Triple Win Property Management Blog

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 is key to defining and communicating your goals to potential clients and investors. It also requires deep insight into what residents want to experience. You may be new to the property management industry, have been managing properties for years and are ready to start your own business, or own a property management company but are looking for greater investment. Whatever the case, 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 What is a property management business plan? A property management business plan is an overview of your company's services, go-to-market strategy, financial plan, and leadership. It provides details on your property management company and how you intend to operate it. Your business plan should be thorough enough that readers can clearly see how you'll run a successful property management business. It should illustrate that you have a comprehensive understanding of the industry and your position in it, as well as your future growth goals. Why do you need a property management business plan? A property management business plan provides a clear view of what you need to do to make your business successful. The process of creating a business plan forces you to truly evaluate your standing as a company, including factors like cash flow, staffing, and sales strategy. Your business plan also provides a roadmap for success. It outlines what steps you need to take to be successful. Whether you're considering large financial projects or incremental business improvements, your business plan helps you better understand how to execute. It also helps you position your company within the property management industry. It can guide your ability to stand out compared to other property management companies and acquire new investors to manage. What to know before creating a property management business plan For entrepreneurs, planning is the key to success. Here’s what you need to get clear at the outset. State laws governing property management business 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. How to create a successful property management business plan Peter Lohmann, CEO of RL Property Management, lays out three critical steps for residential property managers looking to crystalize a successful business plan: Identify your ideal clients. Articulate your unique value proposition for those clients. Go out and find leads. Who are your ideal 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.” Articulate your unique value to those clients The next step is to identify your unique value proposition. There are tons of other 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. Define your business model Your business model, which is a core piece of a business plan, outlines your cost structure and revenue streams. Put simple, it's how you plan to generate profits. Many property management companies select from a few different business models and fee structures. For example, full-service, fee-based, and hybrid models are all popular. This is where you should decide whether you want to charge a flat fee, charge a portion of rent, or some combination. Consider how you want to charge for listing and leasing services, big-ticket maintenance items, and more. What should a property management business plan include? 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, and 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) The market analysis 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 to property management associations as well. This section should also discuss the pricing strategy for these services. Marketing plan and sales strategy Your go-to-market section should describe the company's marketing 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. Related: 10 Property Management Goals to Set for the Year (with examples) 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? You should also 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. Highlight property management and other real estate experience. 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 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, this section includes: Expansion plans Strategic alliances Technology upgrades Emerging market trends Property management business plan free template Follow this checklist or else download our free PMC business plan template to customize to your business. 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: Increase retention with an RBP At Second Nature, we work with property managers around the country to develop better resident experiences that generate more value for their clients and their companies. A Resident Benefits Package, or RBP, helps property managers at every stage of their company’s growth. Each product in this package delivers a service that residents want and sets your PMC apart. Our goal is to help make running a successful property management business as easy as second nature. Related: Property Management Startup Checklist

January 29, 2025

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What to Include in Your Rental Listing Description: Examples & Template

Effective rental listings attract quality applicants, minimize vacancy time, and set the tone for your residents’ experience. That’s why it’s worth taking the time to craft a compelling rental listing with attention to detail, engaging descriptions, and clear information. In today’s blog, we’ll focus on helping property managers create winning listings. Specifically, we’ll discuss: What you need before you get started What rental listings should include How to write rental listing titles, descriptions, and FAQs What to do before posting your rental listing Rental listing overview A rental listing is the first interaction many residents have with their potential new home, so it needs to entice people and welcome them in. These listings typically appear on renting platforms like Apartments.com, Zillow, and Realtor.com, showcasing essential details, images, and descriptions that help potential residents quickly identify whether a property suits their needs. A top-notch listing typically includes: A compelling headline: Highlight a unique feature like "private balcony" or "near downtown" to get the prospective resident interested. High-quality photos: Clean, well-lit pictures of both interior and exterior spaces that showcase the entire rental property. Essential details: Number of bedrooms and bathrooms, square footage, total monthly rent (including base rent and any recurring mandatory charges), pet policies, and amenities. For example, compare these headlines: "2BR Apartment in Midtown" "$1,800 per month– 2 Bed/1 Bath Apartment in Midtown with In-Unit Laundry" The second headline not only gives more details but also draws attention to a key feature. Well-written listings also set expectations by including restrictions (e.g., "no smoking" or "no pets") and highlighting proximity to schools, parks, or public transit. This saves time by weeding out residents who wouldn’t be interested and minimizes the number of questions you have to answer later. What the rental listing should include A strong rental listing provides all the information a prospective resident needs to make an informed decision. Here’s what to include: Interior details: Number of bedrooms and bathrooms, square footage, and specific features like hardwood floors or vaulted ceilings. Common spaces: Shared amenities such as a fitness center, pool, or laundry facilities. Exterior spaces: Whether the property has a yard, patio, or balcony. Restrictions, such as pets, smoking, occupancy limits, and specific leasing conditions. Neighborhood highlights: Nearby transit options, grocery stores, restaurants, schools, and anything else relevant for residents. Application process: Requirements for background and credit checks, income restrictions, and how to apply. Costs: Monthly base rent, security deposit, application fee, Resident Benefits Package fee, and other mandatory charges (e.g., pet fees or parking fees). A listing that answers common questions upfront not only attracts serious inquiries but also positions the property as professionally managed, giving prospective residents more confidence in applying. Before you write your rental listing Before you start, you’ll want to gather all the information you need to create that captivating rental listing description. (Don’t worry–you can use our checklist below to get started!) 1. Property details: Include dimensions, features, and any recent updates or renovations. 2. Photos: Take high-quality images. Ensure the space is clean and well-lit, and avoid common mistakes like leaving toilet seats up or capturing clutter. Highlight the space’s uniqueness and look to other professional listings for inspiration. James Barrett, Co-Founder of Tenant Turner, and a property management expert, said, “You don’t need to have the most expensive digital camera and the greatest lenses. With modern phones, you can get the right quality. And if you're in a market where you're getting a lot of people from out of town, virtual tours [recorded with your smartphone] can be effective." 3. Optional extras: Consider including a virtual tour or 3D models, especially for residents relocating from another city. Virtual tours can help prospective residents imagine themselves in the space and better understand how a home flows from one room to the next. If you’re interested in these elevated listing experiences, we recommend checking out Plan-O-Matic. Rental listing information checklist The checklist below will ensure that your rental property description a) is comprehensive and b) appeals to potential tenants by addressing all key aspects of the property. Address and Property Type Property address (including city and zip code) Rental type: single-family home, apartment, condo, townhome, or other Rental Property Details Number of bedrooms Number of bathrooms Total square footage (including both interior and exterior, if applicable) Appliances provided (e.g., refrigerator, stove, microwave, washer/dryer) Special features (e.g., hardwood floors, vaulted ceilings, natural light, walk-in closets, fireplaces, etc) Lease term: specify duration (e.g., month-to-month, 6 months, 1 year) Parking details (on-street, driveway, garage) Application Process Background check required? (Yes/No) Credit check required? (Yes/No) Income requirements (e.g., minimum 3x rent) Documentation required (e.g., proof of income, references, identification). Consent required for checks (include state-specific legal requirements, if applicable) Costs Total monthly rent amount (defined as base rent plus any recurring mandatory charges). Security deposit amount (include explanation if it’s first and last month’s rent, etc.) Application fee (if applicable) Additional costs (Note: Any recurring mandatory charges should be separately itemized with descriptive language explaining the purpose of each mandatory fee): Resident benefits package Parking fee Pet fee or deposit (including whether the deposit is refundable or not) Utilities: Included utilities (e.g., water, sewer, trash collection, electricity, heating, cooling) Resident’s responsibility (list any excluded utilities). Pet Policy Pets allowed? (Yes/No) Limitations (e.g., specific breeds, size/weight restrictions, number of pets) Specifics (e.g., cats only, dogs only, exotic pets excluded) Amenities Shared amenities (e.g., fitness center, pool, clubhouse, laundry room) Property-specific amenities (e.g., private patio, fenced yard, garage) Community outdoor spaces (e.g., park, basketball court, garden) On-site services (e.g., 24-hour maintenance, package lockers, online payment portal) Location Highlights Nearby public transportation options (list closest stops/stations) Proximity to key commuter roads and highways Proximity to key locations: Shopping centers Grocery stores Dining and entertainment venues Pharmacies Nearby schools (mention top-rated ones, if applicable) Parks or recreational areas in the vicinity Some property listing platforms might require an FAQ section at the bottom of the rental listing with additional information that the prospective resident can review quickly to get an overview of the rental property. Many of the details listed in this checklist will also be included in the FAQ section, so be sure to have this information on hand. FAQs reduce back-and-forth communication, streamlining the process. Writing the title for the rental listing Your headline is your hook. Make it descriptive, concise, and attention-grabbing. Use this template for inspiration: [Rent Price] – [# Beds / # Baths] [Property Type] in [Neighborhood] with [Feature]. Examples: $1,750 per month– 1 Bed/1 Bath Apartment in Uptown with Floor-to-Ceiling Windows and Stunning Views $2,200 per month– 3 Bed/2 Bath Home in Old Town with Private Garden The combination of price, features, and location provides a degree of assurance that the right audience will click through and respond to the call to action. Writing the description for the rental listing Keep your rental description short but impactful, and use vivid language to highlight the property’s best features and selling points. Avoid generic phrases. Instead, provide specifics that create a mental image of living there. Also, keep the description to about four to six sentences (maximum eight sentences). Use this formula: "Looking for [adjective, adjective] living? Discover this [# of beds]-bedroom, [# of baths]-bathroom [type of house] in [neighborhood/city], ready for move-in on [date available]. Featuring [unique feature, such as 'an open-concept kitchen,' 'a spacious backyard,' or 'stunning city views'] and [additional amenities, such as 'on-site parking' or 'in-unit laundry']. Conveniently located near [landmark, public transportation, shops, or schools]. [Accepts/Does not accept] pets. Total Rent: [rent-amount]/month (which includes base rent plus [description of recurring mandatory fees]). Security deposit: [number of months deposit] months. Utilities: [list of utilities included or specify resident responsibility]. Apply now: [application process details, such as an online link or email address], or contact [your name] at [your phone number] to schedule a viewing." Example: Bright and spacious 2-bedroom apartment in the heart of Downtown. Enjoy modern stainless-steel appliances, in-unit laundry, and stunning city views from your living room. Just steps away from cafes, public transit, and parks. Pet-friendly. Total rent is $2,000/month (which includes base rent plus [utilities, RBP, etc.]) with a $1,000 security deposit. When mentioning restrictions or requirements, be upfront. This prevents mismatched expectations, saving time for everyone involved. Pro-tip: Something worth noting is that prospective residents may be put off by properties that have been on the market for a while. It may raise questions about why it hasn’t been leased yet. For that reason, we recommend updating your listing description to simply say, “ready for move-in today” once the property is available, rather than keeping a specific listing date from the past. Including Resident Benefits Package language in the description When listing a rental property that includes a Resident Benefits Package, it’s important to be transparent about both the price of the package and what benefits are included. This can help set clear expectations upfront, and help attract potential residents who are interested in the benefits you’re offering. Here’s an example of how you can present your Resident Benefits Package in a listing: At [Company Name], we strive to provide an experience that is cost-effective and convenient. That’s why we provide a Resident Benefits Package (RBP) to address common headaches for our renters. The total monthly rent price of $[total rent price]* includes base rent plus our RBP which includes our renter’s insurance program, on-demand pest control services, air filter delivery, utility concierge, rent reporting services for credit building and more, automatically added to every property as a required program. More details upon application. *If you provide your own insurance policy, the resident benefits package cost will be reduced by the amount of the insurance premium billed by Second Nature Insurance Services (NPN No. 20224621). Before you post your rental listing It’s a best practice to conduct a final check before posting your listing: Proofread: Typos and unclear details can affect credibility, so you’ll want to make sure you review the copy and run a spelling and grammar check. Comply with Fair Housing laws: Avoid discriminatory language. Review photos: Make sure your listing photos are uploaded correctly. Review the photos to make sure there are no duplicates, the photos aren’t blurry or rotated, and that all the photos accurately represent the space. Review costs: Make sure you’ve mentioned screening costs, such as the credit and background check, as well as any other associated costs. Verify platform rules: Ensure your listing adheres to site guidelines. Once the listing is posted, track how residents find your property—whether through a listing site, social media, or referrals. This insight will help refine your strategy for future listings. Learn more: How to Screen Potential Tenants: Tips for Property Managers What is Security Deposit Insurance? Pros and Cons Pet Policy for Renters: Best Practices for Property Managers Great example of a rental listing Let’s take a look at an example of a great rental listing and what makes it stand out. Why it’s a great listing: Simple, high-quality photography showing the exterior of the unit Clear details of beds, baths, square footage, move-in date, and full address Transparent pricing including both base rent and total monthly cost Why it’s a great listing: Highly transparent, itemized cost breakdown Clear terms and conditions regarding utilities, pet fees, and insurance Highlights key features like fireplace, fenced yard, and pet friendliness Why it’s a great listing: Once again, it highlights key features, going into more detail about them Emphasizes flexibility in lease terms Summarizes the Resident Benefits Package, such as what’s included and that it’s a required program Final thoughts Creating a rental listing that stands out requires attention to detail and a focus on providing clear, engaging, and accurate information. A well-crafted listing not only attracts the right residents but also sets the tone for a positive renting experience. One often overlooked tip is to ask prospective residents how they discovered your listing. This can help you understand which platforms yield the best results, allowing you to refine your approach over time. For additional guidance and resources, check out these helpful tools: 9 Ways to Improve Your Resident Experience Property Management Rental Inspection Checklist [Free Template] To gain deeper insights into crafting rental listings that convert, watch the on-demand webinar Listing to Leased. This session explores expert tips for creating professional, appealing listings. Finally, learn how you can elevate the living experience for your residents with Second Nature’s Resident Benefits Package. It's a simple way to enhance resident satisfaction and streamline property management.

January 16, 2025

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Why Rent Reporting Services Are a Triple Win for Investors, Residents, & Property Managers

All kinds of big consumer purchases are reported to credit bureaus—car loans, credit cards, even furniture financing—but for many people, their largest and most consistent monthly expense simply doesn’t make the cut: rent. Rent reporting services are transforming the property management landscape, creating a Triple Win of benefits for residents, property managers, and investors alike. These programs bridge a critical gap in the financial system by turning rent payments into a tool for building credit. “It’s kind of crazy that someone’s largest monthly expense—their housing payment—is one of the only payments that isn’t on their credit report,” our Chief Customer Officer Andrew Smallwood said in a recent interview. “It’s a really significant payment on a monthly basis.” Below, we’ll take a closer look at the concept of rent reporting and its benefits: For residents: Empowering financial growth through improved credit scores. For property managers: Enhancing tenant satisfaction while reducing administrative hassle for providers. For investors and owners: Increasing tenant stability and ensuring consistent cash flow. Note: At Second Nature, we prefer the term “residents” over “tenants” to emphasize the relationship aspect of property management. However, legal contexts may still require “tenant” for clarity. What exactly is rent reporting? Rent reporting is the process of submitting rental payment data to credit bureaus (TransUnion, Equifax, and Experian) so that rent payment history becomes part of a resident’s credit history. This creates a built-in reward system providing additional incentives to pay rent on time, helping residents build credit and, in turn, access better financial opportunities. For property managers, offering this service can streamline operations and enhance resident satisfaction by aligning their financial goals with reliable rent payments. There are two primary ways rent reporting works: Property manager-led reporting: Property managers can use a rent reporting service to submit rental payments on behalf of their residents, ensuring accuracy and consistency. Resident-led reporting: Residents can sign up for a rent reporting service themselves, which tracks their payments and reports them directly to the credit bureaus. Once payments are reported, they’re factored into the resident’s credit score. On-time payments reflect positively, potentially boosting their score. If missed or incomplete payments are reported, they may have a negative impact. Typically, a new tradeline appears on a resident’s credit report within 90 days of starting the service. Rent reporting services: A Triple Win Residents Smallwood reflected that a member of the Second Nature team rents a home and gets credit building services through their Resident Benefits Package. This individual tracked the first 16 months of renting the property. “What he saw was his score increased by 72 points over that time period, which, to put that in perspective, getting an increase of 20 to 40 points is likely going to move somebody up one to two tiers. A 70-point score is likely to boost somebody up probably two tiers, maybe even three, but what’s the impact of that? It makes life outside of rent much more affordable.” Rent reporting services give residents a significant advantage by transforming what was once an unrecognized expense into a credit-building opportunity. In turn, an improved credit history can open doors to new financial opportunities, such as better loan and credit card eligibility, improved interest rates, and even greater accessibility to future housing. For example, residents who report rent payments see an average 29% increase in their credit scores, which could mean the difference between qualifying for a mortgage, or securing lower interest rates from lenders on a car loan or credit card. This kind of improvement can also lead to significant annual savings on car payments, credit card interest, and future mortgage payments. When it comes to cost, residents who self-report typically pay a small monthly fee for these services, while property managers offering the service as part of a benefits package often include it in their rent agreement. In either case, the investment is minimal compared to the financial benefits of improved credit. Of course, it’s important to note that credit scores are influenced by multiple factors, and while rent reporting can be a powerful tool, it’s not a guaranteed fix-all—residents must also maintain good financial habits across all areas of their credit history to see meaningful, long-term improvements. Smallwood reflected on the impact of rent reporting services, saying, “When you think about the median home price of $400,000 or more and the mortgage somebody would be taking on that to be qualifying at one to two tiers… [they benefit from a] lower interest rate because of [their] credit score. The impact of that is going to be tens of thousands, maybe even a hundred thousand dollars or more over the lifetime of somebody’s mortgage product. “That’s a huge life-changing type of financial impact. It also means on their auto financing, that they’re going to be getting that at a lower rate. It also means their credit card, if there’s a balance, they're going to be paying a lower point of interest right on that credit card. It may mean the difference between even qualifying for a mortgage in the first place or qualifying for that auto loan that they need to get to work in the first place. And so, somebody’s credit score can really have a huge impact on their financial life, and experience as a resident getting the benefit of their largest monthly contribution towards building their score can make a huge difference.” Property managers Rent reporting services offer property managers a cost-effective solution to streamline operations, enhance tenant relationships, and reduce financial risk. In fact, a 2021 study from TransUnion found that 73% of renters would be more likely to make on-time payments if they knew their payment history was being reported to the bureaus. Positive reporting: On-time payments reported to credit bureaus can have a significant impact on residents building credit, incentivizing timely payments, and reducing the likelihood of delinquencies. Tenant screening: Rent reporting creates a transparent rental history and credit profile that future landlords can access, offering insights into a tenant’s payment behavior—both positive and negative. Marketability: Properties offering rent reporting attract tenants with financial goals aligned toward building good credit. These financially responsible tenants are also more likely to pay on time, reducing overall risk. Additional amenity: Including rent reporting as part of a benefits package positions property managers as forward-thinking and resident-focused, helping to retain existing tenants while drawing in new ones. Rent reporting services can even create opportunities for ancillary revenue streams—depending on the program structure. Investors and owners For investors and property owners, rent reporting services provide an invaluable level of financial stability and predictability. By incentivizing on-time rent payments, these services reduce the likelihood of delinquency, ensuring a steady stream of income. Owners can rest easier knowing their tenants are more likely to stay in their homes longer, minimizing costly turnovers and vacancies. Additionally, rent reporting aligns tenant interests with responsible financial behavior, which translates to fewer risks for property owners. Stable, long-term tenants not only protect the value of the investment property but also contribute to overall financial peace of mind. Final thoughts Rent reporting services can represent a transformative opportunity for residents, property managers, and investors. By integrating rent payments into credit reporting, these services empower residents to build better credit, provide property managers with streamlined tools to enhance tenant satisfaction and offer investors the stability of longer-term, financially responsible tenants. Interested in exploring what these services can do for your residents? Second Nature’s Resident Benefits Package makes implementing rent reporting effortless. With features like credit reporting to all three major credit bureaus, 24 months of back-reporting on past payments, and an automated, fully managed process, Second Nature ensures you can maximize the value of your property management strategy while creating meaningful benefits for residents. To learn more about how rent reporting and the entire RBP can create a Triple Win for your company, join our upcoming RBP Workshop.

January 2, 2025

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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.” Average property management fees Different property management companies structure their fees in different ways, so it’s important to familiarize yourself with the different options and determine what works best for you. First, some property management companies will charge an initial setup fee. Not all companies charge setup fees, and those that do typically keep the fee fairly modest. A 2022 survey of 80 metro areas by iPropertyManagement found that the average setup fee was just $185.24. Next, leasing fees are extremely common. Management companies will typically charge a fee for advertising a unit, collecting applications, screening tenants, and signing leases. Also known as tenant placement services, this is the process of filling a unit so that you can get back to collecting rent, and it’s typically charged as a percentage of rent. According to iPropertyManagement’s survey, the average placement fee is 70.6% of one month’s rent. This is higher than a lease renewal fee, which averages $211.92, according to the survey. Finally, companies will almost always charge a standard management fee. This is the bulk of the expense for most owners, and it may be charged as a flat fee or as a percentage of the rent. The average fee, according to the survey, is 8.49% of rent, but there was a large range in responses—from 3.75% to 14%. It’s also important to be clear in your contract whether your fee is based on rent due or rent collected, so that there’s no dispute if a resident fails to pay. Some companies may also charge other fees, like inspection fees, eviction fees, termination fees, or maintenance reserves. 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.” You can also consider adding offerings like Group Rate Internet as a way to increase growth while delivering benefits that your residents want. 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.

December 16, 2024

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How to Choose Moving Concierge Services: Personal Touch vs. Automated

Moving is a complex process that can feel overwhelming, from organizing packing to coordinating utility setup. For many, moving concierge services offer a much-needed helping hand. But in a world leaning heavily toward automation, does the personal touch still hold value? In today’s post we’ll explore: What moving concierge services are How moving concierge services work Typical cost of moving concierge services Two approaches: personal touch vs. automation The verdict What Are Moving Concierge Services? Moving concierge services, or relocation concierge services, are designed to simplify the resident's experience of moving to a new location. Relocation services often cover everything related to setting up a new space, primarily focusing on utilities such as electricity, gas, water, high-speed internet, and home security systems. The idea is to provide a seamless and stress-free transition for residents, taking the worry out of the moving process. Imagine stepping into a new home with all utilities up and running, with none of the hassles of making multiple calls to various providers. That’s the promise of a moving concierge service. Some even extend to help with additional tasks like finding local service providers, scheduling movers, and more. These services can work in different ways. Some are complimentary offerings that come as part of a resident benefit package provided by property managers, while others might require a fee if handled separately. A complimentary resident move-in concierge service typically partners with utility providers to arrange everything on the resident's behalf. How moving concierge services work Different platforms offer varying methods for assisting residents with specific needs in their move to a new house. In many cases, the service involves scheduling a call or using an online portal to set up utilities. When included in a Resident Benefits Package, the property manager works directly with a concierge service provider to ensure utilities and essential services are ready by move-in day. (Note that Resident Benefits Packages typically include this service.) Residents are often sent a personalized link or receive a phone call, allowing them to schedule a session to handle their utility setup. This process may include collecting information from residents, like current utility account numbers, to streamline the transition to the new address. Cost of concierge moving services without a resident benefits package Without the project management support of a moving concierge service, residents may find themselves spending several hours managing utility setups on their own, across a number of days or weeks. The process can include contacting each provider individually, scheduling installation or activation times, and sometimes dealing with long-distance calls, as well as unexpected last-minute fees, even in cases of local moves. The cost can vary widely depending on location, the number of services needed, and the providers involved. For some, the time and stress alone can feel like a hefty price. Moving concierge srvices offered through Resident Benefits Packages are typically included as part of the package, saving residents both time and money. Two Approaches: Personal Touch vs. Automation When selecting a moving concierge service, there are two primary paths: a personal touch approach or a more automated process. Let’s take a closer look at two high-quality services in this field: Citizens Home Solutions (CHS) and Utility Profit. Citizens Home Solutions (CHS) Citizens Home Solutions (CHS) offers a personalized experience, aiming to make the moving process as smooth as possible. CHS originally started as a phone-assisted service, focusing on creating a higher level of personal interaction. Their survey data indicated that 59% of residents preferred phone calls over completing online forms, underscoring the desire for human interaction in the moving process. Through its partnerships with providers, CHS seamlessly handles the setup of utilities like electricity, gas, water, high-speed internet, and security systems—all free for the resident (as part of the Resident Benefits Package). Their approach involves reaching out to residents through calls or digital means, offering a choice between speaking with a representative or completing an assisted digital workflow. This flexibility ensures that residents who value a personal touch can have it, while those who prefer self-service still have that option. The process with CHS involves receiving move-out reports in advance, allowing them to research and prepare for the resident’s new utility setup. When it’s time to set up utilities, residents receive a personalized link through email or SMS to a mobile-friendly webpage. From there, they can choose to schedule a call or proceed with the digital workflow. CHS then guides them through the setup process, including account management, so everything is ready for move-in day. With over 200,000 residents served, CHS has proven expertise and positions itself as a one-stop solution for utility needs. Their experience shows in their seamless process and attention to the individual needs of each resident. You can call them or use this form to schedule an appointment. Utility Profit Utility Profit takes a different approach by automating most of the process. As a newer company, they offer a streamlined service that directs residents to set up utilities on their own through a dedicated webpage. This method is designed for those who prefer handling things directly, with less involvement from a third party. Residents can navigate the setup process using Utility Profit’s online platform, entering their information, selecting utilities, and submitting their account numbers. While this method can be efficient for tech-savvy individuals who want to manage things independently, it may lack the personal guidance some residents find comforting during a stressful move. The simplicity of Utility Profit’s system can be attractive to those who desire more control over the process. However, for individuals who are not as comfortable navigating these tasks solo, this option may seem daunting. The verdict Both personal touch and automated services have their merits. However, in the realm of moving, where stress and uncertainty often abound, the comfort of having a human on the other end of the line can make a significant difference. Citizens Home Solutions stands out because of its blend of personalized and digital options, offering residents the best of both worlds. With a track record of over 200,000 satisfied residents, CHS has honed its process to cater to individual preferences. Starting as a phone-based service, they recognized the need for a personal touch, particularly during such a life-changing event as moving. Over time, they've adapted by incorporating digital workflows for those who prefer a more hands-off approach, demonstrating a commitment to meeting diverse resident needs. In contrast, Utility Profit offers a viable solution for those who are comfortable with a more automated approach. While this might work for some, the value of CHS lies in its ability to offer guidance and support throughout the move, ensuring nothing falls through the cracks. For many, that extra level of care can transform the moving experience from a daunting task into a smooth transition. Final Thoughts Choosing the right moving concierge service depends on what you value most: personal guidance or streamlined automation. Services like Citizens Home Solutions combine the personal touch with modern digital conveniences, ensuring residents receive tailored support while also accommodating those who prefer to manage things independently. If you're looking for a service that prioritizes a seamless move with a blend of personal and automated options, CHS is worth considering. Their extensive experience and adaptable approach have helped countless residents settle into their new homes with ease. Learn more about what Citizens Home Solutions can offer for your move. For property managers interested in incorporating moving concierge services into their resident benefit package, explore Second Nature’s Resident Benefits Package benefits now.

October 10, 2024

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Property manager filling out rental inspection check list

Property Management Rental Inspection Checklist [Free Template]

There's a hero tool that stands between you and potential disputes, wear and tear issues, and even costly oversights. It's a Property Management Rental Inspection Checklist. Now, someone who isn't in property management might think, "It's just a checklist, right?" But professional property managers know that without it, everything can kind of fall apart. Throughout this article, we'll dive deep into what rental inspections are, their undeniable importance, the key items you shouldn't overlook, and – because we love making your life easier – we're gifting you a comprehensive checklist template. Stick around to have all your pressing questions answered in our FAQ section and discover how Second Nature can be your partner in acing rental inspections. What is a Rental Inspection? A rental inspection is a systematic evaluation of a rental property's condition carried out by the property manager, landlord, or a dedicated inspector. It’s not just a casual walkthrough of the premises. The inspector will thoroughly assess every nook and cranny of the property – from the foundation to the roof, from the plumbing to the electrical fittings – is thoroughly assessed. The primary goal? To ensure that the property meets all safety and maintenance standards, that the residents are complying with their lease agreements, and that potential issues are identified and addressed before they escalate into major, costly problems. Think of it as a health check-up, but for properties. It provides an objective snapshot of the property's current state and offers insights into areas that might need attention or repair. Here's an example of what a checklist might look like: Why Are Rental Inspections Important? Rental inspections play a crucial role in the property management world, and here’s why: Resident Experience: A well-maintained property is a happy home for residents. When renters see that the property management company is proactive about upkeep, it fosters a sense of value and respect. This can translate to longer tenancies, on-time rent payments, and even positive word-of-mouth referrals. (Learn more about this in our State of Resident Experience Report.) Protection of Assets: Your rental property is a significant investment on the part of your client. Regular inspections ensure it remains in top condition, preventing minor issues from escalating into costly repairs, and protecting your clients’ real estate investments. Safety Assurance: By checking everything from electrical fittings to potential structural issues, inspections make certain the property is safe for habitation. No landlord wants to be on the receiving end of lawsuits or liabilities. Lease Compliance: Regular inspections ensure that tenants are adhering to the terms of their lease, such as not making unauthorized alterations or keeping pets when they aren’t allowed. Predictive Maintenance: Rather than always being in a reactive mode, inspections help in predicting potential issues. This way, you can schedule maintenance tasks before problems arise, which can be more cost-effective in the long run. Property Value Preservation: A well-inspected and maintained property not only attracts and retains quality tenants but can also help maintain or even increase its market value over time. In essence, rental inspections aren’t just a formality; they're a pivotal tool in ensuring the long-term success of your property management endeavors and in enhancing the overall resident experience. What to Include in a Rental Inspection Checklist When you're planning a rental inspection, your approach should be methodical and thorough. As Janet Sprissler, Broker/Owner at Rent 805, puts it: “There are no optional parts of the checklist. That’s why it’s a checklist; you have to check everything off. I don’t have any nice-to-haves on my checklist because everyone is treated the same. We don’t do for one resident what we won’t do for the other.” Organizing your checklist by room or space is a practical way to ensure no corner is overlooked. For each item listed within these spaces, always include a status, such as "Good," "Requires Maintenance," or "Replaced." This helps in keeping track of the condition and any changes over time. You should also consider what type of inspection you’re conducting and may want to tweak what you include depending on where the property is in its rental cycle. Different types of inspections include: Move-In Rental Inspection: Conducted right before a resident moves in, the move-in inspection serves as a benchmark for the property's condition at the start of a lease. It helps to document the existing state of the property, from the functionality of appliances to the appearance of the interior and exterior. This documentation can be invaluable in resolving potential disputes over damages when the resident eventually moves out. Move-Out Rental Inspection: Carried out once the resident vacates, this inspection compares the property’s condition to its state during the move-in inspection. It identifies any damages or changes that have occurred during the tenancy. Based on this, you can decide what portion of the security deposit needs to be returned. Routine Rental Inspections: These are regular checks conducted during a resident’s lease period. Typically done every six to twelve months, routine inspections monitor the ongoing condition of the property. They're also a great way to catch and address issues early, as well as to ensure lease compliance. “Drive-By” Rental Inspections: These are less invasive checks where property managers drive by the property to ensure its exterior is in good shape and being maintained appropriately. This type of inspection is less about detailed checks and more about getting a general sense of the property's outward appearance and ensuring no major lease violations are visible. For single-family property managers, these inspects may be less frequent since properties are often spread out from each other geographically. As you create your rental inspection report, remember that every property is unique. While categorizing by room ensures thoroughness, it's essential to adjust and add specific items tailored to each property’s unique features and needs. And always remember, communication is key. Ensure that residents are aware of inspections, their purpose, and the schedule to foster a transparent relationship. How to Conduct Rental Inspections Given the importance of rental maintenance, it's important to conduct inspections methodically and thoroughly. We highly recommend using a detailed checklist to ensure you are covering all areas of the property. It's also critical to conduct inspections in a professional and courteous manner to maintain a positive relationship with residents. This means informing them about upcoming inspections (notice may also be required by local laws – more on that below), scheduling inspections at reasonable times, and generally minimizing disruptions to their daily routine. As indicated above, there’s also an important compliance component to rental inspections, so be sure to familiarize yourself with local housing regulations to ensure your inspections meet all legal requirements. This will help you abide by fair housing laws and avoid discriminatory practices. To protect everyone involved in the process, document inspections thoroughly and maintain accurate records. You’ll find it helpful to schedule inspections regularly, for example, on a semi-annual basis, in order to nip any maintenance issues in the bud. Semi-annual inspections should focus on the property's overall condition, including the exterior, interior, and appliances. You’ll also check for wear and tear, potential damage, and any maintenance needs. Also, ensure that safety systems, such as smoke detectors and carbon monoxide detectors, are functioning properly. Yearly inspections are an opportunity for more in-depth inspections, including a detailed examination of the roof, foundation, and HVAC system. You'll assess these for any signs of structural damage or pest infestations, and update any necessary documentation, such as property records and insurance policies. As for the inspection process itself, simply follow the following 6 steps: Schedule the inspection: Coordinate with the resident to schedule a convenient time for the inspection. Gather your materials: Prepare your inspection checklist, camera, and any necessary tools. Conduct the inspection: Work through your checklist, taking note of any issues or concerns throughout the process. Document findings: Take photos and videos of any visible damage or maintenance needs. Communicate with the resident: Discuss your findings with the resident and address their questions or concerns, if any. Follow up: Create a plan to address any issues identified during the inspection. By following these guidelines, your rental inspections go a long way toward protecting the investment, maintaining property value, and ensuring resident satisfaction. How to Notify Tenants about Rental Inspections As mentioned above, effective communication is vital during the inspection process. Here are some tips to ensure that your approach is as thorough as possible. Provide written notice While the property manager's right to inspect the property may be (and should be) specified in the lease agreement, including frequency and required notice, you should also send a formal written notice to the resident, either by mail or email. This notice should include the date and time of the inspection, as well as the purpose (such as routine maintenance, addressing maintenance requests, or ensuring compliance with lease terms). You should also indicate whether the tenant's presence is required during the inspection, and provide your contact information in case of questions or concerns. Choose the right time Be sure to schedule inspections during reasonable hours. For example, avoid early mornings, late nights, or times when the resident may be unavailable. If possible, work with the residents to find a time that’s convenient for them. Respect resident privacy Before entering the property, knock on the door and announce your presence. Limit disruptions by keeping the inspection brief and by avoiding unnecessary distractions. If you need to access areas with personal belongings, handle them with care. Document the inspection Document the condition of the property, any maintenance issues, and any violations of the lease agreement. Consider sharing a copy of the inspection report with the tenant, especially if there are any issues that need to be addressed. Address resident concerns If the resident has any concerns or questions about the inspection, address them promptly and courteously. Explain the reasons for the inspection and the importance of maintaining the property. These tips will help you maintain a positive relationship with your tenants while also protecting the property investment. Property Management Rental Inspection Checklist With the help of OnSightPROS, we've developed a rental inspection checklist template for single-family rental property management companies. Use this template to build out your checklist. General Overview Date of Inspection: Inspector Name: Tenant Name: Address: Previous Inspection Date: Front Exterior Status: [Good / Needs Maintenance / Poor] Mailbox: Functional door and flag, no damage Lawn and garden: Well-maintained landscaping free of debris, no bald grass spots Driveway and walkways: No cracks or obstacles Fencing: In good condition, no damage Exterior lighting: All bulbs functioning Windows/Screens: Clean, no cracks, seals intact, screens intact Walls/Siding: No damage or cracked/peeling paint or caulking, no insect damage Downspout/Splash Blocks: Attached properly Light Fixtures: No missing bulbs or broken fixtures Roof/Trim/Gutter: No visible damage or leaks, discoloration, holes, clogged or loose gutters Rear Exterior Status: [Good / Needs Maintenance / Poor] Lawn and garden: Well-maintained, free of debris, no bald grass spots Patio/Walkways: No cracks or obstacles BBQ Grill: Set away from house, not under awnings Rear Door: Weather stripping intact, locks installed as needed Possible Hazards: Trampoline, open fire pit, swing set Pool: Clean, clear water, no damage, fence and lock in place Fencing: In good condition, no damage Exterior lighting: All bulbs functioning Windows/Screens: Clean, no cracks, seals intact, screens intact Walls/Siding: No damage or cracked/peeling paint or caulking, no insect damage Downspout/Splash Blocks: Attached properly Light Fixtures: No missing bulbs or broken fixtures Roof/Trim/Gutter: No visible damage or leaks, discoloration, holes, clogged or loose gutters Entry Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Patio/Porch: No cracks in concrete, railing, stair intact Front door exterior: No scratches, chipping, stains Locks/Keyless Deadbolts: Check for installation, functioning correctly Front door interior: No gaps in weather stripping, clean Walls and ceiling: Clean, no signs of mold or damage Closets: Shelves stable, no stains or damage to walls Flooring: No damage, carpets clean Blinds/Drapes: Fully functional and clean Windows: Open and close easily, locks work Living Room Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Door/Door stops: Fully functional Walls and ceiling: Clean, no signs of mold or damage Ceiling fans: Working properly Closets: Shelves stable, no stains or damage to walls Flooring: No damage, carpets clean Blinds/Drapes: Fully functional and clean Windows: Open and close easily, locks work Kitchen Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Door/Door stops: Fully functional Flooring: No damage, carpets clean Walls and ceiling: Clean, no signs of mold or damage Cabinet under sink: No leaks with running water, no standing water Countertops/Backsplash: Clean, no damage, caulking intact Cabinets: Doors/drawers work, no damage Sink/Faucet: No leaks, drains well, spray hose works Pantry: Shelves intact, walls clean, lights functioning Appliances (oven, fridge, dishwasher, microwave, etc.): Clean, functional Exhaust fan: Functional, no excessive noise Windows: Open and close easily, locks work Hallway/Stairway Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Door/Door stops: Fully functional Handrails: No loose or missing spindles, or other damage Walls and ceiling: Clean, no signs of mold or damage Closets: Shelves stable, no stains or damage to walls Flooring: No damage, carpets clean Blinds/Drapes: Fully functional and clean Windows: Open and close easily, locks work Bedrooms (repeat for each bedroom) Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Walls and ceiling: Clean, no damage or mold Ceiling fans: Working properly Flooring: No damage, carpets clean Closets: Shelves stable, no stains or damage to walls Door/Door stops: Fully functional Blinds/Drapes: Fully functional and clean Windows: Open and close easily, locks work Bathrooms (repeat for each bathroom) Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Door/Door stops: Fully functional Flooring: No damage, no sagging floorboards or discoloration Walls and ceiling: Clean, no damage or mold Exhaust fan: Working properly Closets: Shelves stable, no stains or damage to walls Toilet: Flushes correctly, no leaks Sink/Faucet: Drains well, no leaks Cabinet under sink: No leaks with running water, no standing water Shower/bathtub: Drains well, faucets work, no mold Towel bars: Present and functional Mirrors: Clean, no damage Blinds/Drapes: Fully functional and clean Windows: Open and close easily, locks work Utility Spaces (if applicable) Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Door/Door stops: Fully functional Flooring: No oil stains or cracks Walls and ceiling: Clean, no damage or mold Closets: Shelves stable, no stains or damage to walls Blinds/Drapes: Fully functional and clean Cabinet under sink: No leaks with running water, no standing water Windows: Open and close easily, locks work Washer/dryer: Functional, no leaks. No lint or debris in dryer. Water heater: No visible damage, no leaks HVAC system: Operational, air conditioning filters clean, no moisture issues around drip pan Satellite dish: Attached to house correctly Garage (if applicable) Status: [Good / Needs Maintenance / Poor] Smell test: No odors from animals, smoke, waste, must Interior door/Door stops: Fully functional Garage door opener: Functions correctly Flooring: No oil stains or cracks Walls and ceiling: Clean, no damage or mold Windows: No damage, hardware intact, no evidence of moisture Storage areas: Organized, no damage Safety and compliance Status: [Good / Needs Maintenance / Poor] Handrails: In good condition, no damage Smoke alarms: Up to code, batteries good, working order. Fire extinguishers: Inspected, and placed in easily accessible and visible spots. Carbon monoxide detectors: Up to code, batteries good, working order Electrical outlets: Functioning, GFCI compliant installed Lighting fixtures: Functional, no missing bulbs or broken fixtures Lighting: Functional Electrical panel: Good condition, labeled, all circuit breaker boxes work properly Additional Notes: Space for the inspector to make any additional comments or observations. Signature: Inspector’s signature, date. What To Do After a Rental Inspection Once you've conducted your inspection, there are a few steps you can take to make sure you're not missing any identified issues. 1. Document the inspection: Create a detailed written report of the inspection, including the date and time of the inspection, the property address, and the names of the inspector as well as the resident. Include all observations about the property's condition, particularly any damage, wear and tear, or maintenance issues. You'll want to take photos or videos of any significant issues, and keep a record of the inspection report in your property management records. 2. Communicate with the resident If appropriate, share the inspection report with the property resident, highlighting any concerns or maintenance issues. Address questions and concerns promptly and courteously. If maintenance or repairs are needed, provide the resident with the expected timeline for completion. 3. Schedule repairs Prioritize maintenance tasks based on their urgency and impact on the property's condition and resident safety. Where needed, hire reliable contractors to complete the repairs. As needed, monitor repair progress and ensure that they’re completed on time and to your standards. 4. Follow up Once the repairs are completed, inform the resident and schedule a follow-up inspection as necessary. If the resident has concerns or complaints about the repairs, address them promptly. 5. Update your records Update your property management records to reflect the completed repairs and any other relevant information. FAQs Here are a few frequently asked questions about rental inspections. Q: How often should you conduct rental inspections? A: The frequency of rental inspections can vary based on several factors, including local regulations, lease agreements, and the specific needs of the property. Generally, here's a recommended guideline: Move-In Inspection: Once, right before a new resident moves in. Move-Out Inspection: Once, immediately after the resident vacates. Routine Rental Inspections: Typically, every six to twelve months. It's a balance between ensuring the property is being maintained without being overly intrusive to your residents. Drive-By Rental Inspections: These can be conducted more frequently, perhaps quarterly, since they are less invasive and don’t require entering the property. However, always consult your local laws and regulations, as some areas might have stipulations on how often you can inspect a rented property. Also, it's crucial to provide residents with proper notice before any inspection, respecting their privacy and rights. Q: Can a tenant refuse a rental property inspection? A: While rental inspections are essential for property managers, tenants have rights, and their privacy must be respected. Generally, a resident cannot outright refuse a rental property inspection if: It's Stipulated in the Lease: Most rental agreements or leases have clauses that allow for periodic inspections by the property manager or landlord, given proper notice. Adequate Notice is Given: Many jurisdictions require landlords to provide a specific amount of notice (usually 24-48 hours) before entering the property unless there's an emergency. The Inspection is Conducted at a Reasonable Time: Inspections should be scheduled during reasonable hours, avoiding early mornings, late nights, or any time that might intrude on the tenant's reasonable expectation of quiet enjoyment. However, if a resident has a valid reason like health concerns, religious reasons, or personal issues, it might be possible to reschedule the inspection to a more convenient time. Always be sure to check local laws and regulations as tenant rights can vary by jurisdiction. Open communication and understanding between both parties can help mitigate any concerns or conflicts. Make Property Management Easier with Second Nature At Second Nature, our goal is to make property management easier for professional property managers. We built our Resident Benefits Package to support property management companies in delivering the best resident experience on the market. From a move-in concierge to air filter subscriptions to rent reporting, we deliver the services that residents will pay for – and stay for. Learn more about our RBP today!

October 10, 2024

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PMC Spotlight: Chambers Theory

Chambers Theory is a world-renowned property management team with clients in more than 30 countries worldwide. They specialize in serving the U.S. military, State Department, and Foreign Services families. Their motto “Real Estate With Intelligence” is more than just a saying. It’s on full display through the introductory videos for landlords and residents on their website in seven languages (Spanish, Portuguese, Italian, Vietnamese, French, Croatian, and English) - all spoken fluently by their own property management (PM) team. Since its founding in 2018, Chambers Theory has been achieving extraordinary performance benchmarks. They’ve led the marketplace in delivering the “Golden Triangle of Success” to their clients, which means the lowest vacancy, the highest average rents, and the highest quality of tenants of any property management firm in its same service area. They’ve also donated over $100,000 to local charities and community organizations, while also leading the way in promoting sustainability practices in real estate and property management services. Their outstanding team attributes their success to their ability to develop and utilize their emotional intelligence skills to capacity to care with all their interactions with both landlords and residents. That’s why they fully endorse the Resident Benefits Package at Second Nature! Find out more about what a Resident Benefits Package is, its benefits, and how it can help create a Triple Win for you, as well as your residents and investors. Related: The State of Resident Experience Report

July 18, 2024

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Investor Experience Platform™️ IXP™️

An Investor Experience Platform™️ (IXP) 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 investor's 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 Experience Platform™️ can include, and how those benefit not just investors, but property managers and residents, too. What Is an Investor Experience Platform™️ (IXP)? As stated above, an Investor Experience Platform™️ (IXP™️) 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 policies, 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. They're commonly managed through an investor experience platform to securely manage and monitor the performance of these assets online, which we'll discuss later. 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 charging for what it’s worth. What’s Included in An Investor Experience Platform™️? An Investor Experience Platform™️ should include 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. In addition, Investor Experience Platforms provide transparency and convenience for your investors. Here are some of the most valuable services that property managers can offer through an innovative Investor Experience Platform™️. 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 managers 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 leave residents frustrated. What if there was a product that costs, 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 the 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, and faster. Another Triple Win! Asset performance reports Another piece focuses on property managers as asset managers. Think about any investment app, like Robinhood, Acorns, etc. You can log in to these apps any time, 24/7, and see how your stock and investments are performing. In most investment classes, you can see in real time 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 is 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 Experience Platform™️? Investors and property managers can benefit from an Investor Experience Platform™️ 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 Experience Platform™️ 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 IBP™️s 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. IBP™️s help establish the stability, transparency, and asset growth for a real estate investment that an investor hopes to achieve. Improved property performance An Investor Experience Platform™️ 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 Experience Platform™️ 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 Experience Platform™️ 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 it to others. Say hello to increased investment inflow and a stronger market position for your PMC. Should You Make an Investor Experience Platform™️ Opt-in? The first thing most property managers ask us when we’re talking about an RBP or an IBP™️ is: Should I offer this program as part of the base service or as an additional opt-in option? Unlike RBPs, where best practices are more proven and established, different PMs are taking different approaches with their IBP™️s. Some have a required 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 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 including in your base package does not generate nearly as much pushback as people expect – and can be a strong value add overall. Final Thoughts About an Investor Experience Platform™️ The Investor Experience Platform™️ 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.

July 17, 2024

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

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

July 15, 2024

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

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

July 3, 2024

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Property Management Insurance Coverage Guide

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

June 25, 2024

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

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

June 21, 2024

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Best 17 Single-Family Property Management Software in 2024

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

June 21, 2024

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SFR Property Management Problems and Solutions

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

June 7, 2024

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Property manager marking startup checklist

How to Start a Property Management Company in 13 Steps [Startup Checklist]

From the Second Nature perspective, focusing on a high-quality resident experience is the secret sauce to standing out in a crowded property management industry. That’s because happy residents lead to higher retention rates, more on-time payments, better care for the property, and shorter vacancies. Our property management checklist can help ensure you build that strategy into the DNA of your company from the beginning. This property management startup checklist is intended to help you orient your company toward a resident focus from the get-go. In the absence of a checklist, it’s all too easy to get caught up in real estate and rental property considerations that do not reflect long-term winning conditions for all stakeholders. Related: Best Property Management Podcasts 1. Write a property management business plan In some ways, a property management business plan is a document intended for potential clients and investors. And certainly, it can help you concretize start-up costs and get funding for the business (learn more on what’s needed to get SBA financing). But in many more important respects, it’s a structured foundation for you to gain insights into what residents are looking for, which in turn will help crystalize the type of clients you want, what types of property you’ll manage, and what kind of property management company you are. You’ll find a property management business plan template here, but in broad terms, here is a framework of the distinct components: Executive summary Company overview Market analysis (Industry, Customer, and Competitive Analysis) Services Marketing plan & sales strategy Operations management Management team Financial plan Growth opportunities Each component will lay the foundation for your future resident-focused success. Related: Property Management Business Plan Template 2. File your property management business In order to correctly file and pay your business taxes, you’ll need to register your property management business and choose a type of legal entity. This step is important, as it can also impact the protection/exposure of any personal assets, associated paperwork, or even the way in which you raise funds for your business. Note that it is certainly possible to change your business structure once it's established, but this can be a convoluted and high-stakes process. For property management businesses, different legal entity options are possible. Common legal structures include Limited Liability Company (LLC), S-Corporation (S-Corp), and C-Corporation (C-Corp). An LLC offers personal asset protection, while S-Corps and C-Corps provide additional legal safeguards. The choice involves considerations such as pass-through taxation for LLCs (where business income passes directly to the business owner's personal tax return) or potential double taxation for C-Corps, which can be mitigated via accounting measures. Other options include sole proprietorships as well as partnerships, where taxes and business liabilities are the responsibilities of the individual owners. Once you’ve identified your new business for tax purposes, you can get a free Employer Identification Number from the IRS. Which type of legal entity you select ultimately depends on your appetite for control, flexibility, and complexity. Learn more about how to structure your property management company. 3. Setup bank account for your property management business Opening a business bank account will help you build credit for your own property management company, maintain separation between your personal and business finances, and streamline tax accounting. It may also be required by law, depending on state laws applicable to your business structure. Some banks offer account features, flat fee or zero fee structures, and services that are particularly beneficial for new businesses and small businesses, so it is worth taking the time to shop around rather than defaulting to the same bank you use for your personal accounts. 4. Setup accounting for your property management Business With the help of OnSightPROS, we've developed a rental inspection checklist template for single-family rental property management companies. Use this template to build out your checklist. Not all accounting is equal. Property management accounting deals specifically with the financial management of rental properties. It helps property managers track rental income, manage expenses, handle tenant deposits, and produce financial reports. Essentially, property management accounting helps you maintain accurate and comprehensive financial records for each property you manage. Property management accounting consists of two components. The first is corporate accounting, which is similar to the kind of accounting done at any company. The second is trust accounting, which is specific to property management. This kind of accounting relates to the client funds that you hold, including security deposits, rent, and funds intended for property upkeep and repairs. Managing rental properties can be daunting when it comes to accounting and finance management, but that certainly doesn’t make it a show-stopper. Learn more about property management accounting, as well as accounting software and single family property management software that can make it significantly easier. 5. Obtain required licenses and permits for your property management business The licenses and permits required for property management businesses vary depending on your location, but common requirements can include a real estate broker license (which often involves an exam-based accreditation as well as potential background checks), a property management license, a leasing agent license, and a business license, as well as any other locally required permits. 6. Secure liability insurance Liability insurance is important to keep your business running on solid foundations. In fact, it’s essential, as it protects not just you but your investor’s assets and your resident’s safety. At Second Nature, insurance is so important to us that we incorporate an insurance product into our Resident Benefits Package. General liability insurance for property managers safeguards against potential financial liabilities arising from physical risks. It typically covers expenses related to repairs, replacements, legal fees, and medical bills, and is applicable to both residential and commercial properties. Coverage can include bodily injury, medical payments, physical damage, reputational harm, and even copyright infringement in relation to marketing efforts. Note that Second Nature's renter insurance program ensures 100% compliance and liability coverage protecting you, your property investors, and your residents. 7. Hire your team Hiring the right team has a huge impact on your ability to achieve the business targets you’ve established in your business plan. Note that “right” doesn’t simply mean “qualified.” That’s because who your employees are is fundamentally more important than what they’ve achieved. After all, you’re setting the stage for them to deliver the best work they’ve ever done in their careers to date. The hiring process begins by understanding what characteristics you’re looking for. For any given candidate, how do they build the new skills required to address new situations? How do they handle challenges when things get tough? And perhaps most importantly, what is their response to failure? Insights into these questions will help galvanize a people-focused approach that is truly a value-driven team. After all, at Second Nature, we want to generate value for ourselves, our investors, and our residents—and we want people who buy into that approach. Get more Second Nature hiring tips on building a people-focused team. 8. Create solid pricing structure and property management contracts Once you hire a team. establishing a good pricing structure for your business and creating all the legal documents required to run the business should be the priority. That's because the right approach can generate value beyond management fees for property managers, their investors, and their residents, which reflects Second Nature’s “triple win” focus. General rental property management fees include collecting the month’s rent, following up on arrears, organizing property maintenance and repairs, and keeping up-to-date on legal issues. Much of the profit in property management comes from driving better value for investors and residents, and pricing for that value. After all, people are willing to pay for better quality experiences in their homes. Additional fees, which will help drive company growth, should be communicated during the onboarding process and lease agreement. In other words, they are never about hidden markups. They’re about charging for value and driving great habits. Fees can be applied on the resident side (for instance, paper lease setup fees, lease renewal fees, late fees, or special programs fee) as well as on the investor side for a number of property management services (inspection fees, vendor screening fees, rent protection or eviction fees). Again, fees help you drive value for both your investors and your residents, and support your business at the same time. Note that because regulations vary across regions, it may not always be possible to charge fees for certain types of services. That's why it's important to discuss any fee and contract proposals with an attorney before implementing them. 9. Execute the marketing plan set out in your business plan While it’s true that businesses thrive on referrals and word of mouth, it’s executing on your marketing plan that will help drive more consistent revenue — and help you capitalize on the market research you conducted to assemble your business plan. As with so many other things, the marketing landscape has changed enormously in just a short time. We’re now living in an era when an active, well managed online presence is critical. This means that a robust marketing strategy is more than simply managing a social media account (although this too is important). It also includes investing in search engine optimization for your website, executing on content creation and distribution strategies, conducting networking events, and advertising online. For optimal property management marketing, where work often stays within specific regional areas, it’s also important to maintain a presence in local business listings. 10. Network with fellow property managers and owners to expand your business We touched on networking in the context of a marketing plan, but for new business owners in particular, networking can be a valuable source for those first few clients. There’s certainly no shortage of opportunities for establishing your business name, ranging from local vendor fairs to national property management conferences and events with thousands of attendees. In addition, there are numerous property management associations that provide opportunities for networking, education, and advocacy for property management professionals. The business and personal development opportunities available through such options present great avenues to expand and optimize your property management business. 11. Write a resident retention strategy - and how you can improve the resident experience You should be thinking about the resident experience from the very start. After all, in an industry where churn is the norm, an effective retention strategy pays its own way. To be truly effective, however, it’s key to recognize that “resident retention” is not simply a one-dimensional number at the bottom of a spreadsheet. The “triple win” approach to resident retention asks the question: “How do we create experiences so good that residents never want to leave?” Answering that question maximizes residential property owner ROI and boosts property manager success. In other words: A win for residents is a win for investors is a win for property managers. In the same vein, we often hear from professional property managers that a Resident Benefits Package (RBP) is a powerful way to retain residents over the long term. RBPs can help with resident satisfaction and resident retention rates. After all, a proactive, differentiating approach to resident retention means building experiences that people will pay and stay for. This is a useful lens with which to examine the full property manager/resident journey, from move-in to collecting rent payments to move-out, for opportunities to generate resident retention ideas—and deliver those wins. 12. Create SOPs to handle complaints, disputes, and requests Once you have the first few properties under your management, it’ll be important to ensure processes and procedures are in place to handle complaints, disputes, excessive maintenance requests, rent collection issues, and tenant problems. In such cases, rather than automatically assuming the resident is the problem, some property managers approach resident issues as behaviors that can be changed. That’s because the root cause is often addressable and the behavior changeable. This emphasis on the people element pays off — and lets you focus on how to adjust “bad” behavior through benefits and rewards, rather than just being transactional. This reframing aside, one of the best ways to deal with complaints and disputes is to avoid them in the first place, which often comes down to non-discriminatory tenant screening processes and background checks. Other standard operating processes include documenting all incidents and updates thoroughly, calling law enforcement in the case of illegal activity, implementing eviction processes if necessary, and staying current and compliant with local laws and regulations. 13. Create and execute a strategy to improve the resident experience Once again, improving the resident experience goes a long way in retaining the residents and creating ancillary revenue streams. From the get-go, you can actively ensure great first impressions with services such as move-in concierges or coordinators. After all, a resident who's had a positive move-in experience is a happier one. Happier residents stay longer, pay on time, take care of the property, and make positive recommendations. Throughout the residential journey, other strategies for improving the resident experience include pest control for property management, credit reporting, and resident rewards. Above all, one of the cornerstones of a great resident experience is responsiveness. This responsiveness is a two-way street! It covers improved maintenance service and response times, as well as opportunities for residents to provide feedback through resident surveys. By setting up this kind of feedback loop, you demonstrate to your residents that their voices matter, which instills a sense of ownership and care that often lead to better property care and longer tenancies. Property management startup checklist It’s famously said that property managers are in the business of helping many different people with many different things. And sometimes, this can feel like a lot to tackle, especially at the startup phase. That’s why we’ve assembled this property management startup checklist to help you begin: Write a Property Management Business Plan File Your Property Management Business Set Up a Bank Account for Your Property Management Business Set Up Accounting for Your Property Management Business Obtain Required Licenses and Permits for Your Property Management Business Secure Liability Insurance Obtain Required Licenses and Permits for Your Property Management Business Hire Your Team Create Solid Pricing Structure and Property Management Contracts Execute the Marketing Plan Set Out in Your Business Plan Network with Fellow Property Managers and Owners to Expand Your Business Write a Resident Retention Strategy — and How You Can Improve the Resident Experience Create SOPs to Handle Complaints, Disputes, and Requests Create and Execute a Strategy to Improve the Resident Experience How Second Nature helps run a property management company profitably At Second Nature, we focus on creating “triple win” experiences for residents, property managers, and investors. This helps property management companies go beyond transactional basics and create new, professional, and holistic experiences that generate growth all around. We didn’t invent this stuff, and we’re certainly not rowing against the tide! Companies like Google, Uber, and Amazon have already changed how consumers think. A convenient experience is no longer a luxury—it’s an expectation. Accordingly, for property management profitability and growth, experience is the winning strategy. That’s the insight that led us to create the Second Nature resident benefits package (RBP). It’s a foundational tool to create unforgettable resident experiences and keep your property management company on a growth path. Learn more now.

February 13, 2024

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6 Reasons Property Managers Should Choose Clients Carefully and Why

Finding the right property management clients can make or break your business. Experienced property managers often declare this with vigor: “Be very specific and selective about who your customers are.” A simple idea, yet one that can feel tricky to execute. And like many things, there is no one-perfect-strategy-fits-all here. The right action plan likely depends on your situation. So here are six next-layer ideas that might help. 1. Push up or push out toxic property management clients Ok, let’s say you’ve made that grit-your-teeth, pain-in-the-keester client list. What’s next? Sure, you could just politely fire them. And if nothing is stopping you, then nothing is stopping you. But there’s another approach that doesn’t torpedo all your revenue all at once: raise prices. Some will leave. Great. Some will stay and pay. This makes it easier to afford resources that mitigate the distraction. You can keep doing this until the premium is worth it or they’ve parted ways. 2. When the exact opposite advice might work best (for a stage) Let’s say you haven’t been at this for years. You’re newer, just starting out. Being super specific about a customer this early could work. But it also could be the right advice at the wrong time. Yes, you could say you’re only working with class-A, single-family rentals with intentional investors who have 2-20 units and don’t live in your market. Yet, while you have a specific idea, the reality is that it usually takes time and hard work to hone your business to actually deliver a service distinctly for this customer. And after getting some reps in, you may learn that you have strengths and competencies naturally built for a different investor profile, a different asset type, etc. Or, you discover a new market opportunity you didn’t see before. I heard an analogy once that early on, you try a wider net. The net pulls up all kinds of fish. Grouper, tuna, mahi, probably seaweed too. Then you start to realize which one you’re really a match for. And you start adjusting your net and where you fish, just for tuna. Or, you realize you want a different net tailor-made for shrimp or crab. Doing this for months can be a good way of learning through doing what’s good and bad. What complexities do you want to take on, and which do you want to avoid? But be sure you do start tightening the net eventually. The suffering comes from not monitoring and tightening when you’re ready. This wide net approach not being time- or stage-bound turns a thoughtful trade-off into the drag weight everyone warns against. 3. Powerful team incentives Maybe you’re in the owner's seat, less involved in the day-to-day. It’s your team that’s bringing new clients on, and they’re responsible for handling good and bad-fit customers. So, let’s say you want to drop bad clients because they’re keeping you from the next level, but you’ve invested in staff and need to replace the revenue. Raising prices is one way. But here’s another: For every 2-4 good-fit clients the team adds, they get to drop one bad-fit client. It may feel good to fire bad clients all at once, right away. But if the business is in the investment or break-even stage, tying it to replacement clients can be a responsible way to mitigate risk to cash flow. This approach motivates the team to not just find any new client or just the ”easy” client. It focuses them on the most valuable clients. And as more are brought in, you can responsibly filter out the worst fits. Empowering employees to improve their own experience at work by putting clear guardrails in place can be a powerful motivator for change. They now have a productive path that gives them agency, as opposed to feeling hopelessly stuck with a bad client until one of them leaves. Perhaps commission changes for better-fit clients are a worthy consideration. A great incentive structure is usually marked by whether or not people “game it.” And your business still wins. That’s a good segue to… 4. Shift your marketing and sales You can address the existing client base, but if your acquisition strategy never changes, they will keep coming in. So, how do you get upstream of the problem in your sales and marketing? Great marketing attracts who you are for and repels who you are not. Help your team understand both the ideal profile AND the anti-profile. Green flags and red flags. And it’s not just about what you’re messaging, it also can tie to where you find clients and invest in acquisition channels. Ask yourself: Do your best-fit customers come from realtor referrals? Client referrals? Which realtors or clients? Do they come inbound from your content marketing? Instead of spreading your budget all around, focus resources on places and programs that attract your best customers and tighten up less reliable channels. This doesn’t have the immediacy of other approaches, but the impact over time can be significant. The same applies to sales. Great sales processes quickly qualify out vs. wasting time with poor-fit prospects. And they prioritize the Glen Garry leads. Even a simple A-B-C grading with entry and exit criteria is a great place to start. When tracking marketing and sales KPIs as blended, it treats all activity as equal. Reality is different. Some leads are 20%-1000% more valuable. Putting policies and processes in place to prioritize and treat them appropriately is a win. 5. Is it possible to be too specific? Most property managers say they once worried about being too specific with ideal client profiles but then were surprised that the problem was almost always in not being more specific. Well, it’s a balance. Here’s an example description: “We work with rental property owners who want a more passive experience in real estate.” That’s very broad. This sounds like a sea of other companies trying to win the same customer. That makes it harder to pick you. How about his: “We work with Cincinnati SFR owners who are full-time OB/GYNs and want to hold for at least a full market cycle.” Ok, this is much more specific. Probably in ways that don’t really matter. For example: Why OBs vs. doctors in general? Or doctors vs. busy, high-income professionals? Do they really have different problems that would materially change your offering or go-to-market? But let’s stick with it, for example’s sake. Your messaging could definitely sound like nobody else. Let’s say it did work more efficiently, and you win 40% of leads instead of 25% with this targeting. I asked Perplexity AI (replacing Google search for me) how many OB/GYNs there are in Cincy. It’s 322 or 478, depending on the source. Let’s say 200 own or would invest in real estate. Some number less for just single-family rentals. Some already have a PM and are happy. How many are willing and want to hold for a full market cycle? This is likely not a viable business strategy for a dedicated PM business. It’s too specific a pool, and growth will likely be too slow even if you close 50% of leads. 50% of 100 is a lot less than 25% of 10,000. So, it helps to think about the tension between the size of the prize (market opportunity) and the opportunity to design and earn a distinct position in it (differentiation strategy). Thinking about both sides can help you find a sweet spot to commit to and focus on organizing around. If you map your market, you can ask and answer: What’s the smallest niche of the market that supports your business goals and model? What’s the biggest opportunity you can credibly develop and win in the near term? How might you expand as you win to keep growing toward your ultimate vision? You can see how a couple of years later, you can expand or add an adjacent customer profile (accidental landlords, new location, new property type, etc.) or adjacent new services (RBP, brokerage, in-house maintenance, etc.) to add dollars to the same customer base to grow. 6. Focus on wallet-share vs. market share Ok, so what if you want to remove problem clients but don’t want to raise prices, risk cash burn, wait until the team can add better replacement property management clients first, or test changes in your funnel or team’s comp? You might feel stuck, but there’s another way to add the revenue and profit you need to confidently pull the trigger without investing more in acquisition or relying on efficiency improvements to justify it. That’s adding more revenue per unit in a way that increases your customer lifetime value. If your ancillary revenue and profit per unit go up, you can afford to let clients go without risking churn. Second Nature helps property managers do this through a fully managed resident benefits package. Industry benchmarking studies show the average PMC profits $10-17/mo per unit. Every lease with an RBP can replace the profits at risk or more. And RBP isn’t the only ancillary revenue opportunity. Pet rent is another good example if you haven’t implemented it yet, amongst others. What are your thoughts? The goal of this article is not to be prescriptive; it’s to spark thinking about key considerations and paths to get there. To that end, did you find this content useful? Anything you can add that’s missing? Connect with us in our Facebook group or get in touch! We’d love to hear your input.

January 4, 2024

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Security Deposit Alternatives for Property Managers and Residents

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

December 1, 2023

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Property manager meeting with future tenants

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

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

October 31, 2023

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How Resident Benefits Packages Benefit Owners and Investors

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

October 10, 2023

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