How much money are you (or your resident managers) leaving on the table each month that you didn’t even know you could have had? Many owners, flush with rental increases and full occupancy, have gotten lazy in their operations. You may be very happy getting $2150 for that two bedroom apartment which rented for $1900 last year. But perhaps you could be getting $2,195 or more, with just a little more effort. Whether you have a 10, 30, or 80 unit building, that’s an awful lot of money to be
How much money are you (or your resident managers) leaving on the table each month that you didn’t even know you could have had? Many owners, flush with rental increases and full occupancy, have gotten lazy in their operations. You may be very happy getting $2150 for that two bedroom apartment which rented for $1900 last year. But perhaps you could be getting $2,195 or more, with just a little more effort. Whether you have a 10, 30, or 80 unit building, that’s an awful lot of money to be
Treating your rental properties like a business and maximizing your profit potential means working even harder to benefit from these good times rather than being satisfied with “good enough”. The extra amount you can reap from your properties can be the difference between “covering the expenses” or “generating some cash flow” and actually having some really good extra income.
Even if you feel you are generating enough cash flow from your property to satisfy your present cash needs, there is no better time than now to prepare for the inevitable downturn in the market. Generating extra revenue that you plow back into improvements in the property is good long term thinking. Here are a few areas for you or your staff focus on:
- Are your apartments market ready? Are they really ready – or are they just close? Could someone move in in an hour if you approved them and they signed the papers? If not, you’re hurting yourself by showing it in its current condition. And don’t just look inside the unit, look at the whole picture.
How does the approach to the apartment look? Is the signage clear? Are the plants and flowers outside looking neatly trimmed and bright? Are the halls spotless? How does it smell? Is it quiet? Being ready can increase how much money you can get on that unit by $50 or more in most markets. Are you giving away hundreds of dollars a year in potential revenue because your manager was too lazy to pick up a few papers from the grounds of your community? Remember, a true vacancy factor is not just rent lost to vacant units – its how much potential rent you’ve lost. Think about it.
- Have you practiced your presentation? How do you answer the phone? What is your ratio of calls to visits? It should be at least 50%! Remember the purpose of the phone call is to qualify the prospect and get him to visit – it is not to rent the apartment! The purpose of the visit is to rent the apartment! If you can’t get them to visit, they won’t rent!
Have you scripted your walk around the community to the apartment? Do you just take the shortest route – or have you figured out the best one…such as the one that goes by the pool, but perhaps avoids an area needing work. When you enter the apartment, do you guide the prospect in the direction you want by placing your body appropriately, or do you just open the door and let them in?
Tour guides show property, professionals sell property! Don’t let the attitude be “If the prospect decides to rent, great. If not, it wasn’t for them” – you know the “here is the living room…here is the kitchen… if you need anything, I’m right here” talk. Your manager needs to be determined to sell. Is your manager properly trained? It means extra money to you each month.
- Have you prepared checklists that your staff can use – to insure consistent quality control? Do you do spot inspections? The easiest way to educate managers to think like owners is to give them a list of the things you look for. Do they have checklists to walk the property?
- How actively do you work “preventive maintenance?” You know a $2.00 caulk job will save you thousands in dry rot repairs. How often do you inspect your units? I recommend a minimum of once per year, although 2 times is better.
And if you’re planning to sell your property, don’t think skimping on your maintenance will make your numbers look better. Sophisticated buyers put their own numbers in anyway. Best to have a well cared for property. That creates real value.
- How do you answer tenant complaints? Have you worked through a procedure? Can you guarantee service within a set time (such as 24 or 48 hours)? You say you never had to do this in the past? True. But now your competition is doing it. Satisfied tenants means less turnover – even at higher rents. That means more money to you. What is that worth to you?
- Now is not the time to get lazy on expense control. Have you re-bid your insurance recently? Have you thought about submetering your utilities? Is solar a viable option for you?
- Are you up on the current laws? Have you reviewed your leases, forms, and procedures recently? One of the best reasons for professional management is liability protection. Megan’s law, Fair Housing, credit reporting issues. Are you up on the current requirements on all these items (and is your manager)? At a minimum, you need to make sure you’re not using outdated forms that could get you into trouble.
Your success depends on how well you run your rental operation. Yes, things may be great compared to just two or three years ago. But it’s one thing to be lifted by a rising tide, it’s another to actually be leading the charge. Now is not the time to get lazy. Improve yourself and improve your operations. Although there is a point where you might reach diminishing returns for your extra efforts – from my experience, most owners aren’t even close to being there.
You bought your property to get rich – or at least to provide a good return. Don’t give that return away. You’ve waited too long to get it.
