Our property is in really bad shape. Can you turn it around?
How would you respond to a prospective client who posed the above challenge?
Naturally, you’d probably have to ask a few questions to clarify exactly what the prospect meant by “bad shape” before you could provide detailed solutions. Whether you are struggling to turn around a property you currently own or manage or you’d like to be prepared if you’re ever faced with a difficult situation, here are a few challenges and possible solutions.
Vacancy Rates Are Higher Than Occupancy Numbers
This is a serious challenge, one that probably needs multiple solutions. The first step should be to explore what has your property upside down.
- Are you constantly heading to court to start another eviction process?
- Do a large percentage of your tenants pay late or skip out on the rent?
- Is the property in a state of decline or disrepair?
- Have you checked your reputation lately?
- What is the number one complaint you hear from current (or former) tenants?
Screen for Better Occupancy Rates
Let’s start with eviction rates. A TransUnion SmartMove analysis showed resident evictions hit a five-year low in 2014, dropping slightly to 3.41 million. Industry experts suggest the drop indicates tenants today have better control over their finances than they did a few years ago. There are qualified residents out there. If your property struggles with slow-pay or no-pay residents, you may benefit from modifying your resident screening process.
The average cost of an eviction is about $1700. That can really curb your profit margin if you’re filing multiple cases every year. But, don’t make the mistake of thinking one eviction automatically disqualifies an applicant. Two thirds of the 66 million Americans who live from paycheck to paycheck are considered middle class, reporting an estimated net worth of more than $40,000. For these 25.5 million people, any unexpected life event like an accident, job loss or divorce can put their finances in a downward spiral overnight. Utilize your screening tools to help you make informed decisions based on job history, income, and past performance. Look for patterns more than single events.
Check Your Reputation
Managing your property reputation is critical today. One disgruntled customer can instantly spread their discontent around the digital landscape in seconds. Google your address, company name and the names of key personnel to find out what the Internet is telling people about your community. You should respond to any negative information online and if the complainer has a valid point, admit your mistakes and take immediate action to make sure your property doesn’t make the same mistake twice.
Banish the Bugs
It should go without saying, but here it goes. If you have a pest infestation, deal with it today. Seriously, right after you read this article, make a plan. Multifamily housing environments report more bed bug infestations and than other sector, including hotels, motels and other hospitality locations, according to a survey conducted by Orkin. Six percent of the survey respondents faced legal challenges stemming from the infestation. Pest control is an integral job for property managers. Not only do pest damage structures and landscaping, some pose health and safety risks for residents and staff.
Part of your job as a property manager is to talk to owners honestly and openly about issues preventing them from capturing the highest return on investment possible. Perhaps, it’s time to have a conversation about finances and property goals. Before you make that call schedule the meeting, make sure you know the challenges ahead and have solutions.