Resident Retention

Resident Retention

Does your current management company have a resident retention plan?  Do you have a clear idea of what it is and how they plan to execute it?

Turning an apartment on average costs $4000.  You can calculate your actual cost here: http://www.multifamilyinsiders.com/apartment-turnover-cost-calculator.

A few of those a month could seriously affect your bottom line.

So how do you mitigate these costs?  The easiest way is to staunch the flow of move outs.  A knowledgeable manager has several tricks up their sleeves to accomplish this.  An effective resident retention plan should include the following:

1.       Knowledge of the submarket.  All managers should know what the rental outlook in the city where your asset is located looks like. (If they don’t it’s time for a change!) In addition to that they should be an expert at their submarket, the 5 mile radius surrounding your property.  Touring, market studies and constant communication with their direct competitors is a must.  How can they sell your asset over another if they have no idea what their competitor is offering?

2.       Knowledge of your asset.  This should be a given, but I think if you were to interview your current manager you might be surprised at how little they know about your asset.  Do they know what year was built, what the current demographic is or what your number one lead generation tool is?

3.       Customer Service. This too should be a given but have you had a chance to read your resident’s comments on www.apartmentratings.com? I think you might be surprised by what your tenants say about the current staff and the way their concerns are handled.  No one will resign a lease if they feel that they have been mistreated, their service requests not handled or they get attitude when they come into the office.

4.       Lease expiration matrix. This is not a new idea but it is one that isn’t widely utilized.  Making sure that your lease expirations are spaced throughout the year can lower your vacancy loss significantly.  For instance if you have a 40 unit property, you do not want 8 leases to expire in December (traditionally the slowest leasing month).  Those apartments will likely sit vacant for several weeks, maybe even a few months killing your NOI.  A good manager will make sure that the majority of your lease expirations are occurring in the warmer months therefore making them easier to rent and lowering your vacancy loss.

5.       Vendor Relationships. If your manager does not know your turn vendors on a first name basis, they are probably not getting you the best deal.  Most vendors will offer discounts to the companies that utilize them the most.  They will also make sure that they are mitigating costs and giving you the best service because of the established business relationship.  Your manager should be your number one cheerleader and should be running your asset as if it were his/her own.

Not all tenants will renew.  Some must move for financial, family obligations,  a job or they have purchased a home.  We cannot save every lease.  Make sure you know why your tenants are moving though.  Find out what is your number one contributing factor to turnover.  Then do everything you can to stem the tide.

Athena Magruder

Vice President Operations

Mission Real Estate & Property Management, Inc.
3600 Pegasus Dr #15 Bakersfield, CA 93308
www.missionre.com 

Renters Insurance?

If your current Property Management Company is not requiring your tenants to carry renters insurance, they should be!

The cost to repair a 1,000 square foot apartment in the 93308 zip code from a typical water leak averages over $12,000. (estimate from www.homewhyse.com)  Ask yourself how many tenants do you have that could come up with that much cash to reimburse your expenses?  In my experience there will not be many.

Requiring renters insurance is a must to protect your investment.  For a minimal monthly fee, your tenants will have the liability coverage they need to assure you are not stuck footing the bill and then subsequently tracking down a previous tenant for a debt that they will never be able to repay.

In addition to covering your investment, renters insurance can be a lifesaver for a renter who experiences a burglary.  In November of 2012 (while I was in the hospital after the birth of my daughter) my home was robbed.  In the two hours the house was empty, the thieves made away with over $7,500 worth of my personal belongings.  We were hit again in December, (while we were away for Christmas) for a total loss of over $5,000 this time.  Thankfully we have a renters insurance policy that covered replacements for all of our things.

Mission Real Estate & Property Management requires that all of our tenants carry a minimum of $100,000 in liability insurance.  Our technology partner, Appfolio, makes this process easy for us with integrated insurance solutions.  We are able to offer our tenants liability insurance with rates as low as $9.50 a month. The average renter's policy costs just $185 a year, according to the National Association of Insurance Commissioners.  Very affordable for nearly every budget.

The idea that requiring prospective tenants to carry renters insurance will drive away business is no longer the case.  It is becoming an industry standard.  According to a Rent.com survey, 40% of renters have carried renters insurance.  Nearly half of the prospects we tour will already be familiar with renters insurance. A survey last year for The National Multi-Housing Council, a national association representing the interests of larger apartment companies, indicated that 66 percent of the 45 participating companies required residents to have renters insurance in 2010. That was up from 44 percent in 2009 and was a big leap from 24 percent in 2008. The companies represented a total of 750,000 apartments.

Don't set yourself up for a serious financial liability.  Ensure that your tenants carry renters insurance and save your self the hassle, expense and headache.

Athena Magruder
Vice President Operations
Mission Real Estate & Property Management, Inc.
3600 Pegasus Dr #15, Bakersfield, CA 93308
www.missionre.com

Welcome

Welcome to Mission Real Estate & Property Management, Inc. A Real Estate and Property Management firm servicing Kern County.

Mission Real Estate provides each client with a line of services including:
Full service brokerage firm providing our clients with a full spectrum of services including the acquisition, management and disposition of your asset.
Local representation from a broker and agents that work out of our Bakersfield office.
Ability to work with all types of financingincluding, FHA, VA, Conventional and cash purchases.
Specializing in investment purchases with an emphasis on return.
Ability to coordinate with pre-screened vendors. Due to the volume of business we give our qualified vendors, we have established competitive prices with them. Nevertheless, we still bid out large repairs or improvements to be sure we receive a competitive bid from them.

www.missionre.com