The key to effectively managing a single-family rental property during any economic cycle hinges on an investor’s ability to maximize their property’s value.
As the current U.S. unemployment rate hovers above Great Depression-Era levels, many property owners are having rent delinquency, leasing and management issues.
So, what can an investor do during the current economic situation to protect their asset? What immediate steps can they take to curtail delinquencies, sign new tenants and avoid long-term vacancies?
The first step is to ensure that the property generates steady monthly rental income in the most efficient manner, even when renters are losing their jobs. Oftentimes, ensuring that a rental produces steady returns, while minimizing vacancies is a full-time responsibility.
During a crisis like the COVID-19 pandemic when residents face unprecedented unemployment levels and challenges paying rent on time, a nominal investment in a property manager will save an investor money over the long term by keeping the property occupied. A knowledgeable, tech-focused property manager mitigates rental delinquencies, retains existing residents, signs new leases and ultimately protects long-term investments during even the most difficult market cycles.
Here are six reasons to consider hiring a property manager for asset protection and preservation in the midst of unprecedented economic challenges:
1. They optimize a rental property’s monthly returns and provide insight on long-term rental growth
A qualified property manager brings critical local market knowledge and applies it to the operations of each individual rental asset they manage. In other words, they understand the economic and supply and demand fundamentals in each submarket in which they operate. A savvy property manager provides investors with average rental rates in their submarket by utilizing rent comps, AI and machine learning to set market-rate rents that get the unit leased quickly.
An effective manager stays laser-focused on a few real-time metrics impacting their portfolios in order to help real estate owners maximize returns and minimize turnover, including:
- Rental delinquencies
- Percentage of new leases signed
- Pending move-outs
- Average rents
- Vacancy rates
By using technology to predict rental demand, an effective property manager can even help an investor determine where to buy rental property. At the end of the day, a good property management and investment team helps command as much value as possible for a rental unit.
2. They provide great customer service for both owners and residents
Property managers can espouse the great customer service they provide all day long. But is there any truth to what they’re saying? How does an investor know if the management team they’re selecting is actually a trusted service service provider?
One of the best ways to measure the level of customer service a property manager provides is to request two metrics: its Customer Satisfaction (CSAT) Score and its Net Promoter Score (NPS). The CSAT Score gives investors insight into the level of service a firm provides over time. A good property manager will send a CSAT survey after a resident has completed the on-boarding process to see how efficient it is, and if any improvements are necessary. If a property manager does not have their own internal service tracking and reporting, they are likely not committed to identifying issues and constantly improving their service.
Good Customer Service Requires Keeping Tenants Safe
In today’s environment, property managers should be up-to-speed on the best practices for entering a home while shelter-in-place orders are slowly being lifted Wearing PPE, especially masks, practicing social distancing when residents are nearby and following all of the guidelines laid forth by the Centers for Disease Control is a critical step to providing not only the best customer service, but the most considerate, protective service that could ultimately save lives.
3. They help owners retain tenants and sign new leases
At the moment, there are no federal relief programs available to small, independent residential property owners who have been impacted by the COVID-19 pandemic. However, many banks and lenders are implementing assistance programs for late mortgage payments. In the meantime, leverage a proactive management team that is directly involved with residents to create rental payment assistance programs.
Some companies are also offering resources to help both owners and residents during the coronavirus pandemic. A high-quality manager also ensures compliance with rent regulations and eviction moratoriums, for instance, that impact the municipalities and states in which they operate.
Another solution to better serve both owners and residents includes providing penalty-free lease breaks. In some cases, it may be better to place a new resident rather than to experience a prolonged vacancy with no rental income.
Adjusting to the Market to Sign New Leases
To prevent negative long-term financial impact, it’s best to adapt to the current COVID-19 situation, which likely means accepting softening rents and higher levels of rental delinquency rates over the short term. Since there is uncertainty as to how long this trend will last, owners should be willing to start taking bold new steps to lease their properties as soon as possible, even if that means renting slightly below market rates.
For instance, it’s recommended that owners utilize one-time rent concessions and/or allow pets in their rental — anything that will help secure a quality resident in the immediate term.
In the interest of retaining existing tenants while also showing some empathy for their current plight, consider postponing scheduled rent increases in light of COVID-19. Also, consider renewing an existing tenant’s lease at their current rate.
Pre-leasing is also an important component for success in the current environment. It allows property managers to reduce unnecessary foot traffic in the home and reduce overall vacancies.
4. They utilize virtual leasing and proven technology to pre-lease and manage property
Quality property managers have people, technology and systems in place to handle — and optimize — the marketing of an owner’s property. This is crucial in the midst of the pandemic: Operators must find new ways to market their properties that enable leasing from the comfort and safety of a renter’s home. Since many managers have portfolios to optimize, not just one asset, they can leverage their large scale and online tools to enhance marketing efforts with property detail pages containing interior and exterior photos and information, 3D tours, self-showings with smart-home automation and more.
Self-Showings Protect Renters
In many states, self-showings are the only way to see properties right now. Renters should have the ability to book self-showings completely online, without interacting with a real estate agent or salesperson and without risking exposure to the coronavirus.
A tech-centric manager provides prospective renters with videos that provide instructions on how to access and secure the unit upon departure.
A tech-forward property manager also makes self-showing appointments easy. A self-showing works like this: A prospective renter simply signs up, goes through a security check and provides a copy of their ID and credit card, and then selects when they’d like to view the unit. Before the showing, the prospect receives a unique access code to tour the property during a specific window of time. The code remains valid only during the allotted time frame. Prospects don’t have to worry about a property manager showing up late to the appointment or hovering over their shoulder while they tour the unit.
After a prospect decides they would like to rent a unit following a self-showing, the online application process should be simple, straightforward and seamless. A prospect can easily pay their application fee online, get approved, set up an account and start the move-in process. All of these steps to lease a property completely online are completed in a contactless manner, mitigating exposure to any viruses.
Once a prospect becomes a resident, they should have the ability to interact with their management team virtually. High-tech property managers have native apps for their residents to pay rent online. Through an app or an online portal, residents should have the ability to make repairs and maintenance requests safely and securely, completely online with contactless property techs.
5. They handle the day-to-day operations of a rental property
Handling leasing, collecting rent, overseeing maintenance and repairs and managing tenant relations is a full-time job. Most small residential property owners have full-time jobs, necessitating a professional property manager to take care of their investment, to manage it and to protect it.
Having an experienced management team becomes even more critical if an investor owns an out-of-state property. A local market expert who can keep their eyes on the property and be available to quickly respond to an emergency situation, especially as new concerns arise from tenants in light of the coronavirus, is needed now more than ever.
6. They provide legal expertise
At the onset of the crisis, new laws on rent freezes and eviction moratoriums were handed down immediately by state and local governments. A property owner may not have even known about the new laws impacting California or Texas municipalities, for instance. That’s one of the reasons it’s imperative to hire a property management expert with local market knowledge: They ensure compliance with local rent laws and regulations, which vary from state to state.
A good property manager has a legal expert on board who is well-versed in legislation impacting rentals, whether there’s a national health crisis or not. They also have good relationships with attorneys to avoid fees and unnecessary legal battles should they ever materialize.
When assessing the value of a property management firm during an economic crisis, a savvy investor should ensure that their property’s returns are optimized, they are consistently provide great customer service backed by data; they can retain tenants, sign new ones and use virtual leasing and other proven forms of technology to manage resident relations; and they have the on-the-ground-staff and technology to handle the day-to-day operations of a rental property.
If an investor lacks the time to perform any of these essential duties to ensure the optimal operation of their asset, they could be missing out on valuable rental income. Consider hiring a knowledgeable property manager with an established track record of helping owners avoid delinquencies, retain existing residents and sign new leases during the most challenging times.