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When people start investing in residential real estate, one of the biggest mistakes is neglecting the importance of solid property management.
We’ve said it before: Your property management team is your first line of defense. They are the best tool for maximizing your property’s performance and value. Without them, even a good investment can turn sour.
Poor property management can take a great investment and turn it below average quickly. Good property management can keep average investments performing, and great management can take average investments and help them grow into fantastic returns by holding down maintenance and vacancy.
It is very difficult to be good at property management—it is an unforgiving business where your primary client, the property owner, reacts to what is happening at the moment.
We have had instances where properties remained occupied, paying, and thriving for five-plus years with relatively little maintenance and no vacancies. Yet, due to circumstances outside management’s control, a resident falls behind, has to be evicted, or leaves early. The response is immediate dissatisfaction with management.
Property management is a thankless service with challenges around every corner. So, what sets excellent management apart from lousy management and lousy landlords? You might be surprised.
What are the Biggest Grievances Residents Have?
Conflict is inevitable. There’s no guarantee that everyone will be happy and satisfied at all times. Issues come up. We hit bumps in the road.
However, so many of the common complaints by rental residents can be avoided with the right team at the helm.
According to various surveys and general data, these are the top complaints residents have against landlords and property managers in both multifamily and single-family housing. These issues are the main reasons that residents look for new housing, even when they love the property or location. If we can address these issues on the front end, the likelihood of keeping residents longer and at modest rental increases rises.
Lack of maintenance
One of the most frequent complaints from tenants is delay or neglect of maintenance and repairs. Residents can become frustrated when management fails to address issues promptly, leading to discomfort and potential safety hazards. If you’ve ever had to wait to get a necessary appliance or problem fixed, you know how frustrating it can be to work around it.
Problems become magnified when they are comfort or quality-of-life issues. Unclean, unsanitary, and unsafe housing conditions can fast-track vacancy.
Communication issues
Poor communication between managers and residents can lead to misunderstandings, confusion, and frustration. People often complain about unresponsive landlords or property managers who do not effectively address their concerns. Residents need to feel acknowledged, heard, and valued.
This ranks high on the list of issues that are most frustrating for renters. It is not simply a lack of good communication, but often a lack of communication, period. If you are hiring a property management company and are having communication and connection issues, imagine how difficult it is for a renter.
Unfair rent increases
Sudden, significant rent increases strain resident budgets and leads to dissatisfaction. Tenants will be unhappy if they feel the rent increase is unreasonable or not in line with market conditions.
We get it—rent increases are inevitable with the market the way it is. However, try to be understanding. Cash-strapped residents perceive that they’re being charged more for less. Make sure you’re raising rent appropriately for your market.
Lack of transparency
Residents may complain about hidden fees, unexpected charges, or unclear lease terms not communicated upfront. This is really a communication issue, but gets broken out into its own category when it seems like a company or landlord is hiding something.
Transparency about costs and expectations is crucial for maintaining trust between both parties. Management should include notice well in advance when residents will be affected. They also need to be skillful and thorough in drawing up all contracts to prevent legal disputes.
Security deposit disputes
Disputes over security deposit returns are common. Residents may feel that landlords unjustly withhold portions of their deposits for repairs or cleaning, leading to conflicts.
Your management team must document the property’s condition before and after the move. Additionally, what qualifies as natural wear and tear and what constitutes revoking a security deposit need to be clear.
Quality of housing
Complaints about the overall quality and condition of the property, such as outdated appliances, lack of insulation, or poor construction, can affect resident comfort and satisfaction. This exacerbates other issues, too. Management must preserve the quality and value of your property—not just for the residents’ sake, but for yours!
Three Principles that Guide Great Property Management Teams
Now that we know the common grievances against landlords and managers, we must discuss the principles that help avoid them. These guide and set apart mediocre managers from the best in the business.
1. Residents are valuable
First and foremost, your residents are valuable, and you’ll want to reduce resident turnover.
Tenants are people with their own lives, concerns, hopes, and dreams. Your property provides a safe haven and home for them. They are more than a monthly paycheck and a means to an end. Investing in real estate is an inherently relational business. Because of this, building lasting relationships creates lasting success!
If your management team respects and cares about residents, it will show in their service.
2. Consistency is key
Consistency makes all the difference in the world. Residents and investors need to know they can rely on management. This means they are reliable, predictable, and consistent. They stick to the rules, act ethically, and make a point to be reasonably available.
This consistency is empowered by a straightforward operating procedure that creates reliability for individual residents and investors across all their managed properties.
3. Details matter
Finally, details matter. Great managers understand the value of doing things right. They don’t settle for “good enough” but pursue solutions that create long-term value and a stellar experience. Even if the problem seems insignificant, they do their best.
For investors, attention to detail mitigates future issues from snowballing and maintains the value of your property.
This article is presented by REI Nation
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
