Some apartment owners may think that turning a profit is easy.
They may believe as long as they stay on top of work orders and collect the rent, the money will come rolling in. Right?
Well, not quite. Although all those daily activities are crucial, it takes more to standout in the market.
These four common mistakes can quickly cause owners to lose their competitive edge.
- Mistake #1. Making Poor Hiring Decisions.
Most owners think they have the best staff. But how do they recruit, train and retain the best?
Hiring a Certified Apartment Manager is one solution. A Certified Apartment Manager (CAM) is an experienced property manager licensed with the National Apartment Association.
As the case with an experienced Realtor assisting buyers and sellers, these professionals live and breathe property management.
They understand the essentials: marketing, risk management, legal responsibilities, human resources, resident relations, property maintenance and financial management.
How to recruit CAM managers? Websites such as Indeed and Ziprecruiter provide excellent job search platforms. These companies allow employers to post qualifying questions that filter through resumes, selectively matching employers with qualified applicants.
Another place to look is the local apartment association. They serve as great resources in networking with certified apartment managers who may be looking for work.
Prior to hiring anyone, owners should check references with an applicant’s last three employers and run background and drug tests.
How to keep a good manager? Pay them well and keep them engaged. Have an established employee manual in place that outlines boilerplate employment policy, pay, holidays and evaluation schedules.
Once hired, a good property manager will be able to use their experience to help make the decisions necessary for a community to excel.
- Mistake #2. Not having a budget
A budget is a plan with numbers. If you don’t have a budget, you don’t have a plan. It acts as the glue that holds a community together. Without it, owners are unable to know how well the community is performing.
How can anyone be held accountable without first having a standard to be held accountable to?
Budgets provide this standard. They give owners the ability to evaluate their community.
The best way to create a budget? Start by opening an excel document and create worksheets for each section of your community’s profit loss statement. Examples of these sections include debt expenses, payroll, utilities, repair & maintenance, marketing & advertising and general & administrative costs.
After labeling each worksheet, begin importing the actual costs associated with these sections from the last 12 months. Once all the data is entered, think critically about how and where to spend money for the next fiscal year.
This can often be an arduous process. Don’t get discouraged.
Once you’re satisfied with the numbers, populate it into one “master budget” worksheet and continue to think critically about where the money is going.
It is also important to budget the income side and let onsite staff take control. This way they are more inclined to take ownership of the budget.
- Mistake # 3. Not using property management software
What property management software do you currently use? Does it generate accurate balance sheets, PL statements and rent rolls?
Does it include lead tracking, work orders, check writing and web portal capabilities? Does your firm use one software system or many systems?
If you feel confident with your answers, give yourself a pat on the back because you have tackled one of the toughest barriers in the industry.
If, however; you feel a little uneasy about these questions, you are not alone. According to a 2017 Property Management Software (PMS) Buyer Report, 51% of multifamily buyers use spreadsheets or other manual methods to manage their properties.
So, how do you fix this problem without blowing the budget? Research industry leading companies and keep things simple. Two specific property management software platforms I recommend are Yardi Genesis 2 and Resman.
Because Genesis 2 was originally a DOS based system, it can sometimes load slowly. But It does deliver important capabilities today’s operators need.
Another popular product is Resman. Resman is considered a software as a service system, (SaaS) — originally created by onsite managers. For this reason, Resman is surprisingly simple. In addition to having a strong accounting framework; Resman’s newer technology enables it to load faster, send text messages and be more compatible with smartphones.
In short, property management software is crucial for operations. But this software is a tool. It is not supposed to take up the whole day. What is keyed into the system is what is reported: garbage in, garbage out.
- Mistake #4. Not effectively utilizing the internet
The internet has generated boundless gains for many organizations.
It has streamlined communication between businesses and customers in a way not imagined 10 years ago.
As a result, this technology has greatly impacted the Multifamily industry.
Cloud based storage platforms such as Google Drive, Office 365 and Dropbox provide owners with document access at their fingertips. These secure outlets protect data from dangerous ransomware viruses and allow operators to go paperless.
Have you ever heard the saying “a business with no sign is a sign of no business?” Well, in today’s market, not having a website is the same as not having a sign.
Through a community’s website, prospective residents should be able to view and even apply for an apartment anytime. Costar sites a study done by Apartments.com and Google stating that “…72% of Americans turn to the internet first when searching for an apartment.”
Moreover, a website must be compatible with smart phones. According to rentping.com, “91% of all apartment residents are likely to use mobile next time they are looking for an apartment.”
Savvy operators who keep their sites up to date and smart phone friendly often show up to work with one or more online applications sitting inside their inbox.
And the process only gets easier from there.
Through online portals, residents can check their account balance, submit work orders and pay rent.
Some portals allow owners themselves to log in and review K1’s and quarterly statements.
By receiving payments through a portal, onsite staff no longer have to handle money; lowering risks of entry error and theft.
But simply having an updated website and portal is no longer enough.
Digital marketing outlets such as Google, Facebook, Zillow and Apartments.com; allow prospects to easily locate their ideal place to live.
Owners who neglect to register with these outlets often miss out on vital opportunities to reach their target audience.
To this end, residents are able to rate landlords and give service feedback.
In her June 28th article titled “Common Marketing Errors Property Managers Should Avoid,” Lisa Calgar sites a Kingsley Associates survey that found that “…90 percent of potential tenants rely on online reviews and ratings when searching for a new home.”
What is the solution? Be proactive. Establish and review your website frequently and use a template that is smart phone friendly.
Ensure that your website is compatible with an online portal and monitor online marketing and reputation management.
All things considered, operating today’s apartment community is not as easy as it looks. It involves experience and dedication. Be mindful of these four mistakes. Owners who do so will see their community flourish.