Optimize Rental Income with Targeted Scheduling

Most property managers are working flat out during the spring and summer moving season and notice a significant slowdown as we move later in the summer and into fall and winter. Securing new tenants is a complicated process with a lot of paperwork and it takes a lot of time to deal with all the aspects of this process. As a residential property owner, it is worth considering the timing for having your rental hit the market and what you can do with the lease terms and incentives to shift that date to the most beneficial one for you.  

 

With respect to moving schedules, most people adhere to the spring/summer moving season. However, not every buyer and seller or renter adheres to this cycle, as there are many factors that influence a moving decision. Each season has its benefits and drawbacks. In order to schedule and optimize the income you could get during every season, it is necessary to understand what is happening during these moving seasons.

 

Be informed

Before knowing all the benefits and drawbacks of all the seasons, it is important to be informed about current lease terms and moving plans of tenants. Good and timely communication is crucial to prepare the property for open house planning the new owners. It should be known how much time it will take for the apartment to be ready for the next tenants, therefore plan accordingly.

 

Summer and spring period

Many people move in the summer and spring because they want their kids to get settled into a new community before the new school year starts whether that is as a new school or an existing one. Business know that families are sensitive to disruptions to school terms and therefore often syncronize transfers to new locations with this same schedule. That is why this is usually the busiest time in terms of people searching for a new place to live. This also means that while inventory is highest in this season, it is also the most competitive for renters. Open houses could feel crowded and bidding wars can break out between interested renters.

 

If you schedule an open house during this season, be prepared for it to be busy and for people want quick responses to their application. Because renters are acutely aware of how competitive it is to get the exact place they want, they will often create options for themselves and not wait around for you to decide. Being set up to make decisions fast can help you find the best tenant to take over your property. This season is typically when property owners can command the best terms and highest rent, therefore it is necessary to be prepared for an intense work schedule. Remaining flexible during this period is also helpful as renters may back out having found something else they prefer meaning that you need to get the next in line signed up.

 

Fall and winter period

In the fall and winter, there are fewer houses on the market which means that there's less competition. It could also be defined as a relatively quiet season. This usually means that the renting prices might drop a little. However, it might be more beneficial to finding the best tenants as the traffic of people moving in and out becomes slower and the homeowner has more time to come to the final decision in finding the best tenants.

 

Be prepared

No matter the season, it is important to be prepared for what people are searching and to react accordingly to this market demand.  Summer will most likely be more beneficial in terms of higher rents, but it will get busy. During winter there will be more time to make the right decision. Using creative lease terms with incentives to shift the rental schedule from a fall and winter one to a spring and summer schedule so that your property will most likely come back on the market during season with higher rents is one way you can increase the ROI on your investment. Just remember to be informed about the current lease terms and plan accordingly.


What Makes A Good Property Manager

A good property manager knows how to listen and communicate clearly, they are proactive, involved, current on regulations, pricing and terms and knowledgeable about the leasing and the property market in general. He or she should also be levelheaded, resourceful, personable and articulate. Ultimately however, a property manager must be adept at building successful relationships with a broad range of stakeholders. 

It is the property manager's duty to make sure everything runs smoothly, and that requires open and clear lines of communication from the property manager to everyone involved in a building. Conflict is generally a result of misunderstanding, often precipitated by a lack of, or breakdown in communication. Like a good diplomat, a property manager appreciates the perspectives of others, can hear what they are saying, and works to solve problems. The property manager needs to understand and balance the views of multiple interested parties including unit owners [or shareholders], building management staff, the board of directors, tenants, contractors, neighbors and regulators. When things are not running smoothly or there is friction between these various units, it is often because the manager is failing to properly communicate. 

The job of a property manager is a balancing act that requires the agent to anticipate and handle the logistical issues of the building without losing sight of the responsibilities to all the people of the building. Mobile, and digital communication tools should make a property manager or their designate available at all times yet, one of the greatest complaints and frustrations about  property managers today is that they do not return phone calls. They are in charge of supplies, finances, employees, professionals, boilers, and a whole slew of responsibilities that require incredible organizational and multi-tasking abilities, but first, they must be adept at answering questions and dealing with people.

Professional property managers focus on the logistics while still catering to people and will generally split their time 60/40 between being in the field and being in the office. A professional property manager will have a capable staff to manage the office workload and communication demands while they are in the field. An excellent property manager will go beyond by anticipating needs and issues and take proactive steps to address before they become serious matters.

In addition to looking towards the future, a property manager must also be physically present, visiting each building in their portfolio at least once or twice a week—though not on a set visitation schedule. This type of unscheduled visitation allows a manager to observe the operations of a building under normal, everyday circumstances. 

It is the manager's job to assist the super, explain to them what needs to be done, and provide enough time to handle things in an appropriate manner. In the end, a property manager has to do what is best for the building and community as a whole. Whether the manager fires a staff member, or the staff member fires himself, is a matter of perspective with the end result the same.

When dealing with professionals associated with running a building, such as attorneys, accountants, or other service providers, a good manager must also act professionally. Dealing with lawyers and accountants requires the same basic interpersonal and communication skills needed to work with anyone, with an understanding of exactly what duties a professional must perform.

Whether it be inspecting a boiler, informing the board of a new law, or even making sure the board of directors have all necessary materials monthly, (especially in the event of a new manager or management company taking over) a good property manager's job is never done. If you have someone who can check the prices of oil or gas against the budget, console a tenant with a sick cat, and mediate a disagreement between two staff members, odds are you're working with a valued professional.

Source: Cooperator


Six Things To Pay Attention To When Hiring A Property Manager

A professional property manager is vital to the growth of your real estate investment.  The process by which you assess services by different providers is therefore crucial to what kind of returns you will see on your property.  Here are six key aspects to pay attention to when hiring a property manager.

1. How many properties is the candidate managing?

Clearly the more experience the more effective a manager is going to be, but there are diminishing returns if someone is trying to handle more units than humanly possible. In addition to knowing how many units they are managing, it is important to know how many employees the property manager has to help them.  Having a staff to help schedule meetings, arrange services and handle correspondence can free up a property manager’s time to focus on improving the returns on your property. Under a manager, a trained employee with the right tools and proven processes can manage between 50 and 60 units.  So, if you are qualifying a candidate, they have no employees, and are currently managing 47 units, how good do you think their service to your portfolio will be if you hand them 7 more?

2. What kind of systems do they use?

In today’s world of property management a professional service will use software to track the details of every property and provide regular reporting and access to real time information to the property owner. There are comprehensive software packages that provide information on payments, lease terms, move-in move-out dates, maintenance requests and scheduling. The best practice versions of these provide a portal for the property owner to access information about their own properties.

3. How does the candidate feel about inspections?

A critical component in managing both properties and tenants is visiting occupied properties on a routine basis.  As part of your discussions with prospective managers, you want to get a commitment from them stating how often they will conduct formal inspections of your properties.  In some cases, managers will be very accommodating. In most, however, they will balk at this requirement or use it as a way to increase the fee they will be charging.  Many property managers believe that conducting routine property inspections is something that is not part of their normal package of services.  Candidates with this mindset should be avoided.

4. How much is the candidate charging to manage your property?

Most property managers charge between 7% and 10% of the rent for managing your properties.  Be sure that you know what that percentage is based on.  Some managers will require that you pay them the agreed percentage on the total rent that could be collected whether they are collected or not. This means that they are not incentivized to find quick replacements for open units.   

5. How will the candidate address maintenance issues?

Be sure that you know how a property manager will address maintenance issues.  There are a variety of ways you as a property owner will pay for getting maintenance issues resolved.  You can expect that the property manager will want to make maintenance decisions (spend your cash-flow) up to a certain dollar value amount before they have to obtain your permission.  Also, many property managers will add a 10% fee on top of the invoice, and while it is often times hard to find a manager who doesn’t make this a non-negotiable requirement. At times, the markup for maintenance services is not made clear to the property owner when discounts negotiated by management companies are not passed on to owners. .

6. What kind of commitment are they willing to make?

Finally, make sure that the candidate will commit to provide reports to you no later than the 6th or 7th day of each month.  The portion of each rent should be paid to you at this time as well.  If rents are not received by the date agreed upon, immediate action should be taken.


The Tenants Management Side Of Property Management

A property can be well designed and located in a desired area, but unless tenants are managed properly and occupancy is maintained at a high level, financial returns to the owner will suffer.

When tenants are dissatisfied with their living situation, they will vacate at the end of their lease– or in some cases– before the lease expires.  The combination of lost rental income and increased costs for marketing to replace lost tenants take a toll on the profitability of a rental property.

Effective tenant management involves:

  • Solid rent collection practices:  Where in the the lease does it state when rent is due? When will rent be considered late?  What are the penalties for overdue rent?  When will drastic action be taken to collect rent?  The first rule of good tenant relations is to have a clear set of rules and instructions for your tenants.  Consistent enforcement of these rules is key in maintaining a respectful and professional tenant-manager relationship. Using modern rent collection techniques like automatic electronic payments from the renter account can help make this process more reliable.
  • Consistent and informative communication:  Whether it’s door flyers, email or text messaging, a consistent channel of communication between manager and tenant is vital to the long term success of a property.  Social media can also be utilized to create more efficient means of communication.  Facebook, Twitter, and Google+ are all mediums that assist property managers in strengthening tenant relations by forming a supportive community.  These platforms allow maintenance requests, building events, concierge services and other needs and concerns to be communicated in a more direct manner.
  • Responsive handling of repairs and maintenance:  Reinforcing the importance of communication and instructions, tenants need to know when and how to report a maintenance problem.  The easier this process the better.  Just as in rent collection, consistency is key in this area of property management.  Tenants need some kind of idea of how soon a manager will respond to a complaint– both during a regular workday and at night or on the weekend.  If outside contractors are hired to make repairs, a manager must remain informed on the situation and make sure the services are completed in a timely manner.
  • Concierge Services: For multi-family properties, a property manager also fulfills a residential services role from handling package delivery to booking amenities and managing common areas so that they are comfortable and inviting for all.

Failure in any of these areas will result in dissatisfied tenants, lower occupancy rates, increased marketing costs and lower return on investment. A property manager that does not consistently perform these duties will likely be replaced by the owner.


Property Management as Partners in Asset Management

Any experienced property manager will tell you that adapting to the industry’s constantly evolving landscape is the most vital aspect of the job.  Swiftly navigating this ever changing environment– and therefore maintaining financial returns– requires the ability to set and meet long-term goals.  This is where property management overlaps with traditional asset management and a top-tier property management company offering fully integrated services eliminates the distinction. Indeed, it is the boots on the ground and deep familiarity with a property and its earning capacity that gives important asset management perspective to a property manager.

While there are still some “old school” managers who believe their only responsibilities are to maintain the property and collect rent, the modern property manager is continually working to assess and improve the financial performance of the assets they manage.  Their goal in investment analysis is simple: maximize the revenue potential of the property and identify new methods of creating longer-term additional value in the asset.

Top property management companies serve as your long-term partner with a shared interest in maximizing investment potential. As a partner, the property management company will regularly analyze key performance metrics for your asset and prepare long-term financial forecasts, perform cash flow analysis and understand the internal rate of return for your investment and how to improve it. As part of this analysis, your property management company can perform due diligence for the acquisition or disposition of your property and provide actionable recommendations. Knowledge of property value and specifically how upgrades and renovations can increase returns means that your property manager can provide excellent advice for whether and how, further investment can reap additional rewards and over what time period.

In addition to this analytic and advisory role, a top property management company can make introductions to lenders or investors so that you can expand your portfolio. As part of the package, a property management company will help increase the value of your asset with effective marketing either as a property to be leased or sold. Finally, as your partner, a good property management company can even negotiate on your behalf to get the best terms for your purchases or sales of property in your portfolio.

The best property managers have the ability to take a step back and understand real estate strictly as an investment– in other words, they understand how to think like an asset manager.  The adeptness with which a property manager can streamline operations and reposition a property determines how drastically costs can be cut and income can be increased.  Ultimately, the better one understands the financial health of the property, the more effectively one can create and execute to achieve the highest possible return on investment.


Professional Facility Management To Improve ROI

In my last post, we looked at the reasons for hiring a property management company. In this one, we drill down to a deeper level of just one of those aspects: facilities management.  It is a universally accepted fact within the real estate world that solid facility management is the foundation upon which a successful property management company is built.  Its importance is rooted in the fact that it deals directly with the physical state of the property– essentially ensuring a structure’s functionality.

The basic concept is that the margin of profit for a real estate investment ultimately begins with the condition of its physical state.  If a building has faulty plumbing and holes in the walls, it will be very difficult to find quality people and companies interested in renting, with those that do, on the lookout for a better alternative.  On the other hand, a clean building with reliable electricity, running water, and air conditioning creates a comfortable, high-quality living or working experience.  In this case, fewer problems arise and tenants are satisfied and stay tenants longer. Every property owner knows that turnover is the enemy of ROI.  The difference between these scenarios can be found in the hiring of a property management company to properly oversee all facilities.

The various aspects of facility management are onerous, require expertise, and an investment of time.  Here are several areas that a property manager will fully supervise and control.

ENVIRONMENTAL, HEALTH, AND SAFETY SPECIFICATIONS

A professional property manager ensures that all environmental, health, and safety specifications are not only met, but to the extent possible, exceeded in some areas.  Meeting these specifications is vital to the growth and longevity of any real estate investment.  Failure to do so can result in administrative work, constant demands and complaints from tenants,  insurance claims and possible fines.  The negative press received from failing to meet certain requirements only further reduces the value of the property.  The worst case scenario is a government entity deeming the property ‘unfit to occupy’.

MAINTENANCE, TESTING, CLEANING AND INSPECTIONS

This area of property management is most essential to the operational efficiency of a building or home.  Property managers possess the connections and experience to negotiate excellent terms with appropriate building contractors– depending on the management company, these savings can be passed on to the property owner. A property management company engages reliable contractors to take care of all maintenance, testing, cleaning, and inspections and is there to make sure the work is completed and acceptable.  Their job is to maximize the lifespan of appliances, machines, utilities, or other technology.  This aspect of property management deals with tenants at the face to face level.  Solid property management companies will ensure an effective delivery of service– a promise that results in satisfied renters.

SECURITY

Security for a property is almost always run by an outside company with specific expertise and fully trained resources.  Again, the invaluable connections of property managers with outside contractors come into play.   Security, which is often overlooked, is one of the most important factors in the efficiency and long term health of a real estate investment.  Professional security teams or top security monitoring systems not only ensure the safety of tenants, they also ensure the safety of the building in the face of vandalism or burglary.

CONCLUSION

A professional, high quality property management company can guarantee reliable and excellent facility management.  For a landlord, this pays significant dividends.  Time is saved, stress is eliminated, and efficiency is increased.  Most importantly, the value of the property is protected and enhanced.  Ultimately, this translates to a higher, more consistent flow of income and an improved ROI.


The Advantages of Hiring a Property Management Company

For first-time and even experienced real estate investors, the the day to day challenges of managing a property can be daunting.  Making inspections, finding tenants, tending to repairs or upgrades, and collecting rent are just some of the processes that can be burdensome and, at times, intensely stressful.  Failure or compromise in any of these can result in significantly lower returns as well as a diminishing in the value of the property.

So, what is the best way to circumnavigate these potential issues?  Hire a professional property management company.  Any successful real estate investor will attest that their property manager is the most crucial resource in keeping their investment safe and profitable.  Here are some of the ways that a property management company can reduce stress, increase returns, and ultimately, make the experience of investing in real estate far more enjoyable.

 

Marketing the Property

Property management companies understand how to price and create the most effective advertisements for a property.  These are placed in the publications/websites with the broadest reach and most effective conversions. Ultimately, the owner is left with the largest pool of potential tenants in the shortest amount of time– and no stress. Property managers have streamlined saving significant time and money for the owner in the long run.

 

Finding Reliable Tenants

When searching for tenants, it is vital to find individuals that will treat the property with respect.  The ideal tenant will pay rent on time, rent for longer, and cause no damage to the property.  For the average real estate investor, it can be very difficult to weed out potentially bad tenants during the screening process.  Using a property management company can reduce the likelihood of renting to unreliable tenants.  Property managers have seen thousands of housing applications.  They know where to look for the key information that raises red flags.  Furthermore, in hiring a property manager, a real estate investor avoids rental scams directed at landlords, as well as discrimination lawsuits.

 

Achieving a Lower Tenant Turnover Rate

A high turnover tenant rate is the last thing an owner wants for the long term health of their real estate investment.  When tenants are moving in and out frequently, the owner is forced to spend time and money to prepare the property for potential renters.  This process includes a careful cleaning, various small or large repairs, painting walls, changing locks etc.  More time and money is then spent on advertising, showing, and screening the property to potential tenants.  A solid property management company will have a tested, reliable tenant retention policy to ensure that renters will be satisfied with the property and therefore, rent for longer.

 

More Effective Rent Collection Process

Property management companies fully understand that only way an owner will see increased returns is if rent is paid on time and in full every month.  Without a property manager, landlords can be taken advantage of.  A good property manager will ensure that all tenants realize that rent collection is a non-negotiable process.  With a property manager, an owner never has to hear excuses or chase down rent.  In terms of eviction, property managers are extremely well versed in the the strict– and often confusing– eviction laws that vary by state.  If an owner incorrectly performs an eviction by themselves, they could be facing a lengthy and expensive lawsuit.

 

Conclusion

Property management companies reduce stress and increase profit, simple as that.  For owners, the peace of mind achieved through not having to deal with day to day issues is invaluable.  With more time comes more freedom to explore other real estate investments and expand portfolios.


The Importance of Tenant Screening

Your investment is something that should not be easily compromised with. You have agreed to invest your money into a property in which you wish to see a return. When receiving applications for your property it is best to evaluate and screen any potential tenant. It is not enough validation to go off of first impression. One tenant may have a kind voice, respectable presence, and no red flags. You think that their application will surpass all your expectations. However, when verifying their information, the red flags became clear, they were not suitable for your rental.

1. Income: It is easy to write down a number on the line provided “monthly income”. However, many tenants seem to exaggerate their income. By making tenants turn in their last couple of pay stubs, you will be able to determine if they can afford your rental.

2. Rental History: During a tenant screening tenants should be asked to give their rental history for at least the last three years. This will allow you to contact their previous property managers to ensure that they were prompt on rent and never evicted.

3. Credit Check: A credit check will showcase how responsible they are on making payments.

4. Criminal Records: This as a landlord is something that you can take into consideration how you would like. No matter what you choose to accept, it is still reasonable to know who is renting your property.
Additional Questions? We are here to help, contact JYZRE Property Management.


How To Deal With Nightmare Tenants?

It may seem like a horrible dream, but nightmare tenants do exist. Every landlord eventually gets them and dealing with frustration of managing a property on top dealing with these types of people can be quite a pain. Here are some helpful tips when it comes to dealing with nightmare tenants. Apart from having a written policy it’s important to stand your ground when it comes to dealing with these tenants.
SCREEN: Although this may seem obvious many landlords forget to do a proper screening. A good screening includes:
a. Running a background check
b. Running a credit check
c. Calling ALL previous landlords
d. Driving by their current residence- maybe even inviting yourself in
e. Verifying their income.
As a property manager dealing with this nightmare here are some ways to handle the situation
a. Be Objective: Set strict ground rules and stick to the policies you create. It’s important to implement these policies with every tenant. Don’t fall into manipulative traps that nightmare tenants can be known for.
b. Train Them: Show your tenants that you’re in control. Be empathetic, but objective and strict when giving options.
c. Write everything Down: When setting agreements or dealing with problem tenants, it is important to write everything down. By laying the ground rules on paper, the tenant will be more inclined to follow the rules.
d. Make a Connection: Having open communication with your tenants will allow them to feel more comfortable.  Don’t avoid talking to tenants due to their actions, it’s important to respond to them in a professional manner.
e. Take Action: Sometimes nightmare tenants don’t always start out that way. It is important to take action as soon as the incident occurs. By not communicating with the tenant on his/her behavior this allows them to continue with their bad behavior. Be sure to address the problem as soon as it occurs.
f. Legal Action: When issues of non-payment or illegal activities have occurred it’s important to take legal action. Hire a qualified attorney to deal with situation at hand.


How to Keep Your Rental Property Secure This Fall Season

September is fastly approaching, which means autumn is almost here. This fall season protect your rental properties from theft and break-ins. There are several small steps you can take to ensure the safety and security of your property and your tenants. So, with that said, here are some helpful changes you can make to provide more security for your rental this fall season.

#1. Provide ample lighting with timers: It is a dead giveaway to burglars that you are not home if lights are off at dinner time. Make sure front doors and side doors are lighted well. Consider purchasing motion floodlights that immediately light up when movement occurs in their direction.

#2. Keep brushes and trees trimmed back: Let all front doors and windows be visible. Burglars can hide easily in a jungle of shrubbery.

#3. Consider installing an alarm system: This is something that can add a lot of value to your rental property. It will keep your property safe and tenants from any theft. You may be able to add a monthly fee.

#4. Install secure locks: It is best to use deadbolts on your exterior doors.

#5. Protect yourself and your investment: Make sure your liability insurance policy covers you from lawsuits stemming from crime and theft.

JYZRE Real Estate offers property management needs that can secure your investment this fall season. Contact them today for more information.