You don’t need to have eyes in the back of your head to know if your rental property management is making costly mistakes. All you have to do is look at your dwindling profits.
If you want to increase the rate of return on your real estate investing, make sure your rental apartments are in good hands. If your profits aren’t where they should be, investigate your manager’s policies and look for these common mistakes:
#1 Profit-Killing Mistake: Not Selling the Rental Apartments to Prospects
A February 20, 2013 survey by apartments listings giant Apartments.com found that only 2 in 5 renters left a rental property with a favorable impression of the property’s overall value. Pride of ownership can’t begin and end with the owner. Be aware of what your rental property management company is saying to entice prospective renters and make them fall in love with your rental property.
What sort of first impression do prospects form? Is there a sense of community, either through social avenues, or with amenities that make an apartment community feel like a neighborhood? Do websites and marketing materials look professional and welcoming?
If your rental management company is doing its job, tenants will be excited about their decision to sign a rental lease with you. Take a look at some examples of actual tenant comments that reflect professional property management:
“I can only afford the basic unit right now, but the manager showed me where the higher end units are, and I’m hoping by next year to get into one of those.”
“I had a hard time when I first saw the space, but then the leasing agent showed me how my furniture would go, and then I was like, Wow! There’s a lot of room in here!”
“I was really lucky to get in when I did because there’s high demand for these units, and the price would have gone up if I hadn’t grabbed it when I did.”
“I thought I’d stick with the one bedroom, but the leasing agent went over all the upcoming vacancies, and the two-bedroom seemed like the better deal and worth paying more for.”
Would your prospective tenants say the same things? You should find out. While going onsite is a good way to experience the same property tour as your prospective tenants, a video tour that puts you in a prospect’s shoes also allows you to troubleshoot why renters may be unimpressed.
#2 All-to-Common Mistake: Not Conducting Exit Interviews
Your rental property manager should be debriefing each and every tenant as they move out. It’s critically important to your ongoing profitability to know what tenants really think about the rental property — and the rental property management — at a time when they have little reason to hold back their true feelings.
Ask your manager to package this information for you to review. If tenants are unhappy, it’s best to know as soon as possible, before multiple tenants sling insults across the Internet and your profits start to suffer.
You’ll never know which tenants you lost over bad publicity, but an exit interview provides disgruntled tenants with a more appropriate forum to voice their complaints. If your rental property management company is not bragging about the good reviews they receive, you need to know why.
#3 Huge Mistake: Not Asking for Renewals in Time
Although it’s good to schedule a vacancy for every unit from time to time, vacancies should not be frequent, or this will drive up turnaround costs. The time line for renewals on rental apartments is about 60 days before the end of the lease. If the rental property manager waits any longer than that, the tenant will have already been shopping around. That can make lease renewal more costly to negotiate.
Additionally, you will run the risk of losing a good tenant to the competition.
You shouldn’t wait for the tenant to communicate their desires. It’s always better to take the initiative. Ask a good tenant to stay, make them feel welcome and appreciated, and keep a good thing going.
What is your manager’s policy on renewals?
Costly Mistake #4: Not Resolving Tenant Complaints
Good management is typically the first thing tenants say they look for in a rental property. This is one of the main reasons you pay rental property management fees.
If your property manager is lax on providing that key component, it won’t take long for the property to start underperforming. Is your manager slow to return phone calls or emails? Tenants will soon mimic the level of interest the manager is displaying in enforcing each rental lease. Frustrated tenants get passive-aggressive. Are you seeing a high percentage of late rent payments? It could be that the rental property management isn’t answering questions or making repairs in a timely fashion.