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Triple Win Property Management Blog

Property Management FAQs about Resident Experience

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

Calendar icon June 28, 2023

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Property Management Profitability: FAQs on Profit Margin

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

Calendar icon June 28, 2023

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How to Create Property Management Business Plan [Free Template]

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

Calendar icon June 28, 2023

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How to Create Self-Service Tenant Onboarding Workflows

A tenant self-service onboarding workflow is a system that enables new residents to complete the onboarding process by themselves using online portals, automated communication workflows, and chatbots, with minimal involvement from property management teams. Why automate? Automation can provide smaller property management companies with an edge by streamlining processes, improving communication with residents, and reducing manual workloads. By leveraging tech tools such as single family property management software, online portals, and automated workflows, smaller companies can increase efficiency, provide better customer experiences, and compete with larger players in the industry. Implementing tech is especially important – let’s actually say it’s imperative – in today's digital age, where residents expect instant communication and online access to property information. By embracing tech solutions, smaller property management companies can not only keep up with industry trends but also stay ahead of the competition. Today we are talking with a leader in property management who has also been an early adopter of some of the most innovative new AI and tech solutions for the property management industry – Wolfgang Croskey. Wolfgang shares some of the best ways to automate your resident onboarding process and how to avoid pitfalls along the way. Key Learning Objectives: Do I need to implement self-service workflows for resident onboarding? What are the greatest benefits of implementing this automated process? What are the pitfalls of tech and automation in resident onboarding? How do I create self-service onboarding workflows? Meet the Expert: Wolfgang Croskey, Founder & President of How’s My Rental Wolfgang Croskey has been working in real estate since he was a little kid. From stuffing envelopes, unclogging toilets, and serving notices to creating leases, he has touched on all aspects of property management. He is a well-respected member of NARPM, a servant leader to his community, and, to top it all off, a father of 6. Wolf has been a board member and president of the Pittsburg Chamber of Commerce, where he is currently the CEO, providing leadership and direction to the Chamber in their daily activities. He is also the Founder of How's My Rental, a site-awareness servicing California landlords as well as the founder of The Perfect Tenant, a Master Leasing Company. A Note on Language: At Second Nature, we prefer the term “residents” over “tenants.” It’s our belief that focusing on the people in every interaction helps us to create better, more valuable, and more profitable business strategies in the long run. Property management is all about focusing on what residents and investors – human beings – want and need! But through this article, you’ll see us use both “tenants” and “residents” due to the fact that many parts of our industry are very technical and require accurate terminology. Why should you implement tenant self-service onboarding workflows? Tenant, or – as we prefer to say here at Second Nature – resident onboarding is an essential aspect of property management. But as any PM will tell you, it can be time-consuming and resource-intensive. That's why a resident self-service onboarding workflow can be a game-changer for property managers. By providing residents with online self-service portals, automated communication workflows, and chatbots, self-service onboarding workflows can reduce the need for manual work, streamline the onboarding process, and improve tenant experiences. According to Croskey, property managers across the country are adopting self-service workflows and automation – but there’s still a lot of room for growth. “There is a growing trend towards adopting self-service onboarding workflows in the property management industry, driven by the numerous benefits they provide, such as reduced manual work, faster lease execution, and improved resident experience,” Croskey says. “However, there may be some pushback from property managers who are hesitant to adopt new technology or concerned about potential security risks. Addressing these concerns through education and demonstrating the benefits of automation can help encourage wider adoption.” As we’ve mentioned before, Croskey has called automation the “great equalizer.” How? According to Croskey, “It allows us to compete with these nationwide companies and to provide not only the same level of service but to be able to pivot and adapt much quicker than those larger companies can. So for me, you're a smaller company, AI and Automation Tech is that equalizer that's going to allow you to shine just as well as these larger companies.” Are there disadvantages to adopting more automation? Croskey says there are areas of vulnerability for PMCs looking to automate their processes more deeply. The issue? Not having those processes right in the first place. Croskey says he’s seen many property managers assume that AI is going to fix their problems. “The reality is, if you don't have your policies, procedures, and processes in place, there is no tool on earth that's going to be able to save your bacon,” says Croskey. “Look at McDonald’s: At one point, some team had to roll up their sleeves and make the process of how to build the Big Mac. And it probably took quite a while to do that. But now that it's done, they haven't changed the Big Mac for at least 40 years. It's still the same nasty hamburger.” With a chuckle, Croskey continues: “A lot of times, myself included, we try to find technologies that can help us avoid that initial work. You’ve got to roll up your sleeves, and you’ve got to get through that.” How to create tenant self-service onboarding workflows So, let’s say you’ve accepted that building self-service workflows gives massive advantages to your PMC. And let’s say you’ve established your processes in a way you’re confident is efficient, legal, etc. Now how do you create the automation to help new residents help themselves? Here’s what Croskey advises, in his own words. To create a resident self-service onboarding workflow, property managers should consider the following steps: Select Software: “To optimize your property management process, it's crucial to select software that offers robust onboarding automation features such as online applications, tenant screening, and digital lease signing.” Integrate Workflows: “Ensure the workflow is tailored to your needs and seamlessly integrates with your existing accounting, maintenance, and communication platforms.” Implement Data Security: “It's equally important to implement stringent data security protocols to safeguard resident information during the onboarding process.” Equip Resident with Resources: “Finally, equip residents with the necessary resources to familiarize themselves with the self-service workflow and provide comprehensive training to your team to ensure a smooth transition.” With those steps in place, let’s look at some of the specific aspects of the onboarding process that property managers can start with when building self-service tools. Virtual tours Croskey explains that AI-powered chatbots can provide virtual property tours – answering questions, and offering additional information to potential residents in real-time. Here’s how it works: Prospective tenants can access an online customer portal or chatbot that offers virtual tours of the property. They can interact with the chatbot to select a specific unit or area of the property they want to tour. The chatbot or other AI tech can then use VR or AR technology to provide a 360-degree view of the selected area. Prospective tenants can move around and explore the space as if they were physically there. The chatbot can also provide additional information about the property, such as floor plans, rental rates, and amenities. Rental application Nearly all automated property management solutions can provide automated rental applications. Here are some tips on how to ensure you’re deploying it effectively: Provide residents with an online portal where they can submit their rental applications and supporting documents electronically. This can include personal information, employment history, rental history, and financial statements. Use automated workflows to guide residents through the application process and send notifications when additional information or documents are required. Implement electronic signature software to enable residents to sign and submit rental agreements and other legal documents online. Integrate the rental application process into your property management software to streamline the process and reduce manual workloads. Beyond that, Croskey explains that “Chatbots can guide residents through the online application process, answering questions and providing support as needed.” Tenant verification Property managers can make tenant verification self-service by implementing tenant verification software into their property management system. These software solutions will help by: Leveraging an online portal where residents can submit their information and documents for verification, including rental history, employment verification, and credit checks. Using chatbots or automated workflows to guide residents through the process, answer questions, and provide them with updates on the status of their applications. Implementing secure authentication measures to ensure only authorized individuals can access and submit sensitive information. Lease negotiation Here are some steps to make lease negotiation automated or self-service: Property managers can create an online lease agreement platform accessible to residents via a unique login and password. The platform can provide residents with the ability to view and select available properties and rental units, along with the associated lease terms and rental rates. Residents can submit a lease application online, which can include information such as their employment history, income, and rental history. The platform can automatically screen the application, verifying information such as credit score, employment status, and income. Once the application is approved, the resident can negotiate lease terms such as the lease duration, rental rate, and security deposit directly with the property manager via the online platform. The online platform can use AI to generate a lease agreement that reflects the negotiated terms, which can be reviewed and signed by the tenant and property manager online. Property services onboarding Getting residents set up with all the services, utility connections, etc. that they need can be a hassle for everyone. You can end up answering several calls and questions, while they may spend hours on the phone trying to identify what they need and how to get it. Self-service onboarding can make a huge difference. One example is Second Nature’s Movie-In Concierge, part of our full-service Resident Benefits Package. In one phone call, residents find out what their best options are and can even get help simplifying setup. An experienced concierge confidently guides multiple people every day to properly set up their utilities. We’ve also automated filter delivery to ensure residents replace filters on time, which saves them roughly $15 per month in HVAC fees. Document management Property managers can make document management self-service by providing tenants with an online portal where they can access, upload, and sign documents. Here are some steps to make document management self-service: Property managers can create an online portal accessible to residents via a unique login and password. Set up permissions so residents can upload documents such as lease agreements, rental applications, and move-in checklists to the online portal. Property managers can upload documents such as rental payment receipts, notices, and lease addendums to the online portal. The online portal can provide residents with the ability to digitally sign documents, eliminating the need for paper-based signatures. Property managers can use automated workflows to track document submissions, ensure that all documents are complete, and send reminders to tenants who have outstanding documents. The online portal can be integrated with the property management software, ensuring all documents are properly filed and easily accessible. Croskey adds that “AI can help organize, store, and retrieve documents related to the onboarding process, streamlining the experience for both property managers and residents.” Resident communication Here are some steps to automate resident communication and ensure residents can help themselves to the info they need. Property managers can create an online portal that can provide residents with information about their lease, rent payments, and property services, as well as the ability to submit service requests and communicate with the property manager. Chatbots or other AI tools can provide instant communication to residents during the onboarding process, answering questions and addressing concerns efficiently. Property managers can use automated workflows to send reminders to residents about rent payments, lease renewals, and move-in/move-out procedures. The portal can provide residents with the ability to report maintenance issues, request repairs, and track the status of their requests. Property managers can use automated workflows to manage and track service requests, assign tasks to maintenance staff, and ensure the timely completion of service requests. The portal can provide residents with access to a knowledge base or FAQs, where they can find answers to common questions about their lease and the property. Maintenance coordination AI and chatbots can help coordinate move-in inspections, maintenance requests, and repairs, ensuring a smooth transition for new residents. The best way to do this is to implement a maintenance management system that integrates via an API with the resident communication platform. Property managers can provide new residents with access to the online portal, where they can submit maintenance requests and track the status of their requests. The portal can include a list of frequently requested maintenance tasks and allow residents to select the task and provide details about the issue. You can use an automated workflow to assign maintenance tasks to the appropriate staff member, schedule the task, and notify the resident of the scheduled date and time. The maintenance staff can update the status of the task on the portal, allowing the resident to track the progress of the repair. You can use data analytics to identify recurring maintenance issues and proactively address them before they become larger problems. Finally, you can provide residents with the ability to rate and provide feedback on the maintenance staff's performance, allowing property managers to continuously improve their service. What are some of the best tools for implementing self-service onboarding workflows? Several automation tools have emerged as industry leaders in resident onboarding. The best tool for your property management business will depend on your specific needs and requirements, says Croskey. He recommends looking into some of the more popular options online, including: AppFolio: AppFolio is a comprehensive property management software that offers automated tenant onboarding, including online applications, screening, and lease signing. Buildium: Buildium provides an end-to-end resident onboarding solution, including application management, tenant screening, and electronic lease signing. LeadSimple: LeadSimple provides a process-oriented solution to onboarding a tenant. By using reactive templated emails, tenants have the ability to select options and then drive the process along. What does the future of self-service onboarding look like? We asked Croskey, and he answered: As technology advances, self-service onboarding workflows can become even smarter by: Personalized onboarding experiences: AI can analyze resident data to tailor the onboarding process based on individual preferences and requirements. Integration with IoT devices: The onboarding process can be integrated with smart home devices, enabling residents to set up utilities, internet, or other services through voice assistants or other IoT interfaces. Enhanced data security: Advanced encryption and AI-driven security measures can better protect resident data during the onboarding process. Automated compliance checks: AI can automatically verify that leases and other documents comply with local, state, and federal regulations, reducing the risk of legal issues. Final thoughts: Just get started! Croskey says the key is to start learning how to use automation and AI now – and make sure you provide your team with the training and support they need. “My recommendation is just to get started and try these new tools,” he says. “And as you grow more confident, make sure to do your team justice by providing them training and providing them opportunities to learn how to use these tools as well. It’s not fair to say, ‘Okay, starting tomorrow, we're using this brand new tool, have a nice day.’ Really focus on some training.” You can learn more by listening to our podcast with Wolfgang: Everything You Need to Know about Practical AI for Property Management. We’re keeping our fingers on the pulse of this space – stay tuned for more!

Calendar icon June 28, 2023

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Property Management Fees: Opportunities for Growth

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

Calendar icon June 28, 2023

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Types of Tenant Problems and How to Deal With Them

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

Calendar icon June 28, 2023

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Do I Need to Clean My Home's Air Ducts?

Is duct cleaning worth it & something you should do for your home? Do you need to have the air ducts in your home cleaned? It’s an age-old question, okay well not really, but it is a question that many homeowners probably don’t even remember to ask. Even still, we’re going to give you the answer. So, is air duct cleaning worth it? Keep reading to find out. What is duct cleaning? Duct cleaning is exactly what it sounds like, which is the cleaning of the inside of the air ducts that carry air to and from the heating and cooling components of your HVAC system. It involves physically removing dust, debris, and other contaminants from heat-ventilated systems, including any associated ducts. Sounds nice, but is air duct cleaning necessary? Is air duct cleaning necessary? It’s true that clean ducts can provide some health benefits and increase the quality of the air you breathe, but it’s not always a smart or necessary practice. There are certain situations where it’s necessary, but the EPA has clarified that there is no evidence that a light buildup of dust or particulate matter in the ducts has any impact on indoor air quality. This is because buildup usually remains in the duct and doesn’t get carried out of the ducts once it’s become stationary inside. Thus, duct cleaning is only really necessary if there is an excessive amount of buildup, or some other concern such as substantial mold growth or an insect infestation. Is air duct cleaning worth it on a regular basis? According to the EPA, there is no reason for regular duct cleanings. Duct cleanings should be scheduled only as necessary. For reasons described above, there are simply no proven negative effects of slightly dirty ducts. Is there a risk to not cleaning your ducts? There is very little risk to not cleaning your ducts on a regular basis. As stated, minor particulate buildup is not proven to have health effects or result in any increase in particulate matter in the air. Significant duct issues such as mold growth or infestation are typically the result of uncommon problems somewhere else in the home that need addressing, and certainly do not occur at a regular cadence that would require regular duct cleanings. Can I clean ducts myself? It is possible to clean your ducts yourself, but it is not recommended. It is an extensive job best done by a professional with professional level equipment. You simply cannot achieve the same level of cleanliness without professional level tools. You may also encounter mold, vermin, or other issues that are best dealt with by a professional. If I wish to have my ducts clean, what can I expect? You can expect a professional duct cleaning service to provide a thorough and complete clean in a manner safe for you, your HVAC system, and the rest of the home. This involves inspecting the system prior to beginning for any dangers. Next comes a vacuuming and brushing of the inside of the duct system, as well as HVAC system components, followed by a resealing of any access points used in the duct system. The price for a professional duct cleaning service will depend on the size of your home, but it’s typically between $300 and $500 Am I posing a risk to my indoor air quality if I don’t have my ducts cleaned? If you’re experiencing issues with indoor air quality, it’s unlikely that duct cleaning will present a long-term fix. Dirty ducts are the result of some other contributing issue that must be addressed, and even if dirty ducts are contributing to allergies or some other consequence of poor IAQ, clean ducts will only serve as a temporary fix until the root cause is addressed. So, Is Air Duct Cleaning Needed on a Regular Basis? No–you don’t need to have your air ducts cleaned regularly to maintain healthy air quality inside your home. Instead, reach out to a duct cleaning service if you suspect there is excessive buildup or mold impacting your ducts. If Clean Ducts Aren’t the Answer to Clean Air, What Is? Air filters. Replacing your air filters every three months helps improve the air quality in your home. If you have allergies or asthma or live near smoke or smog pollution, you may benefit from air filters with high MERV ratings and more frequent replacements. Not sure which size air filter you need? Learn about the different air filter sizes to make sure you choose the best option for your home.

Calendar icon June 21, 2023

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Tips for an Efficient Home: Change Your Air Filter

Change your filters already! Learn how to change air filters and do it already! You had to know this one was coming. For our fifth and final installment of Second Nature’s Tips for an Efficient Home, we want to remind you to change your air filters. There aren’t many routine home maintenance practices that are forgotten with more regularity than the air filter change. You should replace air filters in your home at regular intervals multiple times a year, but we all know someone who hasn’t even looked at their air filters in years (that's been us too, once upon a time). How to Change an Air Filter in Your House Changing air filters is one of the easiest ways to keep your home efficient. It’s probably the easiest of any practices highlighted in this series. That’s because home air filter installation is as simple as opening your vent, taking out the old one, and putting in the new one, or at least it’s that simple (shameless plug inbound) when you use Second Nature. Why Changing Air Filters is Important Air filters do two things. They clean the air that circulates through your HVAC system, allowing you to breathe fresh air inside your home, and they preserve the health of said system by keeping particles and gunk from building up on it. Your system runs more efficiently with a quality air filter installed and will last longer as the result of reduced stress. ‍How to Choose the Best Air Filter for Your Home First, you need the right air filter. Skip the fiberglass and go straight to pleated. Fiberglass air filters is a bit of a misnomer since they are horrible at filtration. They do virtually nothing to keep pollutants out of your air. It’s better for air flow immediately, because it offers so little resistance, but detrimental to the long-term health of your system (and you!), as all the particles that pass through can build up on your HVAC coils and shorten the lifespan. This can result in costly repairs and even replacement. Pleated air filters are the best option for your health and your HVAC’s health. Their construction allows for much more effective and efficient filtration, which keeps that nasty stuff out of your lungs and off your system. Unless your HVAC is quite old (like really old), the more tightly wound construction of a pleated air filter won’t starve your unit of air flow. You've heard that last bit before. We're here to dispel that myth. You ready? Pleated air filters do not restrict airflow to your HVAC system! How does changing an air filter save you money? Great question. It does so in two ways. Efficient air flow through your vents minimizes the work your HVAC has to do to keep your home the desired temperature. An air starved system must run harder and longer to do so, which drives up your energy usage and ultimately your electrical bill. As your air filter catches pollutants, it begins to lose air flow efficiency as it becomes filled with dust, pollen, and any other clean air assailants it has vanquished from your home. It’s good that it’s catching these, but if you leave the filter in too long, the buildup of particle matter starts forcing the HVAC unit to work harder to get air. Now you have a system that’s struggling, thus producing higher energy costs. Learning how to change an air filter that’s dirty for a new one provides an immediate remedy to that and, as a continued practice, can boost the efficiency of your HVAC system by 15%. This boosted efficiency can extend the lifespan of your system as well, which will save you money years down the line in addition to the immediate benefits. How often is regularly? Glad you asked. The answer depends on many factors. Typically, we would recommend you do a new home air filter installation every three months, but certain elements can push this number down. If you live in a heavily polluted area, that filter will get dirty faster. Simply put, a dirty filter does a terrible job of filtering and needs to be changed. Add pets to the equation, and you might need to replace the air filter in your home every one or two months. It will depend entirely on your specific situation. Choosing air filters with higher MERV ratings is also beneficial for keeping your indoor air quality at a healthy level. Not sure which size air filter you need? Learn about the different air filter sizes to make sure you choose the best option for your home. If you want our opinion on your particular case, you can always ask! Tweet us Facebook Message us Email us ‍ And that’s how you can save 15% on your heating and cooling costs. Just swap out your air filters four times a year! If you’re interested in not having to remember this (another shameless plug coming in hot), we’ll ship high-quality, USA-made air filters right to your door when it’s time to change them.

Calendar icon June 21, 2023

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Pet Policy For Renters: Best Practices for Property Managers

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

Calendar icon June 20, 2023

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How to Reduce HVAC Maintenance Costs Data Study

For SFR property managers, HVAC maintenance costs can be a massive drag on your monthly expenses, but HVAC efficiency is critical to resident's safety, health, and overall experience. Not to mention the longevity of the properties you manage. Can property managers reduce HVAC maintenance costs and extend the life of their HVAC systems? Welcome to our latest in-depth analysis, "How to Reduce HVAC Maintenance Costs.” Our analysis comes from a collaborative study by the National Rental Home Council and Second Nature. The study examined the effectiveness of Second Nature’s filter delivery program in preventing HVAC-related work orders for SFR portfolios. As we delve into the study, you'll discover fresh insights that can help you make your HVAC system not only more efficient but also more cost-effective. Gain an understanding of preventative measures and strategic practices to lower your maintenance expenditure and prolong your HVAC system’s lifespan. Tune in and save your investor’s money, your team’s time, and your resident’s comfort. That’s what we call a Triple Win! Impact of Optimized HVAC Filter Delivery Service on Maintenance Costs The National Rental Home Council conducted an 18-month study in partnership with Second Nature, analyzing 7,700+ SFR units to evaluate the effectiveness of Second Nature’s Filter Delivery Service. The data was sourced from Property Meld and Service Titan. Filter Delivery is one of the major pillars of Second Nature’s first-of-its-kind Resident Benefits Package. Filter delivery service helps maintain the lifespan of your HVAC system and boost energy efficiency. This reduces the need for maintenance services and the average cost of energy bills and increases the air quality of your homes. Here’s how the study worked – and the findings on the total impact for property managers, residents, and investors. HVAC Study - Methods The study analyzed data for the frequency of resident HVAC service requests as a percentage of total units, with and without HVAC filter delivery. The frequency of tickets with and without delivery services was used to determine the overall reduction in HVAC problems and service requests. The study was conducted over 18 months, surveying 7,772 units. Filters that required complete change-out were delivered every 60-90 days and date-stamped. Each filter delivery contains graphic instructions to help the resident make the swap themselves. In addition to sending the filters, Second Nature sent residents emails with tracking info and more information on safe installation. Second Nature also provides property managers with lease language and marketing language for listings and applications and renewal notices. The property management company’s name and logo are stamped on the box with messaging about energy savings. HVAC Study - Overall Findings Include 38% Reduction in HVAC Ticket Requests The study found that for those units that had filter delivery service, there was a total reduction of nearly 40% of HVAC ticket requests. Across four separate operators, the percentage decrease in HVAC ticket requests ranged from 31%, 37%, 42%, and 50%. Here’s a breakdown of cost reduction in two major cities from the study: Atlanta: 79% cost reduction Memphis: 32% cost reduction Other observations and conclusions: The EPA states that changing filters regularly results in a 5-15% reduction in monthly heating and cooling bills. All operators from the study enroll residents as part of a Resident Benefits package that saved residents money and delivers superior convenience to retail alternatives. The Resident Benefits Package by Second Nature yields an average of $156 per year in gross profit per home before operational costs. All four operators from the study enrolled 85-100% of eligible leases and renewals over the 18-month period. Tips to Reduce HVAC Maintenance Costs for Property Managers HVAC service costs are increasing year over year. But the right package of services and maintenance plan can help reduce those costs. For property managers who don’t have a Resident Benefits Package to do the work for them, we do have some general tips on how to reduce HVAC maintenance costs with regular maintenance. These tips are best practices across the board for maintaining a top-notch heating and AC maintenance plan and are helpful even if you do have filter delivery as part of your suite of resident services. Of course, an RBP with filter delivery supports most of these already. 1. Regular Filter Changes This is obvious, considering the topic we’re covering! Dirty filters can restrict air flow, causing your HVAC system to work harder than necessary. Regular filter changes can improve system efficiency and reduce wear and tear. They also improve indoor air quality, which contributes to a healthier environment for occupants. Refreshing filters on a regular cadence is critical for both maintaining an efficient HVAC system and protecting your resident’s health. By implementing automated filter delivery by Second Nature, you can rest easy that your residents aren’t falling behind on this critical task. Regular filter changes also reduce the need for maintenance visits and cut down on any replacement costs or labor costs. 2. Schedule Preventative Maintenance & Tune-Ups Routine maintenance is the first and one of the most essential steps toward reducing HVAC repair costs. Annual maintenance is standard, but regular check-ups ensure that the system is running efficiently and any potential issues are identified before they become costly repairs. This can include cleaning the air filters, duct cleaning, checking for refrigerant leaks, and ensuring all components, like the compressor, condenser coils, evaporator coil, blower motor, capacitor, fan motor, drain line, heat exchanger, heat pump – the list goes on and on! – are in good working condition. Most property managers conduct seasonal maintenance to check the air conditioning, refrigerants, etc., before summer or give a tune-up to the heating before winter. Filter delivery is the simplest way to automate preventive care for your resident’s HVAC systems. Simply turn it on, and Second Nature does the work for you! 3. Invest in High-Efficiency HVAC System Investing in high-efficiency HVAC units might require more upfront costs, but they pay off in the long run. These heating and AC units use less energy, reduce operational costs, and tend to require fewer repairs over their lifespan. They also provide a comfortable environment for occupants, increasing property value. Filter delivery helps protect the lifespan of your high-efficiency units by preventing avoidable damage. The average costs of a high-efficiency heating or air conditioning system make sense for the return on investment. 4. Install Proper Insulation Insufficient insulation can cause the HVAC system to overwork, leading to higher maintenance costs and reduced system lifespan. By ensuring your property is well insulated, you can help maintain indoor temperatures for your heating and air conditioner and reduce the strain on your heating and AC system. 5. Use Programmable Thermostats Programmable thermostats allow for more precise control over temperature settings and scheduling. This can greatly reduce the burden on the HVAC system by avoiding unnecessary heating or cooling during off-peak hours or when the property is unoccupied. HVAC professionals can help with installation and maintenance, or you can train your team. There are so many moving parts with heating and cooling systems, and having a programmable thermostat can reduce the complexity significantly. 6. Consider Ductless Systems If feasible, consider using ductless HVAC systems. A new system like this can provide more direct heating and cooling without the energy loss associated with ductwork. This can reduce energy costs and result in less strain on the system, reducing maintenance needs. 7. Train Maintenance Staff for HVAC Service Proper training enables your maintenance team to identify and solve minor problems before they escalate – or before a resident tries to DIY it! A well-trained HVAC technician can also ensure that the system is correctly installed, operated, and maintained, thus extending its lifespan and reducing maintenance costs. You may not need to hire an HVAC contractor as often if your team knows how to handle day-to-day issues. Of course, engaging a filter delivery service can help take a ton of the day-to-day work burden off your staff. Second Nature ensures your residents have fresh filters exactly when they’re needed. No more schlepping out for repair service calls every month. There will always be occasions when an HVAC expert or replacement parts are needed, but you can reduce tune-up costs and visits with good training on your own team. 8. Deploy Energy Management Systems An energy management system can help monitor HVAC performance and identify areas for energy-saving opportunities. HVAC companies provide these at various price points. These systems provide real-time feedback, enabling property managers to make immediate adjustments that improve efficiency and save money. 9. Opt for Longer Warranties While purchasing new HVAC equipment, consider opting for longer warranties. This small investment can cover many future HVAC repairs, saving you from unexpected maintenance costs down the line. Again, using a filter delivery service works in tandem with longer warranties, too. Your systems will last longer, and the longer warranty will continue to cover any issues that do come up down the line. 10. Tenant Education Lastly, educate your tenants about the correct use of the HVAC system. This can include setting reasonable temperature limits and explaining how to properly use programmable thermostats. Well-informed tenants can play a significant role in reducing unnecessary strain on the HVAC system. A key part of Second Nature’s RBP is providing property managers with marketing and educational materials for their residents. We help you communicate to them the value of safe and effective HVAC systems. Again, we’re taking the work off your plate and making HVAC maintenance as easy as second nature! Final Thoughts on HVAC Maintenance Efficient HVAC management not only reduces costs but also fosters a comfortable living environment for residents. Each of the strategies outlined above contributes to these twin goals in its own unique way. The best news, though? Execution of these measures can be significantly enhanced with the aid of a resident benefits package. As the HVAC Study outline above shows, you can cut HVAC ticket requests by up to 50% with a filter delivery service. That means savings for you, your residents, and your property investor. In fact, a well-designed resident benefits package can support and streamline the implementation of many cost-saving property management strategies and reduce the need for emergency services. Ultimately, the smart combination of the tips provided above and a supportive resident benefits package is an excellent approach to reducing HVAC maintenance costs for property managers. The resulting cost savings, increased system longevity, and enhanced resident satisfaction make this a worthwhile investment.

Calendar icon June 12, 2023

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How to Design An Effective And Adopted Ancillary Revenue Program

Ancillary revenue programs like resident benefits packages have really hit their stride in the property management industry. Many property managers get into the industry in the first place because it’s a great way to start building secondary income. The work rewards creativity and innovation in terms of revenue streams and value-generating services. And that’s exactly what ancillary revenue is all about. We sat down with some of the best innovators in the business to talk about what makes an ancillary revenue program effective, how to make them sustainable in the long-term, how to incorporate revenue management, and how to know which ones can work for your business. What is Ancillary Revenue? First, let’s get down to brass tacks. Ancillary revenue is any additional source of income generated by a property that is not directly related to its primary function or purpose. In property management, property managers offer additional services to generate additional income for themselves and their client investors beyond the rent or lease payments they receive from residents. Most of us are familiar with ancillary revenue streams like those used in the airline industry or hotel industry. Companies may charge for early check-in, late check-out, in-flight entertainment, wifi etc. But what many of these programs miss is the opportunity to generate value without nickel-and-diming people. Examples of ancillary revenue in property management can include things like pet fees, renter’s insurance programs, management fees, and more. These compound to boost your total revenue alongside adding value for residents and investors. In some ways, you can think of it like an upsell, but it's really about value generation and finding a way to diversify revenue streams. By diversifying their revenue streams, property managers can increase their income and offset some of the costs associated with maintaining the property. How to Design an Effect Ancillary Revenue Stream “There is one characteristic that is the most important, and that is that you have to believe in it,” says Steve Pardon, Head Broker at JMAX Property Management. “If you believe that there is a benefit to doing it, then you’re good. If you don’t, then it’s hard to sell.” Pardon hits on the most important question any time you’re adding cost to your residents: Does it really create a benefit? All ancillary income programs are theoretically beneficial to the PM, as it directly affects the bottom line, but add-on services that don’t create a benefit for the resident can have long-term consequences as a result of dissatisfaction. Most ancillary revenue opportunities today are operated as part of a resident benefits package built into your business model. Pardon has rolled out an RBP to his residents, but took a very measured and analytical approach to ensure that everything his residents were paying for created value for them. Pardon summarizes his thorough process for determining value with "you have to believe in what you're charging people for." JMAX operates in the Roanoke, Virginia area, and Pardon considers the nature of his specific area when deciding what he believes in charing people for, noting that he feels certain programs work better or worse in his rural market than they would in an more dense market like an Atlanta Residents rarely object to paying for services they find value in, which is why an RBP built with the principles Pardon describes above can be so successful. “You can make anything mandatory, but if it doesn’t create value for the residents, you’re going to pay the price down the line,” says Paul Mauk of Invitation Homes. You can read about resident pushback to RBP here. Good ancillary services can come in many different shapes and sizes, and not all are part of a third-party managed RBP, although that certainly is a proven way of adding them. HomeRiver Group, for example, sends each and every resident in a HomeRiver group managed home a holiday gift. “One thing that we're getting ready to do right now is our holiday gift to the residents, which is another win-win,” says HomeRiver Group CDO Andrew Propst. “We find local companies like restaurants or movie theaters, or the year movie theaters were closed, we were looking at maybe doing some bowling alleys. We buy a bunch of gift cards at a discount. We put it in a nice little letter and we send it out to the tenants. They get $50 in value, we paid $25 for that. And you know we make a pretty good spread, and we spread Christmas and holiday cheer. And, you know, we get good Google reviews. It makes some money. We help local businesses. It's a big one.” Paul Mauk of Invitation Homes notes that ancillary services that don’t directly drive profit can still be hyper-effective as long term initiatives if they contribute to asset protection and low turnover rates in properties. “I think the type of initiatives that we're having success with are those things that provide for enhanced leasing lifestyle for our tenants or residents,” says Mauk. “And that's all often driven via survey and input from residents. So instead of us pretending that we know every potential amenity they would like, we’re actually reaching out to them and asking them what the value proposition would be from their perspective.” “And then one of the additional things would be, you know, items that aren’t necessarily potentially revenue drivers for us, but items that help us relative to asset preservation. So things that may be very specific and required within the lease, if we can find ways in which to make it an easier process for our residents, we can enhance our offering, enhance the experience for them, and increase the length of stay that we see from our residents.” This is a point that can’t be made enough, that minimizing turnover is the most important thing for property management companies. Your client is the investor and your product to the investor is the resident who lives in the property. The more time a resident lives there, the better ROI for the owner, which means better client retention for you and more potential for referrals. That’s why the resident experience aspect of ancillary services is so critical, even more so than the additional funds they can procure. We can talk about ancillary services for days but the successful adoption of your program will always hinge primarily on one question: Does it create value for the resident? Hence why JMAX Head Broker Steve Pardon weighs so heavily whether or not he believes he can offer a service in good faith. Ancillary Revenue Examples Let’s look at some examples of the best ancillary revenue ideas in property management right now. The services with an asterisk (*) are all available in Second Nature’s fully-managed Resident Benefits Package. Filter Delivery Service* Air filters delivery is a premium service for residents that automates air filter delivery to all your properties on a set schedule. Filter delivery simplifies the process for residents and ensures timely replacement at a low cost. HVAC repair costs have increased by 48.7% year over year, and an air filter delivery subscription can cut costs up to $300 per year. At Second Nature, we’ve seen our filter delivery service result in a 38% reduction fo total HVAC ticket requests, and save residents $14.82 per month in energy costs. Resident Rewards Program* Rewards aren’t just a perk for residents – they’re a powerful way to incentivize on-time rent payments. Talk about a win! Residents receive rewards such as discounts to local businesses when they pay rent on time. You and your investors see an increase in on-time payments, and residents now see rent day as rewards day. Credit-Building* Rent is one of the most significant regular payments any of us make. Why not report that to build credit? That’s what property managers are doing as a benefit to residents and another innovative incentive to on-time rent payments. A study by TransUnion found that 67% of residents would choose homes with rent reporting over other equivalent homes. Credit building supports your residents, helps attract financially responsible applicants, and encourages residents to pay rent on time. Move-In Concierge* Any time we move, one of the biggest headaches is setting up utilities. One great ancillary revenue stream is to provide a move-in concierge. At Second Nature, we manage this for you. Our move-in concierge helps residents with their best options int he area and can help simplify setup. In one phone call, residents get what they need. Identity Protection* Did you know that identify theft is a larger security risk today than home burglary? One in eight Americans were victims of identity fraud in 2021, equaling up to $52 billion in losses. Identity protection gives residents peace of mine and protects them finacially – which also protects their abilty to pay rent. Renters Insurance* A quality renters insurance program will allow residents to keep current coverage if they wish, but be automatically enrolled in the PMs program if they don't/don't have insurance. Good renter’s insurance will cover risks like all breeds of dogs, making renting from you a very attractive option. Did you know that 90% of professional property managers require residents to carry insurance on their lease? And yet only 41% maintain compliant coverage. At Second Nature, our renters insurance program has 100% compliance, protecting residents, investors, and the PMCs. Holiday Gift Program A holiday gift program helps residents feel seen, known, and remembered. Residents receive coupons or gift cards to local establishments as a wish of good cheer during the holiday season. Who doesn’t love a holiday gift? Security Deposit Alternatives We’ve seen security deposit alternatives proliferate in the last few years. Property management companies are choosing to offer other ways to cover financial liabilities for damages that do not require a huge payment at move-in, such as a surety bond or ACH authorization. Pest Control Many PMCs offer pest control services to residents to keep cockroaches, ants, etc., out of the property. PMs generate extra revenue while offering a massive benefit to residents, and asset protection for them and their investor. Pet Fees & Services With pet fees, you can because a universally pet-friendly company while still protecting yourself and your investor from risk. You offer the investor a guarantee that their property will be safe from pet damage and the resident pays you for this service. Home-Buying Assistance Programs Home-buying assistance helps boost resident experience and trust, while also investing in resident retention. Learn more about assistance programs for long-term residents looking to purchase a home. How Second Nature Helps Create Ancillary Revenue At Second Nature, we work with property management companies around the country to help them generate more value for their residents and additional revenue for their business through a Resident Benefits Package (RBP). The Second Nature RBP is a custom suite of benefits that elevates the resident experience while adding profit to your bottom line. An RBP is a powerful ancillary revenue strategy – and having one fully managed means that it doesn’t add any burden to your team. Generate more value for your investors, ease for your residents, and profit for your PMC with an RBP.

Calendar icon May 23, 2023

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Investor Benefits Package™️ IBP™️

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

Calendar icon May 23, 2023

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Property manager giving a tour

Property Management Strategies to Grow Your Business Without Burning Out

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

Calendar icon May 23, 2023

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

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

Calendar icon May 23, 2023

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Resident Experience Management: How to Meet Expectations

Resident experience management is improving every resident touchpoint – from application to move-out – to drive an experience so good your residents never want to leave. Today, the role of the property manager is to proactively identify and meet residents’ needs, often before the resident knows they need it. It’s a new world, but it’s exciting, allowing enterprising PMs to stand out in a crowded industry. Solutions that drive value, like a resident benefits package or an investor benefits package, are taking a lead. At Second Nature, we build tools with those enterprising property managers leading the way, and we’ve put together a report on the latest trends and innovations in the space. In this article, we’re diving deep into how to improve the resident experience, why it matters, and the best practices in resident experience right now. For more details and insights from leading PMs, check out the 2023 State of Resident Experience Report. Why is Resident Experience Important? Related: State of Resident Experience Study The “experience economy” has changed both customer and resident expectations. Particularly after the pandemic, the modern consumer is accustomed to the ease of apps like Uber, Airbnb, and Amazon, and they respond to ease and convenience. The question that single-family and multifamily PMCs are asking now isn’t “What’s the most I can get out of residents for the least I can do?” Rather it's: “How do I create an experience so good that residents never want to leave?” Property management companies are redefining resident experiences to improve occupancy rates and help residents, investors, and their companies get a win. Investing in resident experience management strategies is one of the most direct ways to yield positive ROI and reduce turnover costs. According to DD Lee, owner of Skyline Properties Group in Atlanta: “The number one thing (our residents) look for is ease and convenience. They don't want complicated instructions. They just want simple; they want right now. They want contact-free; they don't want to talk to people. So everything we do from showings to moving in to the experience after they move in is all revolved around design for that expectation.” How to Improve Resident Experience Resident experience management is about identifying every unique touchpoint along the resident’s journey – from application to move-out. Property managers are now expected to make each touchpoint painless and convenient. Our 2023 State of Resident Experience Report discusses changing consumer expectations and the key steps to resident satisfaction. Here, let’s expand on each key resident touchpoint where PMs can focus on improvement. Move-In Move-in is the perfect opportunity to design experiences that make new residents say, “Wow” – to make them feel delighted, welcome, and truly at home. Our guide explores some of the best innovations for cultivating a unique move-in experience. One of the best is to offer a Resident Benefits Package (RBP) that folds in services like a move-in concierge, insurance, incentives, and more. Rent Payments Second Nature’s RBP has a credit-building service that reports on-time payments to every credit bureau, giving value to residents and helping them become more financially stable. Another service is the resident rewards program, which incentivizes on-time payments and supports great residents. Maintenance Requests Using an online resident portal for real-time maintenance requests has become a baseline expectation. PMs are going beyond that to ensure they use preventative maintenance and deploying strategies to improve functionality. One such resident experience strategy is an air filter delivery service. Changing filters on time can reduce HVAC requests by 38%, saving the property manager and investor hundreds of dollars a year. Pet Registration Property managers can proactively offer pet registrations or guarantees and even use that as a form of ancillary income. You get the extra pet fees to drive income, the investor gets an assurance that they won’t suffer because of pet damage, and the resident gets to keep their pet! Resident Concierge Services Concierge services are a top way to provide a VIP experience. Second Nature’s RBP includes a move-in concierge who can confidently guide multiple people daily to set up their utilities properly. Residents don’t have to deal with the headache of setting up new utilities – instead, in one phone call, they find out their best options and can even get help simplifying setup. Renewal Process PMs can proactively set up the renewal process, so it’s as easy for the resident as a click of a button. Assuming each touchpoint along the way has anticipated and delivered on residents’ needs – and surpassed their expectations – lease renewal should be straightforward and quick. Resident Communication Property managers aiming to improve the resident experience have found creative ways to improve and streamline resident communication. Great communication is necessary, whether through digital apps and automation, social media, on-site messaging, proactive team members, etc. Move Out When a resident is moving out – whether they chose to move or are delinquent – property managers can help make the process as smooth as possible. Anticipating the resident’s needs, keeping communication open, and deploying motivated team members all help deliver the final touch for residents. The move-out experience is their last impression and can impact your referrals, reputation, etc. Resident Experience Ideas and Examples Resident retention is a key success metric in the current economic climate. Keeping residents engaged and happy can go a long way to delivering a triple win: hitting your goals, their goals, and your investor’s goals. Our State of Resident Experience Report explores how resident experience management can deliver ROI, company growth, and happier investors. We also talk to several experts in the property management field to hear their best and most successful ideas. Here are a few key resident experience ideas that residents will pay for and stay for. Post-maintenance surveys and follow-ups Quick complaint responses and preventive maintenance Pet-friendly property management and insurance Resident engagement programs like a recycling drive, helping minimize waste productions, sourcing local, etc. Prioritizing safety and security and engaging residents in a proactive way to achieve that Each of these strategies helps deliver what “totally taken care of” feels like. Which is exactly what residents are looking for. How to Handle Difficult Residents Every property manager we’ve talked to has dealt with difficult residents at some point in their career. The best property management strategies prevent many of these issues through better resident experiences. The right strategy can help incentivize residents to cooperate, keep a property well-maintained, and make on-time payments. When you are facing a difficult resident situation, here’s how leading property managers advise proceeding. Make sure service promises are fulfilled One of the most important things that sets professional PMs apart from hobbyists or amateur landlords is the delivery of promises. Because you have a team and a plan, you can ensure that what you promise is what residents get. Being courteous, kind, and professional A lot of this is about hiring the right people. Get your core values in place and ensure that anyone you hire is bought in on those values. Finding people that the rest of your team enjoys working with is also important. Cultivating an environment of courtesy and respect goes a long way to ensuring residents are treated fairly. By not taking it personally Improving the resident living experience is all about seeing the human at the other end. When unhappy or troublesome residents aren’t taken personally, it puts us in a better position to take reasonable, effective steps to deal with them. Professional PMs can approach challenging situations without judgment but with clear boundaries and proactive solutions. Delegating This comes back to having the right team in place. If you trust your team, you can delegate specific complex tasks to them without spending all your time on every issue. Peter Lohmann, CEO of RL Property Management, shared that he keeps a delegation cheat sheet printed out at his desk. The steps to successfully delegating are: Outline the vision - “Comannder’s Intent.” Share resources. Describe your definition of done. Give a deadline or interval. Explain how and when they should keep you updated. Having paperwork to back your arguments Ensuring you have documentation of each issue with the resident is critical. Documenting interactions along the way helps protect you and your team. Setting and maintaining expectations Again, professional PMs know that setting and maintaining expectations is one of the top priorities for a happy and successful resident relationship. Knowing that today’s residents expect a certain level of convenience can put professional PMs ahead of the game. Building a Resident Experience Strategy with Second Nature We’ve only scratched the surface of resident experience management and the innovative and exciting ways we’ve seen property managers change the game in that space. The next step might be to explore our Resident Benefits Package and why property managers love it. Or, if you’d like to learn more about property management trends for 2023 – and the changing state of resident experience – you can download our free State of Resident Experience Report. The in-depth report includes advice and insights from some of the most innovative property managers in the biz, data on resident expectations, and key trends for 2023.

Calendar icon May 18, 2023

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Pricing Resident Benefits Packages Mistakes

The Resident Benefits Package (RBP) is one of the leading strategies in SFR property management today. It helps drive resident retention and satisfaction, increase profits for the property investor, and build better property management teams and workflows. A similar product is the Investor Benefits Package (IBP) which also drives value for residents, property managers, and investors. But there's one issue with RBPs and IPBs that many property managers get tripped up on: pricing. How do you choose how to charge for your Resident Benefits Package? How do you ensure you aren't lowballing yourself or pricing yourself out of the market? How do you market it to your residents and investors? How do you ensure a smooth rollout? It's not as complicated as you think. Andrew Smallwood of Second Nature breaks down the best way to price an RBP by sharing some simple insights most Property Managers may not have even considered. ‍ ‍ TRANSCRIPT Andrew Smallwood: Hello professional property managers. Andrew Smallwood here. And I just wanted to record a quick video because there's a common mistake being made and it's a painful mistake, it's a totally avoidable painful mistake, totally preventable, as it relates to pricing resident benefits packages. I'm going to use my other camera here just to draw out what I'm talking about here so that it's easy to see and understand. So here's the thing with resident benefit package pricing. There's basically two ways to go about pricing, and you know what I will show you is what we believe is the wrong way and what we believe is the best way. Now, the wrong way looks something like this. It's adding up the price of your various services that you use. Let's just say this continues on down the line and you've got, I don't know, $15 worth of stuff in your benefit package. And what a property manager says at this point is, "Hey, the margin that I want to make is 25%." And so they say, "I'm going to charge $20 to the resident so that I can make $5, which hits my margin target above my cost." And that's kind of the model. They're starting from what we would call a cost-built price. A cost-built price. I would argue that that's the wrong way to go about it because this is exactly what property owners do who say, "Hey, I've got a mortgage that's $1,000 a month, and I'm just going to say another $100 of expenses. I'm budgeting planning, blah, blah, blah, blah, blah. So I've got this $1,100 cost base and I'd like to be cash flowing $900 a month, and so I'm going to charge $2,000 in rent." Now, as crazy as today's market is, in SFR (single-family rentals), maybe they could get someone to go for that. But if the market is saying, "Hey, really the rent that you're going to get on that kind of home is $1,400," well listen, you can still be cash flowing, but it's not going to be the same. There might also be an investor who had it flipped the other way around. They may be saying, "Gosh, if I could just make a couple hundred bucks in cash flow, that would be amazing, because most people can't get that." But the reality is they could rent it for much more. And this is where you as the professional who has the expertise of what's going on in the market, you can come at things from a different place and you can build it from, "Hey, here's the market value. Here's what the market values this at today." And the way that works within RBP is you need an expert in a resident benefits package who also knows the market and what professional property managers are charging for the mix and services. That's something that Second Nature does. And ultimately you could say, "Hey, if you were piecing all these items together on your own as a resident you'd be paying $45 a month, but we're only going to charge you $29 a month." In certain markets that might be a price. So that's a great savings for the resident. And the pricing to the property manager might be $15.50 for the various services that are included. And so all of a sudden you've got this nice spread of $13.50, whereas somebody might have been undervaluing that at $5, or they might have been overvaluing it and saying, I just want to make 100% margin. Well, everyone would love to make 100% margin. But it's not the cost that determines the price. If you do that, you're going to get tremendous tenant pushback or you're going to be undervaluing the service that you're delivering. So building the market value, there's really a couple of keys of what goes into it. What's the mix of products that you have, the mix of services? How are you marketing and positioning it? And then finally, the service delivery: how are you delivering on those services in such a way that creates value? If you can maximize the mix of products that you have, the marketing and positioning and the delivery of those services, then you can maximize ultimately the market value of your RBP and end up with a great result. And create what we call as a triple win where residents are getting a great deal, property owners are seeing their assets protected and better retention and results, and you, the property manager and your team, are getting a great result as well. But you got to avoid this pricing trap of going from a place of cost and then arbitrarily choosing a margin that you'd like to make, because you may be undervaluing or overvaluing ultimately what the market will pay. If you'd like, Second Nature can help with this, whether you work with us or not. If you want to talk to somebody on the Second Nature team about what we're seeing for pricing in the market, what's working, what's the mix of products that property managers are using in your area and why? And ultimately, class A, B, C, your different portfolio mix, what's going to work across your portfolio and how you need to structure and deploy it? We can speak from a place of experience having helped over 1,000 companies do this, and if not in your area, then we can work with you to help you figure it out from a place of expertise. So, listen, whether you reach out to us or not, please spread the word about this so that people are thinking about it the right way and coming from a market value approach and not a cost-based approach. All right. I'm signing off. Just a quick video. Hope you guys enjoy it. Leave your feedback, I'd love to see a comment or email me. Let me know what you think of this, if you want us to do more videos like this. Thanks.

Calendar icon May 18, 2023

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What is A Triple Win and How Do I Achieve One?

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

Calendar icon May 18, 2023

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Don’t Fear Pushback When Implementing An RBP

Pushback from residents and investors is a common fear when rolling out a resident benefits package, but there is no need to fear. ‍ With resident benefits packages and investor benefits packages being still a relatively new concept in property management, it’s understandable to have some concerns about implementing them. The chief among these is typically resident pushback, which tracks logically with the concept “people don’t like being charged for stuff.” Fearing pushback or a negative response when adding costs to a resident is understandable, but with RBP by Second Nature, pushback is rarely observed in practice. Value Creation Reduces Pushback ‍1 out of 80 residents objected to West USA's RBP rollout Second Nature Head of Sales Bob Hansen, during a workshop at NARPM’s national conference in Kansas City, touched on how infrequently his clients experience pushback during rollout. “For those of you that are a little hesitant about rolling it out or unsure. I recall Director of Property Management at West USA Realty Dave Pruitt talked about rolling out his Resident Benefits Package on a podcast. He rolled it out to people real quick and I think of 80 people, one person pushed back.” That one person did not renew their lease as a result, but Pruitt filled the property with a willing renter a day after and never looked back. Resident pushback proves to be minimal because the programs you’re implementing are creating value. People generally don’t mind paying for things they deem worth the money. Thus, a big key to a successful rollout is making sure what you’re providing is a value add for the resident. Revolution Rental Management CEO Todd Ortscheid elaborated on the concept further, saying “If you're providing a tangible benefit to someone, or even sometimes an intangible benefit, you know, we talked about 24/7 maintenance hotlines, and those sorts of things. These are all real benefits that people aren't able to get from someone else, and they're willing to pay for it.” Communication Is Key Effectively communicating these benefits also plays a big role in an effective and well-received rollout. There is a saying in marketing that “perception equals reality.” Really all that means is that the consumer’s perception of your product or service is what matters far more than the actual characteristics of it. Now, ideally, those things match, but poor marketing efforts and bad PR can create a negative perception of a worthwhile offering. For example, a package of benefits for a renter that adds value which exceeds what the renter pays for it is the reality of a resident benefits package, but the perception could be “more stuff I have to pay for.” This is why communication is key. Being transparent about what these programs are and why they’re helpful can help the perception match the reality, making onboarding much easier. The same is true for your clients, who may have fears of the additional costs putting off potential residents. These programs protect their asset and create a positive experience that actually helps retain residents. It quite literally makes them more money. The benefits dramatically outweigh the costs and the value created for both resident and investor is undeniable. Communicating this is key. Long-time PM Jennifer Stoops, who is the Vice President of Corporate Development at PURE Property Management, notes her decisive action at rollout that resulted in very little negative perception and pushback on her company’s RBP. “So we communicate with everybody first. We like to send information out to all our clients who are really excited about just letting them know what's going on. We updated our website, we updated right before you apply on our application, we updated any FAQs, everywhere that we had any information about applying, leasing from us anything at all, it was all put there. And we made a big deal out of it, because it was a value add.” The only real concern a property manager should have when considering rolling out a resident benefits package is what could happen if they don’t. In due time, a resident benefits package will be standard across an industry that is increasingly focused on resident retention. “So if tenants are moving around one management company to another, and you're the company who doesn't offer this, that's actually the thing that you should be afraid of, you know, thinking about being afraid of benefit packages, you don't want to be the one company who's not offering these things that are now becoming standard," says Ortscheid. "If that's what tenants are expecting to see, you know, all three, that's actually a problem.”

Calendar icon May 18, 2023

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

Is a mandatory resident benefits package (RBP) rollout right for your property management company? Let’s say you’ve set up a resident benefits package and you’re ready to start rolling this thing out, but you’re not sure whether to make it mandatory for all of your properties or give residents the option to participate in it. A mandatory rollout would result in more doors adopting it, but you fear the possibility of dissatisfied residents being forced to participate in it. Property managers also have to decide this when considering investor benefits packages (IBP). It’s a tough call, one that Second Nature’s Head of Sales and former property manager Bob Hansen is here to weigh in on. Key Learning Objectives: Why mandatory resident benefits packages work How to roll out a mandatory RBP Benefits of a mandatory RBP Challenges of an optional RBP What other property management companies are doing Benefits of Mandatory RBP Rollout Hansen and the Second Nature team recommend mandatory rollouts, and they do so for pretty simple reasons. Hansen is quick to note that while “mandatory” may scare some property managers, it shouldn't. Here are some of the benefits he has seen. You’re giving residents something they want “You have to look at the value that a resident benefits package brings to the investor and the resident, not just you as the property manager,” says Hansen. Hansen hits on a key point here about resident benefits packages: They’re desirable to the residents. RBPs are crafted specifically to address problems that residents want resolved. THey make life easier, and give residents incredible value, like credit building, identity protection, rewards, and more. Making these benefits clear to the resident allows an RBP to be adopted easier. Sure, there will be the occasional individual who is an exception, but very rarely is any pushback experienced on mandatory rollouts because the programs are creating value for the residents. Put simply, residents consider an RBP worth the increase in monthly cost. Mandatory rollouts make things easier on everyone “I think conceptually in [a property manager’s] mind, they think it’s not going to work out. But then when they do roll it out, they’re quite surprised at how easy it was,” Hansen says. Once you can internalize the idea that adding a Resident Benefits Package is not an inconvenience in the eyes of nearly every resident, it becomes an incredibly simple decision to install one at each home you manage without worrying about negative perception of the addition. The cost to the business is simply not what you may fear it to be, and making it mandatory allows you to roll it out to the maximum number of doors and the whole process is much more streamlined and easy to manage. You’ll accomplish it more quickly with a mandatory rollout, and see the benefits starting rolling in faster. Investors will have happier residents, and you’ll have better results. Residents rarely give pushback Hansen touched on how little headache resident pushback to mandatory rollout has actually created for Second Nature clients. “For those of you that are a little hesitant about rolling it out or unsure: I recall Dave Pruitt, Director of Property Management at West USA Realty, talked about rolling out his Resident Benefits Package on a podcast. He rolled it out to people real quick and I think of 80 people, one person pushed back.” That one person did not renew their lease as a result, but Pruitt filled the property with a willing renter a day after and never looked back. Challenges of Optional RBP Rollout The primary challenge of an optional RBP is that optional rollouts create unnecessary headaches. Exceptions leads to workarounds which lead to mistakes. “From running operations in a large management company myself in the past, if you’re making exceptions, you’re bound to mess something up. If you’re locking it in as mandatory, it’s a lot easier to manage from the property management side,” says Hansen. Constantly accounting for what services are on and what services are off for which properties creates a load of extra work – that frankly does not result in a payoff worth the lift. Generally the perceived benefit of making your rollout optional is that residents will be happier if given a choice. But rarely if ever do property managers see satisfaction go up when they give residents an option – and it can even go down. In the end, Hansen recommends sticking to a mandatory rollout. Residents end up happier, investors see better retention, and your team gets less headaches. If you’re looking to learn more about how to ensure a smooth RBP rollout, check out our interview on that exact topic.

Calendar icon May 18, 2023

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