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Effective Tenant Screening Guide

Tenant screening is one of the most important jobs of property management. Screening is done to discover what the prospective tenant is really like, and whether he will be able to pay the rent. Application forms cannot reveal much and they can be falsified; hence, an effective tenant screening procedure must be in place, which will not only confirm the details that the tenant has provided, but also analyze outside information that can provide a reasonable estimate of who the tenant really is. Here are certain guidelines for effective tenant screening.

 

Checking Whether Tenant can Afford the Unit

 

The first thing that needs to be checked is whether the tenant can afford to pay the rent of the unit. As a rule, tenants who are earning at least thrice the rent amount will be able to afford the unit, and are least likely to stop their rent payments. Most tenants feel they can afford the unit, even when they really cannot. Hence, it is up to property management to set rules about income thresholds. Usually, income that is thrice the monthly rent is considered sufficient.

 

Checking for Income Stability

 

A tenant might be earning three times the rent right now, but property management also needs to check whether the tenant will be able to earn that much over the long term. For this, you need to check the type of job, past history of unemployment, and if the tenant is in the habit of switching jobs frequently.

 

Checking Rental History

 

Even when tenants are able to afford the rent, some of them will not pay it on time. Property management will have to check the person's rental history to find out if he has been flagged for late payments. Also, check whether there were any complaints about the tenant being untidy, unruly, or was known to create disturbances. As a general rule do not accept people who have been evicted from a property in the past unless they have squared themselves away, perhaps agree to pay higher rent, and seem level headed when you are meeting with them.

 

Checking for Criminal History

 

People who have a history of doing illegal activities, drugs, and criminal behavior are obviously not fit to be tenants, as they will only cause problems in the community, and eventually you will have to evict them, which is going to be expensive and time consuming.

 

Minimum Requirements should be met Before You Accept any Application

 

Set certain minimum standards, which should include:

 

ü  Minimum income of thrice the monthly rental

ü  No felonies or criminal background

ü  No evictions in the past

ü  Good references from previous property owners

 

When a prospect contacts you, make sure the minimum requirements are made clear to the person on the phone. This will save a lot of time, since persons not meeting these criteria should not even see the application form. Why waste their time at all if they do not satisfy the basic threshold?   

 

Application Process

 

During the application process, collect the following:

 

v  Personal details such as the name, current address, phone number, social security number, date of birth, and so on.

v  Details about current employer, job history, and present income.

v  Details about past and current property owners where the person was a tenant.

v  Credit report.

 

 

How to Attract Millennial Tenants

Millennials, who are in the age group of 18 to 36, make up 25 percent of the total population, and they now prefer living in cities rather than the suburbs. Most of them are students who are making the transition from living on university campuses to apartments in cities.

 

Their requirements would have changed from student housing to workforce housing, but they are still attracted to certain amenities that they have been accustomed to during their campus days. These Gen Y renters have a clear set of things that they consider "essential", and they can easily pass up a property that does not provide these basic requirements. Here are certain aspects that property management should consider if they want to attract the millennial crowd.

 

Convenience

 

The main thing, Millennials look for in any property is convenience. The Gen Y crowd has got used to walking on campus, and they prefer everything within walking distance, whether it is shopping or their place of work. However, they are also not averse to taking the subway, wherever it is easily accessible. Hence, while marketing the units, property management should definitely mention that the shopping area or the subway is within walking distance.

 

Cost and Amenities

 

Millennials prefer smaller living spaces, as they will be less costly. However, the cost is not going to pay a major role when they consider amenities. For most Gen Y renters, the right types of amenities play the most important role in their choice of properties. So, what do they look for? Larger common areas are popular, and so are Pilates studios and fitness centers on the property. Pools, decks, and patios are also hot favorites, along with outdoor BBQs in the common area.

 

If the property is being newly developed then consider having higher ceilings with relatively smaller floor plans. This will not only bring down the rent, but the area will also appear bigger and have a solid or respectable amount of light. Another important aspect that is highly appealing to Millennials is smart storage solutions inside the units. Many apartments now include locks for bike storage directly on the ceiling or wall, which facilitates hanging the bike inside the apartment. Bike storage lockers are also popular, since tenants do not have to carry the bikes to their units.

 

Technology and Social Media

 

Millennials fully engage in social media and technology. Hence, if the property does not measure up to the latest technological amenities or capabilities like Wi-Fi connectivity, entertainment cable network and so on, it will lose its appeal instantly. Secondly, property management will need to have a strong online presence to attract this crowd, since they mainly look to online rating sites, Facebook, and Twitter to find an apartment. Lastly, these renters will expect doing all transactions online, from paying the rent to issuing a complaint.

 

Eco-Friendly and Green

 

 

Millennials seem to be more conscious of protecting the environment than any other section of society.  Hence, providing eco-friendly lifestyle and greener bright attributes could play a role in attracting these types of renters. 

Common Issues in Property Management

Profitably managing an owned property is quite a daunting task. Many owners incur losses, when they are unable to tackle certain situations. Here are five problems that are quite common, while managing properties, and their possible solutions. 

 

1) Maintenance Issues

 

Buildings and individual houses need ongoing maintenance in structural aspects, plumbing, and electrical systems. Anything can pop up at any time, and repairs have to be attended to immediately to avoid inconveniences to tenants. The best solutions for managing maintenance issues is to have a preventive maintenance program in place, and have a professional staff attending to the repairs.

 

2) Handling Tenants and their Complaints

 

Complains from tenants can keep pouring in on a daily basis. These complaints range from small issues with other tenants, to major complaints to do with the state of the property. However, most complaints are to do with repairs or correcting something on the property. It could be about the illumination in the common areas and requests for brighter lights, or it could be about the potholes in the driveway. Every complaint needs to be looked into and cannot be ignored, especially ones that show potential problems in structural aspects of the building. Tenants should also feel that their complaints are being heard and appropriate action is being taken.

 

3) Payment Issues

 

Not receiving rent on time is a major issue faced by all property owners. Most tenants have a range of excuses at hand for not making payments. Missed payments, late payments, check payments are all cause of concern and can eat away at the profits. Solution to this problem requires a multiple pronged approach. Firstly, there should be a person in charge who will go around collecting payments on the due dates, which will make tenants aware that they have to keep their payments ready on time. The second aspect is to levy some penalty or late fees, which is a percentage of the total amount owed. This usually works when the property owner is able to enforce it strictly and with precision and reason.

 

4) Profitability

 

Profitability is affected by several factors and the overall management of the property. One of the reasons could be due to many units laying vacant on the property. This issue can be handled with the right marketing technique for attracting tenants to the property. Proper advertising and good reputation about the property can make a major difference in getting the right tenants. Sometimes, even when all the units are occupied, the business might still run into losses and this could be for a number of reasons.

 

This could be due to charging low prices to tenants or improper overall management. For assigning the proper rental price, it is necessary to have the property assessed to know the actual worth of the lodgings, and analyzing what people would be willing to pay. It also helps to do some research on what people are already paying at similar properties in the area. However, in most cases, losses occur due to improper overall management, and the best solution is to hire a professional property management company that is offering comprehensive services for handling all aspects of the property.

 

 

Amenities that Make a Stark Difference

 

Mostly properties gain popularity by the amenities they provide. When property management considers the requirements of millennials and baby boomers, they might seem different, but there are many similarities, and amenities need not be tailored for any one generation. Here are some of the important amenities that most tenants look for in a property.

 

Storage Space

 

With size of units becoming smaller, most tenants, whether they are young or old, require smart storage solution. People gather belongings and they need a place to store all their things. The unit should have adequate closet space, and a number of cabinets, especially in the bathroom and kitchen area. Apart from storage solutions inside the units, many tenants appreciate storage units nearby that they can easily access.

 

If there were, space available on the property, building storage lockers or allotting basement space would be an acute idea. Many tenants now also want a place to store their bikes, and providing bike storage lockers could attract many prospects.

 

Welcome Pets

 

According to recent studies, about 32% to 35% of millennials and baby boomers have pets. Hence, it is a tremendous idea to provide special amenities for pets, such as pet park area that has adequate space for walking or running dogs. Property management could also consider including obstacles and tunnels in the pet park to make it more interesting. Welcoming the pets into the community by posting their photos on the property's Facebook page is also greatly appreciated by tenants. 

 

Fitness Center

 

Both generations are equally interested in fitness and health, and providing a fitness center or gym can make a big difference. Tenants will love it, when they simply have to walk to the gym, instead of spending time on a long commute. However, exercising equipment should be chosen carefully, which will appeal to both generations.

 

Open Floor Plan

 

An open floor plan will help in making smaller units appear larger. Secondly, most tenants prefer this type of floor plan, as it opens up more spaces, and connects areas having different functions. For instance, people now prefer a kitchen that is openly connected to the living room without walls or corridors. This type of design is especially preferred by tenants who entertain often.

 

Type of Appliances

 

Stainless steel provides a clean and attractive look, which is preferred by most tenants. Even though steel appliances need a hefty investment initially, they work out cheaper in the end due to better durability. Secondly, whatever appliances are provided in a unit, property management should make sure they match appealingly. Having a white dishwasher, brown refrigerator, and black stove, could diminish the looks of the kitchen. Along with the appliances, tenants should be assured about quick repairs and maintenance, if anything goes wrong.

 

Laundry Facilities

 

A washing machine and dryer in every unit is huge plus, but if this is not possible, then at least consider common washers and dryers for tenants in the basement. This is much more preferable than taking a ride to the Laundromat with dirty laundry. Anything is more appealing than that.   

 

 

 

Stellar Property Management: Improving Profit by Effectively Managing Energy Requirements

One of the major costs that can eat away profits is utility bills. Energy is required for heating units in the winter and cooling the home in the summer. It is also required for working all our digital equipment and for powering our security systems 24/7. Even though we cannot do without energy, we can control how much of it is used to keep the budget under control.

 

Many property managers have been successful in reducing energy consumption costs and they have managed to improve revenues without any change in the occupancy rate. Here are a few important points to consider for reducing energy costs.

 

Energy Efficiency

 

According to studies, multifamily properties consume $22 billion worth of water and energy each year in the United States. A research report that studied certain multifamily properties that were involved in retrofitting, found that the communities were able to reduce their energy bills by 20%, and were able to control energy wastage by 25%. Upgrades that provide better energy efficiency may need sizable investments initially, but they always work out cheaper and more economical in the end.

 

Certain financial experts are also of the opinion that controlling the existing energy system can work out less expensive compared to a retrofit or upgrading project. Properties that may not have the funds for investing in high-end upgrades can still reduce energy costs by investing a much smaller amount in using existing systems more efficiently. For instance, staff members can undergo a training program that teaches how to keep boiler and HVAC systems running at peak efficiency.

 

Demand Management

 

First, property management should have a magnificent understanding about how the energy companies are charging for energy in their bills. The next step would be to curb consumption during peak hours and shifting energy loads. The energy demand on the property can be curbed by installing control system and major loads can be shifted to the off-peak hours. Property management can see a major decline in energy costs by lowering demand charges. However, limiting demand can backfire, when the staff is not able to monitor the consumption closely. Certain energy providers impose huge fines when the plan is not followed exactly.

 

Implementing policies for improving demand management can provide fabulous and clear dividends. Bills can be audited by a professional auditor or in-house property management staff can be in charge of monthly audits. A team can also be formed for monitoring usage and recommending the required changes.

 

In case a staff member is in charge of auditing then these things must be implemented:

 

§  Meter readings should be recorded every month, and these figures should be compared with the billed statements.

§  Keep track of incidents concerning heavy loads for comparing off-peak and peak demand charges.

§  Keep a look out for new charges and inappropriate fees.

§  Check current rates as per the contract and verify the cost per unit is being charged accordingly.

 

Check the calculations and computations on the bill to see if it is done as per the contract, and their accuracy as well.

 

 

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