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How to Create Your Tenant Move-in Checklist, Tips + Free Template

We get a lot of questions here at Second Nature about the ideal tenant move-in checklist. After all, whether you're new to the realm of property management or a seasoned expert, one common goal unites us all: creating an excellent resident experience. The move-in process marks the beginning of your resident’s journey, and it's an opportunity to make a great first impression. A well-crafted resident move-in checklist can make this process smooth, efficient, and stress-free for all parties involved. In this article, we're talking to a leader in the single-family rental property management space to help us delve into the essentials of a resident move-in checklist, its benefits, and how it can enhance the overall resident move-in experience. Let's dive in and discover how a simple checklist can streamline your move-ins. Interested in reading more about resident experience management? Read our State of Resident Experience Report. Meet the Expert: Janet Sprissler, Broker/Owner, Rent 805 Janet Sprissler has over 20 years of experience in property management and a philosophy of working with residents to bring them value and help communities thrive while providing investors with a positive net operating income. She started her career in Los Angeles with 24 units and grew to a multi-family fixer for over 400-unit buildings throughout Ventura, Los Angeles, and Orange Counties. Janet left multifamily to consult with single-family residential managers to bring her problem-solving philosophy to life. Starting Rent 805 has been a lifelong dream of hers to bring investments, housing, and a positive impact in the property management community. Janet also received the 2023 Triple Win Property Management Award for Leadership in Resident Experience. Related: Notice to Vacate Tenant Free Template What is a Tenant Move-In Checklist? A tenant move-in checklist is a detailed document that records the condition of a rental property at the time a resident moves in, serving as an essential tool to prevent potential disputes over property damage during the lease period. Some consider this a landlord-tenant agreement but can be between property managers and residents, as well. This checklist is a lifeline for both property managers and new residents. From the state of the kitchen appliances to the condition of the flooring, this checklist serves as a comprehensive record of the property's state. Other names for the checklist could include: Think of it as a snapshot in time, providing a clear reference point for both parties. It's not just a piece of paper; it's a roadmap to a smooth tenancy for everyone involved. Now, that's a win-win! Note on Language: At Second Nature, we like to say “resident” rather than “tenant,” but will use the terms interchangeably since many property managers have official terminology around these checklists. Benefits of Using a Tenant Move-In Checklist Using a well-crafted checklist has far-reaching benefits for property owners, property managers, and property residents. We’re breaking down the benefits based on each of these perspectives. Benefits for property owners Protection of property: A move-in checklist includes a detailed property inspection, protecting owners from damage disputes at the end of a lease. Compliance with local laws: Some jurisdictions require move-in checklists for legal protection. Maintenance tracking: Early identification of maintenance issues can help property owners address them proactively. Benefits for property Managers Streamlined process: A move-in checklist provides a clear process, helping property managers to stay organized and ensure all essential tasks are completed. Improved communication: A checklist sets clear expectations for the move-in process, promoting transparency and minimizing misunderstandings with residents for the lease agreement. Property protection: By signing off on a detailed checklist, property managers ensure their good work is documented and any issues can be clearly identified as resident responsibility. This is critical when it comes to the security deposit if there is damage. Increased efficiency: Using a checklist can speed up the move-in process, maintenance before move-in, etc., saving property managers valuable time. Benefits for residents Clarity and transparency: A checklist provides residents with clear expectations of what the move-in process involves and their responsibilities. You will have a document of pre-existing damage and know what repairs are needed, plus what’s just normal wear and tear. Peace of mind: A detailed property inspection at move-in provides a record of the property's condition, protecting residents from unjust damage claims. It also helps them ensure any open issues are repaired. Smooth transition: A well-organized move-in process can ease the stress of moving, enhancing the resident’s initial experience and ensuring they move into a space that’s ready for safe living. How Should a Property Management Company Prepare for Tenant Move-In? Making sure the property is ready for the new tenant before they move in, and that the former tenant (if applicable) has a seamless transition out of the property - follow these guidelines to ensure a smooth process and happy tenants. Redirect mail: Before your last communication with the former tenant, PMs should notify them they can submit a change of address via USPS so all their mail gets forwarded to their new address with ease. Clean the property: The previous tenant will typically clean up the space to some degree before they move out, and PMs will do a rental inspection to review the condition of the rental property. After this process, we recommend scheduling professional cleaning services to spruce up the property and make it move-in ready for new tenants. Confirm repairs are completed: Any repairs or maintenance tasks identified in the move-out inspection should be completed before the new tenant moves in. Check for safety hazards: Conduct a thorough inspection and fix any potential safety issues, such as exposed wires, tripping hazards, or loose handrails. Copy the keys: The former tenant will leave you with a copy of the house keys. Make sure they’re not damaged and test them to make sure they still work properly before handing them over to the new tenant. If you happen to change the locks, be sure to set time aside to create an extra set (or two, just in case the tenant loses one). Share appliance instructions: While some of this information would be included in a welcome packet for tenants, it’s helpful to share instructions or operating manuals for some of the appliances to help them understand how to properly care and use them during their tenancy. Check landscaping: Make sure the grounds (such as lawns, gardens, and commons) are presentable and well-maintained. This should include reviewing the exterior elements of the property such as the driveway, light fixtures, fence, roof, and gutters. Reach out to your landscaping and maintenance vendors to schedule regular upkeep, unless this is the tenant’s responsibility such as mowing the grass. Provide utilities information: Share information about the utilities such as electricity, water, gas, heating/cooking systems, and internet. Make sure they know how to transfer utility bills to their name, as well. You can also include information about a move-in concierge in a Resident Benefits Package through Second Nature. What Should a Property Management Company Provide to the Tenants During the Move-In Process? During the move-in process, property management companies should provide tenants with the following: Lease agreement PMs should provide tenants with a copy of the signed lease agreement, which details the overall terms and conditions of the lease. We recommend providing a hard copy, in addition to an electronic one to ensure peace of mind both for the property management company and the tenant. Related: Lease Management Process Safety records Safety records, including smoke and carbon monoxide alarm certifications and any other safety inspections, should be readily available to ease the tenant’s mind. Having this documentation helps make sure the property is up to safety code, as well for the PM. Smoke alarm and carbon monoxide detectors In addition to PMs sharing documentation showing that smoke alarms and carbon monoxide detectors are properly installed and functioning, they should also discuss when and how often they may need to be replaced. This is essential to tenant safety and can reduce the risk of fire and carbon monoxide poisoning in the rental property. Inventory of the property A detailed inventory of the property, including the condition of furniture, appliances, and other items is helpful for tenants to be aware of. This is the bulk of the checklist, and includes an evaluation of each room's condition, including walls, flooring, windows, countertops, faucets, doors, light fixtures, and any furniture or appliances. More details can be included such as the condition of the paint, if there are any visible carpet stains, and the functionality of the appliances. PMs can take the extra step by providing clear photos of each room to show existing damages so there’s a visual record and to clarify any potential disputes. Property managers should perform the inventory check with the tenant, and allow them to review this checklist so they can agree on the condition of each item before signing off on it. By dating and signing the document, this confirms their agreement on the property’s initial condition. What Should a Property Management Company Do on the Day the Tenant Moves In? Property managers can start a positive relationship with the tenant by providing a warm welcome on their move-in day and clear communication about the property. Here are some guidelines on what to walk through that first day: Demonstrate equipment Tenants are typically aware of how equipment in the property works, such as locks, dishwashers, and washing machines. PMs should check with the tenant if they’d like an overview of anything, to make sure they understand how to use it. Explain safety equipment Part of the walkthrough should include an overview of where the safety equipment is so they can be prepared if there’s ever an emergency. This should include an explanation of how to use relevant equipment such as fire extinguishers and blankets, locks, and any security systems. Provide emergency contact numbers Tenants should have a list of local emergency contact numbers, as well as main points of contact at the property management company. This should include a written explanation of how to deal with different emergency situations on the property, such as losing power, issues with the HVAC system, or an urgent repair. Answer questions Once the walkthrough is complete, tenants should have the opportunity to ask any immediate questions they have about the property or their tenancy. If they have questions later, they can always reach out to the property manager later. Hand over the keys Once the property manager has walked through everything and answered all the tenant’s questions, the last step is handing over the keys and making sure they have access to any additional common areas. Are Property Managers Required to Use a Tenant Move-In Checklist? Sometimes, new tenants must be provided with a written statement on the condition of the unit at move-in time, including a comprehensive list of existing damage. This varies by state, though. For instance, this applies to all new tenants in Arizona, Connecticut, Hawaii, Kansas, Maryland, Nevada, North Dakota, and Virginia. Yet, in other states, such as Georgia, Kentucky, Massachusetts, Michigan, Montana, Washington, and Wisconsin - this depends on whether a security deposit is being collected. This process is designed to ensure transparency and fairness, promote better communication, and reduce potential conflicts between the tenant and property management company. For detailed information on specific state requirements, we recommend consulting local laws or legal resources, particularly since cities and counties may pass local ordinances that affect tenant rights and responsibilities. How to Create a Tenant Move-In Checklist As hinted earlier, a tenant move-in checklist involves several comprehensive sections to make sure it fully captures the property’s condition. (Don’t worry, we’ll provide a template you can use!) Some of these will include the following section: General information: This covers the basics like the property address, the names of the tenants, and the date of the move-in inspection. Rooms: This includes noting the condition of each space such as the bedroom(s), bathroom(s), kitchen, living room, and dining area. It typically includes an overview of the conditions of the doors, floors, walls, and windows in each space. Appliances: This describes the state of the appliances and fixtures in the property such as microwaves, dishwashers, fridges, washing machines, and outlets. Utilities: This includes a review of systems such as plumbing, electrical, HVAC, and the to make sure the electrical panel is property labeled and connected. Safety: In this critical step, a property manager does a walkthrough of safety equipment such as smoke alarms, carbon monoxide detectors, and fire extinguishers. This includes making sure they’re visible and functioning properly. Exterior: An overview of the exterior features of the property, such as the front walkway, front porch, rear deck, yard, driveway, security lighting, and any outdoor structures. What To Do After Completing a Move-In Checklist Once the move-in checklist has been properly filled out and completed, the property manager can wrap up the final steps of the process. The first step is to go over the details of the checklist with the tenant to make sure they understand it and agree with the property manager’s assessment on the conditions of everything in and around the property. If they disagree about any of the items, the property manager should discuss it with them immediately so they’re both in agreement before they sign off on it. Once the tenant has approved this, make sure they sign and date the checklist as well as the property manager. A copy of the signed checklist should be given to the tenant once they’ve signed it, and then the property manager should retain the original and copy for their own records. If the tenant has any repair requests, they should be able to share them by reaching out to the property manager directly or submitting a ticket through the property management portal. Tip to Optimize the Move-In Experience With a Checklist A checklist is the foundation of a wonderful move-in experience. But it’s just the starting point. How does a property management company set itself apart from others in the move-in experience? Here’s where we went to Janet Sprissler and others in our Triple Win Property Managers community for input. Use the right tools It’s easy to forget a step if you don’t have tools that help automate your process and keep your whole team on the same page. The most important thing? “You don’t forget a step!” Sprissler says. “Without a checklist, you’re pretty much setting yourself up to fail,” she continues. “You will drop things, things will be missed, they’ll move in, and there’s going to be a problem. When you set the tone that ‘this is going to be a hot mess,’ you’re setting yourself up to have disgruntled residents, and disgruntled residents never take care of the property well.” Sprissler especially recommends Monday.com for tracking the checklist and process with your internal team and tools like Tenant Turner to help on the resident side. They use zInspector to ensure they are on top of property inspections. “I’m not big on a bunch of papers around,” she says. “I want to see it all automated, I want any of my team members to be able to dive into Monday.com and see what’s missing or needed right away. That system runs so much, I’m a huge fan of it.” Treat all residents with equal care Sprissler says focusing on making residents feel that “WOW!” is critical to their longevity and care for the property. At her company, they focus on seamless processes, transparent communication, and even gifts! The key is that every resident gets that same treatment. “New residents MUST have a move-in gift,” Sprissler says. “They must all get the procedures we’ve set ahead of time. They must receive their birthday gift, they must receive access to our First of the Month Club. We do a move-in concierge through Second Nature – they must have that touch point. We don’t ever say, ‘Hey, this is going to happen,’ and then it doesn’t happen.” Design the ideal move-in process We asked Sprissler how they create an ideal resident experience throughout the move-in process, and this was her top recommendation. “We make it seamless. SEAM. LESS,” she said for emphasis! “On the move-in side, our new residents go through Tenant Turner to get onto the property with an access code. Move in and move out is on Tenant Turner. We make it very simple for them to get access to the property. We don’t play around with it.” “At every stage of the process, prospective and new residents have had conversations with us so that they’re set up, and they know what’s going to happen next.” For Sprissler, it’s about thoughtful touches that give residents a sense of a VIP experience. “For example, people get hungry!” Sprissler says. “We have pizzas delivered on a moving day. One of our move-in questions is ‘What’s your favorite pizza?’” Be willing to go above and beyond Added touches – like the pizza on move-in day – go a long way to establishing the best resident experience and behavior. “When tenants have those touches, it makes life better. It just does,” Sprissler says. They provide birthday gifts and move-in gifts and will add items for pets or children customized to those residents. “People often say, ‘How are you recouping that?’” Sprissler says. “I’m recouping that by having great units when I walk through the door. You cannot pay someone to take care of a unit. But if they feel the worth of themselves and how you feel about them, they take great care of the unit.” Provide a move-in concierge Second Nature includes a move-in concierge as part of the Resident Benefit Program. Sprissler says this is one of the best parts of a seamless move-in. “We use a move-in concierge through Second Nature,” Sprissler says. “People really like it when they’re being reached out to, and all of that is handled. Moving is one of the top five stressors people experience in life. You have to realize as a property manager that you have to take some of that pressure off them. Take it off their plate! Are you making a better experience by piling stuff up on them?” “When people come into my office and say this is the best experience I’ve ever had, I know we’ve done our job,” Sprissler says. Provide a renter’s insurance program Making sure that residents have insurance coverage from day one is key. You never know when something could happen, and protecting residents is the foundation of a good experience. Second Nature’s RBP includes a renter’s insurance program that has 100% compliance across its use. Sprissler is one of the people who use this program, and she says it’s critical to have for her residents. Set clear expectations and incorporate incentive fees Sprissler recommends requesting a tenant ledger so you have the clearest information about the resident before move-in. “You can see if they’ve been charged for maintenance requests, you can see what day they pay – it really is a black and white of how they treated that previous unit,” she says. And then, of course, that clarity should be reciprocated. Sprissler emphasizes transparency upfront and excellent follow-through. Be clear, but also show that you are willing to listen. “Say what you mean and mean what you say,” Sprissler says. “I have Rent 805 rules and regulations, and any delinquency is heavily fined. Those are behavioral fees. For example, my late fee is very high, but then it’s also part of my resident benefit package to forgo that one time during the life of the tenant being in the unit. It just sets expectations.” Ultimately? “If you use good software that does a good job of screening, these questions are all resolved for you.” Free Tenant Move-In Checklist Template To help streamline the move-in process and ensure clarity for both property managers and tenants, we’ve provided a free tenant move-in checklist template. This comprehensive checklist covers all essential areas of the property and helps document its condition at the time of move-in. Property managers can feel free to customize the checklist to their specific needs. We also recommend getting legal guidance to make sure you’re covering all your bases. Tenant Move-In Checklist Property Address: Tenant Name(s): Move-In Date: General Information Property Address: Tenant Name(s): Move-In Date: Living Room Walls: Floors: Windows: Doors: Kitchen Walls: Floors: Windows: Doors: Appliances: Refrigerator: Stove/Oven: Dishwasher: Microwave: Bedrooms Walls: Floors: Windows: Doors: Closets: Bathrooms Walls: Floors: Windows: Doors: Fixtures: Sink: Toilet: Shower/Bathtub: Utilities and Systems Plumbing: Electrical: HVAC: Safety Equipment Smoke Detectors: Fire Extinguishers: Carbon Monoxide Detectors: Exterior Yard: Driveway: Outdoor Structures: Signatures Tenant Signature: Property Manager Signature: Date: Final Thoughts Remember, a move-in checklist is not just a document; it's a tool to enhance communication, establish expectations, and create a positive resident experience. Our top recommendation for ensuring a world-class resident experience is to build a resident benefits program. Second Nature has pioneered the only fully managed Resident Benefits Package for single-family property managers. Learn more about resident experience management in our State of Resident Experience Report, or explore the benefits of a Resident Benefits Package.

July 15, 2024

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Property Management Pest Control Gone Wrong: Resident Horror Stories & Nightmares

In the world of property management and real estate investing, maintaining a clean and pest-free environment is central to the well-being of the residents who live in your properties. That being said, effective property management pest control is not only a best practice, but also a strategic move that enhances your properties’ living experience, making your life as a property manager easier and your residents happier. Pest control is crucial for several reasons: Investing in pest control saves significant potential costs by avoiding large-scale infestations and property damage, enhancing resident satisfaction with a healthier, pest-free environment, and preserving property value. This approach reduces health risks, protects against liability, and maintains a good reputation by demonstrating the property management company’s dedication to providing safe, comfortable living spaces for great tenants. Ultimately, pest control sets professional property management companies apart from DIY and amateur real estate investors by safeguarding both residents' well-being and property assets. By addressing these points, you can foster a positive living environment that benefits both you and your residents. It’s important to note that our goal is not to call out “good tenants” vs. “bad tenants.” Instead, we always aim to foster a constructive dialogue focused on addressing problems and finding solutions. By emphasizing respect and fairness, we can help create a positive environment that benefits all residents, ensuring their rights and dignity are always respected. Also note that even though we here at Second Nature prefer the term "resident" over "tenant" to foster the human element, the word "tenant" may still be used occasionally due to its long-standing legal and real estate context. "House of Horror" Stories Most property managers have encountered their share of resident horror stories – and many, not for the first time. These tales often involve unexpected and severe pest infestations, made worse by residents' behaviors. Indeed, from bedbugs and roaches (the truly bad tenants any property manager is looking to be rid of) to animal issues, the range of pest problems is vast and daunting. Our "House of Horror Stories" video provides a vivid account of these situations, including some landlord horror stories that are too distressing to include here. Maggots falling from the ceiling: A tenant reported maggots falling from the ceiling onto their bed. The pest company discovered that these maggots were larvae of beetles infesting the air ducts in the neighborhood. Pets and extensive damage: Animals in one property caused extensive damage by covering all floors with feces and chewing through doors, door frames, flooring, HVAC systems, and appliances, with clean-up costs exceeding $15,000. Flushable wipes backup: A tenant flushing baby wipes caused a major sewage backup, leading to water damage throughout multiple rooms (including the living room and master bedroom), with clean-up costs close to $5,000. Donkey in the basement: During the purchase inspection, a donkey was found tied to the deck and later moved to the basement to hide it from animal control, calling for its quick removal. Rodents damaging appliances: Rats infested a property, chewing through a new dishwasher, insulation, and electrical wires, requiring repeated pest control visits and extensive repairs. These stories from a range of contributors highlight the unpredictable and often extreme challenges property managers face in maintaining their properties and ensuring the safety and well-being of their residents. How to Control Resident Pest Issues A robust pest control program is often the property manager’s best friend. After all, infestations can be difficult to proactively defend against, given that background checks, references, and tenant screening go only so far in uncovering the pest issues that can befall even the best tenants. Regardless of the challenges residents may present, a comprehensive pest control plan can mitigate potential infestations before they escalate into true horror stories. This includes timely intervention, and educating residents about maintaining cleanliness. Providing residents with clear guidelines on waste disposal and food storage can also significantly mitigate pest problems. Additionally, offering pest control services as part of a Resident Benefits Package can encourage residents to report issues early, allowing for swift action. Planning Ahead When dealing with problematic residents, it's essential to have a clear action plan. Issuing notices to clean the property promptly (e.g., with a 7-day notice period) is a critical first step. Leveraging a notice-to-clean template can streamline the process and ensure that you comply with tenant laws and legal standards. If worst things come to worst, an eviction notice may become necessary. However, this process is governed by various rules and regulations that can differ significantly across federal and state lines. It's important to be well-versed in these laws to avoid legal pitfalls. A detailed “notice to vacate” template can be incredibly helpful for property managers looking to take care of these complex situations. Nipping Things in the Bud In conclusion, maintaining a pest-free environment is integral to property management success. On-Demand Pest Control is a service in Second Nature’s fully managed Resident Benefits Package (RBP). It offers predictable, cost-effective, and fast solutions when a pest issue arises. Instead of expensive scheduled preventive treatments, residents can request service as needed. This approach ensures fast response times, directly addressing the problem at hand and saving costs over recurring treatments Property managers simply select the best pest plan from four tiers of service levels to include in their RBP. When an issue arises, the resident reports it in the On-Demand Pest Control portal, and the pest issue will be resolved. Learn more about On-Demand Pest Control by getting in touch, or read our latest study on the impact of our RBP on the resident experience.

July 3, 2024

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Your Guide to Property Management Laws, Regulations, & Rules

Property management activities involve overseeing rental properties, ensuring they’re maintained, residents are managed, and finances are handled effectively. While a real estate license is not always necessary to manage rental properties, licensing requirements can vary significantly by state. Typically, states may require property managers to hold a real estate license or work under a licensed broker. Property managers should familiarize themselves with the specific regulations in their state to ensure compliance. Related: What is the resident benefits package? What Are Some Important Property Management Rules and Regulations? Property management laws encompass various areas, ensuring the safety, rights, and responsibilities of both property managers and tenants. Key areas include: Anti-discriminatory laws: Fair housing laws such as the Federal Fair Housing Amendments Act (FHAA) prevent discrimination based on race, color, national origin, religion, sex, familial status, or disability. Lease paperwork: Legally binding lease agreements must include specific terms and comply with local regulations. Safety, maintenance, and repairs: Property managers must ensure properties meet habitability standards, including weatherproofing, heating, water, and electricity. Financial management: Proper handling of security deposits, monthly rent collection, and financial records is essential to comply with regulations and avoid disputes. Property management laws by state Each state has specific property management laws that property managers must adhere to. For instance, in many (but not all) jurisdictions, property managers must obtain a real estate broker license to operate. These laws are typically drafted and enforced by various regulatory bodies such as the state's Department of Real Estate or similar agencies. For instance, the California Department of Real Estate is responsible for regulating real estate activities, brokers, and salespersons, including those who work in property management, while the Texas Real Estate Commission handles these responsibilities in Texas. These agencies ensure compliance with state licensing laws and often provide resources and guidelines for property managers of both residential properties and commercial properties. Below is a table linking to the respective government sites for state-specific regulations: State State Body Alabama Alabama Real Estate Commission Alaska Alaska Real Estate Commission Arizona Arizona Department of Real Estate Arkansas Arkansas Real Estate Commission California California Department of Real Estate Colorado Colorado Division of Real Estate Connecticut Connecticut Department of Consumer Protection Delaware Delaware Real Estate Commission Florida Florida Department of Business & Professional Regulation Georgia Georgia Real Estate Commission and Appraisers Board Hawaii Department of Commerce and Consumer Affairs' Real Estate Branch Illinois Illinois Department of Financial and Professional Regulation Indiana Indiana Professional Licensing Agency Iowa Iowa Department of Inspections, Appeals, & Licensing Kansas Kansas Real Estate Commission (for commercial real estate property management only) Kentucky Kentucky Real Estate Commission Louisiana Louisiana Real Estate Commission Michigan Michigan Department of Licensing and Regulatory Affairs Minnesota Minnesota Department of Commerce Mississippi Mississippi Real Estate Commission Missouri Missouri Division of Professional Registration Montana Montana Department of Labor and Industry Nebraska Nebraska Real Estate Commission Nevada Nevada Real Estate Division New Hampshire New Hampshire Real Estate Commission New Jersey New Jersey Real Estate Commission New Mexico New Mexico Real Estate Commission New York New York State Division of Licensing Services North Carolina North Carolina Real Estate Commission North Dakota North Dakota Real Estate Commission Ohio Ohio Division of Real Estate & Professional Licensing Oklahoma Oklahoma Real Estate Commission Oregon Oregon Real Estate Agency Pennsylvania Pennsylvania Real Estate Commission Rhode Island Rhode Island Department of Business Regulation South Carolina South Carolina Real Estate Commission South Dakota South Dakota Real Estate Commission Tennessee Tennessee Real Estate Commission Texas Texas Real Estate Commission Utah Utah Division of Real Estate Virginia Virginia Department of Professional and Occupational Regulation Washington Washington State Department of Licensing West Virginia West Virginia Real Estate Commission Wisconsin Wisconsin Department of Safety and Professional Services Wyoming Wyoming Real Estate Commission Note: This list excludes resources from Idaho, Maine, Maryland, Massachusetts, and Vermont. Tenant screenings Tenant screenings are a critical step in property management, involving background checks, credit checks, income verification, employment verification, rental history, and proof of ID to assess prospective tenants. This process helps ensure that potential renters are reliable and financially responsible. It's important to obtain signed consent before running credit checks, as required by the Fair Credit Reporting Act (FCRA), to comply with legal standards and protect tenant privacy. Another important guidance is provided by the Fair Housing Act, which prohibits discrimination in housing-related activities based on race, color, national origin, religion, sex, familial status, and disability, ensuring equal access to housing for all individuals. Learn more about Tenant Screening Tips for PMs Lease agreements A lease agreement is a legally binding contract between the landlord and tenant, outlining the terms of the tenancy. Key components of rental agreements include lease terms, rent amount, security deposit regulations, and common clauses such as maintenance responsibilities and lease renewal terms. Regulations governing lease agreements can vary by state, so it's essential to ensure that leases comply with local laws. For instance, state laws often contain security deposit limits, provisions for the return of unused portions, as well as a clear accounting for any deductions. Consulting with a lawyer is crucial to ensure your agreement is legally sound and reflects your specific circumstances. We’ve shared some relevant resources below: Learn more about property management agreements, featuring a free template Learn about security deposit insurance, and its pros and cons Financial management Effective financial management in property management involves establishing clear rent collection procedures and maintaining organized financial records. This includes tracking rent payments, managing tenants’ security deposits, and adhering to landlord-tenant laws to avoid legal disputes and financial penalties. Keeping detailed records can help property managers resolve issues efficiently and ensure transparency with tenants and property owners. Solutions such as property management software can streamline financial operations, automate routine tasks, and perhaps most importantly - ensure accuracy and regulatory compliance with respect to various accounting regulations and legal requirements. Evictions Evictions are a legal process to remove a tenant from a property. Common reasons for eviction from rental units include nonpayment of rent, property damage, lease violations, and criminal activity. Property managers must follow their state's rules for eviction notices, such as unconditional quit terminations and termination for lease violations, to ensure the process is lawful and fair. State laws regarding unconditional quit terminations and terminations for violation of a lease vary widely. Unconditional quit notices typically demand that tenants move out immediately without an opportunity to remedy the violation. States like Indiana and Mississippi allow landlords to issue these notices for serious or repeated violations, with Mississippi requiring 14 days to move out. For lease violations, the notice period and the opportunity for tenants to remedy the breach also differ by state. For example, in Kentucky, tenants generally have 15 days of written notice to cure a violation, but if the same violation occurs within six months, landlords can issue a 14-day unconditional quit notice. In contrast, states like Iowa and Maine require a seven-day notice period for tenants to address lease violations before eviction proceedings can begin. In California, on the other hand, tenants must be given three days or more to cure the violation before landlords can file for eviction (source). These legal nuances emphasize the importance of PMs and tenants understanding their specific state regulations to navigate eviction processes appropriately. Property maintenance and repairs Maintaining rental properties is a legal obligation for landlords, ensuring that properties are safe, habitable, and free from hazards like lead, asbestos, and mold. This includes weatherproofing, providing adequate heating and water, and ensuring electrical systems are functional. You can find out more about these issues in our Property Maintenance Guide for PMs. Landlords must also give notice to tenants before entering the property for repairs, as required by most state laws. When in doubt, consult a legal advisor to ascertain the specific laws that apply to you in your state. Tenants have the right to a habitable living environment, and failure to meet these standards can lead to legal consequences as well as issues with occupancy rates. Indeed, when landlords fail to make required repairs, tenants have several options depending on their state's laws. Tenants may withhold rent, make the necessary repairs themselves and deduct the cost from the rent, pay a reduced rent, report the issue to local building inspectors who can order repairs, or even break the lease and move out. Additionally, tenants can sue the landlord for a partial refund of past rent or for damages caused by the substandard conditions, including discomfort and emotional distress. Get our preventative maintenance checklist for property management Learn about the importance of pest control to maintain a pest-free environment Second Nature's Guidance Staying informed about state-specific regulations, maintaining organized records, and ensuring compliance with federal laws such as the Fair Housing Amendments Act is key to successful property management. On a practical level, understanding and adhering to property management laws and regulations is crucial for property managers to ensure smooth operations, maintain property value, and foster positive tenant relationships. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

July 3, 2024

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The Good and The Bad of Virtual Property Management

Scott Hampton, who founded Hampton and Hampton with his wife in 2004, has seen the continued growth of the rental proptech sector over the last 20 years. With virtual becoming a buzzword in basically every industry, property management included, Hampton and Hampton has had to challenge some its preheld notions about the industry and learn how to best leverage virtual processes in the business. There are good parts and bad parts of an increasingly virtual world, and Hampton was kind enough to share his experiences trying to navigate this. Related: What is the Resident Benefits Package? Virtual showings One area where Hampton has committed to the benefits of a virtual approach is in showings. The rise of the virtual showing during COVID changed quite a bit for Hampton and Hampton, and Scott was very honest his old-school nature creating some qualms about the process, but the benefits were real as well. “Before COVID, people were still uncomfortable,” says Hampton. “They wanted someone to show up and shake their hand and open the door. Now, people are perfectly fine with getting a code on a code box. And I can sit on a Zoom call or Google Meet call with you on my phone. I can do it on a laptop.” The flexibility is really the big win with virtual showings. The logistical burden gets lifted quite a bit. The concept may not have unpopular in the past with prospective residents, but Hampton has seen a shift in how open renters are to more virtual processes. “I've seen our staff show houses on their phone at lunch and just walk the people through the house, literally, anywhere they're at and the people are fine with that. And then obviously just send them a link for the application and do everything digitally for that right there and to grease the skids as I say, to make that transaction as easy as possible for them. So you know, I think virtual showings have been a huge change for us.” While there are drawbacks to virtual showings that Hampton will touch on, the win here for the PMC is ease of logistical management. You no longer have to get an agent to a place and coordinate that. It just helps remove so much of extra legwork. "Logistically, it's hard when you're in two cities," says Hampton. "Even though you have staff in two cities, it's still logistically difficult to do that, to coordinate those things and to get that many people around. So that's helped." Related: Benefits of Property Management Outsourcing Services Virtual Assistants A lot has gone virtual over the last four years, for better or worse, and the geographic reach of the hiring companies has seen some of the biggest change. This virtual outsourcing has helped Hampton and Hampton be more efficient in the post-sales process, which in turn allows their salespeople to be more efficient and do the things they are more cut out to do. “We now work a lot more with virtual people. Not virtual companies per se that are out there, but currently, we have more virtual folks that are more like sales agents that are in other cities. They write contracts for us. They handle closings. I've never met some of our virtual closing people. They literally are US-based real estate agents and they write the contract they get handed the contract once it goes, they go to get the inspections done, and they get the financing in place. So the salespeople can kind of just move on to another sale and not be bogged down dealing with, you know, did the inspection get done today? Did the electric get turned on? And so we do a lot more with that." Drawbacks of Virtual Property management will also be a people business. Good PMs understand optimizations and processes built on tech is not a golden ticket. Relationships matter, and one of the drawbacks of a more virtual world is the spiking difficulty of managing relationship. "That's really hard to do," says Hampton. "It's just really hard to to convey that to people. I used to know the tenants' names and they used to know me. I rented them the house and, you know, I knew their boys. Same with the clients. I used to know their voice, but you lose that touch. So it's very hard and that's the one thing too that I think we all lose is that personal touch of a human relationship."

June 27, 2024

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Property Management Insurance Coverage Guide

A study by Orchid on property manager insurance found that while 80-90% of property managers require residents to carry insurance, only about 41% of residents actually have or retain that required coverage. Kind of crazy, right? Especially when you consider that that gap represents a huge exposure to risk for both the property manager and their investor. Insurance for property management is a must – it protects not just you but your investor’s assets and your resident’s safety. At Second Nature, insurance is so important to us that we wrap an insurance product into our resident benefits package. So, today, we’re looking at property manager insurance requirements and why it’s so important to get into the nitty-gritty details. ‍ Key Learning Objectives: What is property management insurance? Why do property managers need insurance (risks and liabilities)? What types of insurance are important for property management companies? Should property managers require residents to have insurance? How do you choose the best insurance for property managers? How much does property manager insurance cost? Examples of property management insurance coverage claims What our tenant liability insurance product can cover What is Property Management Insurance? Property management business insurance is protection for property managers against the risk of damages or claims against you from residents or clients. In other words, property management business insurance ensures that you, as the professional property manager, are covered in the case of liability claims, legal proceedings, or losses from perils like fire, vandalism, or burglary. Property management business insurance can also include tenant liability insurance, or your leases may require that renters are insured in some form. We’ll talk more about tenant liability insurance below. Why Property Managers Need Liability Insurance Coverage Property managers are responsible for a lot. Managing people’s homes means that property managers take on considerable liability risks. Claims of injury or property damage can lead to serious financial losses if you aren’t protected. Property management liability insurance coverage reduces that risk exposure and keeps you from paying out the cost of wrongful eviction claims, injuries, property damage, etc. In a perfect world, there would be zero property management requirements. We talk a lot about the Triple Win and how property managers should aim to build services and products that delight residents, protect investors, and retain talent on their teams. But even with the best service, everyone inevitably hits some speed bumps. Maybe a resident isn’t happy with an eviction notice, a maintenance item slipped through the cracks, or a property simply got unavoidable damage. Property management company insurance ensures you’re not liable for the costs of these inevitable parts of life. What are the Types of Insurance That a Property Management Company Needs? At Second Nature, we’ve worked with professional property managers across the country and seen several different approaches to insurance. But no matter where you manage property, there are some standard types of insurance that property managers should buy or require. Here are some of the basics. General liability insurance for property managers General liability insurance for property managers covers physical risks for which you might become financially liable. It will typically help cover repairs, replacements, legal fees, and medical bills. You can get it for residential or commercial property. Property manager liability insurance can include coverage for claims like: Bodily injury: If a resident decides to sue for an injury they sustained on the property. Medical payments: If someone gets hurt on your property and holds the property manager responsible for the injury, the PM could be liable for covering their medical costs. Property damage: If you or one of your employees caused damage to the property. Reputational harm: This helps cover you financially if someone sues you for libel, slander, wrongful eviction, privacy violations, etc. Advertising injury or copyright infringement: This typically refers to coverage if you ever faced a lawsuit for copyright infringement in your marketing. Professional liability insurance for property managers Known as both professional liability insurance or E&O insurance, this type of property management insurance protects Property Management companies (PMCs) from claims about mistakes in their professional services. Errors and omissions insurance willy typically cover legal fees if there was a mistake in a contract or if there were any – well – damaging errors or omissions in any communication. It may also cover errors in service, omissions in information, negligence, or even inaccurate advice. Like with any insurance, ideally, you’ll never need this! However, it is best to protect your company from such financial risks if any of your clients decide to make a case against you. Cyber liability insurance for property managers Cyber liability insurance helps protect you from financial losses due to cyberattacks or data breaches. Cybersecurity is a top focus of business leaders for 2024 and should also be a strong consideration for property management leaders. PMCs handle sensitive personal data from both residents and clients. Should your company ever experience a data breach, fraud, or other cybersecurity threats, this insurance will help recoup your losses. Worker’s compensation insurance for property managers Every business with employees – whether it’s one or many – needs worker’s compensation insurance. Worker’s comp covers the costs of employee injury while at work. It also can protect business owners from employee injury lawsuits. Even sole proprietors may use worker’s comp insurance to cover work injury costs that health insurance might not cover. In most states, businesses without worker’s compensation insurance will be fined. Be sure to know your state’s laws. Deposits and damage coverage insurance for property managers Deposits and damage coverage is a payment the resident submits up-front to be given back at the end of a lease, assuming they haven’t damaged the property. There’s a lot of innovation in this space, with new products and services providing security deposit alternatives. Many of these are pure insurance, covering damages for a monthly fee. Vacation rentals owners’ insurance Vacation rental owners’ insurance covers the investor for any vacation rental property they own. This coverage protects against losses in case of robbery, fire, vandalization, or other damages, whether the building is vacant or occupied. While property owners should have their own policy, sometimes property managers can extend coverage for some losses as part of their license. Tenant discrimination insurance for property managers While we don’t know any property managers in our network who would intentionally discriminate against residents, it’s smart to have this type of insurance as well. Discrimination based on sex, race, religion, ethnicity, age, sexual orientation, disability, etc., is illegal. But that doesn’t mean you’re automatically protected from a discrimination suit. This type of insurance can protect you in case a disgruntled former resident attempts to sue, no matter how baseless the allegations are. Tenant discrimination claims can lead to serious financial risk and expensive lawsuits. Coverage for such claims are generally excluded from General Liability policies. Be sure to review your existing policy to determine your exposure and add additional coverage as needed. ‍Renter’s insurance Renter’s insurance – or H04 insurance – is essentially a financial safety net for residents and their belongings. Renter’s insurance should include three distinct types of coverage: Property Damage/Liability Insurance: Plans typically provide around $100K in coverage, though different properties may require different coverage (pools, for example, increase coverage) Contents and Belongings Coverage: For any damaged or stolen belongings they would like covered. Usually, this will be around $10K of coverage, but residents can opt for higher coverage. Loss of Use/Additional Living Expenses: For any costs a resident incurs for living expenses in the vent the residence is uninhabitable. We recommend residents seek contents and belongings coverage that provides replacement cost value (RCV) rather than actual cash value (ACV), as ACV may not offer sufficient coverage. For example, if you have a 10-year-old laptop that gets damaged, ACV would only cover the value of your 10-year-old laptop at the time of the damage. RCV would cover the value of replacing it with a new laptop of a similar kind and quality. Should Property Managers Require Renter’s Insurance? Do property managers need to require their residents to carry renter’s insurance, or in the least, tenant liability insurance? Most professional PMs would say absolutely yes. Remember, 80-90% say they require their residents to carry insurance coverage. So, why do only 41% of residents retain that coverage? Often it’s simply a matter of insurance lapsing without anyone noticing. Or a resident might submit paperwork that’s out of date or decide to end their policy without thinking they need to let you know. Whatever the reason, it’s important to have a backup plan. If a resident’s insurance lapses, you could be liable for damage during that time. At Second Nature, we provide tenant liability insurance as part of our Resident Benefits Package (RBP). This feature allows property managers to offer price-competitive insurance coverage that applies to all residents with one basic group rate. We’ve seen 100% insurance compliance among property managers using our RBP. How to Choose the Best Insurance for Property Managers As you choose your property managers' insurance plan, it’s important to consider the risks you want covered and any liabilities you might face. Here are a few best practices for selecting a property management business insurance plan. 1. Consider your niche and your needs. What is your property management business niche? What kind of properties do you manage? What is their value? What risks or liabilities are you most concerned about? Do you have employees, or are you a sole proprietor? It’s also important to consider your goals and how your business services and objectives might change over the coming year. If you need a new type of insurance soon, include that consideration in your search. 2. Establish your budget and review prices Get a good idea of what’s on the market and how much it costs. Consider the level of coverage you need vs. what you feel you can afford. Make sure you’re building those insurance fees and deductibles into your pricing structure. 3. Compare vendor specialties Some insurance companies focus on offering several types of insurance, while others dial down into a specialty. Often, just like with property management, going with the specialist vendor will ensure better coverage and service, however, it may also cost more. 4. Use your network This is where your network really becomes useful. The SFR property management community is an open, generous group of folks. Most will be more than willing to share their insurance experiences, what has worked, what hasn’t, and their favorite vendors. Ask around within your network for advice. Also, make sure to read reviews of any potential insurance companies and see if they have property management clients. 5. Always talk to your attorney Of course, this is probably the most important practice. Never make any insurance decisions without discussing them with your attorney! They will be best able to help you navigate legal requirements, your greatest risks and liabilities, and what type of coverage makes the most sense for your PMC. Explore our resident benefits package, which includes renters insurance. How Much Does Property Management Insurance Cost? The cost of property management insurance will fluctuate based on what you decide you need. Your level of risk also affects the cost of insurance. Insureon gives several estimates of standard costs for property management and real estate insurance. The following average prices are based on Insureon’s customers’ policies, subject to change at any time: General Liability insurance costs, on average, about $30/month for a $1 million per-occurrence limit and a $2 million aggregate limit. Errors and Omissions insurance can cost, on average, around $55/month with a $1 million per-occurrence limit and a $1 million aggregate limit. Worker’s Compensation insurance can cost, on average, about $50/month or $600-$620/year. Cyber Liability insurance can cost, on average, a median of $140/month, depending on the sensitivity of the information. The average prices listed above will vary based on the PMC, properties covered, and the type of coverage and limits requested. Again, property managers should consider which type of coverage they need and then build those costs into their pricing structure. Examples of Property Management Insurance Coverage Claims Let’s look at a few examples of common property manager insurance coverage claims. How does insurance help when you face a crisis like damage, injury, or a lawsuit? Here are a few examples of common types of claims. Wrongful eviction That’s one no property manager wants to see! But it takes just one disgruntled former resident to bring a wrongful eviction suit against a PMC – even if the claim is unreasonable. An example of this could be a resident approved with excellent references, but after move-in, begins disturbing the peace in the neighborhood. Maybe they get noise complaints late into the night or transgress community guidelines. Another example would be a resident who is not making rent payments on time. In those cases, the property manager would then deliver formal notice of the problem and take the proper steps to legally evict the resident if necessary and allowed by law. It’s still possible that the resident could sue for wrongful eviction. However, as long as you document your process clearly with your attorney, and follow all legal requirements, your insurance should cover the costs that may result from the lawsuit if such coverage is included within your policy. Loss of rental income Here’s a good example of coverage for loss of rental income: Our built-in tenant liability insurance plan provides coverage to a PMC in the event one of their properties is unrentable due to a covered loss caused by a resident. For example, if a property that is covered by our plan is damaged due to a fire caused by the resident and the PMC is unable to rent that property out for a few weeks, they can file a claim under the Loss of Use endorsement and receive up to $1k. Property damage Property damage could be covered differently based on the type of coverage – either by the renter’s insurance, the PMC’s, or the investors’ general liability insurance. So, here’s a real-life example from one of Second Nature’s partners: A resident went out of town, and when he returned after two days, he found that the back sliding door with two glass panels was cracked on one side. It’s tempered glass, so the PM didn’t know if it was from heat, intentional damage, or something else. In this case, if the damage were caused by a covered peril (fire, smoke, water, explosion, collapse, etc.) or resident negligence, the PM’s master insurance obtained through our offering would help cover the cost. An investor’s property insurance should also cover property damage for the same causes. Pet damage or dog bites Pet liability insurance helps cover any damage done by pets to the property – or injury caused by the pet to anyone else. Under our tenant liability insurance benefit, pet damages and dog bites are covered up to $25k. We have one of the only insurance policies that cover any dog breed as long as the property manager approves the dog. Animal liability covers the cost of any suits filed and medical expenses up to the policy’s limit. How Second Nature Helps with Your Resident’s Insurance Coverage At Second Nature, we know how valuable your investors’ assets are – and how much risk you take on as a property manager. While insurance can sometimes feel like a zero-sum game, we aim to make every opportunity a win for everyone involved. That’s where our tenant liability insurance product comes in. We offer PMCs a fully managed tenant liability insurance plan that helps ensure compliance and that you, your investor, and your residents can rest easy knowing you’re covered for damage or harm. With our tenant’s liability insurance, we’ve seen our partner PMCs go from: Only 41% of residents covered → 100% of residents covered Portal administration → Fully managed for you Leasing team tracking certifications → 100% certificate management Higher premiums → lower premiums Implementation and vendor management → 1 RBP, 1 Invoice Derrick Scott, from IMG put it this way: “I don’t know if people grasp just how important the ‘fully managed’ part of that is. We’ve seen property managers whose residents’ insurance lapsed, but no one knew about it. Unfortunately, the resident had a claim during the three-month period they didn’t have insurance. So the property manager took on that liability. “Being fully managed means transferring some of that liability to get that done – and ensuring you have coverage. I see that as a massive benefit.” Every property manager knows insurance matters, but that doesn’t make it any less of a headache. If you want to learn more about how we can partner with you to make that part of your life simpler, check out the details on our Resident Benefits Package.

June 25, 2024

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Accidental Landlord? Why You Should Hire a Property Manager (and How)

In the ever-evolving real estate market, the term "accidental landlord" refers to individuals who find themselves managing rental properties unexpectedly. This can happen for various reasons – perhaps you’ve inherited a family home, moved for a job, or decided to rent out your property instead of selling it in a slow housing market. Certainly, today’s interest rate trends are contributing to the rise of the accidental landlord phenomenon by making it less attractive for homeowners to sell their properties. As interest rates increase, prospective buyers face higher borrowing costs, reducing their purchasing power and dampening demand. This often leads homeowners, who might have otherwise sold their property, to rent it out instead, especially if they’ve locked in lower mortgage rates from previous years. Consequently, many individuals find themselves in the role of landlords unintentionally, seeking rental income as a viable alternative to selling in a sluggish market. Regardless of how you got here, stepping into the role of a first-time landlord can be both overwhelming and time-consuming. In this article, we’ll highlight the importance of professional property management for accidental landlords. Effective property management can alleviate many of the stresses associated with being a landlord, allowing you to reap the benefits of rental income without sacrificing your personal or professional life. We’ll also explain how homeowners can avoid headaches by locking in high-quality long-term tenants with a property manager powered by Second Nature's resident benefits package (RBP). Note that even though we here at Second Nature prefer the term "resident" over "tenant" in order to foster the human element, the word "tenant" may still be used occasionally due to its long-standing legal and real estate context. The Challenges Faced by Accidental Landlords Stepping into the landlord role comes with countless challenges. Understanding these obstacles is crucial in recognizing the value of professional property management. Time management issues One of the primary challenges accidental landlords face is time management. Balancing a full-time job with the responsibilities of managing a rental property can be daunting. From advertising vacancies and showing the property to potential renters to handling day-to-day administrative tasks and responding to maintenance requests, the demands on your time can quickly become overwhelming. This often leads to burnout, which can negatively impact both your professional life and the quality of your property management. Legal complexities Navigating the legal complexities of being a landlord is another significant challenge. Understanding tenant laws, lease agreements, and your legal obligations can be intricate and ever-changing. Landlords must stay updated with local, state, and federal regulations to avoid potential legal issues. This includes everything from fair housing laws to health and safety regulations. Without proper legal knowledge, you risk costly fines and legal disputes. Maintenance responsibilities Maintaining a rental property involves regular upkeep and emergency repairs, which can be both time-consuming and costly. From routine maintenance tasks like lawn care and HVAC servicing to unexpected emergencies like plumbing leaks or electrical issues, ensuring your property is well-maintained is crucial to keeping your residents happy and protecting your investment. Tenant management Managing residents is another area where accidental landlords often struggle. Effective tenant management includes everything from screening prospective tenants and handling lease agreements to addressing disputes, ensuring timely rent collection, and dealing with evictions. Poor tenant management can lead to high turnover rates, property damage, and lost rental income. Financial considerations In the current real estate market, navigating financial considerations can be particularly challenging for accidental landlords. Many find themselves dealing with buy-to-let (BTL) mortgages and managing mortgage payments on their primary residence and rental property. By law, landlords must also adhere to specific regulations, including securing landlord insurance and managing security deposits correctly. Additionally, fluctuating mortgage interest rates have prompted many homeowners, especially in states like California, to rent out their current homes rather than sell them. This strategy not only helps cover mortgage payments but also provides an opportunity for generating passive income, turning a potentially burdensome situation into a profitable venture. Benefits of Hiring a Property Manager Hiring a manager for your investment property can alleviate many of the challenges above, providing expertise, efficiency, and peace of mind. Expertise and experience Property management services bring valuable market knowledge and experience to the table. They understand local rental markets, enabling them to set competitive rental prices that maximize your income while attracting high-quality residents. Their expertise in marketing and leasing also helps minimize vacancies and ensure your property is always occupied. Legal protection and compliance Staying updated with the ever-changing landscape of local, state, and federal laws can be overwhelming for any landlord. Property managers have the knowledge and resources to ensure your property complies with all legal requirements, reducing the risk of costly legal disputes. They handle everything from drafting lease agreements to ensuring fair housing practices are followed. Efficient tenant management Effective tenant management is crucial for a successful rental property. Property managers can help with screening tenants, and handling lease agreements, rent collection, and dispute resolution – ensuring your property is well-managed and your residents are satisfied. Their experience in dealing with tenants can help prevent issues before they arise, saving you time and stress. Maintenance and repairs Property managers have access to a reliable network of contractors and service providers, ensuring timely and cost-effective maintenance and repairs. They conduct regular property inspections and coordinate routine maintenance tasks, keeping your property in top condition and preventing costly emergencies. Financial management Property managers provide detailed financial reporting, helping you keep track of your rental income and expenses. They can also assist with tax benefits, ensuring you take advantage of all available deductions. This level of financial oversight can help you maximize your rental income and make informed decisions about your property. Moreover, effective financial management involves navigating complex notions around capital gains, depreciation, and income tax. Property managers can thus help optimize your financial strategy by leveraging depreciation to reduce taxable income, advising on capital gains implications when selling the property, and ensuring compliance with income tax regulations. This comprehensive financial approach not only enhances profitability, but also secures long-term investment growth. Expenses and Other Financial Considerations When considering whether to hire a property manager, it's important to weigh the costs against the potential benefits. Cost vs. benefits analysis Property management fees typically range from 8% to 12% of your monthly rental income. While this may seem like a significant expense, the potential savings in time, stress, and legal issues can far outweigh the cost. Additionally, property managers often help optimize rental prices and reduce vacancies, increasing your overall rental income. Impact on rental income A professional property manager can help reduce vacancy rates by effectively marketing your property and setting competitive rental prices. They can also help ensure timely rent collection and minimize rent arrears, providing a steady stream of rental income. Over time, these benefits can offset the cost of property management fees. Tax deductions Property management fees are considered a deductible expense, reducing your taxable rental income. This can result in significant tax savings, making professional property management even more cost-effective. How to Choose the Right Property Manager Choosing the right property manager is crucial to ensuring your property is well-managed and your residents are satisfied. As a general note, when choosing a property manager, consider their experience with both short-term and long-term rental strategies. A good property manager will have a solid understanding of real estate investing, including knowledge of high vs. low interest rate environments and the implications for homebuyers and investors alike. For instance, they can provide valuable insights into leveraging buy-to-let mortgages to maximize rental income while ensuring compliance with all relevant laws and regulations. Partnering with reputable realtors and lenders, they can also offer guidance on the best financial practices for managing your rental property, ultimately helping you achieve a balanced and profitable real estate portfolio. Here are some best practices for choosing a property manager: Research and referrals Start by seeking referrals from friends, family, and real estate agents. Online reviews and professional associations can also provide valuable insights into the reputation and performance of potential property managers. Be sure to look for a property manager that offers a resident benefits package (RBP), which can enhance the living experience for your residents and increase retention rates. Interviewing potential managers When interviewing potential property managers, ask key questions about their experience, services offered, and fee structure. Understanding their approach to tenant screening, maintenance, and financial reporting can help you determine if they’re the right fit for your property. Checking credentials and references Ensure the property manager is licensed and certified by relevant professional associations. Request client testimonials and references to gauge their performance and reliability. Understanding the contract Carefully review the property management contract, paying attention to the services provided, fee structure, and termination clauses. What to Expect From a Property Manager Hiring a property manager comes with certain expectations. Understanding these can help you maintain a positive and productive relationship. Regular updates and communication Expect regular updates on your property, including monthly financial reports and maintenance updates. Clear and consistent communication is key to ensuring your property is managed well. Transparency and accountability A good property manager will operate with transparency and accountability, providing detailed financial reporting and being responsive to your concerns. An open-book policy and effective conflict resolution strategies are essential. Proactive management Proactive property management includes preventive maintenance and staying ahead of market trends. A property manager who regularly inspects your property and makes recommendations for improvements can help maintain its value and appeal. Case Study: JWB Real Estate Capital Consider the case of JWB Real Estate Capital, which demonstrates the benefits of long-term leases and proactive property management. By focusing on high-quality residents and providing exceptional service, JWB has achieved a "Triple Win" for owners, residents, and the company. Their approach emphasizes the importance of professional property management in maximizing rental income and minimizing vacancies. The Triple Win concept revolves around creating a mutually beneficial environment where everyone involved sees positive outcomes. For owners, this means consistent rental income and well-maintained properties. Residents benefit from high-quality living conditions and responsive management, while the property management company sees increased retention rates and positive reputation growth. This holistic approach ensures long-term success and satisfaction for all parties involved. Taking the Next Step Hiring a property manager can help accidental landlords avoid the headaches of property management, ensuring that real estate investors are well-protected and their residents are satisfied. That’s because a property manager provides expertise, legal protection, efficient tenancy management, reliable maintenance, and detailed financial reporting. These benefits can help maximize your rental income and reduce the stress of being a landlord. To avoid the headaches, lock in high-quality long-term tenants with a property manager powered by Second Nature's RBP. Visit Second Nature's Solutions for Property Owners for more information. Embracing professional property management can transform the experience of being an accidental landlord from a burdensome task into a rewarding venture. Property managers, if you’re reading this, here's how to attract accidental landlords: Second Nature's Solutions for Property Managers.

June 21, 2024

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Best 17 Single-Family Property Management Software in 2024

Property management software is a booming industry with dozens of options for multifamily and single-family property management companies. Today we're going through the best software for single-family property managers, and tips from two experts on how to leverage the software best. What we'll cover Our two experts, Kelli Segretto and Rhianna Campbell, have been through more than their share of tech rollouts. They’ve seen what works and what doesn’t for single-family property management, and they’re here to share with you what a good process for building a tech stack actually looks like. For this article, they walked us through some of the best property management software for single-family homes. These apps and platforms can help with everything from: Rent collection Work orders Credit card payments Online rent payments Tenant Screening Lease management Maintenance management CRM Let's jump right in with the top 17 software solutions for single-family property managers. The first six in our list are software solutions specifically and exclusively designed for property managers. 1. RBP by SecondNature Second Nature pioneered the property management industry’s first-ever fully managed Resident Benefits Package (RBP). The RBP includes critical services that more and more residents are asking for – and are willing to pay for. It's not just a package of services, though. The RBP is a tech platform that helps single-family property managers boost retention by creating a better resident experience and incentivizes better resident behavior with support like resident rewards and credit building for on-time rent payments. Campbell says that she looks for technology that can support both her team and the resident experience: “One of the things I want my clients to think about is the property management software is not just for our benefit," Campbell says. "This is not just to make our lives easier and our jobs easier; it's to really be able to reposition our time so that we're focused on value creation.” RBP by Second Nature generates value through: Attracting and retaining residents Boosting rental rates through improved resident experience Giving PMCs a competitive advantage Driving ancillary revenue opportunities Incentivizing good resident habits like on-time rent payments, property care, etc. The RBP supports PMCs by managing services like credit building, air filter delivery, maintenance requests, renter’s insurance programs, resident rewards, and more. The RBP by SecondNature provides services that residents and investors love, and that support you and your team. 2. Appfolio Appfolio is another cloud-based software that can be used for single-family property management and helps automate tasks and workflows for PMCs. They support real estate and property management professionals in digitizing their business operations, and support every aspect of your workflow with management, training, marketing and leasing, maintenance, accounting, and communications. They're one of the most popular apps for single-family property managers, thanks to the easy-to-use platform, automation, and customizable dashboards and reporting. 3. Buildium Buildium is another all-in-one property management software for both single-family homes and multifamily apartments. They provide management tools for accounting, leasing, maintenance, a mobile app, and integration services. Their platform includes tenant and owner portals and templates for leases, listings, reports, and more. We like their 14-day free trial that helps you really evaluate if the tech is a fit for your team, and get buy-in. Plus, their analytics are some of the best. 4. PropertyWare PropertyWare is a rental property management software for single-family properties. The software helps manage every aspect of a PMC workflow, from listing, leasing, managing payments, ordering and tracking maintenance, accounting, and more. Tenants and owners have a portal with 24/7 access that you can customize. Customers like that the system can easily scale and makes communication easy, but some of the downsides include that the reports are less customizable than other options and glitches sometimes take a while to get fixed. 5. PropertyBoss PropertyBoss is a platform solution that supports property managers for student, multifamily, and single-family rentals. Manage phone calls, work orders, financial statements, and rent payments all in one place. They aim to help property managers automate and run services without needing to scale up their teams. It's fairly customizable with an excellent QuickBooks integration and other financial packages. It's not as intuitive or easy to learn as some of the other options, but great for robust support. 6. YardiBreeze YardiBreeze is another cloud-based property management software for small to medium-sized owners or property managers. They have solutions for both residential properties and commercial. On the residential side, their app allows you to manage all your properties on one device with tasks and activity calendars and tracking, workflow managment, leasing, rent collection, accounting, owner tools, maintenance, and more. It's one of the easiest to use of all the apps on our list, but it does require some workarounds for reports and can be difficult to organize. 7. Rent Manager Rent Manager is another software built specifically for property managers. It's an operations platform solution that combines all the tools you need to run your property management business. Its features include accounting tools; operations support like communication, a call center, a mobile app, and an owner portal; reporting and automation; maintenance management; marketing and leasing; and software customization. Like PropertyBoss, the platform can be difficult to learn, and some features may only be used if your team keeps up to date with training. Now let's move into a group of apps that are focused on serving both property managers and landlords. 8. Innago Innago is a free rental property management software for small to mid-sized landlords and property managers. The software helps with rent collection, leasing, and tenant management all on the cloud. Everything is collected in a straightforward dashboard tracking rent collection, managing late fees, invoice automation, online leasing and document storage, and more. The app has a very high rating among customers and is particularly easy to use with a slick and professional interface for residents. 9. TenantCloud TenantCloud is a cloud-based property management software connecting property managers, owners, landlords, tenants, and service vendors. Its capabilities include posting listings, collecting rent online, and screening applicants. Overall, the interface is fairly intuitive, even from the back-end accounting and maintenance management. The software puts most of the responsibilities of property management in one place and streamlines workflows and communication. On the downside, some of the features, especially related to payments, aren't very customizable, and the software can be slow. 10. DoorLoop DoorLoop is a property management system that provides services like a built-in CRM, tenant portal, owner portal, and rent collection. Like other platform solutions, you can handle most of your workflows and tasks within the app and use their tools to build reports, track payments, and communicate with tenants and owners. The UX is intuitive and user-friendly, with excellent integration capabilities. Some functionalities are still being built, but it is overall an excellent solution for single-family property managers. 11. Hemlane Hemlane is a platform solution for landlords and PMs that supports and automates the day-to-day tasks of managing rental properties. It includes a user-friendly tenant portal for online payments, plus tools for lease management, listings, tenant screening, applicant tracking, maintenance and repairs, and more. Their UX and user-friendly design stand out among competitors, but if you need really robust accounting tools or reporting for single-family property management, you may want to go with a different option. 12. Rentec Direct Rentec Direct is a platform solution with full features for property managers and landlords managing properties. The web-based solution includes general ledger accounting and financial reporting that you can integrate with Quickbooks, and accept online payments from tenants through a tenant portal and app. The platform supports tenant and owner communication, listings, marketing, billing, tenant screening, and more. One unique feature is their US-based customer service team. The app is missing some advanced features that you can find with other solutions supporting single-family property management, but they are adding more regularly. 13. ManageCasa ManageCasa is built for landlords, property managers, and community associations. The platform provides full-service owner and tenant portals, lease management, digital documents, accounting and reporting, online payments, and marketing tools. You can build a marketing website, manage listings and leasings, and automate workflows, all with the support of a 24/7 customer service team. Some of the reporting and banking tools are not as robust as other single-family property management software options, but the marketing and communication portals are a standout. And, finally, let's look at a group of apps focused primarily on serving landlords, though some single-family property managers may find the technology useful. 14. Avail Availa is a landlord software that helps property owners or "DIY landlords" find and screen tenants, sign leases, and collect rent. It's focused on helping landlords be more hands-off and helps manage the onboarding of new tenants, leases, and even maintenance requests or work orders. The platform helps track payments and maintenance costs, too. A few cons are the app is sometimes slow, and the payment portal isn't as easy to use or customizable as some competitors. 15. Stessa Stessa provides real estate investors with single-family and multi-family rentals an easy platform to track, manage, and communicate. Their tools focus on supporting rental applications, tenant screening, rent collection, banking, and accounting. One standout feature is the Stessa Tax Center, which helps guide landlords/owners through the complexities of filing their taxes. One downside is the single-entry accounting system, which doesn't allow for more robust accounting. But for basic tracking all in one place, it's an excellent tool. 16. Landlord Studio Landlord Studio also helps DIY landlords with finding, screening, and placing tenants. Their portal includes online rent collection and tax reporting. Plus, they have a feature for responding to maintenance requests, prioritizing tasks, and easily communicating with tenants. It's very easy to use and relatively inexpensive for what it offers. However, their pricing structure can make it tougher to scale up with charging per unit, and some users find the features difficult to customize. 17. RentRedi RentRedi is a mobile app for landlords to help manage their properties. Landlord features include listing, tenant screening, lease support, rent collection, rental property accounting, and renter's insurance. Their tenant features include a tenant app that supports different forms of rent payment, application tracking, credit building, and more. A few downsides include some glitchiness in the integrations with Zillow and Trulia, and a lack of transparency into all communication sent to tenants. How to choose the right software for your single-family property management business Now it's time to turn to our two property management experts for insight on how to pick the right software from the list above. Meet the Experts: Rhianna Campbell and Kelli Segretto are two property management consultants who combine more than 35 years of property management experience. Kelli Segretto is the founder of K Segretto Consulting and a 20-year veteran of property management. Rhianna Campbell is a property management consultant and speaker with Proper Planning LLC, and former CEO with over 15 years of experience in the industry. Campbell and Segretto walked us through the process of identifying the best software for your property management business. Define the problem you want to solve with software “Start with your issues list,” says Segretto. “Realize what your biggest need is first and choose technology that matches that need. Talk to your fellow PMs, join these mastermind groups, attend Triple Win LIVE events, network on Facebook, and talk to other people to find out what’s working for them.” The biggest mistake PMs make when trying to build a useful tech stack is collecting as many programs as possible and trying to jump directly into a fully functional stack instead of identifying solutions and rolling them out strategically. Instead, says Campbell: “I talk to every single employee and find out what their biggest challenges are,” says Campbell. “And then from there, you can really pull out some of the commonalities that everyone seems to be having.” Below is an example of an issue list template Segretto uses in meetings with her clients. Issues List Template from K Segretto Consulting Vet potential PM software vendors When vetting specific technologies, Segretto suggests asking for a sandbox instead of just a demo. “Ask for a sandbox to where you can actually play with it, manipulate it, break it, find where those weaknesses are in that software before you commit to it,” Segretto says. She also recommends seeking referrals to users who have used the software successfully and who have tried the software and decided against it. Being able to understand those different perspectives will help you see a complete picture of who the software is for, where it excels, and where it may come up short. Get buy-in from your team & track performance “I’ve seen hundreds of businesses launch technology across the nation and helped them implement. Ones that tend to fail are the ones that are not prepared,” says Segretto. “What I mean by not prepared is they don’t have their team’s buy-in. They don’t even know what they really want the technology for. They just feel like they want it, and they want it right now. They’re not willing to dedicate a resource or a person that’s going to own it. Without that ownership, tech stacks fail.” Getting buy-in from your team is critical for any implementation. The people who are using the tech need to believe in and understand it. Nothing guarantees failure more than just throwing a new service at someone. “You’re prepping your team, you’re talking about it, and you’re giving those ‘why statements’ so that everyone is on board before you launch. All of that needs to happen in your pre-implementation,” says Segretto. You also need to identify who on your team is the point person for the new tech rollout. According to Segretto: “You have to pick a designated person who's going to be the owner of that technology. Then, as you implement, they're going to be the expert.” Finally, monitor the tech’s performance. Campbell says you need to conduct regular reviews of your tech’s performance much the same way you would of your team’s performance. “Being able to evaluate whether or not that technology is working is really important,” says Campbell. “I've seen a number of times where people buy into the tech and then don't use it. It’s important to have points in time where you check to see if you're really utilizing that software that you paid a lot of money for, and not just spending money on it every month.” Final Thoughts Tech is a good thing. Don’t let the length of this article about implementation scare you into thinking it’s more complex than it is. As long as you’re willing to manage your tech stack and make sure your team knows how to use it, you’re going to be in good shape. You wouldn’t bring on a new employee for no reason, so don’t add tech for no reason. Tech is a tool, and its power is determined by the person who wields it. If you’re purposeful and thorough, you can vastly improve the efficiency of your business with the ever-growing field of PropTech companies in existence. Learn more about how Second Nature is supporting property managers with leading tech solutions and services that residents pay and stay for.

June 21, 2024

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Property Management Skills Shared by Top Performers: Mastering the Art of Excellence

In the high-stakes world of property management, professionals are constantly juggling a multitude of responsibilities, from resident relations to financial oversight. The pressure is immense, and it's no wonder that over 25% of real estate property managers (PMs) are expected to abandon the industry within the next five years. The burnout is real, and the struggle to find enough time is a common theme among PMs. However, mastering a set of crucial skills can significantly alleviate these pressures and transform careers. These top skills include communication, organizational prowess, financial acumen, relationship building, and adaptability. In today’s post, we’ll examine these "big five" skill sets that truly elevate good property managers to great. Note that even though we here at Second Nature prefer the term "resident" over "tenant" in order to foster the human element, the word "tenant" may still be used occasionally due to its long-standing legal and real estate context. 1. Communication: Building Bridges and Trust Strong communication skills are the cornerstone of successful property management. Clear and concise communication ensures that all parties involved are on the same page, reducing misunderstandings, boosting negotiation skills, and fostering a collaborative environment. Clear and concise communication Effective communication is not just about speaking or writing well; it's about conveying a message in a way that is easily understood by everyone involved. This means avoiding jargon, being direct, and tailoring communication styles to different audiences (for instance, how you’d communicate with a potential tenant about maintenance issues might differ from how you’d interact with a contractor or a rental property owner). Active listening Active listening is equally crucial, particularly when it comes to tenant concerns. It involves fully concentrating, understanding, responding, and then remembering what is being said. This skill helps constructively address the concerns of residents, thereby enhancing their satisfaction and trust in your organization’s brand of management. Multilingual capabilities In today's multicultural society, having multilingual capabilities can be a significant asset. Being able to communicate in multiple languages broadens your reach and improves interactions with a diverse resident base, making you a more inclusive and effective property manager. 2. Organizational Prowess: Keeping the Plates Spinning A top-notch property manager excels in organization. After all, with so many moving parts, a systematic approach to managing the details is essential to keep everything running smoothly. Time management Effective time management is about prioritizing tasks and ensuring that important issues are addressed promptly. Utilizing tools such as calendars, to-do lists, and project management software can help to manage available time more efficiently. Attention to detail Paying close attention to details ensures that nothing falls through the cracks. This could be as simple as ensuring that property building maintenance requests are logged correctly or as complex as meticulously reviewing financial statements for discrepancies. Strong record-keeping Keeping accurate and detailed records is fundamental. From lease agreements to property maintenance logs and financial records, strong record-keeping practices help in staying organized and prepared for any situation, including legal issues. Marketing savvy In addition to operational tasks, being marketing-savvy is a vital organizational skill. This includes knowing how to market properties effectively to attract and retain renters, using traditional methods as well as social media and other digital platforms. 3. Financial Acumen: Keeping the Bottom Line Healthy Financial acumen is about understanding and managing the financial aspects of property management to ensure profitability and sustainability. Financial management: budgeting and forecasting know-how Creating and adhering to a budget is crucial. This involves forecasting future expenses and revenues to ensure that the property remains profitable. Effective budgeting helps in planning for unexpected costs and allocating funds where they are needed most. Rent payments Efficient rent collection processes are essential to maintaining cash flow and ensuring timely payments. This includes implementing automated systems for rent collection and tracking payments to minimize late or missed payments and maintain a steady revenue stream. Financial reporting Generating accurate financial reports is critical for monitoring financial performance, identifying areas for improvement, and making informed decisions. These reports provide insights into rental income, expenses, and profitability, helping property managers to stay on top of their financial health. Understanding rental markets Staying informed about property values and rental market trends allows you to set competitive rental rates, ensuring maximum occupancy and profitability. This involves understanding local market conditions and pricing, vacancy rates, economic factors, and demographic trends. 4. Relationship-Building: The Cornerstone of Trust Building strong relationships is at the heart of property management. This involves fostering trust and ensuring that all stakeholders are satisfied. Excellent interpersonal skills Interpersonal skills are essential in managing relationships with residents, contractors, and property owners. Being approachable, empathetic, and professional helps in building a positive rapport with all parties involved. This helps boost such critical indicators as tenant satisfaction and tenant retention. Conflict resolution Conflicts are inevitable in property management. Whether it's a dispute between residents or an issue with a contractor, having effective conflict resolution skills is key to maintaining harmony and ensuring that problems are resolved swiftly and fairly. Responsiveness and follow-through Being responsive to queries and requests shows that you value and respect others' time and concerns. Following through on commitments builds trust and reliability, which are essential in maintaining strong relationships. Customer service In the context of day-to-day operations, excellent customer service skills are about much more than resolving issues. They’re about creating a positive experience for residents, which can lead to higher retention rates and positive word-of-mouth referrals. 5. Adaptability: Thriving in a Dynamic Industry The property management industry is dynamic and ever-changing. Top performers thrive in this environment by being adaptable and open to change. Problem-solving Effective problem-solving involves identifying issues, evaluating options, and implementing solutions quickly and efficiently. This proactive approach ensures that problems are addressed before they escalate. Staying current with regulations Regulations and laws related to property management are constantly evolving. Staying current with these changes is essential to ensure compliance and avoid legal issues. This involves regular training and keeping abreast of local, state, and federal laws. Embracing technology Technology is transforming property management. Embracing new technologies such as property management software, smart home devices, and digital marketing tools can streamline operations and improve efficiency. Final Thoughts Elevating a property management career can rest in large part on mastering the skills of communication, organizational prowess, financial acumen, relationship-building, and adaptability. These skills not only help in managing day-to-day challenges, but also pave the way for long-term success and job satisfaction. Of course, obtaining relevant real estate industry certifications is a clear demonstration of a property manager's expertise and professional development. Certifications such as the Certified Property Manager (CPM), Residential Management Professional (RMP), or the Certified Apartment Leasing Professional (NALP) provide recognition of specialized knowledge and skills, enhancing credibility and career advancement opportunities. But in the end, the ideal job description is often about finding the sweet spot that lies at the intersection of what you love to do, what you’re good at, what the world needs, and what you can be paid well for. By focusing on the essential skills we’ve highlighted here, property managers can find greater fulfillment in their work, knowing that they are making a difference while doing something they excel at and enjoy. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

June 21, 2024

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Property manager filling out rental inspection check list

SFR Property Management Problems and Solutions

In recent years, the single-family residence (SFR) rental market has seen significant growth as more property owners recognize the potential for steady income and long-term appreciation. With this rise in popularity comes a unique set of challenges for the rental property managers (PMs) who are tasked with overseeing these properties. Related: What is the resident benefits package? Unlike multi-family units, managing single-family homes can present a range of issues that require tailored solutions. Scattered-site properties also present a logistical challenge, as they are by nature harder to service and manage. From finding quality residents to handling unexpected maintenance emergencies, a strategic and proactive approach is required to ensure a smooth and profitable rental experience. Note that even though we here at Second Nature prefer the term "resident" over "tenant" in order to foster the human element, the word "tenant" may still be used occasionally due to its long-standing legal and real estate context. What Are the Most Common Property Management Challenges? The most common problems faced by SFR property managers generally fall into three buckets: finding quality residents; maintenance and repairs; and time management and communication. Let's explore each. #1 Finding Quality Residents One of the most critical aspects of managing SFRs is resident placement. Indeed, inadequate resident screening processes can significantly impact resident retention as well as profitability. That’s because poor screening can lead to high turnover rates (including evictions), increased property wear and tear, and ultimately, financial strain. Additionally, attracting responsible residents who will treat the property with care and adhere to lease agreements can be particularly challenging in competitive rental markets. #2 Maintenance and Repairs Unexpected maintenance issues are a common hassle for SFR property managers. From plumbing leaks to HVAC failures, emergencies can arise without warning, leading to unplanned expenses and logistical challenges. Finding reliable and responsive contractors who are able to address repairs promptly adds yet another layer of complexity. The inability to swiftly manage these issues can result in resident dissatisfaction as well as potential property damage. #3 Time Management and Communication Managing multiple single-family homes requires excellent time management skills. Balancing the diverse needs of residents, coordinating with vendors, and ensuring regular property inspections can be overwhelming. That’s why it’s essential to establish clear and timely communication channels to maintain good resident relationships and efficient operations. However, juggling these responsibilities can lead to lapses in communication, resulting in time-consuming misunderstandings and unresolved issues. Solutions for a Smoother SFR Rental Experience While the challenges of managing SFR rentals are significant, there are effective strategies and tools available to streamline operations and enhance resident satisfaction. Here are some solutions to common property management business problems. Strategic Resident Screening Implementing a robust resident screening process is crucial for minimizing vacancy rates and securing responsible residents. To this end, utilizing professional screening services can help identify prospective tenants by thoroughly evaluating their rental history, credit scores, and background checks. Clear lease terms and expectations should be established from the outset to ensure residents understand the responsibilities and obligations that occupancy brings. Learn more: Tenant Screening Tips for PMs 10 Steps to Onboard New Tenants Proactive Maintenance Proactive maintenance is key to preventing costly emergencies and maintaining the property’s condition. Scheduling regular preventative maintenance inspections allows property managers to identify and address potential issues before they escalate. Building relationships with reputable and responsive repair professionals ensures that maintenance tasks and requests are handled promptly. Consider leveraging technology that allows residents to conduct their own regular inspections to provide early detection of problems and streamline the property maintenance process (learn more). Vendor and Supplier Selection Choosing the right property management service providers and vendors is crucial to successful property management. Establishing relationships with reliable and responsive contractors ensures that maintenance and repair issues are addressed promptly, reducing downtime and inconvenience for renters. It’s essential to vet vendors thoroughly, checking their credentials, references, and reviews to ensure they meet the necessary quality and reliability standards. Building a network of trusted professionals can lead to better service rates, priority scheduling, and consistent adherence to due dates as well as work quality standards. Additionally, negotiating long-term contracts with preferred vendors can offer cost savings and a more streamlined management process. By prioritizing quality vendor and supplier selection, property managers can enhance the overall efficiency of their operations and maintain high tenant satisfaction. Technology and Automation Incorporating technology and automation into property management can significantly enhance efficiency and communication. For instance, online portals for collecting rent payments and addressing maintenance requests simplify transactions and ensure transparency. They can also facilitate incentives for prompt rent payment, follow up on late payments, and generally optimize rent collection with an eye to optimizing cash flow. Property management software can also streamline vendor and tenant communication, track maintenance schedules, and provide detailed financial reporting. These tools not only save time but also build trust and improve resident satisfaction by ensuring quick and effective responses to their needs. Naturally, you will need to conduct a due diligence process of technology selection and provider assessment that addresses pricing, customer support, and support for the features that are mission-critical for your organization. Second Nature’s Outlook Effective property management is essential for maximizing the profitability and longevity of single-family home rentals. By addressing common challenges with strategic solutions, property managers can enhance resident satisfaction, reduce vacancy rates, and maintain the property’s value. Embracing technology and proactive management practices are critical components of any successful SFR business strategy. Property managers are encouraged to explore these solutions and adopt the approaches that best suit their specific needs. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

June 7, 2024

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How to Craft a Notice to Tenant to Clean Property [with Template]

Ensuring that rental properties are well-maintained is crucial for property managers and landlords, not only to protect the value of their real estate investment but also to provide safe and pleasant living environments for residents. One important tool for maintaining property standards is a "Notice to Tenant to Clean Property" letter that communicates concerns about cleanliness and outlines necessary actions for residents. In today’s post we’ll cover essential elements you should consider around transparency and effectiveness, as well as a sample letter you can use to craft your own notice. Related: Free Property Management Agreement Template A note on language: Here at Second Nature, we prefer to use the terms "resident" and “residency” rather than “tenant” and “tenancy,” in order to emphasize the human element of property management work. However, there may be instances where terms such as "tenant" are used for legal or industry-standard purposes within documents or communications. In these cases, please understand that our intent remains the same – to provide clear, accurate, and meaningful information to all people involved in the business relationship. What to Do When Your Tenant is a Hoarder? Hoarding can present significant challenges for property managers. It not only poses health and safety risks but can also lead to severe property damage. Here are steps to take when dealing with a hoarding situation: Understand the issue Hoarding is often a complex psychological condition that requires sensitivity and understanding. It’s important to approach the situation with empathy and awareness of the resident’s potential mental health needs. This understanding can guide your interactions and help you manage the situation more effectively. Conduct thorough inspections Regular property inspections are crucial for identifying hoarding behaviors early. These inspections should be conducted in accordance with the lease agreement and local laws. Document any findings with photographs and detailed notes to provide a clear record of the condition of the property. Communicate clearly and compassionately When addressing the issue with the resident, clear and compassionate communication is key. Explain the concerns and the potential consequences if the situation is not addressed. Emphasize that the goal is to ensure a safe and habitable living environment. Provide a formal notice If the hoarding issue violates the lease agreement, a formal "Notice to Clean Property" may be necessary (more on this below). Collaborate with professionals In severe cases, it may be beneficial to involve professionals who specialize in hoarding disorder. This can include social workers, mental health professionals, or professional organizers who can provide the resident with the necessary support to address their hoarding behavior. Follow legal procedures Ensure all actions taken are in compliance with local and state laws. This includes providing the correct amount of notice, following proper eviction procedures if necessary, and respecting the resident’s rights throughout the process. Document all actions Keep thorough records of all communications, inspections, and notices related to the hoarding issue. This documentation can be crucial if legal action becomes necessary and helps protect you as the property manager. By addressing hoarding with a combination of empathy, clear communication, and adherence to legal requirements, property managers can manage these challenging situations more effectively while maintaining the safety and integrity of their properties. Identifying When a "Notice to Clean Property" Letter is Necessary A "Notice to Clean Property" letter becomes necessary under various circumstances. It's essential to recognize these situations in order to maintain the property's value and condition, and to ensure compliance with lease agreements. Routine inspections Routine inspections are an integral part of property management, allowing managers to identify issues early and address them before they escalate. If an inspection reveals unsanitary conditions, excessive clutter, hoarding, or neglect of cleanliness, a formal notice is warranted. This proactive measure helps maintain the property and encourages residents to uphold their end of the lease agreement. Failing to address these issues promptly can lead to severe problems such as mold growth, pest infestations, plumbing issues due to neglected maintenance, and increased costs associated with turnover when a property is vacated. Complaints Neighbor complaints regarding cleanliness issues, such as uncollected trash, odors, or visible clutter, can indicate a need for intervention. Addressing these complaints promptly with a notice demonstrates that management is responsive to concerns and committed to maintaining a harmonious living environment. Ignoring such complaints can exacerbate the problem, leading to pest infestations that can create an unhealthy living environment for residents. Lease violations Most lease agreements include clauses that outline residents' responsibilities for maintaining the property in a clean and sanitary condition. When these clauses are violated, issuing a notice is necessary to enforce the lease terms and remind residents of their obligations. Failing to act on these violations can result in significant property damage, including plumbing issues from unaddressed leaks or blockages, mold growth from damp conditions, and ultimately, costly repairs and renovations needed to restore the property for the next resident. This can also lead to increased turnover costs, as the property may need extensive cleaning and repairs before it can be re-leased. The Importance of Clear Communication Open and effective communication is vital in property management, especially when addressing cleanliness issues. A clear, well-crafted notice helps prevent minor issues from becoming major problems and sets the stage for resolution. Proactive approach Early intervention through timely communication can prevent minor cleanliness issues from escalating into significant problems. Addressing concerns as soon as they are identified shows residents that management is diligent and proactive. Setting expectations A well-crafted notice clarifies expectations for resident maintenance responsibilities. By explicitly stating what is required, renters understand their obligations and the standards of occupancy they must meet. Documentation The notice serves as a documented record of the identified issue and the steps taken to address it. This documentation is crucial for protecting the property manager's interests if further action is needed, such as additional fees or eviction proceedings. Note that property managers can proactively address cleanliness and maintenance issues by clearly setting expectations with new tenants from the outset. This can be achieved by including a detailed cleanliness clause in the lease agreement, conducting a thorough walkthrough of the rental unit at move-in, and providing a welcome packet to ensure each tenant knows their responsibilities. During the initial walkthrough, managers should highlight specific cleaning requirements and standards, demonstrating proper care for different areas of the property. Regular communication, such as periodic reminders and tips for maintaining the property, can further reinforce these expectations and prevent issues from arising, ensuring a smooth and mutually respectful resident-PM relationship. Crafting a Compelling and Effective Notice Creating an effective "Notice to Clean Property" involves several key elements that ensure clarity and encourage compliance. Introduction Begin the written notice with a clear statement of its purpose as a formal notification regarding the property's cleanliness and upkeep condition. Include the property address and the resident's name(s) to avoid any confusion. Specific observations Detail the cleanliness issues observed during the inspection or reported by others. Use clear, descriptive language to ensure there is no ambiguity about the concerns. For example, instead of saying "the property is dirty," specify "dirty dishes are piling up, attracting roaches/pests; or “an abundance of waste materials is creating a health hazard/fire hazard." This also helps differentiate the cleanliness issue from normal wear and tear. Reference to lease agreement (optional) If applicable, cite relevant clauses in the rental agreement that outline the resident’s responsibility for maintaining the property in a clean and sanitary condition. This reference reinforces the legal basis for the notice and the resident's obligations – and helps ensure that you are respecting applicable tenant rights and state laws. Outline of expectations Clearly define the expected level of cleanliness and specific actions required to rectify the situation. A timeframe for follow-up is useful for helping the resident to address the issues, such as a 7-day notice period to clean. This approach gives residents a clear understanding of what needs to be done and by when. Consequences for non-compliance (optional) Briefly outline potential consequences for failure to address the cleanliness concerns within the designated timeframe. This might include increased inspections, withholding of security deposits, or legal action, including a potential order to vacate/eviction notice. Note that although it may well become necessary to instigate an eviction process, it’s important to maintain a professional tone and avoid excessive threats to encourage cooperation. Additional Considerations for Specific Situations Different scenarios may require tailored approaches when issuing a proper notice to clean the property. Health and safety hazards If the cleanliness issue poses a potential health or safety hazard, such as mildew/mold growth, pest infestations, or overflowing sewage, prioritize immediate action. In such cases, involving relevant authorities might be necessary to ensure the issue is resolved promptly and safely. Chronic offenders For residents with a history of neglecting cleanliness standards, consider outlining a stricter course of action. This might include increased inspections or even potential lease termination if the behavior continues. Clear documentation and a consistent approach are essential when dealing with chronic offenses. Delivery Methods and Maintaining Records Ensuring that the notice is delivered and documented correctly is crucial for effective property management. Delivery methods Consider the following methods for delivering the notice: Hand-delivery with a signed receipt: This method ensures the resident receives the notice and acknowledges its receipt. Certified mail with return receipt requested: This provides documented proof that the notice was sent and received. Other methods with documented proof of delivery: Any method that provides verifiable proof of delivery is acceptable. Maintaining records Retain copies of the notice, delivery confirmation, and any relevant communication for your records. This documentation is crucial if further action is necessary and serves as evidence that the issue was addressed appropriately. Free “Notice to Tenant to Clean Property” Template Providing a template can simplify the process for property managers. However, it's essential to note that legal advice is recommended to ensure compliance with local laws and regulations. ``` [Your Name] [Your Address] [City, State, ZIP Code] [Date] [Resident's Name] [Property Address] [City, State, ZIP Code] Re: Notice to Clean Property Dear [Resident's Name], This letter serves as a formal notification regarding the cleanliness condition of the property located at [Property Address]. During a recent inspection conducted on [Date], the following issues were observed: - [Detail the specific cleanliness issues] As per the lease agreement, Section [Lease Section], you are required to maintain the property in a clean and sanitary condition. To rectify the situation, please take the following actions by [Specify Deadline, e.g., 14 days from the date of this letter]: - [List the specific actions required] Failure to address these concerns within the specified timeframe may result in [potential consequences, such as additional fees, increased inspections, or eviction proceedings]. We appreciate your prompt attention to this matter. Please contact us at [Your Phone Number] if you have any questions or need further clarification. Sincerely, [Your Name] [Title] [Contact Information] ... Promoting a Culture of Responsibility Maintaining a clean and well-kept property is a shared responsibility between residents and property management. By promoting a culture of responsibility, property managers can create a positive living environment that benefits everyone involved. Encouraging residents to take pride in their living spaces and providing resources such as Second Nature’s Resident Benefits Package (RBP) can foster this culture. The RBP can include regular maintenance tips, access to cleaning services, or rewards for maintaining high standards of cleanliness. Ultimately, a collaborative approach leads to what we at Second Nature call a "triple win" — residents enjoy a pleasant living environment, owners maintain their investments, and PMs have an easier role to play in maintaining these thriving, beneficial relationships. Learn more about Second Nature’s RBP.

June 7, 2024

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How to Write 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. Related: Free Property Management Agreement Template What Is a Notice to Vacate Letter? A notice to vacate letter is a formal document that’s provided by a property manager to a resident and formally notifies them they need to move out of the rental property by a specific date. This letter is used to terminate the tenancy in accordance with the lease agreement and applicable laws. The notice period and specific requirements for the letter can vary depending on local regulations and the terms of the lease. Types of Notice to Vacate Letters The reason why a property manager might need a notice to vacate letter varies depending on the situation. Here are some of the most common reasons why a notice letter would be appropriate: 1. Notice to vacate for lease expiration This type of notice is used when a fixed-term lease is approaching its end date, and the landlord or property manager has no intention of renewing the lease. The notice lets the tenant know about the lease’s end date and the requirement to leave the premises by that specified date. 2. Notice to vacate for month-to-month tenancy termination In a month-to-month lease, either the landlord or the tenant can terminate the lease by providing enough notice. This type of notice informs the tenant they need to vacate the property within a certain amount of time - typically between 30 to 60 days. Keep in mind, the notice period will depend on local and state laws. 3. Notice to vacate for lease violation When a tenant violates any of the terms and conditions of the lease agreement, this type of notice is issued. Some of the most common reasons why this would be used include not paying rent, causing property damage, or engaging in illegal activities on the premises. The landlord or property manager typically specifies the nature of the violation and provides the tenant with a deadline to either fix the issue or leave the property. 4. Notice to vacate for major repairs or renovations Properties sometimes need extensive renovations and repairs that might require the tenant to be out of the property for a set period of time. This notice informs the tenant that they need to be out of the property temporarily while repairs are being done. The letter should include information on the work being done, when it’s expected to be completed, and provide context as to why they need to vacate the property during this period. 5. Notice to vacate for owner move-in In some jurisdictions, landlords can ask tenants to vacate the property if the owner or their immediate family intends to move into the property. Details about the expected move-in date of the new resident, as well as the mandatory vacate date of the current tenant should be included in the letter. 6. Notice to vacate for sale of property When a property is being sold and the new owner plans to use it for a different purpose, the current tenants may be required to vacate. This notice includes information about the sale and the need to vacate by a specified date to the tenant. 7. Notice to vacate for conversion of use Tenants may be required to leave a property if it’s being converted to a different use, such as a commercial space or for redevelopment purposes. Information about the conversion of the space and vacate date should be provided in the notice. 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. Best Practices to Follow When Writing a Notice to Vacate Letter Introduction Start the letter by explaining its purpose as a formal notice to vacate the property. Be as specific as possible by identifying the property by address and the tenant(s) by name. If applicable, reference the lease agreement, as well to provide context and legitimacy. Vacate date Clearly indicate in the letter what the last day the tenant has to vacate, and make sure it aligns with the required notice period outlined in the original lease agreement or by local and state law. Specifying the exact move-out date in the written notice avoids any ambiguity and sets a clear timeline for the tenant. Reason for termination (optional) While it may not always be required by law, briefly explain the reason for the termination to maintain transparency. Whether it’s because a lease is expiring or isn’t being renewed, or there’s a leave violation - sharing a concise, professional explanation avoids any issues down the line. Next steps Share 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 isn’t being renewed due to reasons such as property sale or personal use, briefly state that 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 Ensure that the notice is delivered using a method that provides documented proof of receipt. Some of the most common options include: Hand-delivery: A signed receipt from the tenant. Certified mail: A return receipt requested to confirm delivery. Maintain records Keep extra copies of the lease termination letter, delivery confirmation, and any relevant communication both as hard and digital copies. Keeping detailed records is essential, especially in case of disputes or legal proceedings with the former tenant. Contact information Include contact information in case there are any follow-up questions or potential disputes from the tenant. Providing a main point of contact helps address tenant concerns and facilitates a smoother transition. Professionalism and courtesy Throughout the process, maintain a friendly and professional manner. This approach not only reflects well on you as a property manager but also helps reduce conflict and promotes a more cooperative environment. Legal counsel For complex situations or unfamiliar legal paperwork, consider seeking legal advice. You’ll want to double-check with a legal professional to make sure your actions comply with all relevant local and state 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. Find out how a Resident Benefits Package (RBP) can help create a better experience for your residents through unique perks and support, as well as retain them. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

June 7, 2024

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Property manager handing new residents the keys to their new home

Property Management Compliance with Insurance Regulations: Answers to Your Top Questions

Property management companies navigate a complex world of regulations. Indeed, ensuring legal compliance goes far beyond collecting rent and handling repairs. For instance, the tenant screening process involves legal obligations and occupancy considerations outlined in fair housing laws, along with background checks to ensure resident safety. Habitability standards and safety regulations, dictated by local landlord-tenant laws, may require meticulous property maintenance – or real estate rental properties may require improvements to meet tenant rights and safety standards as outlined in the Americans with Disabilities Act (ADA). In addition, the key areas of security deposits, lease agreements, and eviction procedures all have legal requirements that must be stringently followed to avoid legal issues. Audits can arrive unexpectedly, and failing to comply can result in hefty fines or loss of licensure. However, one of the most intricate areas of regulatory compliance involves insurance, particularly when it comes to insurance for residents. We delve deeper into this specific challenge in the following sections. A note on language: At Second Nature, we prefer the term “residents” rather than “tenants.” That’s because focusing on the people in every interaction helps us create better business strategies in the long run. After all, property management is all about focusing on what residents and investors – human beings – want and need! But throughout this article, you’ll see us use both terms interchangeably due to the technical nature of various compliance issues. Related: Notice to Vacate Tenant Free Template What Makes PM Compliance with Insurance So Complex? The biggest hurdle property managers face with insurance compliance requirements is the jurisdictional complexity. Federal laws provide a framework, but individual states and even municipalities can have their own regulations regarding insurance for tenants. Understanding these variations is crucial. Property managers must stay up-to-date on the specific laws governing their area to ensure they are not only compliant but also considering the best interests of both the property owner and the tenant. Insurance Compliance FAQs A recent discussion between Second Nature’s very own Andrew Smallwood (Chief Customer Officer) and Rob MacKethan (VP of Risk, and the Designated Responsible Licensed Producer for Second Nature’s licensed producer subsidiary, Second Nature Insurance Services, LLC, NPN No. 20224621) highlighted frequently asked questions and issues raised over the course of a number of industry discussions. Rob has been in the insurance space for about 35 years, and worked with multiple startups in the industry prior to coming to Second Nature, where he leads the team in creating value for customers using insurance tools. Below is a summary of FAQs and responses from their conversation. What aspects of property management should PMs be aware of when offering a solution for a tenant to meet the PMs’ liability insurance requirement? The key thing to remember is that insurance is a highly regulated industry, especially at the state level. If you operate in multiple states, you need to make sure you comply with local regulations in each one. In the end, regulators are there to protect consumers from being misled and to ensure insurance companies will pay out claims when needed. Can property managers require residents to get a specific renters insurance policy? No, but, in the majority of states, they may include a requirement in the lease agreement that requires residents to carry an insurance policy that provides for tenant liability coverage that meets a minimum coverage level. Regulators don’t want residents to be forced to purchase a specific policy. They want them to have the option to shop around and meet lease requirements with a policy of their choice. Can property managers add an administrative fee on top of the premium, or reduce the premium themselves? Regulations related to PMs' involvement in premiums and fees vary by state; however, such involvement is typically limited to establishing the tenant liability coverage limits. Some states prohibit any changes to the premium, while others may allow reasonable administrative fees within certain limits. The safest approach for a PM is to not change the premium at all. Is it important to avoid inducements like discounts on rent in exchange for purchasing insurance? Absolutely. Offering incentives related to the purchase of insurance can be seen as anti-competitive or a form of rebating, both of which should not be offered by unlicensed PMs. PMs must be careful to avoid acting in a manner that may cause the PM to be considered by regulators as performing certain acts without proper licensing. Unlicensed PMs should avoid any act that may cause them to appear as though they are selling, soliciting, or negotiating insurance. What should property managers be aware of when creating marketing content about renters insurance programs? This is a crucial point. Selling, soliciting, and negotiating insurance are activities that require an insurance license. Property managers should avoid creating their own marketing materials about insurance coverage, deductibles, pricing, or comparisons to other policies. They should partner with a licensed insurance company or broker and reference them in their materials. Brochures and website content are best reviewed by legal counsel to ensure regulatory compliance. How can property managers ensure residents meet and maintain liability insurance requirements throughout the term of their lease? Partnering with a licensed company that provides policy status tracking and record keeping is key. This will help ensure residents comply with the lease requirement and that the property manager, or their vendor, is notified of any lapses in coverage and can action them appropriately. What should property managers keep in mind if residents pay insurance premiums through the property management software along with their rent? It's critical that those payments be passed through to the insurance carrier or broker promptly upon collection. Withholding or retaining premiums can have serious consequences due to non-compliance with regulations. How Second Nature Helps with Your Resident’s Insurance Coverage At Second Nature, we know how valuable your investor clients’ assets are – and how much risk you take on as a property manager. While compliance with insurance regulations can sometimes feel like a zero-sum game, we aim to make every opportunity a win for everyone involved. In the end, successful property management not only fosters smooth operations, but better outcomes for all stakeholders. That’s where the renters insurance program offered by Second Nature’s licensed insurance subsidiary, Second Nature Insurance Services, comes in. Second Nature Insurance Services offers a master policy with convenient enrollment, and a customizable HO4 policy option if residents want to tailor a policy to their needs, both of which will meet your tenant liability insurance requirement. Or they can get their own policy and show they’ve met the requirements on their own. PMs get a fully managed renters insurance program that helps ensure compliance and that you, your investor, and your residents can rest easy knowing you’re protected from key areas of risk. With our fully managed renters insurance program, we’ve seen our partner PMs go from: 41% of residents covered → 100% of residents covered Self-managed portal administration → Fully managed for you Leasing team tracking certifications → 100% certificate management Higher premiums → lower premiums Complex implementation and vendor management → 1 RBP, 1 Invoice Every property manager knows insurance matters, but that doesn’t make it any less of a headache. Learn more about how our Resident Benefits Package just makes life simpler. * Renters Insurance Program is provided by Second Nature Insurance Services, LLC (NPN 20224621)

June 7, 2024

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Managing Property Management KPIs

Defining the KPIs you want to track as a property manager is one thing, but ensuring that you’re consistently getting useful information and insights from those KPIs is another. KPI management is an important process that is often not given enough effort, and the result is incomplete data or metrics that don’t do a great job actually showing you what you want to know about your company. KPI Management comes with two key parts. Ensuring you’re using the right KPIs Ensuring the data is comprehensive and accurate There are no steadfast rules for what property management KPIs you should and shouldn’t track. As long as you understand what you’re trying to measure, you’re committed to continuous improvement, and you don’t overload your KPI sheet, you’re on the right track. "So I have gone across the bridge that maybe many of you have of having a spreadsheet with 400 KPIs, and it was crushing us," says Tim Wehner, Marketing Coordinator at Dodson Companies and property management veteran. "I blew up that bridge, Don't cross that again, right. I like five, especially for the property managers. You just say, hey, there's just five numbers I'm going to track. It's like the power five KPIs." Obviously, there will be different KPIs at different levels of the organization, but Wehner’s power five KPIs for his property managers are: Tenant vacancy rate Owner delinquency rate Available unit rate Percentage of units in turn Percentage of PMR collected But while what he is measuring may be valuable to you, his bigger point here is that managing the quantity of your KPIs is important in order to maintain focus and clarity in the data. These aren’t set in stone. If you find that your set of KPIs isn’t giving you the information you want, you can always adjust. Many companies conduct quarterly reviews of what they’re actually measuring to ensure the effort they put into tracking is ultimately fruitful. "We review our KPIs, not the numbers, we do review the numbers, but the actual type of KPI, we review that every quarter to see is this number still relevant? Or do we want to replace it with something else?" says Julie Mullinax, Owner of CRM Properties. "So that would be one thing that I would say, don't feel like, if you have these five KPIs for your property managers, you have to keep those five KPIs for your property managers for the next 10 years. I think we've really changed ours as we see a number got better. " Ensuring that KPIs are useful to the people using them helps heighten awareness of the importance and current state of those metrics. That team buy-in is critical. “One of the things that's really important about KPIs is this idea of trash and trash out,” says BetterWho CEO Matthew Tringali, the idea being that if you put trash effort into your KPI structure, you’re not going to get helpful insights as the output. “We all have this idea of like, oh, yeah, I agree with these beautiful KPIs. And you know, I want my software to produce this beautiful report, this beautiful number," continues Tringali. "The reality is, most or all of your software can do that stuff, but it's only going to be as good as your team is at actually putting in the numbers. So if you don't have the right fields, or your team is just, you know, they don't see the value without putting the numbers in, then you can't actually make progress with that.” Tringali’s point about KPIs is similar to a prevalent point he and many others have made about tech as the PM industry has been inundated with automation systems: If your team, as the people using the process, is not invested and committed to it, it will not work. The idea of having a simple approach and a manageable number of KPIs for people to keep track of plays directly into this, especially with more action-oriented people like your sales team. Different property management firms have different approaches to ensure data is valid and entered regularly. Wehner employs a remote team member whose job is explicitly that. “all of our property management, property managers, all of our staff, our leasing agents, they're all very, very busy,” says Wehner “So you want to make it super easy. And then one of the things that we do is we have actually a remote team member, that we have that that's what their sole focus is, is making sure that our data in our systems is correct.” Darus Trutna, Founder of Rentor, is a big believer in a process that gets his team to internalize the numbers, the theory being that being in "physical contact" with your most critical metrics on a daily basis prevents overlooking them. "You just need to type on the keyboard that number, right?" says Trutna. "It has to go from the screen here, in here, I see my delinquency rate, I then have to express that number on people. So I feel that number. And I want the team members to know those numbers, because that's pain for the owner. Right, and for the resident, and for us. And so I've actually moved away from automation." Reluctance and hesitance comes from this friction to do something right. We've all had some habit we wanted to start, right? But until you make it incredibly easy and put it in front of yourself, so you can't not do it. That's how we operate now. So we have a team dashboard that we've set up, and the team members cannot leave for the day until those data points are entered. And once again, they can ask for help with it. But it's not something that you can not do. And the whole team sees they haven't put their KPIs in there. So the data is really easy to pull, and then you can't get away in a sense, right? It's just there in front of you. It's like putting something on top of your keys before you leave, right you're not going to forget the item because you can't get your keys without touching the KPI." Wehner ties incentives to team member-specific KPIs in order to promote the importance of tracking. "What we've done with the team is we have financial incentive payments in their portfolios, so they have a certain percentage they receive every quarter based off the actual revenue of their portfolio. So every Tuesday we have our weekly huddle and the five or six property managers, they have their KPI report, their delinquency rate, vacancy rate, and turnover numbers. The discussion is that the lower the delinquency rate, a higher the bonus, the lower the vacancy rate, the higher the bonus, etc." Savvy property managers understand the importance of a system of KPIs that produce consistent, actionable insights. If you're finding that you have KPIs, but you're struggling to pull useful information from them, consider some of the tactics above to create something that's of a more beneficial nature to your business. Consider a Residents Benefits Package (RBP) when thinking about your KPIs. Providing residents with the amenities and support they want will go a long way in creating a better experience that will keep them and increase their likelihood of renewing their leases.

May 29, 2024

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Best Property Management Conferences, Trade Shows, and Events in 2024

One of the best ways to grow and optimize your property management business is by attending conferences. There are plenty of property management conferences in 2024, ranging from small local vendor fairs to national events with thousands of attendees. Here is our list of the best conferences and events to attend. NARPM National NARPM's largest conference, the NARPM National Convention and Trade Show, is hosted every year around mid-October. It’s among the SFR industry’s headline events with nearly 1,000 attendees annually, and it's an excellent conference for any size SFR operators. This is not specific to large PM companies by any means. It features a vendor fair, numerous workshops and panels, and a range of other events for NARPM members. It’s one of the best networking opportunities for property managers that exists, and an opportunity to become a #SecondNatureVIP. Register for the event via NARPM and get a sneak peek at their schedule. NARPM Broker/Owner NARPM’s second largest conference, typically held in April, is specific to CEOs and brokers/owners. Structurally, it’s similar to the national conference with a collection of speakers and sessions, circled around a large trade show featuring some industry-evolving vendors. The difference, as mentioned, is the exclusivity of the audience. You're networking directly and only with other major decision makers, which has its advantages and has made Broker/Owner a very popular conference for property management leaders. This year’s event, held on Amelia Island, Florida, from April 16-18, featured speakers and panelists discussing best practices, leadership development, and technology integration. The next edition of the Broker/Owner Conference & Expo will be held March 24-26, 2025, in Colorado Springs, Colorado. Register for the event on the NARPM website, and view the conference schedule. IMN Single-Family Rental Property Management, Operations, and Tech Forum Information Management Network offers three single-family events, which typically have over 2,000 attendees. It's a destination for large companies and Real Estate Investment Trusts (REITs), so you'll get more of a scaled perspective of the industry than you might at a NARPM event. IMN doesn’t have a keynote speaker and is built around a large set of industry panels. In addition to a trade show, it's heavy on industry expertise from large-scale operators in the tens of thousands of doors. If that perspective is interesting to you, the IMN single-family will be worth your time. The 2024 edition of the show was held May 20-22 in Miami, Florida, with an agenda that covered topics including operational efficiencies, technological advancements, regulatory updates, and strategies for scaling portfolios. NRHC Industry Leaders National Rental Home Council (NRHC) is a relatively new organization, and its Industry Leaders Conference is going on its third year in 2024. It's an advocacy organization founded by five 30,000+ door owner/operators, so the conference focuses more on large-scale advocacy. It's a different type of educational opportunity than what you might find at a NARPM or IMN event. Since these companies are owner/operators, there’s more on the resident experience topic that's discussed and less on investor relationships. The 2024 NRHC Industry Leaders Conference took place April 7-10 in Houston, Texas, and focused on housing policy, innovation in the single-family rental (SFR) industry, leadership insights, property management techniques, and strategies for navigating the capital landscape. PM Systems Conference Headed up by Paul Kankowski and Wolfgang Croskey, the PM Systems Conference is a relatively new annual conference held in Las Vegas. It's built more around working sessions than panels, making it generally more application-based than learning-based. You'll spend time at the PM Systems Conference digging into the actual processes and systems you use and working to optimize them, essentially working on your business while you're there. Attendees have expressed that they’ve enjoyed being able to have action items and start optimizing processes while there, instead of starting after they leave. If you missed this year’s event, which was held from January 23-26, you can check out the event podcasts, featuring interviews with a range of industry experts. Register for the 2025 conference here, scheduled for January 20-23. Apartmentalize Apartmentalize is an industry-renowned trade show and conference for the multifamily industry. Typically in June and in a rotating location, Apartmentalize has seen over 11,000 attendees in past years. With tons of exhibitors, over 100 learning sessions, and over 200 industry experts speaking, Apartmentalize is a great opportunity for multifamily property managers to drive business growth and learn new strategies. Held in Philadelphia from June 19-21, this year’s edition features over 100 educational sessions, extensive networking opportunities, and industry trends showcased by more than 500 exhibitors. For more information, visit NAA’s website. Triple Win Leadership Xchange Triple Win Leadership Xchange is a great way to engage and connect with property managers without having to get on a plane. It’s an online, half-day event that offers a keynote session, multiple panels, and interactive opportunities for professional property managers to take the insights gained from the panels and talk about applying them with their peers. Past keynote speakers have included: FBI hostage negotiator Christopher Voss, author of “Who Not How,” Benjamin Hardy, and former 1-800-GOT-JUNK? COO and author of “Vivid Vision,” Cameron Herold. The conference is focused on helping you develop your business, and all proceeds go to NARPM’s Past Presidents’ Charity. This year’s event took place on April 30, 2024, and featured special guest, Hal Elrod, author of “The Miracle Morning.” IMN 6th Annual Single Family Rental Property Management, Operations, and AI The IMN 6th Annual Single Family Rental Property Management, Operations, and AI Forum in Austin, Texas, will focus on the latest advancements in property management, operations, and technology within the single-family rental industry. Attendees will be able to participate in networking sessions, attend panel discussions and workshops, and engage with industry leaders and tech exhibitors. The forum will be held on August 22-23, 2024, and registration details are available on the IMN website. IREM Global Summit The 2024 IREM Global Summit in Indianapolis, Indiana, focuses on the "Power of Purpose," inspiring attendees to shape their futures through leadership and innovative property management practices. It’ll feature educational sessions, networking opportunities, and panel discussions on industry trends. The summit is scheduled for October 6-9, 2024. For more information and to register, visit the IREM Global Summit page. NARPM Annual Convention & Trade Show The 2024 NARPM Annual Convention & Trade Show will be held at the Hilton Anatole in Dallas, Texas. This event includes a variety of educational sessions, networking opportunities, and an extensive trade show. The convention runs from October 21-24, 2024. Further details and registration information can be found on the NARPM website. IMN 12th Annual Single-Family Rental Forum (West) The IMN 12th Annual Single-Family Rental Forum (West) in Scottsdale, Arizona, focuses on investment opportunities, operational strategies, and technological advancements in the SFR market. The forum will be held from December 3-5, 2024. For more details and to register, visit the IMN website.

May 23, 2024

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Kristin Johnson Founder & CEO of TripleTie

15 Best Property Management Accounting Software in 2024

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

May 21, 2024

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Property Management Agreement Guide + Free Template

With a renewed focus on rental income as an investment trend, the popularity of property management is on the rise. Busy professionals and out-of-town real estate investors increasingly rely on property managers to handle the day-to-day operations of their rental properties. When they come to you for the first time, one approach to establishing clear differentiation with respect to your competitors is through the clarity and comprehensiveness of your property management agreement. In today’s guide we’ll cover the essentials of a property management agreement that provides a foundation for transparency throughout this critical relationship, as well as peace of mind for the investors relying on you to manage their investment. What is a property management agreement? A property management agreement is a legally binding contract between a property owner and a property management company or individual. This document outlines the specific responsibilities and duties of the property manager, the expectations of the property owner, the terms of service, and the compensation structure. The agreement serves as a guideline for both parties to understand their roles, rights, and obligations in managing the rental property, ensuring a clear and professional relationship. Why do you need a property management agreement? A property management agreement is essential for multiple reasons: Clarity and expectation management: It clearly defines the roles and responsibilities of both the property manager and the property owner, avoiding misunderstandings and conflicts. Legal protection: The agreement provides legal protection for both parties, specifying the terms under which services are rendered and the consequences of breach of contract. Financial management: It outlines the financial aspects of the relationship, including management fees, rent collection, and maintenance costs, ensuring transparency in financial transactions. Maintenance and repairs: The agreement specifies the procedures for handling maintenance and repairs, ensuring the property is well-maintained and any issues are promptly addressed. Dispute resolution: The agreement includes provisions for resolving disputes, which can help prevent conflicts from escalating and provide a clear path for resolution. What should a property management agreement include? Crafting a solid property management agreement doesn't have to be daunting. Here's a breakdown of the key components: Parties Involved Property owner: Clearly identify the legal name and contact information of the property owner(s). Property manager: Do the same for the property management company or individual. Property Details Address: Include the full address of the property being managed. Legal description (optional): For added clarity, consider including the legal description, particularly for complex property ownership structures. Property type: Specify whether it's a single-family home, multi-unit building, or commercial property. Unique features/limitations: Mention any unique features (e.g., pool, historic designation) or limitations (e.g., zoning restrictions, HOA rules). Term and Termination Effective date: Define the start date of the agreement. Termination clauses: Outline the grounds for termination by either party (e.g., breach of contract, property sale). Notice period: Specify the required notice period for each party if they wish to terminate the agreement (e.g., 30 days, 60 days). Termination mechanisms: Explain how the date of termination should be communicated (written notice, specific format [e.g., certified mail]), along with any applicable indemnification measures. Manager Responsibilities Resident screening: Detail the process for resident screening, including applications, background checks, and credit checks. Rent payments and security deposit collection: Outline procedures for security deposit collection, rent collection, late fees, and eviction processes. Maintenance oversight: Specify the property manager duties and roles in overseeing maintenance requests, repairs, and independent contractor/vendor selection (approval thresholds, cost limitations). Financial reporting: Define the frequency and format of financial reports provided by the property manager (monthly statements, annual reports). Communication protocols: Establish communication protocols regarding occupant inquiries, maintenance emergencies, and routine updates. Availability: Consider outlining the property manager's availability for emergencies (24/7 hotline, designated contact person). Owner Responsibilities Repairs: Specify the owner's responsibility for major repairs beyond normal wear and tear. Providing access: Outline the owner's role in providing access to the property for maintenance or showings when residents are not present. Major decisions: Define how major decisions regarding the property (e.g., renovations, capital improvements) will be made (joint agreement, owner approval). Property inspections: Address expectations regarding the frequency and purpose of property inspections conducted by the owner. Insurance coverage: Clarify the owner's responsibility to maintain appropriate liability insurance policy coverage for the property. Fees and Compensation Management fee: Detail the structure of the property management fee (percentage of rent collected, flat fee). Additional fees (optional): Address any additional disbursements for specific services, such as resident placement or lease renewals. Dispute Resolution Process: Explain the process for resolving disagreements between the owner and the property manager (mediation, arbitration, legal action). Governing laws: Specify the governing laws that apply to the agreement in case of disputes. Free Property Management Agreement Template (Basic) This contract template is for informational purposes only and should not be considered a substitute for legal advice. Please consult with an attorney to tailor the agreement to your specific needs and to ensure that the provisions of this agreement comply with local and state laws. Property Management Agreement This Property Management Agreement ("Agreement") is made and entered into as of [DATE] by and between: [Property Owner Name] residing at [Property Owner Address] ("Owner"), and [Property Management Company Name] located at [Property Management Company Address] ("Manager"). WITNESSETH WHEREAS, Owner is the legal owner of the property located at [Property Address] (the "Property"); and WHEREAS, Manager desires to provide property management services for the Property; and WHEREAS, Owner desires to engage Manager to provide such services for the Property NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the parties agree as follows: 1. Services Manager agrees to perform the following services for the Property (Services may be added or removed based on specific needs. Consult with a lawyer.): Resident screening and resident selection (application processing, background checks) Collection of rent and late fee enforcement Maintenance oversight and coordination (up to $[AMOUNT] per repair) Move-in/move-out inspections Monthly financial reporting related to management of the property 2. Term and Termination This Agreement shall commence on [DATE] (the "Effective Date") and shall continue for a period of [NUMBER] year(s), unless earlier terminated as provided herein. This termination of this Agreement may be effected by either party upon [NUMBER] days' written notice to the other party. 3. Management Fee Owner shall pay Manager a monthly management fee equal to [PERCENTAGE]% of the gross monthly rent collected. 4. Legal Proceedings In the event of a legal proceeding arising out of this Agreement or the management of the Property, the following provisions shall apply: Authority: The Property Manager is hereby authorized to initiate and prosecute any legal action deemed necessary to collect rent, enforce the terms of tenant leases, or protect the Owner's property interests. Owner Approval: Prior written approval from the Owner shall be required for any legal action exceeding $[Dollar Amount] or involving potential litigation. Costs and Reimbursement: The Property Manager shall keep detailed records of all legal expenses and attorney’s fees incurred. The Owner shall reimburse the Property Manager for all reasonable and documented legal expenditures associated with authorized proceedings. Representation: The Owner shall have the right to be represented by their own counsel in any legal proceeding. However, the Property Manager shall have the right to participate in the proceedings and may retain separate counsel at the Owner's expense if a conflict of interest arises. Communication: The parties agree to cooperate fully and share all relevant information in a timely manner throughout any legal proceedings. 5. Dispute Resolution (Optional - Replace with preferred method if applicable) Any dispute arising out of or relating to this Agreement shall be settled by [METHOD OF DISPUTE RESOLUTION, e.g., mediation] in accordance with the rules of [NAME OF MEDIATION PROVIDER] (the "Rules"). The decision of the mediator shall be final and binding on the parties. 6. Waivers The Owner acknowledges and waives any and all claims, demands, or causes of action against the Property Manager arising from the following, unless such claims arise from the Property Manager's gross negligence or intentional misconduct: Acts or omissions of any resident of the Property. Loss or Property damage caused by reasons outside the Property Manager's reasonable control, including natural disasters, acts of war, or civil unrest. Unexpected repairs or maintenance issues beyond the scope of normal wear and tear. The Owner further agrees to indemnify and hold harmless the Property Manager from any and all claims, liabilities, damages, losses, or expenses (including attorney's fees) arising from the Owner's violation of this Agreement or any applicable laws or regulations. 7. Entire Agreement and Governing Law This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written. The terms of this Agreement shall be governed by and construed in accordance with the laws of the State of [STATE]. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. [Property Owner Signature] [Property Owner Name (Printed)] [Property Management Company Signature] [Property Management Company Name (Printed)] Optional addendums For specific situations, consider adding supplementary documents like: Bed bug addendum Pool addendum Pet lease addendum These addendums can address unique requirements and regulations related to these aspects of the property. Considering everything explained above, here is our free example template: Best practices when using property management agreement templates Using property management agreement templates can streamline the creation of your contracts, but it’s important to adapt them carefully to meet your specific needs and legal requirements. Here are some best practices to ensure your agreement is both comprehensive and effective. Personalize the agreement Every property is unique, and so are the needs of the property owners and managers. Personalize your agreement by: Incorporating specific property details: Include unique features or limitations of the property, such as historical designations, HOA rules, or special amenities. Tailoring financial terms: Adjust the management fee structure and additional fee details to match your specific financial arrangements. Regularly update and review Property management agreements should not be static documents. Regularly review and update them to reflect changes in: Legal requirements: Stay informed about changes in local, state, and federal laws that might affect your agreement. Market conditions: Adjust terms to reflect current market conditions, such as changes in rental rates or maintenance costs. Establish effective communication channels Establishing effective communication channels within the agreement ensures smooth operations and quick resolution of issues. Include: Defined points of contact: Specify the primary contacts for both parties and their preferred methods of communication. Communication protocols: Set clear guidelines for reporting maintenance issues, handling resident inquiries, and providing updates. Plan for contingencies Anticipate potential issues and include contingency plans in your agreement to handle unexpected situations: Emergency procedures: Outline steps for handling emergencies, including contact information for emergency services and protocols for urgent repairs. Dispute resolution: Provide a clear process for resolving disputes, including mediation or arbitration clauses to avoid costly legal battles. Cover legal considerations Consulting with a lawyer is crucial to ensure your property management agreement is legally sound and reflects your specific circumstances. An attorney can help you with: Specifying maintenance coverage: Clearly define which maintenance issues are the responsibility of the property manager and which fall to the owner. Pet policy details: Outline a comprehensive pet policy including pet restrictions, fees, and deposit requirements. Local legal compliance: Ensure your agreement adheres to all relevant laws and regulations in your area, such as resident rights and fair housing regulations. FAQs: Helping Potential Investors Demystify Your Property Management Agreement Q: Is a property management agreement legally required? A: While not always mandatory, a property management agreement is highly advisable. It protects both the owner and the manager by outlining expectations and responsibilities. Q: Can I use your template for any property management situation? A: The provided template is a basic framework. It's best to consult with a lawyer to customize it for your specific property type, location, and desired services. Q: Do I need a lawyer to draft the agreement? A: While not mandatory, legal guidance is highly recommended. An attorney can ensure the agreement is legally sound, protects your interests, and complies with local laws. Q: Can I use this template for agreements outside of property management, e.g., for lease agreements or rental agreements? A: No, this template is specific to property management agreements. For other types of agreements, consult with a lawyer or use appropriate templates designed for those purposes. Q: What should I do after finalizing the agreement? A: Once both parties have signed the agreement, keep a copy for your records and provide one to the property manager. Familiarize yourself with the terms and communicate openly to ensure a smooth and successful working relationship. Conclusion A well-drafted property management agreement is the cornerstone of a successful relationship between owner and property manager. By using the provided template as a foundation and consulting with a lawyer for customization, you can establish a clear and comprehensive agreement that provides full transparency and fosters a smooth rental property experience. On top of your agreement, consider rolling out a resident benefits package (RBP). It’s a powerful way for property managers to create a Triple Win – for residents, investors, and themselves. An RBP like Second Nature’s is designed to be simple to use and easy to implement. All the services included within it are managed externally by Second Nature, meaning there is no day-to-day upkeep required from the manager. You plug it in and Second Nature keeps it running. The value creation an RBP generates – with such little work required from the PM – is an incredibly easy way to grow your business and create great experiences that residents will pay and stay for. Don't get left behind in the evolving world of resident experience. Learn more about our fully-managed Resident Benefits Package and how we can build ease for you, your investors, and your residents.

May 14, 2024

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How to Reduce Employee Turnover in Property Management: A Guide to Retaining Your Valuable Team

The property management industry faces a significant challenge: high employee turnover. In the US, the national average employee turnover rate measured in 2023 across all sectors was 17.3%. With highs of nearly 33% in some sectors, and lows of 12% in others, turnover is a pressing issue. Indeed, the National Apartment Association (NAA) reported that multifamily industry turnover rates in the last decade were up to 40%. While numbers for single-family home property management companies are harder to measure, the bottom line is that employee retention is often a casualty of the stresses that come with the high stakes of simultaneously managing people’s homes on one hand, and substantial real estate investments on the other. A revolving door of staff creates a ripple effect of negative consequences: residents face disruptions in service and communication, while companies struggle with lost productivity, increased recruiting and training costs, and a decline in overall morale. This comprehensive guide will equip property management teams with the tools and strategies to build a happy, engaged workforce and keep valuable co-workers on board. Understanding the Reasons for the High Turnover Rate Multiple factors contribute to the high property management turnover rate, particularly during inflationary periods, when low wages and benefits may fail to match the demanding workload. Team members face long hours, stressful interactions with residents, and the constant pressure of handling emergency situations. Many may feel undervalued and underappreciated, with limited opportunities for career advancement. Poor communication within the company, coupled with an unsupportive culture, will further fuel feelings of dissatisfaction and disengagement. Another factor may well be the cultural fallout from the recent pandemic, which catalyzed large changes in labor market behaviors, particularly among the so-called millennial generation. This has driven an upending of traditional wage-earning paradigms, giving rise to an endemic “gig economy” that industry and governments are still grappling with across sectors. Building a culture of retention Shifting the focus to a positive and supportive work environment is key to stemming the tide of staff turnover of property management employees. Here are several strategies to help cultivate a culture of retention and employee satisfaction: Competitive compensation and benefits Analyze local market wages and offer salaries that reflect the responsibilities and demands of the job. Provide comprehensive health insurance plans, paid time off, and other benefits that demonstrate your commitment to employee well-being. Consider offering perks and incentives such as gym memberships or fitness equipment subsidies to further enhance the compensation package. Work-life balance Promote healthy boundaries by offering flexible scheduling options whenever possible. Explore remote work opportunities for certain roles, especially those suited to administrative tasks. When dealing with difficult resident issues, encourage employees to take breaks throughout the day to prevent burnout. Implementing a core-hours policy, where employees are guaranteed to be available during specific times for urgent matters, can help maintain a sense of work-life balance. Investment in training and development Investing in your employees demonstrates your commitment to their growth and success. Offer ongoing training programs encompassing property management software, tenant relations, conflict resolution, fair housing laws, and industry certifications. This not only enhances their skillset and knowledge, but also empowers them to perform their jobs more effectively and confidently. Clear communication and recognition Establish consistent communication channels to keep employees informed and engaged. Hold regular team meetings, conduct performance reviews, and encourage open communication from the bottom up. Address concerns promptly and professionally. Most importantly, recognize and celebrate employee achievements publicly. A simple "thank you" or a public shout-out goes a long way in boosting morale and fostering a sense of appreciation. Building a team environment Foster a sense of teamwork through team-building activities, mentorship programs, and encouraging collaboration. Promote a supportive environment where colleagues can rely on one another for help and share best practices. This creates a sense of community and belonging which helps reduce feelings of isolation and discouragement. Strategies to Reduce Stress and Burnout High levels of stress can lead to employee burnout and ultimately, turnover. Here are some practical solutions to address this concern: Workload management Analyze workload distribution within your teams and identify opportunities for better balance. Consider cross-training employees to share the burden and alleviate pressure points. Utilize temporary staffing solutions to handle peak periods or unexpected vacancies. Technology and automation Embrace technology to streamline tasks and free up employee time for more strategic endeavors. Implement property management software to automate tasks such as rent collection, maintenance requests, and lease renewals. Consider online portals for residents to submit service requests and access property information, which reduces the burden on leasing and maintenance staff. Stress management resources Offer access to Employee Assistance Programs (EAPs) to provide confidential counseling and support for employees dealing with personal or work-related stress. Consider offering on-site mindfulness training or wellness programs to help employees develop healthy coping mechanisms for managing stress. Retention through Growth and Opportunity Providing a clear career path is critical for retaining top talent. Here's how you can promote employee growth and development: Create clear career paths Map out advancement opportunities within the company and establish clear performance benchmarks for promotion. This gives employees something to work towards and motivates them to invest in their long-term success with the company. Mentorship programs Establish mentorship programs that connect experienced employees with newcomers. Mentors can provide guidance, answer questions, and offer support during the onboarding process and beyond. This fosters a sense of community and helps new hires feel more integrated into the team. Cross-training Invest in cross-training opportunities to broaden employee skillsets and increase job satisfaction. This allows employees to gain exposure to different areas of property management, keeps their work interesting, and prepares them for potential future opportunities within the company. Empowering Your Team: Fostering Ownership and Engagement Empowering your employees fosters a sense of ownership and engagement, leading to a more motivated and productive workforce. Delegate tasks and decision-making Delegate tasks that match employee skill sets and provide them with some level of decision-making authority. This demonstrates trust in their abilities and encourages them to take ownership of their work. Encourage feedback and suggestions Create an environment where employees feel comfortable sharing their ideas and suggestions for improvement. Hold regular brainstorming sessions and actively solicit feedback on company policies, procedures, and resident services. Recognize and value employee ideas Acknowledge and value employee ideas, and whenever possible, implement suggestions that can enhance efficiency or improve resident satisfaction. This demonstrates that their input matters and fosters a sense of ownership within the company. Conclusion Reducing employee turnover in property management requires a multi-pronged approach that prioritizes employee well-being, professional development, and a sense of belonging. By implementing the strategies outlined here, property management companies can cultivate a happy, engaged workforce that delivers exceptional service to residents and contributes to the company's long-term success. Remember, a strong team is the foundation for a thriving property management business. Invest in your employees, and they will invest in your company's success. Learn more about property management company best practices, marketing, and more in our Second Nature Community.

May 14, 2024

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How to Build the Perfect Property Management Tech Stack

Building a property management tech stack takes an understanding of your needs, your options, how your team will use tech, and a commitment to continuous improvement. Technology, as most people know, is a double-edged sword. When used correctly, it can optimize business processes and create more efficient systems within your business. When used incorrectly, it can tear a hole in the space-time continuum, and you don’t want that. Industries all over the world have been going through their own tech revolutions over the last 40 years, and property management’s really began in the 80s with Yardi's "Basic Property Management" software. Online listings really took off in the early 2000s, and. Now, PropTech is everywhere, and the use of tech in property management has never had more potential or been more complicated. So how do you build a tech stack that works for you and your employees? Meet Rhianna Campbell and Kelli Segretto, two property management consultants that combine to boast more than 35 years of property management experience. Both have been through more than their share of tech rollouts. They’ve seen what works and what doesn’t, and they’re here to share with you what a good process for building a tech stack actually looks like. Related: Best Property Management Podcasts Start from the problem Technology will help you button up inefficiencies, but tech itself can create inefficiencies if it’s implemented for its own sake, which is one of the most common mistakes PMs make when at the top of the tech funnel. “Start with your issues list,” says Kelli Segretto, Founder of K Segretto Consulting and 20-year veteran of property management. “A lot of times what I see is a property manager will go to a convention and they’ll meet with a lot of different vendors, and they’ll come home with five new things they want to implement tomorrow.” There’s something of a FOMO effect with tech as it’s viewed as innately progressive, but tech is only progressive on a case by case basis. It will only help you so long as it solves a problem for you. You have to spend the time to identify what problems exist in your business before you start searching for solutions, lest you find yourself putting the cart before the horse. “You really have to dive into your issues list,” continues Segretto. “Realize what your biggest need is first and choose technology that matches that need. Talk to your fellow PMs, join these mastermind groups, attend Triple Win LIVE events, network on Facebook, and talk to other people to find out what’s working for them.’ Segretto really stresses the importance of doing your homework, because there is a tremendous amount of money and effort that goes into a technology implementation, and the worst thing you can do is go through all of that for little to no benefit. The biggest mistake PMs make when trying to build a useful tech stack is just collecting as many programs as possible and trying to jump directly into a fully functional stack instead of identifying solutions and rolling them out strategically. “We really need to be strategic about how we onboard because how many of you want to onboard new technology today and then decide in a year that it’s the wrong one and change? None of you think that’s a good idea. It costs a lot of money. It takes a lot of effort,” says Segretto Segretto’s issue list template is something she works through with her clients. If you're interested in a professional consulting session to help create an issue/action plan for your PMC, you can schedule a call with K Segretto Consulting here. How do you compile an issue list? “I talk to every single employee and find out what their biggest challenges are,” says Rhianna Campbell, a property management consultant and former CEO with over 15 years of experience in the industry. “I love to hear directly from the people who are working face to face with residents and clients and find out what some of their challenges are in the way that they do things on a day to day basis. And then from there, you can really pull out some of the commonalities that everyone seems to be having.” Campbell goes on to clarify that your issues list that you compile from these conversations gives you a clear cut list of questions you can ask software vendors when investigating solutions. “You can say ‘these are a list of my challenges. Can you walk me through how this software can help me solve these problems?’ And that’s a more direct approach versus being sold all the features that you may not even use.” When vetting specific technologies, Segretto suggests asking for a sandbox instead of just a demo. “Ask for a sandbox to where you can actually play with it, manipulate it, break it, find where those weaknesses are in that software before you commit to it.” Segretto also recommends seeking referrals to users who have used the software successfully and who have tried the software and either passed on it or gotten rid of it. Being able to understand those different perspectives will help you see a more complete picture of who the software is for, where it excels, and where it may come up short. Implementation Once you’ve identified which proptech vendors you want to work with, it’s time to enter the implementation phase. This is where most people’s fears reside. “I’ve seen hundreds of businesses launch technology across the nation and helped them implement. Ones that tend to fail are the ones that are not prepared,” says Segretto. “What I mean by not prepared is they don’t have their team’s buy-in. They don’t even know what they really want the technology for. They just feel like they want it and they want it right now. They’re not willing to dedicate a resource or a person that’s going to own it. Without that ownership, tech stacks fail.” The biggest parts of a successful implementation are team prep, ownership, and monitoring. Team Prep Getting buy-in from your team is critical for any implementation. The people that are using the tech need to believe in and understand the tech. Nothing guarantees failure more than just throwing a new service at someone. Explaining and training are the two big words here (it’s neat that they rhyme). Make sure your team knows why you’re doing this and how to use it. “You’re prepping your team, you’re talking about it, and you’re giving those ‘why statements’ so that everyone is on board before you launch. All of that needs to happen in your pre-implementation,” says Segretto Define Ownership Segretto believes it’s critical to identify who in the company will own the technology rollout. A tech rollout is just like any other undertaking in your business in the sense that it needs a central point of leadership to understand and manage all the processes of it. “You then have to pick a designated person who's going to be the owner of that technology. Then as you implement, they're going to be the expert, and they need to have time during that pre phase to become an expert, to get the training, to know the tool so that when questions happen in your office, your team members have a point of contact in office who's going to be able to either give them the answer or find them the answer.” Monitoring “It’s never set it and forget it,” says Segetto regarding the upkeep of a tech stack. “That would be cool, but that’s not reality. You need to be constantly monitoring its performance. I think that sometimes we tend to expect things will just keep working and we don’t really do the work we need to to monitor performance.” Campbell believes it’s helpful to monitor performance of tech that same way you would monitor performance of an employee. You need to conduct regular reviews of your tech’s performance much the same way you would of your team’s performance. Things change, companies grow, priorities shift. The same tech implemented the same way won’t necessarily be efficient forever. Tech audits are necessary to identify places where you can further optimize on a regular basis. After all, constant improvement should exist in any good business. “Being able to evaluate whether or not that technology is working is really important. I've seen a number of times where people buy into the tech and then don't use it. So really having points in time where you check to see if you're really utilizing that software that you paid a lot of money for, and not just spending money on it every month. And that can happen too. So just making sure that you are creating some opportunities to evaluate the performance of your technology to make sure that it's keeping up with the demands and the changes of your organization is so key.” Continuous Improvement The point of continuous monitoring is to promote continuous improvement. Tech evolves. It updates. Platforms overtake other platforms as the landscape changes. It pays to be aware, otherwise you can end up with less of a tech stack and more a tech pile, featuring redundant technologies, unused features, and wasted money and time. Getting the most out of your tech helps prevent these issues and keep your business efficient. Segretto, in her 20 years of property management, has seen companies go searching for tech solutions to problems they’ve already solved but were just unaware of. “Once you've identified how you're using it, then we start going on a treasure hunt to start looking for the hidden gems of what are the potentially overlooked features within my current tech stack.” Squeezing every drop out of your tech is a worthwhile endeavor. For every functionality you need that you can ID in your current stack, that’s one less rollout, one less training, one less process development you need to engage in. It’s a heck of a lot easier and cheaper than getting a whole new system. “How many of you would have time to stop and rebuild all of your processes every six months? Nobody? Yeah, it's impossible. And so instead of adding a new tool into that organization, what we did was we went back in and we maximized the utilization of that existing tool, which is a lot less expensive and a lot less cumbersome on the team than shifting entirely.” Tech is a good thing. Don’t let the length of this article about implementation scare you into thinking it’s more complex than it is. As long as you’re willing to manage your tech stack and make sure your team knows how to use it, you’re going to be in good shape. You wouldn’t bring on a new employee for no reason, so don’t add tech for no reason. Tech is a tool and its power is determined by the person who wields it. If you’re purposeful and thorough, you can vastly improve the efficiency of your business with the ever-growing field of PropTech companies in existence.

May 9, 2024

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How to Write a Friendly Rent Increase Letter + Free Template

Before implementing a rent increase, it's essential to communicate with your tenants clearly and professionally. Writing a rent increase letter is a critical first step in this process. Due to inflation and the rising cost of living, rent adjustments have become increasingly important for maintaining the financial viability of a property. However, executing this task involves a delicate balance to ensure tenants feel respected and valued. The key to this process? Transparency. By clearly communicating the reasons behind the rent increase, such as inflation and increased operational costs, you can help your residents understand the rationale behind your decision. A note on language: Here at Second Nature, we prefer to use the terms "resident" and “residency” rather than “tenant” and “tenancy,” to emphasize the human element of property management work. However, there may be instances where terms such as "tenant" are used for legal or industry-standard purposes within documents or communications. In these cases, please know that our intent remains the same – to provide clear, accurate, and meaningful information to all people involved in the business relationship. When Should You Increase the Rent? Rent increases should be considered periodically to keep up with inflation and the rising costs associated with property maintenance and management. Specifically, inflation drives up the costs of utilities, repairs, and general upkeep, making it essential to adjust rents to cover these expenses. Other rising expenses include property taxes, insurance costs, and even the costs of improvements – all contributing to the need for rent increases. By aligning rent adjustments with these economic factors, property managers can ensure the financial sustainability of their properties while continuing to provide quality living conditions for their tenants. What to Consider When Increasing the Rent There are several factors to consider to ensure fairness and transparency during a rent increase. These considerations will not only help in setting a rent increase amount that's justified, but also in maintaining a positive relationship with residents. Rent competition Understanding the rental market's competition is crucial. Evaluate the current market rates for similar properties in your area – this will help in setting a competitive yet reasonable rent increase that aligns with local conditions. Lease term Consider the length of the lease term currently in place. Typically, longer lease terms might warrant smaller, more gradual increases to retain residents, while shorter terms may allow for more frequent adjustments based on market trends. Rent increase amount Decide on a fair and justified level of rent increase. This should reflect market conditions, the property's value, and any improvements that have been made. Transparency about how this amount is calculated can help mitigate resident concerns. State notice period requirement Each state has specific legal requirements for notice periods before a rent increase can take effect. Ensure that you comply with these regulations to avoid legal issues and give residents enough time to adjust to the change. Security deposit Review the impact of the rent increase on the security deposit. In some states, the security deposit may need to be adjusted in accordance with the new rent amount. Ensure that any changes are clearly communicated and legally compliant. Reasons to Send a Rent Increase Letter Sending a rent increase letter is a necessary step in maintaining transparent and professional relationships with residents. Here’s why they're essential: Legal compliance A rent increase letter ensures compliance with state and local laws regarding notice periods and documentation. It serves as an official record of the change and helps protect against potential disputes. Clarity and transparency Providing a written notice offers clarity to residents about the new rent amount, the effective date of the increase, and the reasons behind it. This transparency helps maintain trust and minimize misunderstandings. Professionalism A formal rent increase letter reflects a professional approach to property management. It shows that you respect your residents and are committed to clear and open communication. Justification of increase The letter is an opportunity to explain the rationale behind the rent increase. Whether it’s due to rising maintenance costs, property improvements, or market adjustments, providing these justifications helps residents understand and accept the change. Recordkeeping Documenting rent increases helps in maintaining accurate records for the property manager, the property owner, and the resident. This can be crucial for future reference, renewals, or if any legal issues arise. By considering the factors that go into the rent increase and clearly communicating the reasons, property managers can ensure a smoother transition and foster a positive relationship with their residents. What Should a Rent Increase Letter Include? Here's what should be included in a rent increase letter to ensure your residents have all the information they need: 1. Friendly tone Use a warm and polite greeting. Express appreciation for the resident's tenancy. Maintain a respectful and understanding tone throughout the letter. 2. Resident information Clearly state the names of the residents you're addressing. Include their address. Mention the end date of their current lease agreement. 3. Clear announcement of rent increase Precisely state the effective date of the rent increase. Clearly outline the new monthly rent amount. If applicable, mention any changes to additional fees like utilities, parking, or pet rent. 4. Justification for the increase (transparency is key!) Highlight specific reasons for the rent increase. This could include rising property taxes, increased maintenance costs due to inflation or repairs, market value adjustments based on comparable rentals, or significant property improvements you've made. Be specific and provide data or evidence to support your claims whenever possible. For example, mention the percentage increase in real estate property taxes or highlight the specific property improvements that are enhancing the resident's living experience. 5. Consequences of nonpayment Clearly explain the consequences if the new rent amount is not paid by the specified date. Outline the potential late fees or penalties that may apply. Describe the steps that'll be taken if non-payment persists, such as the issuance of a notice to vacate or potential eviction proceedings. Emphasize the importance of timely communication from the residents if they foresee difficulties in making the payment, and encourage them to discuss potential solutions or payment plans. 6. Resident options (maintain a positive tone) Briefly remind residents of their right to review their new lease agreement. Express your willingness to answer any questions they may have regarding the rent increase. Clearly state your contact information (phone number and email address) for easy communication. Sample Rent Increase Letter Template Below is a template you can use for your rent increase letter. Simply customize the highlighted sections with your specific information. [Your Property Name and Contact Information] [Date] [Resident names] [Address of rental property] RE: Rent increase effective [effective date] Dear [Resident names], This letter is to inform you of an upcoming rent increase for [property address], effective [effective date]. Your current monthly rent of [current rent amount] will be adjusted to [new rent amount]. Additionally, [mention any changes to additional fees, e.g., "the monthly pet fee will increase to $XX"]. We understand rent increases can be disruptive, and we want to be transparent about the reasons behind this adjustment. The increase is necessary due to [list specific reasons for the increase, e.g., "rising rental rates for comparable units… ," or “neighborhood revitalization resulting in enhanced value…”]. [If applicable, provide data or evidence to support your claims]. We value you as a resident and appreciate our relationship. You have the right to review your lease agreement if you have any questions about its terms. We are also happy to answer any questions you may have regarding this rent increase. Please feel free to contact us at [phone number] or [email address]. Sincerely, [Your name and the name of your property management company] For example, our rent increase template looks like this: How To Send a Rent Increase Letter Delivering a rent increase letter requires a balance between convenience and ensuring you have verifiable proof of the notification. First and foremost, you’ll need to consider local regulations. Ideally, consult with a lawyer specializing in landlord-tenant law to determine the mandated method for delivering rent increase notices. Some states or municipalities may require certified mail or another verifiable method (e.g., signed delivery receipts with regular mail). Don't skip this step – non-compliance with local regulations can lead to legal issues down the line. Delivery method options Certified mail: This is generally the safest option. Certified mail provides a receipt confirming the letter's delivery and the date it was received. This documentation can be crucial in case of future disputes or legal proceedings. It's typically more expensive than regular mail, but the added security it offers can be worth the cost. Regular mail with signed delivery receipt: This option offers some level of proof of delivery but may be less secure than certified mail. Residents can potentially refuse to sign for the receipt. Hand delivery: If feasible, handing the rent increase letter to the resident in person and obtaining a signed receipt is the most secure method. Note that while some residents might appreciate the convenience of email, this isn't always the most reliable notification method. Consider your residents' demographics and preferred communication channels. In any case, the original lease agreement you have with your residents should explicitly state acceptable methods for delivering important notice letters, including rent increases. For instance, if lease terms include email as an acceptable form of communication, then you can choose to use it for rent increase notifications. A note on property management software Property management software can be useful for maintaining a centralized repository of all your communications with residents, including rent increase letters. It's also a useful tool for furnishing clear audit trails and documentation in case of disputes. You should, however, remember to make updates if the software handles rent collection reminders, in order to reflect the conditions of your new rental agreement. Rent Increase FAQs Q: How many days’ notice of rent increase do residents need to be given? A: The required notice period for a rental increase can vary depending on your location and the terms of your lease agreement. In general, most states require that residents be given 30 to 60 days' written notice before a rent increase takes effect. This can vary for year-to-year lease renewals vs. month-to-month. It's important to check local rent control regulations for specific details on timeframes. Q: Can the rent increase be contested? A: Depending on your location and specific circumstances, residents may have the right to contest a rent increase. For example, rent control laws in some jurisdictions allow residents to challenge rent hikes that are deemed to be excessive (statewide in California and Oregon, or locally in New York, New Jersey, and Maine). It's best to obtain legal advice from lawyers specializing in applicable local laws and state laws to understand your options. Q: What resources are available for residents? For residents who ask about their rights or renting in general, here are some resources you can provide: HUD Tenant Rights: The U.S. Department of Housing and Urban Development (HUD) website offers a wealth of information on tenant rights, including resources on rent increases and eviction processes. Local tenant rights organizations: Many cities and states have local tenant rights organizations that can provide residents with specific guidance and support for renters based on their location and situation. Final Thoughts Prioritize clear communication and transparency, and you’ll find you can navigate rent increases effectively, while ensuring a healthy and positive relationship with your residents. These communications are a unique opportunity for positioning with your residents by reconnecting on terms, updating expectations, and more. The way you compose these letters – and the way you position the changes – can make all the difference in your renewal rate and resident satisfaction. It’s also the perfect opportunity to introduce a Resident Benefits Package (RBP) and remind residents of your role in adding value to their living conditions. Learn more about the benefits of Second Nature’s fully managed RBP.

May 7, 2024

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