Successful Multifamily Property Management, Under The Surface

Property management success at a minimum requires a combination of knowledge, skills, and a willingness to adopt innovative technology.?

A property manager and PMC (property management company) should also understand the competitive landscape they operate in, rental rates, and trends, so they are able to make profitable decisions.

Property managers should most certainly be able to communicate effectively with tenants, owners, and vendors.?

Multifamily property owners look for the following qualities when selecting property management companies

1. Technology: Owners want a management company that can use proven technology to streamline processes such as utility expense recovery, rent collection, maintenance requests, and communication with tenants.
2. Experience: Owners want to work with a management company that has experience in managing the specific type of property they own and understands the macro and micro market conditions.
3. Financial management: Owners want a management company that is transparent in its accounting and financial reporting and can maximize the property's revenue while minimizing expenses.
4. Marketing and leasing: Owners want a management company that can successfully market and lease the property to attract and retain tenants.
5. Communication: Owners want a management company that is responsive to their needs and concerns and provides regular updates and reports on the property's performance.
6. Expertise: Owners want a management company that has the necessary skills and expertise to effectively manage the property, including knowledge of property management laws and regulations.
7. Service: Owners want a management company that provides consistent and high-quality service to both the property owner and tenants.
8. Tenant Retention: Owners want a management company that will retain tenants and minimizes vacancy rates, which directly affects the revenue of the property.
9. Maintenance and Repairs: Owners want a management company that can effectively and efficiently maintain and repair the property, to keep the property in good condition.

How to differentiate your property management company and set it up for success

1. Emphasize financial management: Highlight your company's ability to maximize the property's revenue while minimizing expenses, and its transparency in accounting and financial reporting.
2. Market and leasing expertise: Highlight your company's ability to market and lease the property effectively to attract and retain tenants.
3. Emphasize technology: Market your company's ability to use technology to streamline property management processes such as rent collection, maintenance requests, and communication with tenants.
4. Focus on communication: Promote your company's ability to effectively communicate with property owners, tenants, and other stakeholders. This can include regular property reports and updates, as well as a dedicated point of contact for the property owner.
5. Highlight your tenant retention rate: Highlight your company's ability to retain tenants and minimize vacancy rates.
6. Highlight your experience: Emphasize your company's experience in managing the specific type of property and your knowledge of local market conditions.
7. Showcase your expertise: Highlight your company's expertise in property management, including knowledge of property management laws and regulations.
8. Provide outstanding service: Market your company's commitment to providing consistent and high-quality service to both the property owner and tenants.
9. Highlight maintenance and repairs: Showcase your company's ability to maintain and repair the property to keep it in good condition effectively and efficiently.
10. Compliance: Highlight your company's ability to ensure compliance with all relevant laws and regulations, including fair housing laws and safety codes.
11. Tailor your service: Offer customized services that are tailored to the specific needs of each property owner.
12. Provide references and testimonials: Provide references and testimonials from satisfied clients that showcase the quality of your services.

(Proptech) Property technology solutions and process changes can create operational efficiencies. Some examples of how Proptech can be utilized include

1. Data analytics: This allows property management companies to track and analyze data on everything from property performance to tenant behavior, which can be used to make more informed decisions and improve the overall performance of the property.
2. Accounting and financial management: There are software solutions that can automate tasks such as rent collection, invoicing, and financial reporting, which can save time and reduce administrative costs.
3. Property automation and IoT devices: These can be used to automate tasks such as lighting, heating, and security, which can save energy and reduce costs.
4. Online portals and apps: These allow tenants to pay rent, submit maintenance requests, and communicate with the property management company online, which can save time and reduce administrative costs.
5. Virtual capabilities: These technologies can be used to create virtual tours of properties and to visualize potential renovations or remodels, which can save time and costs.
6. Maintenance management: There are software solutions that can track and schedule regular maintenance, inventory, and ordering of supplies, and track expenses, which can save time and costs.
7. Leasing and marketing: There are software solutions that can automate tasks such as listing properties online, managing leads, and tracking analytics which can help to increase the occupancy rate and revenue.

Reasons why multifamily property management companies lose their clients (property owners and tenants)

1. Lack of transparency: If the property management company is not open with its accounting and financial reporting, the property owner may choose to find a different company.
2. Poor communication: If the property management company is not responsive to the needs and concerns of the property owner or tenants, they may decide to switch to a different company.
3. Unreliable or poor service: If the property management company is not providing consistent or high-quality service to the property owner or tenants, the owner may choose to switch to a different company.
4. High turnover rate: If the property management company has a high turnover rate of staff or management personnel, it may be difficult for the owner to build a relationship with the company and may choose to find a different company.

Example costs of not running an efficient PMC

Tenant turnover, also known as "churn cost”, can be calculated using the following formula:

(Vacancy cost + Make-ready cost + Advertising cost) / Average length of tenancy

?Where:

1. Vacancy cost is the lost rent during the period the property is vacant between tenants.
2. Make-ready cost is the cost of cleaning, painting, and any other repairs or upgrades that need to be made to the property before a new tenant moves in.
3. Advertising cost is the cost of finding a new tenant through advertising, such as listing on rental websites or placing classified ads in newspapers.
4. The average length of tenancy is the average length of time a tenant stays in the property.

For example, if a PMC has a vacancy cost of $2,000, a make-ready cost of $1,000, and an advertising cost of $500, and the average length of tenancy is 12 months, the cost of tenant turnover would be: ($2000 + $1000 + $500) / 12 months = $250 per month.

Property Owner Turnover /Churn -The cost of property owner turnover to a property management company (PMC) can be calculated using the following formula:

(Lost management fees + Transition costs) / Average length of property management

Where:

1. Lost management fees are the fees that the PMC would have earned from managing the property if the owner had not left.
2. Transition costs are the costs incurred by the PMC in transferring the management of the property to another party. These costs may include legal fees, advertising costs, and other expenses associated with finding a new property owner.
3. The average length of property management is the average length of time the PMC managed the property for the owner.

For example, if a PMC loses a property owner with a monthly management fee of $1000 and has a transition cost of $2000, and the average length of property management was 12 months, the cost of property owner turnover would be: ($1000 x 12 months) + $2000 / 12 months = $1333.33.

Success or failure

Successful PMCs and managers are continually wanting to learn how to improve their craft and are adapting to new technologies, but ultimately, the key to multifamily management success is a combination of all the factors listed earlier and more.?