Enter your email address for weekly access to top multifamily blogs!

All Things Property Management

All Things Property Management is a one-stop destination for folks interested in learning more about managing real estate. Broken down into a variety of targeted columns, the information that you are looking for is easily accessible — from investing tips and best practices in The Intelligent Investor to the real-life dilemmas of property managers in Stories from the Front Lines. We’ve brought on contributing writers from across the country to share their respective expertise with you, whether you’re a landlord, a professional property manager, or an association board member. Your feedback, participation, and comments will help us deliver the information you need most.

Set Ground Rules Early with Owners and Tenants

By Ben Holubecki, STML Realty Group, Glen Ellyn, IL

I’ve always had a lot of respect for professionals who truly learn from their mistakes.  Many of the top companies and executives in the world admit that they have made plenty of them over the years.  What sets theThe Rule Book successful companies apart from the unsuccessful ones is the ability to immediately make adjustments and avoid making the same mistake twice.  It can be costly to make an error on the job but it can be devastating to repeatedly make the same mistake over and over again.  That’s why I sat down last week to reflect upon a recent string of lost property management accounts.

Those of us who manage properties owned by others all have our steady, long-term clients.  These are the ones that we can count on.  We depend on them to provide the residual revenue that drives our business and allows us to operate on a monthly basis.  These owners generally defer to our decisions, believe in our process, and most importantly trust us to manage an important part of their investment portfolio.  In our experience we have found a common theme that runs along with most of these clients.  Ground rules and expectations were properly set at the beginning of those business relationships.  Although there are always ups and downs involved in managing any relationship when you are playing with someone else’s money, those hurdles can often be overcome if guidelines were properly established at the beginning of the relationship.  If those guidelines are not set up properly and early we are asking for trouble.  If we wait until a problem arises to set up those expectations the business relationship is ultimately doomed.

Property management is a high churn business by nature so there are a certain number of accounts that are going to be lost and replaced every month.  Property owners sell their properties, they get foreclosed upon, or they let their hard-on-his-luck brother move in.  We are used to this, but those transitions are generally friendly ones with property owners thanking us for our service and moving on.  What prompted this post was the fact that we began losing a few accounts that were not for these reasons.  We had three accounts last month choose to self-manage their properties rather than continue with our services.  I began to consider where things went wrong and why those owners no longer saw value in our services.  Once I asked a few questions and gave some thought to how things transpired I realized that it was not WHERE things went wrong that mattered.  It was WHEN things went wrong.  Every one of those property owners were signed and set up by a previous employee who was not terribly thorough during the setup process.  We failed as a company to compensate for that shortfall and allowed the relationships to begin and continue without setting up those ground rules.  As we faced typical challenges throughout the two years with these clients we were always butting heads with them about very minor issues.  The fact is that this conflict could have been avoided by properly establishing the program from the beginning.  Once we had already run into issues it was simply too late.

This doesn’t only go for the owner/manager relationship.  The same dynamics exist when we are dealing with our tenants.  There’s a reason why it is so much easier to deal with tenants that we have placed ourselves as opposed to inheriting a tenant placed by a property owner or another agent/management company.  When we place them ourselves we have control of that critical initial period where we can properly set expectations regarding rental payment, collections, maintenance, service calls, etc.  Once a tenant has had a bad experience with a previous agent or have become accustomed to poor payment habits it is extremely difficult to turn them around.

Some of the more important items to establish:

When managing the manager/owner relationship
- Clearly explain the service call process.  Walk them through a typical call from the tenant call-in all the way through paying the vendor for that service.  We will often go through this twice just to be clear.
- Explain spending guidelines, limits, and approvals in detail.
- Make it absolutely clear who the owner contact is within your organization.  Our firm typically has 2 contacts for each owner but we try to clearly explain when the owner should contact each of their contacts.
- Make sure owners understand how the money flows through your system.  They should be clear about how security deposits are held, how the tenants pay, how expenses are assessed and paid, when they get their money, and how they receive it.  Avoid the “where’s my money” call at all costs.  A quick tutorial regarding their Buildium online owner account is a great idea at this time.

When managing the manager/tenant relationship
- Explain rent payment options, terms, and most importantly the ramifications if rent is not paid on time.  Many managers are afraid to discuss late fees, 5-day notices, evictions, and judgments at this time.  There is no better time to set up these expectations.
-Make the maintenance request process crystal clear.  Provide appropriate phone numbers.  Let them know step-by-step what will happen when they call.  Will they leave a message or speak to a live person?  Should they expect a call in 5 minutes or 5 hours?  By setting the expectations properly you will avoid repeat calls and many complaints.
-Walk the tenant through the move-in process in detail.  They should know who will be contacting them and when.  They need to know what will happen during their move-in walk through, what they need to bring at the time of possession (rent, deposits, etc), and what is expected during their move-out walk through.

These are the basics that we establish for every account.  Every property and market are going to have their own particular set of rules that need to be addressed but the important thing to remember is that WHEN is the most important variable as you set the expectations for owners and tenants. Your best bet is to always act early.


Property Management Software Rental Property Management Software Landlord Software HOA Software Property Management

Rate this blog entry:
0
 

Comment Below

  1. Posting comment as a guest. Sign up or login to your account.
Attachments (0 / 3)
Share Your Location
  STOP ask yourself do you do your follow up calls or thank you cards?!?!?!?  By Jolene Sopalski Leasing Specialist WRH Realty Services If you answered no to that question then I want you to hold up your right hand and pledge the following “ I will  start following up with my prospects no prospect will go un-followed up”. Good now if you are one of the ones that said yes I do my follow up calls and thank you cards I want to give you a big hug so just picture me giving&...
Demand for apartments in Dallas/Fort Worth is getting back on track. During the first three months of the year, renters absorbed 6,520 apartment units, the best quarterly demand performance seen since fall 2007. The occupied apartment count climbed by 9,970 units between March 2009 and March 2010. It appears that a stabilizing local economy is allowing apartment demand to pick up again. While the annual employment change numbers still look pretty bad, most of that loss actually occurr...
Don’t you just love Twitter? With a simple hashtag, you can tell the whole world exactly how you feel! What about Facebook? All you do is post on a company’s wall and WHAM! Message received. Remember those pesky days of phone calls and emails? All the searching for the correct contact information, all the time spent explaining your issue, all the waiting… And for what? For only one person to hear your story!? Well, the game has changed. We are now able to rant about our customer servic...