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How Property Management can Increase Rents without Increasing Vacancies

Property owners are allowed to increase the rent of their units each year but it is limited by a percentage fixed by the law. For 2015, the allowable rent increase is 2.5% for residential tenancies. However, the rent increase is more of a balancing act for property management and property owners, since they could end up with a loss if the increase has caused some vacancies to materialize. Here are some important points to consider, before you make a decision to hike rents in an economy that is nothing to write home about.

 

Assessing Tenants and the Market

 

Research has to be conducted in two areas, and property management will have to assess tenants' value and the state of existing rental market. In order to assess accurately consider the following points:

 

For Tenants

 

*      The last time rents were raised

*      Who are the valuable tenants and can you risk losing them

*      Can you consider excluding certain high-value tenants from the rent hike to avoid the risk of losing them

 

For the Rental Market

 

§  Review rental rates of similar properties and see how they match up with rent on your property

§  If your rates are higher than other, what features or amenities justify the high rate

§  Is the demand for your type of property higher than usual

§  Your current rate of vacancies

§  What type of units are more in demand, for instance smaller units compared to bigger ones, and should you consider hiking rent for only units with higher demand

 

Announcing the Increase in Rent

 

Obviously, nobody is going to be happy with an increase in rent, but the negative effect can be reduced largely by effective communication in a professional, clear, and polite manner. Use the official medium for announcing the hike, which is usually a printed notice on company's or property owner's letterhead. The language should be simple to understand, concise, and include some of the reasons for justifying the increase, so that number of complaints can be reduced before they occur.

 

Formulating a policy where you tie the increase to an indexed measurement would be an incredible and judicious idea, since that way you can avoid surprises and it can help tenants plan their budget accordingly. For instance, a consumer price index would be a magnificent point of reference to base the increase.

 

After the Announcement

 

After the increase in rent has been announced, be ready to respond to negative feedback and even outright anger and shock from tenants. Ready a list of legitimate justifications, which you feel were the main reasons behind the hike in rents. Some of the reasons that most tenants will understand them to be legitimate are higher costs of repairs and maintenance, expensive janitorial service, higher cost of utilities, and increased rates of property fees and taxes.

 

If you are planning to improve features and amenities for enhancing the living experience of tenants then make a point to mention it to them. However, first make sure, most tenants will value such improvements. There is not any point in increasing parking spaces for instance if everyone already has a spot to park and there are already enough extra spots available. Finally and moreover, if you have not raised the rent in a long time, point out the duration since the last increase in rent took place. But keep in mind that the economy has not improved in years so that date may not mean as much.  

 

 

 

Handling the Move-In Process in Property Management with Acumen

An effective move-in process involves much more than simply signing lease documents and providing the keys of the unit to the new tenants. Most property managers do not give much importance to the move-in process and are not even equipped with a thorough checklist. Even though this is a simple task, it can backfire if it is not thought of and executed properly.

 

Being a Professional Organization

 

The most common issue is when the tenant is moving out and is leaving a mess behind. Most tenants will claim that they are leaving the unit in exactly the same condition as when they moved in. The only solution to this problem is to have a checklist procedure that documents the state of the unit when the tenant is moving in. The property manager could document each item on paper and rank the state of the paint and other features of the unit, but this would be a lengthy and inefficient procedure.

 

Eliminating Ambiguity

 

Now, with the ready availability of digital devices, it would be ideal to document the state of the unit by using a digital camera. The property manager could click photos of the items or could take a walk-through video that documents everything in the unit. The photos and videos provide substantial proof of the state of the unit at move-in, and they do not leave any room for arguments or denials.

 

An effective move-in checklist will also provide a reference to check maintenance and repairs requests. Many tenants are in the habit of making repair requests for items that have not been damaged by normal wear and tear. When the move-in checklist is available, property manager can show proof of the item being in solid condition and that the tenant would have to bear the expense for repairing it.

 

First Rate Organizations know about First Impressions

 

Move-in checklists are actually meant for protecting the rights of property management as well as the tenant. The checklist will protect property management from costly damages, and the tenant from foregoing security deposit unnecessarily. Move-in checklist also provides a strong indicator to tenants that the property management is quite serious about the condition of the property, and does not tolerate any damages. The tenant will receive this message quite clearly, and will be more cautious in using the items and maintaining their condition.

 

If someone is moving into a rental unit and it seems the property management does not have it together, loses the renter’s paperwork, does not have keys at the moment for the unit, does not show up on time, the unit is not even cleaned yet, and so on indicates to most professionals and students (certainly their parents) that this property is not ran well. To most decent and dignified people, this could be wakeup call that perhaps this is not the place you want to be doing business with. First impressions matter in any professional setting.

 

Lastly, move-in checklists offer peace of mind to tenants, as they know their security deposit money will be safe and will be given back to them when they move out, if they maintain the place properly and avoid damages. Coordinating the document signing and move-in inspection is usually a daunting task for property management, but it has to be handled efficiently. It is best to have a protocol or a sequence of things that need to be completed within a given period.

 

Processing New Renters should be Routine

 

The lease document and move-in inspection and checklist are equally vital, and any mistakes can prove costly to both parties, especially to property management. However, tenants should not be rushed, and they should feel welcome, since they will be forming their opinions of the place when they are moving in as already indicated, and these impressions will play a major role when they will be extending their lease later.  

 

 

How Property Management can Handle Challenges of Heavy Snowfall

Winter weather hits hard each year and property management is faced with the challenge of snow and ice on the property. Precipitation and snowfall has been steadily increasing each year, and this year it is expected to gain new momentum.

 

Apartment properties are especially at risk during heavy snowfall, since they can be dangerous and damaging to the property and residents. In 2013, there was a record seven feet of snow, which caused roofs to cave in, and FEMA (Federal Emergency Management Administration) had to declare a disaster designation.

 

For property management protecting the units and residents during heavy snowfall is a challenging task, and digging and clearing the snow is even more challenging and arduous. Many workers who are hired to remove snow sustain serious injuries every year, and some are even killed. Injuries and fatalities are usually caused by falls through skylights, from roof edges, and from aerial lifts and ladders.

 

Property management should regularly listen to weather forecasts, and before expected snow or stormy weather, devise an effective plan for safely removing the snow from elevated surfaces and roofs. Here are some tips for removing snow effectively and safely.

 

Use Special Equipment and De-Icing Agents

 

One of the best ways to avoid injuries and fatalities is not going on top of the roof to clear the snow. Instead, use draglines, snow rakes with extensions, and de-icing agents. Property management could also consider installing de-icing system on the structure, comprising of heating elements that will minimize buildup of snow on the eaves and roofs.

 

Mark Hidden Hazards

 

Falling is the leading cause of injuries and fatalities, and many of these falls are through vents, roof drains, and skylights. Property management can make it safer for workers by providing a map of the roof and highlight these hidden hazards, so that workers are aware what lies underneath the snow at those points on the roof.

 

Consider the Load of the Snow

 

Snow removal should be done in a systematic and uniform manner to avoid unbalanced loading. Certain important things have to be considered before the removal task, including the weight of the workers, equipment, and the snow's weight. Estimating the weight of snow, and the weight a roof can cope with, is quite difficult. The focus should be on uniformly lessening the load, rather than removing the snow completely.

 

Protective Gear and Safety Rules

 

Property management should make sure workers are wearing the appropriate clothing and they should be equipped with protection gear just in case they actually do fall. While ladders can be used for accessing rooftops, it is important to see that workers are not using a shovel or snow rake while climbing or working from the ladder. Injury and illness is also possible from too much exertion and exposure to the intense cold.

 

 

Make sure workers are wearing warm clothing suitable for extreme cold, to avoid hypothermia and frostbite. Provide adequate rest breaks to avoid exhaustion, back injuries, and dehydration. These conditions are known to cause falls and serious injuries and even fatalities which is a serious detriment to the entire operation and business. 

Is there Rising Demand for Smaller Units?

Many people are under the impression that Gen Y and millennial crowd prefer smaller living spaces. This may be true to a certain extent but the demand for micro units has not risen sharply. Micro units could be classified in the 200 to 600 square feet range, and in urban areas, these units may not be game changers. According to a report by Urban Land Institute, units that were below 500 square feet formed only 2.7% of the real estate market in 2012-2013.

 

Additionally, many developers have not considered this segment when they are developing new properties. Most developers are unwilling to downsize after considering the performance of micro units compared to larger floor areas. Even though minimum unit sizes have an appeal for the millennial segment, they are being redefined for millenials wanting more living area.

 

Small Spaces Sought After

 

Most property managers and property owners feel that young professionals in urban areas would consider favorably units with bigger areas that provide better living and entertaining facilities. Another interesting development is the millennial segment that is doing well in their professions and businesses. Many developers want cater to their needs and they feel increasing the square footage would be a sunny idea. In many properties, apartment units that were around 550 square feet were booked in record time.

 

Nevertheless, recent studies also show that the number of single adults and single households has grown steadily for the past seven decades, and so has their concentration in urban areas. Single adults seeking life in the midst of urban areas have a low rent paying capacity, and therefore prefer micro units. Secondly, studies also show that occupancy rate of smaller units were overall higher, and they had the best occupancy rates at around 91%, in new developments that were finished recently during the year.

 

The Hot Spots

 

Smaller units are appealing to those residents who simply prefer less living space, and those who like to live in trendy locations with limited finances. However, certain city councils seem to be opposed to the idea of smaller apartments and are implementing size restrictions on new developments. This is mainly to pacify residents who do not like living near micro units and the tenants they serve.

 

The Trend is Shooting towards Smaller Spaces

 

Most developers are now considering upping their square footage, since they not only want to meet the city council restrictions but also want to meet the demands of future renters who prefer increased footage areas. However, many developers whose average floor plan was in the 850 to 880 square feet range are considering switching to 650 square feet plans.

 

 

In view of all these developments, property management should focus on demographics that are able to afford larger floor areas, rather than restricting their efforts to only single household segment. Competitive pricing could play a role in attracting new prospects, but one has to be careful not to lower the rent drastically, since it might reflect on the state of the property. Secondly, young couples have dual incomes and they do not want to own a property, but prefer rentals with appealing features.  

An E-Payment System is the Best Option for Collecting Rent Payments

There has been an alarming increase in book manipulation by property management staff to steal rent payments and at the same time causing undue stress on residents and other property management employees. This is because some residents are being wrongly evicted which does not help anyone. These residents paid their rent on time but because of internal theft, their rent payment is never recorded.

 

There have been cases where the site employees have diverted large amounts of rent payments to their personal accounts, and rent checks have been reported stolen from drop boxes.

 

Ultimately, it is the paying tenants, the property owner, and the property management company that suffers. Even though most of these crimes are solved, residents have to endure inconvenience, stress, and even agony, including legal payments and issues as well. The consequence is a much greater loss than the rent payment or money order was worth.

 

The best solution to these issues is implementing a secure electronic payment system. Such systems can now integrate seamlessly with payment sources and many popular property management software, thus minimizing the risk of fraud and theft. For residents who do not have credit cards or bank accounts, can still make cash transactions and make their rent payments through electronic money order from anywhere.

 

The level of integration available in today's systems enables cash payment transactions from numerous retail locations, which can be done securely and without risk of employee theft. Tenants do not have to make a separate trip to purchase a money order and then deposit it into the drop box. In most instances, they can make their payments while they are shopping for their groceries.

 

Integrated electronic payments systems provide several advantages to tenants, as well as property management.

 

Security and Convenience to Tenants

 

Tenants can make their rent payments securely through an integrated electronic payment system. Retailers or shops in the area are designated, which offer the electronic portal for payments. Residents can make their payments any time, even after office hours, and there is no necessity of depositing payments in drop boxes.

 

Helps Property Management in Eliminating Internal Fraud

 

Identity theft and other types of fraud are possible when the checks provide personal information, account, and routing numbers. This information can be easily stolen and manipulated from checks, whereas in an electronic payment system, all this information remains secure and it is not easy to pilfer.

 

Efficient Process

 

An electronic payment system will eliminate the paper trail at the property office, and employees will not be able to manipulate account books or even a record keeping system kept on a computer. In fact, employees are not involved in the whole process, and only an acknowledgement is received by the office that the particular resident has made his rent payment.

 

Real Time Transactions

 

Rent payments can be made in real time from anywhere. Even when the tenant buys an electronic money order, the payment is posted to the tenant's account in real time.

 

Integration with Property Management Software

 

Certain property management software allows full integration with electronic payment systems, while others can interface. Both ways the payments are accepted according to conditions and rules mandated in the system, which ensures a safe and secure transaction and easy processing. 

 

 

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