Is a Property Management Company Right for Me and My Investment?
Reflecting on the climate of the investment property mindset and motivations to become an investment property owner, property management is a profession that involves dealing with difficult situations on a day-to-day basis. Often times, a property manager has to work with people with differing viewpoints and demographics, financial structures, etc. On one side of the spectrum, there are real estate investors who are looking for a maximum return with minimal expenses obviously.
On the other side of the spectrum, tenants and residents are looking for the maximum value of a home and ancillary benefits for minimum rent. It can be a very fragile balance between the two parties all the while, the property manager attempting to service both sides. As tenuous as that sounds, it can often times, be an incredibly satisfying position to be in as resolving differences or increasing revenue for an owner, will keep a property manager happy and keep that hunger to resolve and create revenue for the owners.
One key component of a property management provider that is tried and true, no matter the economic climate or customer base, is customer service. It is often the most overlooked key to balancing these two perspectives. A vital component base of superior customer service is building a positive first impression through creating a common ground. A casual entry conversation can often bring a familial vibe that only creates equity and trust from the onset. This is the beginning of a hopefully long standing and profitable business relationship. Be real and understanding. Relate to them with one’s own personal experiences and always remember that they may be wary and unsure of a new manager or management company.
We must always remind ourselves that an owner simply wants all of their financial desires to be heard and understood thoroughly. Being proactive and focusing on a personalized and transparent approach that hits home with the owner is important to keeping their 'attention' and finding what they care about most in procuring a property management company. Listening to any concerns along the way can be vital as it will potentially stem a situation that could eventually erode the business relationship.
Regarding the importance of customer service beyond the first meeting, most industries can point to this as vital as well but all too often, poor or lazy management provides the atmosphere in the work environment that is conducive to low energy and/or lazy customer service and sufficient follow up. Experts know that understanding and true customer service is the keystone of a business model and will stand the test of time in any business and investment workplace.
The balancing act after this tends to be, how does one create real value for tenants while also increasing return on investment for owners? Wisdom says that you MUST start with quality customer service for the tenants and show genuine interest in any and all situations that may arise. This can be manifested in numerous ways and actions, i.e., productive response time, value and professionalism are some of the key factors for a quality and successful property manager. For some reason, one or all of those three components are easily lost in the grind of a busy day; but they must be constantly adhered to, by reminding oneself of the reason you are in the property management business...management of an asset, an expensive asset.
An owner’s trust in our business and ultimately us, as property managers, is quite the responsibility and should never be taken for granted. This balance requires finesse and if mastered, it is a game changer and we can be way ahead of any competition. It's also not a bad idea to keep the old saying in mind and treat others/customers the same way you'd want to be treated.
Most, if not all property managers all know some of the most common customer complaints and they usually involve response time: "they never called me back or I never heard from them at all." Responsiveness, in my mind, shows courtesy and respect. A happy tenant will know that a great property manager truly cares for the well-being of the rental experience. An owner will realize this through communication and highly cost-efficient solutions to any maintenance issue that arises. The mere fact that this seemingly easy task of responding, calling a tenant or owner back, has become the difference between a successful property management company and one just in it for the wrong reasons.
It boils down to this, simply answer the phone and/or return all calls in a timely manner, and you will have a competitive and undoubtedly successful advantage as a business. Sounds easy but for a multitude of reasons, it becomes the glass wall that separates a productive and valuable manager and one that is there collecting a paycheck. Another truism, always listening to tenants is paramount to keeping a potentially adversarial relationship, in the best light possible. An easy answer or solution may not necessarily be the best solution, for all parties, tenant and owner alike. One needs to try to simply understand the issue or problem and then find the resolution that directly will address the issue and keep a happy tenant. It can be lost in the micromanaging of a situation that a few words of understanding and compassion to ANY situation or issue, will build a bond and equity that will go far in keeping the tenant in the owner's investment property. In a perfect world of property management, a good tenant to property manager relationship is key to building a revenue producing rental with hopefully long-term tenants.
Now, as a property manager your absolute desire is to have expedient response times, provide pertinent updates and viable follow ups to your tenants. It's funny in that we can look to how we were raised and taught at a young age on how to simply stay polite and practice what we learned. Show up early, be respectful and always remember we have 2 ears and one mouth, so listening is important as one can ascertain many things and tips that you never would have thought of previously. Just listen. We must remember that fact remains but is sometimes not realized, you do want them to get their security deposit back because if they don't, it is simply a lot of extra work that could have easily been avoided from the onset by better communication or by listening along the way. It's also important to remind the tenant that they must remember the obvious, this home is a rental and belongs to another party.
So, an unreported issue or problem always compounds and becomes a larger issue down the road which may and often times does, greatly impact their security deposit and also, the owner's lack of desire to offer a renewal lease due to the neglect and lack of communication. With this, we, as property managers, do understand that tenants will never be as "invested" as one would hope for when it comes to the upkeep of the investment property. Fully realizing this, and also providing a clear pathway of communication to report any and all issues that they may see fit, will go a long way to simplify the way a tenant may show care for the property while residing. One could even say that, over communication is even encouraged to a degree. There has seldom been a case where a tenant is not open to having an abundant amount of communication. It can be a comforting vibe knowing that matters are being noted and handled in hopefully an efficient and amicable manner.
Touching on the very reason that a property management company is in business to provide peace of mind for an owner. When making a home purchase, large or small, typically, people review the available options while weighing the pros and cons of each choice and then of course, look to make a decision that results in the best value or return on their investment. Conversely, tenants typically do the same thing and use the same criteria when searching for a rental home. They will look at the available properties that fit the basic criteria and location and then pursue the best perceived value based upon many levels of their specific needs.
One thing that all owners must remember is that this means that landlords are always in competition with other landlords in the area and can be fighting for the same tenant demographic. Competition can be fierce and because of this, a strong game plan and realistic outlook are vital. Essentially, landlords are providing a product and tenants are purchasing that product. That really breaks it down to a simplistic thought, but it just is the simple fact. To be a successful real estate investor, you need to provide value with a quality product that will attract quality tenants. This will obviously increase your chances of achieving above average returns through high rents, long term tenancies and reduced turnovers.
An experienced property management company with a diverse and professional staff will absolutely assist an owner in that very goal along with a continuing stream of support perhaps and strive to provide potentially revenue increasing ideas through constructive communication and again, setting clear goals from the onset. In NO way does the relationship between the management company and the owner need to be combative or looked upon with insecurity, as is often the norm for some situations. Paranoia built through poor communication and broken promises is and can be a killer of any relationship...in any business. Inexperienced landlords often times may and will attempt to rent their investment in below average conditions, put off repairs, even they obviously know that some kind of maintenance or work needs to be done.
A common trait is to avoid investing time and money back into property improvements or the often forgotten, tenant relations. We all realize, or at least should realize, that an owner is not looking to purchase their "forever home", rather an investment home that tenants in this rental market will undoubtedly want to lease. A happy tenant is a lease renewing tenant. But having this short sighted and unrealistic business model of a thrifty owner, is all too common and creates a cycle of short tenancies, evictions, vacancies, lost revenue and declining property value. Whereas, an experienced real estate investor and property manager will look to improve the condition of properties and improve tenant relations with equal treatment for all residents. Simple maintenance upgrades such as matching light fixtures or matching doorknobs can create a clean well-maintained home.
A true business professional knows that to gain and increase revenue, one must spend at the most cost efficient manner to increase the desired curb appeal. The saying, you reap what you sow, can be applied here. While many owners have a clear pathway and strategy, it can be unfathomable to a property manager that an owner would invest so much time and money on their purchase to only stand by as it loses value and potentially monthly revenue, all due to maintenance neglect, no upgrades or improperly thought out upgrades OR quite possibly an unprofessional property management company.
Therefore, an owner and the property manager should have at the very least, a healthy rapport and understanding of the clear goals of the investment at hand. With that very basic understanding and initial communication, many issues can be easily remedied as when that business relationship is on solid ground from the beginning, most issues are resolved with an ease that is envied throughout the industry. That adage of "all iteming in the same direction" mindset is the sweet spot, that we as property managers strive to attain.
When it is achieved, it is satisfying on many levels. One must always remember that an owner can be just as apprehensive and insecure of our intentions as we of theirs. The faster both sides of the business relationship realize this and are quick to establish common ground, property manager nirvana can be achieved. But the law of averages and a diverse population do not always allow for this mindset to take hold and be cemented, and if a concentrated effort was put forth, one has to concede at times, that not all owners are created equal.
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