenue while also creating operational efficiency. RBPs provide tools like filter delivery service, identity protection, rewards programs, on-time rent incentives, credit building, move-in concierges, insurance, and more. Here’s just one example: The National Rental Home Council (NRHC) surveyed 7,772 single-family residences over 18 months to analyze the frequency of resident HVAC service requests with and without HVAC filter delivery service. Second Nature delivered HVAC filters every 60 to 90 days in a date-stamped box with illustrated instructions and sent emails with tracking information and educational content before each delivery. Overall, there was a 38% reduction in HVAC-related ticket requests among the group that received filter delivery—a result achieved without creating any additional work for the property management company. Resident benefits packages help standardize benefits in a cost-effective way across all your properties. With an RBP, you know every resident is getting a level of service that feels high-touch but doesn’t create any extra work for your team. RBPs strengthen communication, transparency, self-service, and speed – in other words, the resident experience and relationship. How to effectively manage a property maintenance team Managing a property maintenance team efficiently is key to ensuring your properties are well-cared for, and your residents remain satisfied. From scheduling tasks to fostering teamwork, every aspect plays a crucial role. In this section, we'll break down essential tips into actionable strategies to help you lead your maintenance team effectively. Establish Clear Communication Channels Effective communication is the backbone of successful team management. Establishing clear channels for reporting issues, discussing solutions, and sharing feedback ensures everyone is on the same page. Use digital tools like email, messaging apps, or property management software to streamline communication. Implement a Scheduling System A well-structured scheduling system is crucial for organizing maintenance tasks. Make sure your maintenance team uses digital calendars or maintenance management software to allocate tasks, set deadlines, and track progress. Ensure their schedules are flexible enough to accommodate emergency repairs while maintaining routine maintenance work. Prioritize Tasks Based on Urgency and Importance Not all maintenance tasks carry the same weight. Prioritize issues that directly impact resident safety and comfort, such as HVAC problems or plumbing leaks. Regular maintenance can be scheduled around these more urgent tasks to ensure efficiency without compromising on critical repairs. Use Technology for Efficiency Leverage technology to automate reminders, maintain records, and manage work orders. Property maintenance software can significantly reduce manual administrative work. Regularly Evaluate Performance Conduct regular assessments of your maintenance vendors. Use these evaluations to identify areas for improvement, acknowledge accomplishments, and set goals for future growth. Encourage Feedback from Residents Residents are often the first to notice maintenance issues. Encourage and facilitate easy ways for them to report problems. This feedback can be invaluable in identifying areas that need attention and enhancing resident satisfaction. Plan for Preventive Maintenance Instead of always being reactive, schedule regular preventive maintenance checks. This proactive approach can significantly reduce the frequency of emergency repairs and extend the life of property assets. Building in solutions like a Resident Benefits Package can bring residents on board with prevention strategies, too. Balance Workload Fairly Ensure that the workload is evenly distributed among team members if your team does the maintenance work. Overburdening certain individuals can lead to burnout and reduce the overall efficiency of the team. How does a Resident Benefits Package help reduce maintenance needs and costs? Managing single-family properties presents unique challenges, particularly due to the fact they're generally scattered-site management. This setup can make regular maintenance a logistical and financial burden for SFR property managers. But a well-structured, fully managed Resident Benefits Package (RBP) can make a huge difference in alleviating those challenges. At Second Nature, we built an RBP with integrated solutions that support and empower residents to take better care of the properties themselves. This helps reduce maintenance needs over time. Take air filter delivery: Simply subscribing to HVAC filter delivery can reduce HVAC ticket requests by 38% and save hundreds in energy bills. Another example is pest control. On-demand pest control can ensure residents deal with pest issues immediately. Instead of paying for expensive prevention, you can be sure actual issues are dealt with before they escalate. Or, consider resident rewards. With a built-in rewards program, property managers can customize the behaviors they want to encourage. Small preventive tasks or maintenance checks can be included in those incentives. Maintenance, tracking down vendors, invoicing work orders, etc., will always be a part of the property manager's life. But with an RBP, you can significantly cut down on the time and money you spend on a maintenance team. Why property maintenance can make or break your success as a PMC You’ve heard this from us before, and you’re going to hear it again – it’s all about the resident experience. Retention depends on it. Consumers today are looking for products that can offer them: Ease and convenience: Thanks to companies like Uber and Amazon, consumers are now used to having solutions at their fingertips – or the click of a button. Personalization: With our data everywhere, we’ve all become accustomed to brands that know us more intimately than ever before. Automation or speed to answer: Smart homes and connected devices can solve problems remotely and quickly. Even though PMs aren’t robots, we see more PMs solving with digital solutions and proactive services like resident benefits packages that anticipate and deliver on residents’ needs before they become problems. The modern resident has different expectations than the generation before. The “convenience economy” has come for us all. Residents don’t just expect to have maintenance issues resolved. They expect management services to provide a certain level of ease, comfort, familiarity, and convenience. Of course, maintenance work has obvious urgency: Nobody wants to live with a clogged toilet, a leaky faucet, no hot water, backed-up gutters, etc. But emergency repairs are now the minimum that property managers provide. Property management maintenance is integral to the resident experience – and one of the primary ways to set your business apart. We’re not just looking for “good enough” – we’re looking to answer the question: “How do we create experiences so good that residents never want to leave?” Regarding rental property upkeep, delivering on that question will involve many factors: Safety first: Safety is the baseline for all properties. If residents don’t feel safe, they are not likely to stay. Staying on top of carbon monoxide detectors, leaks, etc., is paramount. Timeliness: According to Ray Hespen, “the biggest leading indicator for resident satisfaction is speed.” Transparency: Whether through an online dashboard, text communication, or other tools, residents expect to know what’s going on with their homes. Preventive maintenance: We have to go beyond reactive maintenance. Processes that prevent issues from occurring can save time and money and boost the resident experience. We’ll talk about how resident benefits packages can deliver this for PMCs. First-time fixes: Nothing is more frustrating than getting something fixed only to realize the maintenance team didn’t actually resolve the issue. Communication: Residents don’t want to explain themselves or the problem several times to different parties like the property manager, the vendor, etc. Self-service: Many residents like the control and convenience of self-service options like air filter delivery or online payment portals. These are the characteristics we’re seeing across some of the most successful property management companies – the PMCs standing out from the crowd. How to reduce property maintenance costs Maintenance costs can quickly spiral if not carefully managed, but with strategic planning and smart practices, you can significantly reduce these expenses without compromising on quality or resident satisfaction. Let's dig into a few practical tips that will guide you on how to efficiently lower your property maintenance costs, ensuring your operations remain both cost-effective and top-notch. Implement Preventive Maintenance Proactive maintenance can significantly reduce long-term costs. By implementing services that protect key elements like HVAC systems, plumbing, and electrical circuits, you can prevent minor issues from becoming major expenditures. Services like air filter delivery create excellent return on investment when it comes to prevention like this. Use Energy-Efficient Solutions Invest in energy-efficient appliances, lighting, and HVAC systems. These not only reduce energy costs but also tend to have a longer lifespan and lower maintenance requirements. Consider LED lighting, energy star-rated appliances, and smart thermostats to boost efficiency and cut costs. Train Staff on Basic Repairs Equip your team with the skills to handle basic repairs in-house if it makes sense for you in terms of time and cost. Training staff to fix common issues like minor leaks, electrical faults, or appliance glitches can save on expensive contractor fees. However, ensure more complex tasks are left to professionals. Negotiate Contracts with Vendors Establish long-term relationships with trusted vendors and negotiate contracts for regular maintenance services. Buying services in bulk or agreeing to long-term contracts can often result in significant discounts. Ensure these vendors are reliable and offer competitive rates for their services. Monitor and Manage Inventory Efficiently Keep a close eye on your inventory of maintenance supplies if that's something your team manages. Bulk purchasing of frequently used items can save money, but be wary of overstocking, which can lead to waste. Use inventory management software to track usage and avoid unnecessary purchases. Optimize Use of Technology Leverage technology for maintenance management. Use property management software to track maintenance requests, schedule work orders, and monitor expenses. This can help in identifying patterns or areas where costs can be trimmed without compromising on service quality. Conduct Regular Financial Audits Regularly review and audit your maintenance expenses. This practice can help you identify areas where you may be overspending, spot inefficiencies, and adjust your maintenance strategies accordingly to ensure cost-effectiveness. How thousands of property managers are approaching the future of maintenance and resident experience A property manager’s ability to respond to maintenance needs proactively can have a massive impact on renewals and referrals. We’re sure every property manager has stories of how maintenance can make or break the resident experience and company growth. Innovative property managers set themselves apart by building teams and systems that go above and beyond for the resident experience to create a Triple Win. They create systems that proactively address maintenance, apply technology to support their teams, and provide fantastic benefits to residents. If you want to build a differentiated resident experience people pay for and stay for, learn more about our Resident Benefits Package or subscribe to our podcast for regular insights from the PMC world.

Calendar icon November 2, 2023

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Property Management Profitability: FAQs on Profit Margin

Property Management profitability is, of course, how much money a property management company keeps of their revenue after their expenses. But Daniel Craig, the CEO of ProfitCoach, wants PMCs to think of profitability far more expansively. “We recommend that you think about profit as the opportunity to reinvest in the business,” Daniel says. “Your business isn’t just a machine that makes a profit; it's a machine that turns profit reinvested into more profit.” In other words, profit is a virtuous cycle that, once started, can deliver increasing ROI, better value, and better business. The big question is: How do property management companies increase profitability? That’s what we connected with Daniel to talk about. We’re sharing some of Daniel’s insights on property management profits and experiences we’ve gathered over years of working with property management companies across the country. Key Learning Objectives: How property management companies increase profit How long it usually takes to become profitable Common mistakes property management companies make when trying to build profit How to optimize operating costs How to find the right residents and property investors Tools for helping to increase profitability Meet the Expert: Daniel Craig Daniel Craig is the CEO of ProfitCoach, which provides property management entrepreneurs with financial knowledge, tools, and strategies to drive greater profits. How do Property Management Companies Make Money? In the most basic terms, property management companies make money through real estate investors paying for the services they offer. The more value a PMC can drive for its property investors and residents, the more revenue they generate. The profit, of course, is how much is left over after paying all your expenses. “We've worked with hundreds of residential property management companies and seen a wide variety of profitability levels,” Daniel says. ProfitCoach and NARPM started benchmarking profits with the NARPM Financial Performance Guide and Daniel says they’ve seen a significant shift in the past few years. In 2017, the average profitability in the property management space was 6%, and the top 25% of performers’ profitability was 25%. In 2021, the average profitability was 11%, and the top performers were 32%. The important nugget in these benchmarks? Seeing what’s possible. Many rental property managers may not realize they could strive for anywhere from 25% to 32% profitability. But if the target is that high, how do you get there with your business? At ProfitCoach, Daniel and his team have outlined the “Three Steps to 3X Profitability.” 3 Steps to 3X Profitability Here’s what Daniel has to say about the three steps to 3X your profitability. 1. Get Clear PMs need to get clear on where they are, where they want to be, and what they can achieve. It’s important to know: What’s possible across the industry Trends in your local market How you compare If you're not clear on the potential, then you're not going to be clear on what you should strive towards. If you're not clear on where you are today, you're not going to be clear on whether you need to change. 2. Define Your Target Compare your performance to the latest NARPM numbers and benchmarks and determine your target for each of the six Do-or-Die metrics. Maybe the benchmark isn't your target, and that's fine, but you need to know what's possible. Many people go through their business lives without engaging the possibilities. They operate within certain boxes, and those boxes need to be compared to what other people are doing. Then you can adjust your perspective of what's possible and set realistic targets. Next, build a realistic financial forecast that helps you chart the course from where you are to where you want to go based on your financial goals. 3. Stay on track Now it’s time to bring the team into the conversation and basically say, “Here’s our roadmap. What specific tactics and strategies will we enact to accomplish the financial shift we need in each of these six areas of our business?” And once you have those defined, measure your progress against your goals monthly or quarterly. Engage your whole team in the conversation and engage a coach to help you define a financial performance improvement action plan and hold you accountable. How Long Does it Take for a PMC to Increase Profitability? According to Daniel, businesses should give themselves between one to three years. “We've seen companies make massive changes in 12 months, and we've seen companies make massive changes across several years,” Daniel says. “But generally speaking, I would say to give yourself one to three years to make a major shift – if you want to go from an average company to a benchmark company.” How to Set Up a Property Management Business For Profitability Setting up your business for profitability is often about avoiding the most common mistakes other businesses make. We asked Daniel about where he sees professional property managers most often go wrong. Daniel says three major mistakes affect how profitable your business is. 1. Financial Fog Daniel defines financial fog as “Not having clarity on where you are, where you want to go, or what's possible in the industry.” “One of the cool things about this industry is that it's such a unique opportunity,” Daniel says. “I don't think that many property management owners realize the extent to which they can drive profit in this industry. They often don’t have a clear sense of what the real opportunity is.” 2. Financial Isolation “At ProfitCoach, we believe that finance should be done in community,” Daniel says. “We are advocates of what we call community-driven finance, which is essentially engaging with community-based benchmarks, community-based best practices, and community-based scoring.” Community-driven finance helps individual rental property managers and businesses know how they’re stacking up against top performers. It also helps generate value for everyone, where each PMC can benefit from best practices from those top performers. “One of the wonderful things about the property management space is that it truly is a community space in which there is a lot of idea sharing,” says Daniel. “We think that when you bring that idea sharing into a conversation that is also numbers-based, you can begin to see the strategies and tactics that will be most effective as indicated by the data.” “Staying in financial isolation is a huge mistake,” he says. 3. Not Being Mission-Driven Being mission-driven is all about thinking in terms of customer lifetime value. Sure, it’s possible to get a quick win on pricing, but it may cost you in the long run if you’re not thinking about lifetime value. Rather, Daniel says, “you want to make sure that your approach to pricing, marketing, everything in your business is values- and mission-driven.” “What is your mission as it relates to your employees? What is your mission as it relates to your stakeholders? What is your mission as it relates to your owners/investors? What is your mission as it relates to your tenants/residents?” How to Reduce Operating Costs to Increase Profitability So, once you’ve considered the three steps to 3X your profit and evaluated the pitfalls of profitability – what next? How do you actually optimize your operating costs and increase profitability? Daniel advises every PMC to adopt the NARPM Accounting Standards Chart of Accounts for their bookkeeping. He says the best part of using the NARPM Chart of Accounts to optimize your profit is the six “Do-or-Die” metrics. These property management KPIs are critical to business success: Profitability Direct Labor Efficiency Ratio Revenue Per Unit Unit Acquisition Costs Churn Expenses as a Percent of Revenue “It’s critical that property managers get a clear line of sight on how they stack up in terms of specific rental property management metrics that have an operational connection.” For example, an income statement will tell you how much revenue you have but won’t tell you how much revenue per unit you have. By building off your income statement with the PM-specific metrics, you’ll be able to tie it to a more operational connection. For example: From profitability to profit per unit From revenue to revenue per unit From sales and marketing spend to unit acquisition costs In this way, you can understand on a per-unit basis how your business is performing operationally. Daniel says: “The problem with the standard income statement is that it doesn't often give property management owners and entrepreneurs a lot of clarity on specific operational shifts that they need to make in your business. When you implement the NARPM Chart of Accounts, you can then implement a whole suite of metrics that does give you that operational clarity and insight to drive action and improvement in your business.” How to Increase Profitability in Property Management Increasing profitability takes time and should be done in a few different steps across your business model. These steps are the same whether you are a large or small business. Daniel breaks down the work between developing your pricing, labor, expense, and growth models. Look at Your Pricing Model Your pricing model is a significant driver of profitability. Getting your pricing right is one of the pillars of profitability. A few things to consider as you are managing properties: How does your pricing compare to the local market in your area? Are you offering any property management services that you should charge management fees for? What are you doing beyond rent collection that you should charge a flat fee for? Are there more services you could offer and charge for their value? How is your cash flow? Daniel cautions that it can take time. “If you roll out a new pricing model to tenants and owners, it takes time to implement. You should give yourself about a year to get that fully implemented.” Look at Your Labor Model Your labor model is the next big thing, as labor is your biggest expense and could also be a driver of inefficiency if you don’t have it right. Daniel recommends asking: Do we have all the right people in the right seats on the bus? Do we have the right mix of U.S. talent versus global talent? Do we have retention strategies in place? Do we have the right systems in place to enable each team member to be maximizing their productivity and their effectiveness in the organization? Again, these questions may lead to significant strategic shifts that you should give yourself time to implement. Look at Your Expense Model This one is a little bit easier but just as important. You can trim expenses fairly quickly once you identify where to cut back. Are you spending too much on overhead? Could you engage property management software to help with bandwidth? In some cases, changing your expense model may take some time – for example, if you need to renegotiate a long-term lease. Look at Your Growth Model Evaluating and updating your growth model is another opportunity for maximizing profitability. Once you’ve identified and set your targets, here are some potential next steps for growth: Finding and hiring a high-performing business development manager Get a new sales process in line Dial in your lead generation strategies so that you have enough leads for that BDM Etc. Again, this shift may take several months or years to integrate into your business processes fully. Launch a Residents Benefit Package Ultimately, one of the best ways to increase profit and influence your bottom line is by considering where you can add more value for your residents and residential property investors. Daniel recommends starting small tweaks to your Revenue Per Unit. “We have seen repeatedly that a 10% improvement to revenue per unit can easily result in a 100% increase in profit per unit. So, look for ways to get small wins on value creation, value communication, and value realization.” Daniel says one of the quickest and most practical ways to adjust Revenue Per Unit is to implement a Resident Benefits Package. (And we didn’t even put him up to it!) “A resident benefits package alone can result in that 10% bump to revenue per unit, which can result in that 100% increase to profit per unit. This profitability can result in more fuel to your freedom, more fuel to your mission, and realizing all the things you went into business for in the first place.” How to Find Profitable Residents & Investors and Keep Them Happy Daniel says they’ve seen significant profitability gains when a company identifies the right-fit and wrong-fit clients. “We have seen significant profitability gains come about for those who are looking through the client list, finding the misfits accelerating, and then getting those misfits out of their portfolio so that they can bring in the right-fit clients who are going to be a better fit from a value proposition perspective. Getting rid of low-performing clients and then backfilling those with the right kind of clients is a great way to improve profitability.” Daniel says that this goes back to being mission-driven. By identifying your point of view on your industry, your values, etc., you can build a “why” for your company that can help you define the right new clients for your business. Daniel uses his own company as an example: “At ProfitCoach, we believe in community-driven finance. If we come into contact with a potential client who's all about financial isolation – they don't want to share their numbers with anybody, they don't want to engage in a community conversation, they don't wanna learn from the best practices in the industry – that's not a good fit for us.” So, the two questions to define are: What is your point of view? What is the value proposition that comes out of that? Based on that value proposition, there will be a certain set of criteria that will define what a right-fit client is and what a wrong-fit client is. Learn more about SecondNature’s Resident Benefits Package, which is designed to generate revenue and “Triple Win” conditions that benefit residents, investors, and property managers alike.

Calendar icon June 28, 2023

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How to Create Property Management Business Plan [Free Template]

There are as many different perspectives on property management business plans as there are different PM businesses. But one thing holds true – in the classic adage usually attributed to Dwight D. Eisenhower – it’s not the plan that matters so much as the planning. Outlining a detailed business plan isn’t just important for defining your own goals, it’s key to communicating those to potential clients and investors. It also requires deep insight into what residents want and are willing to pay for. Whether you’re new to property management, have been managing properties for years and are ready to start your own business, or own property management business but are looking for greater investment, we’ll cover important topics to address business plan creation. We’ll explain why business planning can be so important, as well as who to target with your plan. We’ll also share a free template to get you started. Key Learning Objectives: How to identify and find your ideal clients How to articulate your value proposition What to include in your business plan How to outline your business plan A free property management business plan template Meet the Expert: Peter Lohmann, CEO RL Property Management What to Know before Creating a Property Management Business Plan Not to get too deep down the rabbit hole, but the first step to creating a high-quality business plan is – you guessed it – to make a plan for the plan. For entrepreneurs, planning is the key to success. Going through the following steps first will make the process much easier and more effective in the long run. Here’s what you need to get clear at the outset. State Laws governing property management business As you know, each property management company’s approach is very dependent on regional or state regulations. Before taking any steps to either start or change your business, you need to have a clear understanding of the local laws governing your business venture. We highly recommend hiring an attorney who can help you navigate those laws and regulations. Who are your ideal clients Lohmann lays out three critical steps to crystalizing a successful business plan: Identify your ideal clients. Articulate your unique value proposition for those clients. Go out and find leads. So, first: Who are your ideal new clients? “Get really clear on who your ideal customer is,” Lohmann says. “Are you managing associations, office buildings, big apartments, single-family rentals, etc.? The narrower and more specific you can be, the better your life is going to be and the more money you’re going to make.” In other words, anything outside of this target market is going to be a waste of your time. That’s why this is the first step. “The more narrow and specific you can be here, the more directly you can speak to your prospects in a way that’s compelling,” Lohmann says. “Everything becomes easier – content strategy, sales conversations, even operations become easier – if you know who you want to manage for and what types of properties you want to manage.” What type of property management company you are The next step is to identify your unique value proposition. There are tons of property management companies out there. Why should your ideal client choose you? In Lohmann’s words: “Your second step is to ask, ‘Why should anyone care?’ Property management isn’t a new concept; there are tons of property managers. So, identify what your unique value proposition is.” This is key to figuring out not just who to pitch to but how to pitch to them. “What are you going to talk about?” Lohmann says. “You can’t just say, ‘Oh, hire us, we’re the best!’ You need clear examples that say, ‘Our company does something a little different.’” For RL Property Management, that started as a promise that they would never charge a leasing fee. “Sure, it’s kind of crazy, and I don’t know anyone else who doesn’t charge that, but it worked,” Lohmann says. “We were trying to figure out why everyone hated their property manager. And we decided that it might be an incentive problem where the property manager’s incentive is to fill the unit as quickly as possible so they can get that big leasing fee, and that was creating bad outcomes for property owners. So we decided that we weren't going to charge a leasing fee, and we've stuck with it ever since.” How to find your ideal clients The third and final step of preparation is to identify where you need to go out and find leads and engage property management marketing. “Given what you know about how you defined your ideal prospect and your company and what they offer, the next question is where you go and get these leads,” Lohmann says. “A lot of property managers start with this third step. They just say, ‘How can I get more leads?’ But that’s the wrong question. Why do you deserve those leads? Answer that first. Downstream of that is ‘Where are those people hanging out, and how can I get this to them?’” Getting this step right involves researching property management and real estate property in your area and getting familiar with industry news, conferences, and listings. What should a property management business plan include? Now, let’s talk about the actual outline of your PM business plan. If you’re starting a new business and aiming to present a business plan to investors, or even business partners, you should outline each section below as a presentation deck. The information presented in this section needs to read like it is designed for investors and should highlight key terms and concepts they care about. Here’s a sample property management business plan outline, followed by a detailed explanation: Executive Summary Company Overview Market Analysis (Industry, Customer, and Competitive Analysis) Services Marketing Plan & Sales Strategy Operations Management Management Team Financial Plan Growth Opportunities Executive Summary This is a high-level overview of your entire presentation. As such, it should be the last section that you write. You want to be concise but interesting and hook the reader quickly. Outline the following in broad strokes: The type of property management company you are operating Your target market Your objectives Your plan for meeting these objectives Company Overview The company overview will dive deeper into your property management niche and business model. Explain what types of properties you manage and how you operate. Options include single-family residential property management (SFR), multi-family property management (MFR) or residential apartments, HOA management, and commercial property management. Give a brief history of your company and your legal business structure. Other important information might include: Your key competitive differentiators and core competencies Your metrics for success Your management team Financial details Mission and vision statements Market Analysis (Industry, Customer, and Competitive Analysis) This section benefits you almost as much as it does your audience. Researching for this section will help you more deeply understand the industry, customers, and competition. Industry analysis should include details on the trajectory of the market, its size, and key trends, along with challenges and opportunities. Customer analysis should include details about your target customers, their wants and needs, etc. Competitive analysis should outline direct competitors (PMCs in your area) and indirect competitors like in-house managers, automated tools, etc. Explain why your value proposition is unique. Ideally, present a thorough SWOT (strengths, weaknesses, opportunities, threats) analysis. Services This section should describe the property management services the company plans to offer, such as leasing, maintenance, and rent collection. Depending on the jurisdiction, legal compliance and documentation services may be relevant as well. This section should also discuss the pricing strategy for these services. Marketing Plan & Sales Strategy This section should describe the company's marketing plan and sales strategy, including how it plans to attract and retain clients. It should also discuss any advertising or promotional campaigns the company plans to undertake. Promotions could include paid advertising in print and on websites, social media marketing, radio advertising, SEO marketing, and more. Here, it’s important to document your marketing channels (organic online, targeted online, print advertising, professional networking) as well as ongoing sales and marketing programs. Operations Management Outline your short-term processes and long-term business goals, as well as estimate day-to-day operations. What property management software are you using in the business? What bottlenecks slow down work that’s moving through the organization? How will you structure your company and your teams? It may also be helpful to include details on critical process workflows, risk mitigation strategies, and technology integrations and updates. Management Team Outline your management structure and the skills and experience of your management team. You’ll particularly want to highlight property management and real estate experience. This is a key moment for you to consider who you have in the company, who is a right fit, and who needs to be looked at as not a great fit. Financial Plan This is where you give your financial projections and approach. Outline your major cost centers and revenue drivers. What management fees are you going to charge? You should include a profit and loss statement, balance sheets, and a cash flow statement. Growth Opportunities Identify and outline the most targeted growth opportunities for your business right now and over the next five and ten years. Knowing your long-term goals requires you to gain a deep understanding of the real estate and property management market in your area and to understand clearly where you fit in and how you can generate growth and value for years to come. Typically, in this section you might include: Expansion plans Strategic alliances Technology upgrades Emerging market trends Property Management Business Plan Free Template Although you may prefer to draft your own property management business plan from scratch, there are a couple of options for short-cutting the process. You can use the checklist below to organize your plan, or else simply download our free PMC business plan template to customize as you see fit. Executive Summary The type of property management company you are operating Your target market Your objectives Your plan for meeting these objectives Company Overview Mission and vision statements Your property management niche and business model How you operate Company history Your legal business structure Your key competitive differentiators and core competencies Your metrics for success Your management team Financial overview Market Analysis Industry assessment Customer analysis Competitive analysis Services Marketing Plan & Sales Strategy Outline of sales and marketing plans Marketing channels Ongoing sales and marketing programs Operations Management Long-term business goals Current processes Critical process workflows Risk mitigation strategies Technology integrations and updates Management Team Management structure Skills and experience Financial Plan Financial projections Cost centers and revenue drivers P&L statement Balance sheet Cash flow statement Growth Opportunities Targeted growth opportunities Expansion plans Strategic alliances Technology upgrades Emerging market trends ‍ Get your free PMC business plan template here. Beyond the business plan: Focus on retention with the Second Nature RBP At Second Nature, we work with property managers around the country to develop better resident experiences that will generate more value for their clients and more profit for their companies. The product we have found most helpful to property managers at every stage of their company’s growth is a fully managed resident benefits package or RBP. Each product in this package aims to deliver something residents want or need and a service that helps set your PMC apart. We want to help make running your business as easy as second nature.

Calendar icon June 28, 2023

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Types of Tenant Problems and How to Deal With Them

Google “how to deal with problem tenants,” and you’ll see dozens of articles, probably written by people who have never managed property in their lives, about how to react when you have an issue with a resident. What these articles don’t understand is that thinking about “problem tenants” doesn’t get you anywhere. After all, if the problem is the person, your only real recourses are eviction or non-renewal. Not ideal! You’re also left reacting to issues after they’ve become emergencies rather than focusing on a proactive, positive resident experience in the first place. Instead, property managers across the industry are starting to redefine the issue as “problem behaviors, habits, or situations.” While they can't control what others do, expert rental property managers are absolutely in a position to influence change in behavior, habits, and situations. Here’s how we’ve seen professional property managers approach difficult situations and turn them into wins. Types of “Problem Tenants” (hint: it's problem behaviors!) Success for a property manager 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. Rather than automatically assuming the resident is the problem, 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 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 they 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. 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 approvals 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 those local and state laws with their residents. A legal advisor also goes a long way to help 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. The 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. Tips to Deal With Difficult Tenants Before we talk about strategies to build good habits among your residents, we’ll also touch on some practical tips to deal with difficult residents – 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 difficult residents 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 credit checks into credit reports, proof of income, employer and previous landlord references. Make sure you're aware of tenant rights laws in your area and taking care not to discriminate. 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 residents. 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 residents 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 residents 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 stay safe, avoiding penalties, and providing fair service to every resident. How to Turn “Problem Tenants” 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 Manage Difficult Tenants 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 a 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 on 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 SecondNature RBP Helps in Managing “Problem Tenants” 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.

Calendar icon June 28, 2023

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Property Management Strategies to Grow Your Business Without Burning Out

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

Calendar icon May 23, 2023

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

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

Calendar icon May 23, 2023

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How to Market A Property Management Company | RBP by Second Nature

Learn how to market your SFR property management company to new investors from marketing professionals in the PM space. How do you market your property management company? Well, first, what does that mean? More specifically, the question is how do you as a property manager use marketing tactics to strengthen your brand and grow your door count as a result. Effective Property management marketing is based on the same concepts as any effective marketing strategy, but with some industry specific insights, you can create an effective strategy that will efficiently grow your door count. Here we dive into the process of constructing a good marketing strategy for your property management company. We’re joined by Rodney Hays of Geekly Media (formerly RentBridge), who has spent a lot of time conducting marketing specifically for property managers, as well as Second Nature marketing professionals Carol Housel and Brandy Hammond. Identify informational needs of real estate investors A big part of digital marketing for property management is content marketing, which is defined as media creation (videos, articles, social media) designed to inform rather than to persuade. A good content marketing strategy gives you access to potential clients in the places they are asking questions. This includes places like Facebook, LinkedIn, and Google, where investors and potential investors consume real estate investment content that you can provide. Search engine optimization (SEO) is the process of optimizing a website to send signals to search engines and their users to gain organic visibility. Search engines, mainly Google, are the number one place where people begin their search for information. Content hosted on your website that addresses the most common questions investors are asking can position you well on the search engine results page (SERP), leading to increased website traffic. So how do you find out what topics to build content around? SEO programs, such as Semrush and Ahrefs, have an incredible database of keywords and common search terms, along with insights for those terms such as how much competition there is to rank well, how much search volume there is, and how often searches result in a click. You can also use the “people also ask” tab in the actual SERP to see what common questions are being asked. Then it’s just a matter of addressing the questions in a useful way to start increasing traffic to your website. “[Real estate investors] are going to ask questions about lease agreements and tenant screening. They’re going to ask questions about evictions, emotional support animals, those types of questions are always going to come up,” says Rodney Hays of Geekly Media (formerly RentBridge), providing a window into what real estate investors are often interested in learning. Create/Curate useful content for real estate investors A big part of SEO is identifying what your potential new clients are interested in. A good content marketing strategy follows that up with useful content that addresses the questions and leverages the specific keywords associated with them. Useful is the keyword here. Google is smart, and the analysis it conducts on webpages is extensive, so it will know if you’re just writing some slop and jamming keywords into it. Many property managers maintain a constant stream of content through a website blog. Real-Time Leasing’s website has extensive content written by their CEO, Deb Newell, who is also a property management consultant. Others communicate useful content with podcasts, such as AHI Properties and Evernest (link to Andrew’s episode), both of which appeared on the Triple Win Property Management podcast. “Good content seizes opportunities you’ve identified through SEO or other forms of communications and delivers actual value to the readers. A holistic strategy covers both of those parts, and you’ll fail to realize the potential of your marketing efforts if you skip one of them,” says Second Nature Marketing Services Manager Carol Housel. A popular content curation strategy used by Geekly Media is the industry news page, an example of which can be found here. This is curated content. It’s not written by the property management company, but rather compiled from sources and shared all in one place, which still creates a lot of value and a reason for real estate investors to be on your website. Rodney Hays of Geekly has opened a lot of industry news pages for clients and recommends sharing them across social channels whenever they’re updated. “Our customers will put their industry news page out there;, they'll pull in like 15 or 16 new articles every month. And then, out of those 15 or 16, we will take eight of those and put a third- party link in it and send those out on social media as well. And I think that's done pretty well in bringing in some different traffic that you know, it's just another resource for the people that might be visiting your page,” says Hays. Paid channels Paid marketing efforts for property managers are more about visibility and awareness. They’re high-funnel and useful if you have a budget for them. Hays notes that Geekly clients opt for Facebook, LinkedIn, and sometimes Twitter as targeted social channels. Facebook and LinkedIn have far and away the most active property management discussions and, in addition to paid search, are where you can see the most value for your investment. When it comes to old- school paid marketing efforts, Facebook ads are among the best ways to advertise property management services. Ads on Facebook are pretty easy to run and include useful features for property managers such as geotargeting. “Facebook ads are a great gateway into paid ads, since Google ads typically require a much higher budget to get similar performance. Facebook in the past has had a lower cost per click, so you’re getting higher performance from it for less lift and less spend, which is why I recommend it as a really good starting point,” says Brandy Hammond, B2B Marketing Specialist at Second Nature. Hammond goes on to note that paid facebook ads are one of the best marketing ideas for property management companies. Certain ad platforms, including Facebook, also offer geotargeting and audience mirroring, which are useful to property managers who need to target specific audiences in specific regional areas. “One thing I do love about Facebook ads, like with any other kind of paid ads, is that you can geotarget. Especially with property management and real estate, it makes sense that you’re going to target a specific area because, depending on the scale of your PMC, you probably don’t have national properties,” continued Hammond. Establish authority Becoming an industry-leading property management company is about more than just the number of doors you manage. There is a saying in marketing that perception equals reality. If you want potential clients to perceive your company as an industry leader, you have to give them a reason to believe that you are. That’s the point of a marketing strategy that seeks to establish the company as an authority in the space. A point will come where a large portion of your new doors will come from referrals. People don’t usually get into real estate without talking to people, so word gets around. Welch-Randall, a property management firm based out of Ogden, Utah, attributes 92% of its new doors to referrals. This is the mark of a business with established authority reaping the benefits of the work it put in to create that trust. This is the end state of everything discussed above. This is the fruits of your labor. Real estate investors, especially new ones, above all else, are looking for expertise in the real estate field to guide them through the ownership of their assets. By achieving visibility and brand awareness via paid channels and SEO, and following that up with useful content that answers the questions most important to investors, you’re establishing your company as a trustworthy and knowledgeable option for investors. By answering the questions they have, you’re also driving them closer to a decision. And when you’ve provided them the answers, guess which PMC they’re most likely to want to work with.

Calendar icon July 31, 2022

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