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Renovations vs. Repairs in Regards to Solid Property Management

Renovating the property has many advantages. A property having a new look or one that offers better features is always attractive for potential tenants, and there is bound to be lesser vacancy rates as a direct correlation. Renovations could be a sure way to improve the reputation of the property and attract more tenants; however deciding upon what renovations to undertake is often a daunting task. And it normally involves some type of executive understanding, maintenance schedule, or management protocol.

 

You have to consider carefully the renovation costs and the expected ROI. Choosing the right remodeling project will not only preserve the property's equity but also its integrity.

 

Minor Improvements and Major Repairs

 

One of the best ways for property management to find out the right renovations is to consider the rental property to be a home rather than just a unit. It also does not have to be a major project, since well thought of scaled down remodeling and renovation projects can provide outstanding and tangible returns. Hence, even minor improvements can make an exceptional difference.

 

Nevertheless, certain major projects are unavoidable when it comes to structural integrity roofing of the building. A leak in the roof could result in a major loss, when units become inhabitable and tenants start moving out. A top priority should be given to preserving the integrity of the dwelling, while everything else can be evaluated as per its cost and potential ROI.

 

Cleaning vs. Replacement

 

The condition of the flooring and carpets has a major influence on the looks of the unit. If the carpets are in fantastic condition then it is not necessary to replace them; however, it is integral to have them shampooed and cleaned. If you are planning to replace carpets, then consider remodeling the apartment with tile of wooden flooring.

 

The project will be relatively expensive but compared to the average life of a 10 year old carpet, the tiled or wooden flooring could last a lifetime. Secondly, if the unit already has tiles, then minor flaws such imperfections, scratches, and chips can be fixed with spot replacements.

 

Painting

 

A fresh coat of paint to the walls makes the unit appear new, and a painting job is required before a new tenant moves in, especially when the previous tenant was occupying the unit for a long time or had been a smoker. Painting can be an inexpensive renovation compared to trying to hiding the smell and the decayed look that cigarette smoke over time can bring to a home. The paint job could be limited to certain walls that show wear, decay, or will probably not inspire potential residents.

 

Bathroom and Kitchen Renovations

 

Renovations to bathrooms and kitchens need investment as well and this should impress any potential renter that the property management shows this work too. If you are on a smaller budget, then consider the option of resurfacing instead of implementing total replacements. Resurfacing cabinetry, showers, and bathtubs can also work compared to a complete overhaul.

 

Usually baths with acrylic coating have a lifespan of about 15 years. Hence, you could use this as a guideline to estimate whether the bathroom and kitchen will need to be gutted and completely redone or if a resurfacing job will suffice.  

 

 

What Property Management can expect in 2015

With the year ending on a relatively positive note, many property managers might be worried about what the coming year is going to hold. Here are certain important predictions by the top experts regarding rental properties.

 

Increase in Demand for Rental Properties

 

While demand for rental units is expected to increase next year, the main demand will be for apartments. This is because many Gen Y members are not eager to start families and therefore are not going to need starter homes. According US Census Bureau the normal level of new households is around 1.1 million, but only 746,000 new households were formed last year.

 

This indicates that it now takes much longer for Americans to complete various rites of passage such as marriage, starting a family, buying a house, and so on. Secondly, the new generation has seen the despair and bankruptcy people had to endure because of the housing collapse, and they do not want to rush into owning a home. 

 

Additionally, it is much tougher now to acquire a mortgage, since the qualifying process is more stringent because for many years banks were forced by the federal government to authorize loan giving to people that should not have been qualified to live in that home. Most of the young crowd has a huge debt to income ratio, since they will be repaying student loans with income from part-time or temporary jobs. Hence, hardly anyone seems to be eager to become a homeowner, and therefore there will be increased demand for rental properties.

 

Major Demand will not be in the Metros

 

Most of the millennial crowd is not seeking to make it big in the top cities. Rather they prefer working and living in areas that have lower cost of living. Secondly, telecommuting has increased dramatically in the past couple of years, which makes it easier for young professionals to visit offices in metros occasionally, since they can deliver their work digitally most of the time. Therefore, all these reasons will contribute towards more demand for rental properties in smaller cities rather than big city metros.

 

Renters will Prefer Walking

 

Renters are choosing to bike or walk rather than drive a car over long distances. This means renters are looking for neighborhoods that will satisfy most of their needs within walking distances. This trend had started last year and is likely to continue in the next year as well, but falling fuel prices might mute the full effect.

 

Older People Prefer Renting

 

In the past, most people who raised children would stay on in their paid for homes, after their children had left. However, recently this trend has changed, and empty nesters are preferring rentals rather than living in the same home they have been living in for so many years. Secondly, these people are in the age group of 50 to 65 and not very old. These couples are also much more active and healthier, and they like to live in happening & vibrant communities rather than dull suburbia.

 

 

Many such people are moving to places where there is more scope for recreation and meeting other people. This trend has mainly developed due to changing lifestyle choices. However, many people have been affected by foreclosures and divorce, as well. Whatever, may be the reason, elder people will also be driving up the demand for rental units.  

How Suitable Property Management can Attract Millennials

When the property is located near college or universities, property management should focus their marketing efforts in attracting the millennial crowd. Each year there are many young renters, leaving their campus environment and looking for a home. Your property could be ideally suited for the Gen Y crowd, but marketing with the right content and tone is essential to capitalize on this demographic. For this, it is essential to know the trends prevalent amongst millennials and their preferences. Here are some tips that will work best.

 

The Right Channel and Tone

 

Majority of millennial crowd hate ads, and prefer interacting. Therefore, social media should be the main channel for informing and involving Millennials. Facebook and Twitter being the two main platforms used by adults, marketing efforts should mainly focus on these two. Secondly, different social media websites appeal to different demographics.

 

For instance, LinkedIn is most used by graduates and people with higher degrees, whereas, Pinterest is preferred mostly by women. Instagram is also slowly catching up and it is used mostly by adults and young people in urban areas. These various platforms can be used to show millennials how they can benefit from the community or how it could provide a specific solution. While interacting on social platforms, focus on key aspects that drive millennials such as sharing, diversity, discovery, passion, and happiness.

 

Authentic and Creative Engagement

 

Being skeptical of ads, property management needs to connect with the millennial crowd through authentic and creative engagement. Here are some tips for effectively engaging their attention.

 

Customization

 

Offer products that can be customized to their preferences and economics. For instance, offer a base package that covers only basic living amenities, and provide additional packages such as high-speed Internet, cable connection for entertainment, gym membership, and so on. When you offer customization, you can attract a much wider section of the millennial crowd.

 

Freebies

 

Everyone likes something that is offered free as an incentive. Collaborate with businesses in the immediate area. Ask them for gift cards and discount coupons, which can be distributed amongst new tenants. This way, businesses find a way to advertise their products, and property management can provide freebies without incurring any costs.

 

Handling Negative Reviews

 

Almost all millenials trust reviews, which have some percentage of negative comments. In fact, when they do not see any negative feedback they feel the review might be fake or censored. Therefore, some degree of negative comments are not that terrible; however, property management should make sure to respond to these comments, and offer their side of the story. Nevertheless, it would not be wise to get into a war of words with people who delight in posting such comments.

 

They do not have to be professional, whereas you do.

 

Improved Technology

 

Millennials love to do everything online, so make sure you provide online portal for doing everything from paying rent to submitting maintenance requests. Other technological amenities that attract millennials would be Apple TVs, docking stations in common halls, electronic keys, and high speed broadband connection with Wi-Fi. Smart storage solutions inside the unit are also very attractive for millennials. 

 

 

Hiring Maintenance Staff

The major part of property management involves regular inspections of the property, and repairs and maintenance tasks. If the property were very small, then hiring a contractor would be a marvelous idea to attend to the repairs and maintenance when they crop up. However, for bigger properties it would be cost effective to have in-house staff.

 

Once you have hired trustworthy and efficient maintenance staff, it will not only make the job much easier, but you will also save lot of money, which will improve returns. However, hiring such a staff at a reasonable rate could be a daunting task and here are some tips that can be helpful.

 

Clearly Define what is Expected

 

Firstly, before hiring anybody, you need to be clear about what you would like the staff to do. You must jot down all the responsibilities that the proposed maintenance staff is to take up. You might feel most maintenance tasks are of general nature, but it is important to match your requirements with the qualifications of the staff, you are planning to employ.

 

For instance, if the property has a particular boiler system, then you would want someone who has knowledge and experience in handling issues with such systems. When you are specific about responsibilities, you can find the best staff suited for the maintenance requirements of your property.

 

Advertising Job Requirements

 

After you have clearly listed the responsibilities that you would want your maintenance staff to take up, then it becomes easy to prepare an ad to attain or receive responses from suitable candidates. If your requirements are vague, then you will have to sift through many candidates, which will be a big waste of time. The advertisement should clearly list responsibilities, and the possible challenges the staff will have to face in the job. Additionally, do not ignore your specific requirements, even when the candidate has been referred to you by someone you know.

 

Interviewing Candidates

 

Before you start interviewing candidates, it would be a sound idea to make a list of questions that are important to you. Avoid time wastage by asking practical and specific questions, which will reveal the suitability of the candidate for the jobs you have in mind. The first few questions should reveal whether the candidate meets your general requirements. If the candidate is promising, then you could ask another set of questions that are more specific and elaborate.

 

You could create certain scenarios that you feel are most likely to occur on your property, and ask the candidate, how best he would handle the situation. This will test the candidate's knowledge and his decision-making skills.

 

What to Look For

 

Apart from specific skills and experience, it is important to know the character of the person you would be employing. Candidates with drug problems or prison records should obviously be avoided. If the person has worked in a similar capacity before, ask for the reference and the reason why he has left the previous job. Additionally, make sure the candidate is responsible, and can manage the work independently & professionally.

 

 

How to Avoid Late Rent Payments

A late rent payment is a major issue faced by property management, since it restricts cash flow and the profit margin can come down. However, late rent payments could be inevitable due to the economy and the sudden changes in the financial situation of tenants.

 

Sometimes payments are late simply because the tenant forgot to send the check or put the check in the slot on time. Hence, some amount of flexibility is required to maintain cordial relations with tenants; however, providing flexibility should not be construed as acceptable behavior.  Here are some tips that can help reduce occurrences of late rent payments.

 

Tenant Screening

 

According to studies, people who have a history of skipping rent are most likely to repeat this behavior. Therefore, the first step would be to avoid renting properties to such people, by having an effective screening procedure. History of rental payment of prospective tenant can be accessed from Experian Rent Bureau. The history will have information about how well the person has paid rent in the past and whether there are any negative remarks. Hence, property management should take tenant screening seriously, and form policies for an effective screening procedure.

 

Punitive Actions

 

Late rental payments can be avoided largely by having some punitive action clause in the lease agreement for defaulters. Initial defaulters could be given a warning, but tenants who regularly skip rent should be penalized with late payment fees. Property management can keep track of such tenants, and keep sending them reminders before the due date.

 

However, the property manager should maintain a personal connection with the tenant and find out why the tenant is paying the rent late. Sometimes it can be a legitimate reason such as health problem or sudden unemployment, and so on. In such cases, property management should judiciously decide whether to be lenient or not. This is always a tricky issue because other tenants will start expecting the same treatment even when they are facing some sort of financial difficulty, which may not be as severe as unemployment or bad health.

 

In case of legitimate reasons, the property’s management can chart out a payment schedule with extended due dates, which is more favorable to the tenant. However, a firm stance should be taken against repeat defaulters, and tenants who are not able to keep up with the revised payment schedule.

 

Eviction should be the Last Resort

 

Leniency towards certain tenant who has legitimate reasons for paying the rent late could be warranted. However, when the problem persists and the tenant is not paying the rent due to habit or circumstances, property manager cannot afford to lose income. Therefore, ultimately, evicting the tenant will be the only solution to the problem.

 

However, before taking concrete steps to evict the tenant, property manager can serve a "pay or quit" notice, which will make the stand taken by property management quite clear. If the tenant does not respond even to this notice then the eviction process should be initiated immediately. There are laws governing the eviction of tenants, and property management should make sure not to break any law; otherwise, the eviction can prove very costly, and the defaulter might even win the case in the end.

 

 

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