A few weeks ago, we talked about 10 Signs of Property Management Success. This week, we’re going to take a look at the flip side of that coin, reviewing some indicators that it may be time to make some changes (after all, the time for New Years’ resolutions is just around the corner!). Following are a few red flags to keep an eye out for in your property management business.

1. Lack of referrals – This applies to both tenants and property owners. In an ideal scenario, you should be creating a web of referrals that expands year after year. If you’re not, it may mean that: 1) existing tenants and clients aren’t confident enough in your work to refer you or 2) business-building incentive programs are not in place.

2. Haphazard organizational systems – If your office doesn’t have an organizational system in place for things like accounting, rent payment tracking, and maintenance requests, your efficiency and accuracy may be taking a hit. An investment in property management software will pay off big in the long-run.

3. Sporadic maintenance schedule – Staying on top of regular maintenance (like winterizing) and repairs will keep your property value up and your tenants happy. Creating and sticking to an annual maintenance check-list is the most sure-fire way to stay on track.

4. High turn-over – This applies not only to your tenants, but also to your property management staff. While people move on for any number of reasons (both personal and professional) , a consistent pattern of frequent turn-over indicates it’s time to take a look at your property management and business management practices. Happy tenants and employees both tend to stick around.

5. Offline – Are your apartment listings online? If not, they should be.  Dip into the online rental listing pool through sites like Craigslist.

6. Slow response time – Do you make a point of getting back to rental queries and tenant communications within a 24-hour period? If not, you could be losing out on potential tenants and letting your tenants’ best interests fall to the wayside.

7. Lack of goals – Having both long-term and short-term goals helps ensure your business not only stays on track, but continues to grow and improve over time. If you have not yet made a point of establishing business goals for yourself, 2011 is the perfect time to start.

8. Missed annual review – Speaking of goals, a great way to determine areas for growth and improvement is through the completion of a thorough annual review. Reviewing your properties, tenants, staff, office procedures, accounts, and marketing programs on an annual basis and honestly identifying your successes and failures will help your business continue to grow and improve. Not doing so can result in stagnancy and missed opportunities for improved processes, cutting costs, and streamlining.

9. Non-compliance – Do you make a point of attending seminars or other informational gatherings at least once a year to learn about changes to FHA, ADA, and other federal, state, and local law changes that may affect you and your property? If not, it’s important to begin doing this immediately—laws change quickly and it’s all too easy to fall out of compliance without realizing it.

10. Slacking on screening – Though it can be a cumbersome process, it’s essential that each and every tenant has a credit and criminal background check, employment verification, referrals from past landlords, and personal references. The more thorough you are, the better tenants you will have.

No business is perfect—chances are you have not yet mastered every single area on this list. But looking for business elements to improve is one of the best ways to build a red-hot property management company.

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Just as with any other business, the success of your property management company is inextricably tied to staff morale. The more content your staff is, the more effort they will put into their jobs and the more invested in your company they will become. And the better they do at their jobs, the better your company will do as a whole. Good staff morale can be bred through many avenues, but one of the biggest overarching ways to ensure a good culture is to show your employees that you appreciate them. Following are some of our favorite ways to let your staff know you’re thankful for them.

Weekly Gatherings
During the dot-com boom, beer hours (usually around 4:00 p.m. on Friday) were all the rage. Since the bubble busted, these have largely gone out of vogue, but the idea is still solid. Sure, you may not want to serve alcohol to your employees on company time, but having some sort of unwinding time together at the end of the work day over snacks can pay off in a number of ways. It sends staff the message that you appreciate them and it allows people to mingle—this can result in idea generation and in a greater attachment to/investment in co-workers and your company in general. If you don’t like the idea of sacrificing an hour of work-time, consider providing some sort of lunch for everyone to enjoy together a few times a month.

Monthly Rewards
Recognize your employees’ efforts on a regular basis. At the end of each month, reward the employee who has filled the most vacancies with a token of recognition, such as a $50 gift card. Or, if you would prefer not to single one person out and create a culture of competition, set a goal for vacancies to be filled or new clients to be won on a monthly or quarterly basis. If the company collectively reaches this goal, a reward can be given to all members of the team.

Acknowledge Special Occasions
Show your employees you care by acknowledging birthdays and other special occasions. It doesn’t take much—just a card and perhaps a $10 gift card to the local coffee shop. This sort of personal touch demonstrates you appreciate your staff as individuals, rather than just employees.

One-on-One Time
Make the effort to get to know your employees on a one-on-one basis. Many managers are good about taking new employees out for a one-on-one lunch, but limit this practice to new-hire situations. Make it your goal to take a different employee out to lunch once a month to get to know your employees better and let them know that they have your ear. Not only will you make your employees feel appreciated, but you can also get some great ideas out of these sessions from experienced voices operating daily on the front-line of your business.

Let Employees Lead the Way
If none of these suggestions do it for you, try asking your staff what sort of morale-building measures they would like to see incorporated in your office. Not only is this a great way to get lots of fresh ideas, but selecting a few to incorporate also sends a clear message to your staff that you’re listening to them and want to make them happy.

So, remember: In the spirit of the season, do everything you can to find little ways to show your staff that you’re thankful for them.

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Renters’ insurance can give your tenants peace of mind — and while it’s not your job to ensure that all of your tenants have a policy, it is certainly in your best interest to make all new tenants aware of the benefits of coverage. A basic policy can protect tenants living in your building from damages caused by natural disasters, theft, or even injuries taking place in their unit. Best of all these policies are often very inexpensive — and you can often get an even better deal by purchasing a renters’ insurance policy through the company you get your car or other insurance policies from.

• Insure.com provides a great article on the basics of renters’ insurance, including a list of what standard policies tend to cover.
• This article provides an example of why renters’ insurance is so important — make sure you are being savvy and protecting yourself.
• Check out this website if you are thinking of purchasing a renters’ insurance policy — the site will compare quotes from multiple renters’ insurance providers.
• Still not sure if it’s worth it for you to buy a renters’ insurance policy? This article is a great resource as to what you should consider before buying a policy.

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Though the acquisition of renters’ insurance is ultimately your tenants’ responsibility, as a landlord it’s important that you have an understanding of what it is and why it’s important, both for your own well-being and for your tenants’.

Your tenants should be aware that in the case of a destructive event at your property (fire, natural disaster, theft, etc.), existing property insurance will only protect your actual property. In other words, tenants’ possessions and personal belongings are not covered.  In addition to protecting their personal items, renters’ insurance also helps protect tenants in the case that a visitor is injured due to their negligence while in their unit. For example, if  a tenant’s dog bites a visitor, renters’ insurance will protect the tenant.

Some property managers build a clause into their lease stating that renters are obligated to purchase renters’ insurance for the duration of their occupancy. Whether or not you choose to include this sort of stipulation in your own lease depends upon your personal preference and, also, state and local laws.

Why would it work to your benefit to require tenants to have such insurance? After all, they’re taking on the risks of being uninsured and you don’t want to give competing properties an advantage by requiring tenants to pay the additional costs, right? Before making this decision, be aware that in cases where a tenant without renters’ insurance is sued by a person who is injured in their apartment, you can be included in this lawsuit also and are not covered if a renter does not carry insurance.

If you choose not to include renters’ insurance as a lease requirement, you should still make a point of informing renters that they are responsible for insuring their own personal belongings, both verbally upon lease signing and in the actual lease text. Generally speaking, most renters’ policies are extremely affordable, and can often be obtained for less than $100 per year. Additionally, many insurance companies offer breaks in cases where a client purchases more than one type of insurance. For example, a tenant may well get a price break by purchasing renters’ insurance through the same company they receive car insurance from.

Ultimately, renters’ insurance is your tenants’ responsibility. That said, you ultimately could be affected by your tenants’  insurance status. Whether or not you decide to require renters’ insurance, always make sure that renters are aware of their options and know what is and is not covered in the event of an unfortunate circumstance.

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Formulating and implementing a late fee policy can be tough — this type of policy by nature is not going to thrill your tenants — but it can go a long way in making sure you receive rent from your tenants on time and can provide additional income. These links will help you formulate a policy that is both fair and effective.

• Check out this article from The Landlord Protection Agency — it offers a strong stance on late fees and suggests that you may also want to implement a bounced check penalty.
• This blog article suggests that you collect late fees from tenants in all applicable circumstances, at the risk of otherwise losing control.
• Here’s an interesting question — who gets to keep the late fees?
• Check out the comments under our “Implementing a Late Fee Policy” post on our Facebook wall — some property managers have incredibly unique and effective strategies all their own.

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Collecting timely rent payments from tenants is essential to keeping your property finances in order and promoting responsible tenant behavior. Writing a late fee policy into your rental agreements is a good way to make sure tenants remain diligent about on-time payments throughout the course of their tenancy. Just as important is making sure you hold your tenants to this policy.

Rental agreement payment policies should include the following information:

1. The day of the month rent is due.
2. The day the late fee kicks in.
3. The amount of the late fee.

In a standard rental agreement, landlords provide tenants a five-day “grace period” between the day rent is due and the day the late fee is applied. Late fee penalty payments generally fall around $25. However, before setting the fee, be sure to check state and local laws to find out what maximum fees are allowed by law. While some landlords charge a single flat late fee, others charge an escalating amount for each day payment is late (for example, $5 on the first day, $10 on the second day, etc.). If you do use an escalating scale, you will also need to cap the late fee at a reasonable maximum amount.

Not only is it important to build late fees into your lease contracts, but it’s also important to enforce the policy. With this in mind, though, judgment and reason are called for. For example, if a tenant has lived in your unit for eleven months and consistently paid rent on a time but does not pay until the sixth day of the twelfth month, you may want to give the tenant the benefit of the doubt. If you feel it’s necessary issue a verbal warning but refrain from putting the fee in effect until the next violation. Bear in mind that giving such chances on a regular basis will counteract your late fee policy as tenants won’t take it seriously. Only make such allowances on first violations or in clearly extenuating circumstances.

Finally, remember that as a landlord you want to build good, long-lasting relationships with your tenants. Just as you want to promote timely rent payment by enforcing a late fee policy, you may also want to acknowledge tenants who do pay their rent on time each month. For example, when a tenant has paid rent on time for twelve months in a row, you may consider rewarding them with a small acknowledgement like a $10 gift card to a local coffee shop. While this is obviously not necessary, it’s one of those little gestures that demonstrates your appreciation of a good tenant. Sometimes positive reinforcement is just as important as implementing negative consequences.

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It’s time to set your property management fees — where do you start? Obviously you’d like to charge a price that will make you profitable, yet you don’t want your rates to be so high that they are prohibitive in acquiring new clients. These links will examine property management fees from your perspective as well as the owner’s — ultimately helping you set fees that are fair to both parties involved.

• Our blog post on property management fees from last year is still relevant today and serves as a great starting point — are you going to charge a flat rate or a percentage of rent? What tasks are included in your fees?
• Here is another great article on property management fees including questions that should be asked of any potential property manager regarding their fees.
• As an owner, you might not be ready depart with 10% or so of the monthly rent that you charge. But take a look at this complete list of property management services. Does your potential manager perform all of these tasks for their fees?
• Still not sure if you need to hire a property manager? Check out these 11 Questions for Determining if You Need a Property Management Firm.

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Setting your property management fees can be tricky business. Obviously, you’d like to obtain the greatest amount of money possible for your services. On the other hand, it’s important that your prices remain competitive in order to secure new clients. Following are some things to take into consideration when setting and evaluating your property management fees.

Know Your Competition
While your prices shouldn’t be totally dictated by what your competitors are doing, it is important that you have an idea of the going rate for property management services in your area. While you don’t want to undercut yourself, you will likely also have a difficult time selling your services to potential clients if your rates are significantly higher than your competitors’. If they are higher, be sure you have a compelling answer lined-up when potential clients ask why that is (for example, “We offer more automated services for you to utilize” or “We have twenty more years of industry experience than our closest competitor”).

Compare Apples to Apples
In that vein, when evaluating competitors’ prices, be sure that you are taking similar companies into account. For example, if you have ten years of experience and several successful properties under your belt, you should not compare your prices to those of a relatively novice, start-up property manager. Obviously, the converse of this also holds true.

Account for the Local Economy
How are things in your area? Are vacancy rates high? Or is business booming, bringing lots of new residents to town? Keep your fingers on the pulse of your local economy and remember to be flexible and nimble. Perhaps things were booming three years ago, but such is not the case now. You may have to adjust your rates to compensate for this in the interest of acquiring new business.

Don’t Undercut Yourself
With the above point in mind, though you may be able to command higher rates at some times in contrast to others, never devalue yourself or your property management business. If a property owner is unwilling to pay a fee you know you deserve, hold out for better customers. Dedicating your time and skill set to an unprofitable endeavor will harm your business in the long-run and take up resources that will ultimately be better used elsewhere.

And a couple of final thoughts: When explaining your rates to potential clients, be sure to be explicit about what these rates do and do not include (for example, if maintenance fees are an additional charge, be sure that both parties agree on this from the off-set). And, finally, be sure to re-evaluate your rates on a regular basis (we suggest annually). A good customer will understand that rates rise over time as the cost of living increases and you continue to prove your mettle.

Be sure to check out our previous blog post for more specifics on setting your property management fees.

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