KPIs and systems are great, but they are just the tip of the iceberg. You really need to dive deeper into your management of the property to get the best results. By this we mean, working with your property management company to improve their operations not just at your property but as a company. Making them better, makes you better and ensures future success for both parties.
- Yearly budgets
- Do you give the property manager your yearly budget in advance or do you have them create their own? Different operators do this different ways and there is no right or wrong. However, we have them create their own first and then make adjustments based on their first run through. In our experience, their budgets have been much more aggressive than ours. If you show your hand too early they may lower their expectations. Let them tell you what they think the budget should be first. For all of our properties we have 2 budgets. Our proforma per our investment summary and the property managers budget. One great example is a property we own and operate in Phoenix, AZ. The property management company provided a budget that was $225k higher in NOI than our budget. This means if the property manager misses their budget by $225k we would still be flat to ours. If you give them a lower budget, they will lower their expectations and work to that budget.
- It is important to be on the same page with your property management company as far as your business plan but that does not mean they have to see all of your cards. People tend to play down to the level of their competition or expectations and you want your property management company working for you at the highest level, so we prefer to have their budget be a stretch goal to reach for.
- Show up to the property unannounced
- If your property management company knows you are visiting, then the property will look its best. You will be surprised at what goes on day to day if you show up unannounced.
Look for cleanliness and overall curb appeal
Are projects that you were told were underway or completed accurate?
How do the renovations look?
Are things out of place?
What is the staff doing upon arrival?
- Also, drive by the property at night.
Do the gates work properly?
Is it loud outside or is there anyone causing a disturbance?
Do the lights work and are they adjusted properly?
Are there lights left on that should not be left on?
- These are all things you would not discover had you not visited the property. Always trust but verify and check in on your property. Your property management company should be handling these things but the only way to ensure they are being done is to check in on them from time to time and hold them accountable. At the same time be a good partner to them and help them improve.
- Extended rent roll
- We have asked our property management company to include and customize an extended rent roll to include days vacant in each phase (eviction, rehab, in-house turn, lease up) to identify bottlenecks. Again, what gets measured gets managed. Getting the number of days a unit has been vacant is not telling you much. It is very difficult to identify why a unit has been vacant for so long. However, what if you know how long it was in the eviction process, how long for an in-house turn or rehab and how long in lease up?
- You can now average them out and know about how long each phase should be taking. This allows you to pinpoint where the management company needs to adjust and improve instead of just saying, we need to have days vacant be less. This does take additional work for the property management company, but it is worth it in the end. Knowing exactly where to focus your energy is crucial to creating a successful apartment operation.
- Secret shopper reports
- We secret shop/audit our properties on a monthly basis and we do this in two ways. First, we have someone call into the property and speak with the staff or leave a message. Some of the things we are looking for in this call are:
Did they answer and if not how long did it take them to call back?
Were they friendly and inviting?
Did they sell the benefits of the community?
Did they ask for the close? Meaning did they schedule a visit or application.
- The next thing we do is setup a new email account and send them an online inquiry. It’s important to send these emails from a new email every month and also change up the message so it’s not easy to identify. If the manager knows it’s you, they are more likely to be on top of it. The goal here is to know how prospective residents are communicated with and being treated. Here are some items you should be looking for on the online shopper report.
Did the manager acknowledge and thank you for your inquiry?
Did they answer any questions you asked about or did the email look to be copy and pasted?
Were there links to pictures/videos/floor plans of the property and nearby schools and attractions?
How long did it take for them to follow up?
Did they ask for the close? Meaning did they schedule a visit or application.
Do they have an inviting photo of themselves in their email signature?
- First impressions are everything and by doing these seemingly simple things you can separate yourself from your competition very quickly. Always think about how you can best treat your prospective residents and how you can add value to them even before they sign a lease. Below is a screen shot of our template we use to score and keep track of the results of the online shopper report.
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- Managing property managers and implementing systems to hold them accountable may seem like a lot of work and it is! However, you have a responsibility to your investors and to your business to put these processes in place to get the best and most efficient results. If you are overwhelmed, take things one step at a time. Not all these things need to be setup on day one for you to be successful. The best advice we can give is to layout a plan in advance and take small steps towards executing your plan a little at a time. Many of these systems and processes were not setup when we purchased our first property. But little by little we added them and now we have a great system that allows us to be more efficient and get the best out of our property managers and the property. And we will continue to add, tweak and improve these systems.
- Remember, Always be Improving!
“ Failing to plan is planning to fail“
Alan Lakein
