Effective property management is critical in tenant retention and revenue growth.
By Diana Pittro (NREI Online Article) — As U.S. households continue to look more favorably on renting versus owning than at any other time in the last half century, it’s a good time to be a landlord. It’s also the key reason why the multifamily sector continues to outperform, with positive absorption rates and higher rent revenues. Investors have taken notice, too, actively buying and selling multifamily properties nationwide.
The downside to investors trading properties? As apartment communities change hands, residents may be challenged by the new owner’s approach to property management. Especially if the landlord is inexperienced and unsure about what it takes to successfully market, manage and operate an apartment community so their ROI performs accordingly.
At Chicago-based RMK Management, we oversee a portfolio of over 7,000 rental units throughout Illinois and three other states. When one of our apartment communities is sold, the first step we take is to understand and get to know the new owner’s investment strategy and goals and effectively communicate how our third-party management experience can chart the course and deliver those results. Ultimately, it comes down to three key areas: operations, marketing and resident retention.
Each market is different when it comes to landlord-tenant relations, lease regulations, advertising and disclosures. A professional third-party manager is well-versed in the differences of each market and can skillfully lead a new property owner through the process, thereby avoiding costly mistakes.
It’s important for new owners to find a trustworthy resource that can provide this valuable institutional knowledge. And, vice versa, by providing that service, property managers can substantially boost their profile and value.
Likewise, day-to-day site operations, staffing, and oversight of capital projects are just a few of the routine, yet critical, functions of the property manager. Communicating effectively and often with the property owner and taking a very hands-on approach with site visits and weekly calls will ensure the entire property management team is on the same page. This is especially important in the first year of ownership.
Savvy property managers know and understand the nuances of local multifamily markets, and through smart marketing practices can successfully promote amenities and services, and remain competitive and in-step with current offerings and incentives.
Smart marketing goes beyond placing an ad or posting photos on Twitter. Instead, it’s about using local expertise and market knowledge to identify and connect with a target audience, and there are many creative avenues to reach prospective tenants. For example, community engagement efforts can increase foot traffic, effective referral incentives can encourage more personal outreach and resident surveys can offer insight into the interests and needs of tenants, so you can tailor effective programming. But smart marketing, like anything else, is not a one-size-fits-all approach. Each property has its own personality, so owners need to keep in mind that what resonated with residents at a building down the street, may not have the same results at their new investment. It is also important to build strong relationships with the surrounding business community.
And now we get to the holy grail of property management: resident retention. New or inexperienced owners can avoid common pitfalls by partnering with a seasoned property manager who will work to deliver residents the best possible experience and lifestyle. This is done by offering value-add concierge services that ease the stress of day-to-day life; ensuring maintenance requests are quickly and properly handled; and creating a sense of community through social activities, communications and engagement that bind residents to the property and their fellow neighbors.
An often-overlooked component of resident retention is cultivating a staff that is well-trained to meet a tenant’s day-to-day needs and provide exceptional customer service. From resolving complaints to answering questions to planning social engagements, front-line staff members play a pivotal role in resident retention. Property management veterans know that retaining and growing talented employees is inextricably linked to resident satisfaction and have invested in quality training programs, encourage employee engagement and reward customer service.
At RMK, we live by a motto: See it. Solve it. Report it. We empower our property managers to make decisions if they encounter a problem and build their confidence to effectively handle issues as they arise. It may mean some mistakes are made along the way, but in those rare instances we analyze what happened and learn from it.
Going forward, new investors will continue to enter the market as the economic fundamentals and demographic trends that make multifamily properties a good investment are projected to continue. Tapping the expertise of an experienced property manager is key to ensuring the property remains a viable, profitable asset by providing a happy home for the renter.
Diana Pittro serves as executive vice president with RMK Management, a Chicago-based property management firm.