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As you venture in to a new year you may be re-examining your goals and the challenges that go with managing property. The economic recession has created volatile markets, including the real estate market. In the years I have been in this business I’ve seen upswings and downswings in the rental market. The market area I live in is currently experiencing one of these downswings. Vacancy rates are reported throughout the area from 10-25% depending on location and rental rate. And in some buildings, units higher than $800 per month are seeing the highest side of that range.
Now more than ever, it is critical your management company works a targeted plan to fill vacancies and maintain top-notch customer service for the existing tenants. Management companies must think outside the box and be willing to implement new processes and offerings setting them apart from others in the rental industry. There are several facets to this and the following is by no means inclusive of everything that can be done, however, here are a few key items that can make all the difference in your property’s vacancy rate.
Communication: In any organization, clear communication is critical to success. Your management company should periodically let you know how they are doing, and allow you to ask questions, express concerns and provide suggestions. Some of the best ideas I’ve had regarding marketing, property improvements and other lease-up strategies have come from owner-clients. Your management company’s willingness to keep an open mind and share their successes and failures demonstrates not only their attention to your property but the ability to change and evolve with the rental market.
Likewise, communication with tenants is another critical component to stellar management. Retaining tenants, addressing problems and questions in a timely fashion, and asking for tenant feedback are all important to managing your property. Sending out tenant surveys, secret shopping employees, and tenant events are all great ways to keep the lines of communication open so tenants know they are heard. The smallest thing can have a significant impact on tenant satisfaction. A fresh coat of paint, clean carpets, a new light fixture, all are relatively inexpensive improvements that benefit the value of your asset and demonstrate to tenants that management and owners care. And the costs of these items most likely outweigh the turn over costs incurred for advertising and re-renting the unit.
Marketing: Make certain your management company has a system that tracks activity, providing feedback on marketing tools, advertising and the closing rate of the rental agents. Does the advertising your management company schedules reflect where the leads come from? If 80-90% of traffic comes from drive-by and/or internet is there appropriate signage in front of the building? Are all the internet advertisements updated and current? Has the management company looked for other sites to supplement their internet presence? In many markets, newspaper and other print media have drastically fallen to the wayside as a vehicle to recruit tenants. Ramping up your property’s internet presence is crucial. Look to sources such as Google ad words, facebook, linkedIn, local rental web sites, craigslist and other internet sites. One of the best parts of advertising on the internet is it is inexpensive, if not free in some circumstances.
Incentives and “Free Rent”: When vacancy rates soar, tenants have a huge selection of properties to choose from. Many properties offer huge rent discounts, free rent, upgrades like paint, garages or appliances and other incentives to lure new tenants. Customers are savvy when shopping for their next apartment and ask for these things up front and use their position to negotiate the best deal for their budget and needs.
For management companies, the solution can be two-fold. One, your management company should make the effort to be top-of-mind when tenants are looking for a place to live. And second, management companies need to sell prospective tenants when showing them your property. This takes a combination of stellar sales technique and the right combination of meeting their needs and/or offering incentives to close the sale. Too many times inexperienced leasing agents throw out the incentive before they know what the prospect needs or wants. Finding the unit first, asking the right questions and then offering an incentive to close the deal will ultimately result in higher closing ratios and a tenant who is convinced of the value of the features and amenities of the property.
Ultimately, as an owner, you need to choose a management company you feel comfortable with, one you can communicate with–ask the questions and get relevant answers. Make sure your management company is paying attention to marketing the property and that they track the traffic to your property. Training their employees on how to sell and when to offer incentives is another critical component. If you aren’t satisfied with the answers or the results, it’s time to re-examine your management strategy. Your management company works for you, make sure they are committed to managing your investment as if it were their own.
Jennifer Fleming is Broker Associate and co-owner of Legacy Real Estate. Her expertise lies in commercial and residential brokerage, real estate investment, historic redevelopment, development, and property management. Jennifer possesses an extensive knowledge of Sioux Falls market conditions and is experienced in historic renovation and Historic Tax Credit programs, lofts and downtown development. Jennifer leads the Legacy team of brokers, property managers and support staff. Jennifer has a BS from South Dakota State University and is a member or Sioux Valley Optimists, Women in Networking and other local service organizations. Contact Jennifer @ 605.376.1308, via Email or View Jennifer Fleming’s profile.
