According to Fair Housing Act of 1968, it is illegal for property owners and property management to refuse tenancy to an individual based on religion, sex, race, national origin, disability, or family status. However, a property manager has to consider the prospective tenant's finances and ability to pay the rent. Therefore, property management should have strict policies based on consistency and fairness, regarding screening of prospective tenants. Here are some important criteria that can be implemented into the screening process.
Establishing Income Level Requirement
This might involve extra work, but it will save a lot of time in the end for a property manager. When there are different types of properties, or different types of units on a single property, property management can work out the minimum income a prospect should be earning for renting the particular unit. For example, if there is a one-bedroom unit that has a monthly rent of $600, the minimum income requirement could be fixed at $1,800. All applicants for such a unit whose income is below the required level are to be declined without exceptions.
Policies for Reviewing Credit Report
A credit report is a strong indicator of the prospective tenant's finances. However, there are many ways to judge a credit report, especially when the economy is not doing well. Many property managers consider various aspects, apart from the figures shown in the credit report. Hence, if you are willing to accept a tenant with a low credit score, while considering other aspects, then you should consistently apply the same policy to all prospective tenants. Once a particular standard is fixed, it should be uniformly applied without any exceptions.
Considering rental history of a prospective tenant is quite important, as it provides a picture of what type of tenant the person has been in the past. An application can be legitimately denied if the rental history shows, damaged homes, evictions, and/or consistent late payments of rents. Again, if you are basing your policies on rental history, then they should be consistently applied for all, and not be biased towards a specific group.
Job stability is an important factor to consider while screening prospective tenants. Evaluating employment history of the individual will provide information about how long the person is able to hold on to a job. However, it is difficult to frame an exact policy about reviewing job history, as many factors can come into play regarding job changes. Individuals, who are just starting out on their career might have to change jobs to find better opportunities according to the experience they have gained.
Secondly, a person who has recently moved into the area might not have enough time in a particular job, which might indicate instability. Hence, it is important to carefully chart out all types of exceptions and apply them uniformly.
While screening tenants it is important not to take cultural background, disability, familial status, sex, or race into consideration. Secondly, whatever standards are adopted for screening various other aspects, they should be uniformly applied to all.
Apart from regular inspection of the common areas, a property manager has to carry out inspection of each unit at least once a year. Having magnificent long-term tenants, who correctly renew their leases each year, is definitely a boon. However, property management will never have a chance to inspect such units when they are vacant, and hence it becomes imperative to carry out inspections when these units are occupied.
Property inspections are unavoidable because property manager must have a salient idea about the condition of the unit, so that repairs and maintenance can be carried out wherever required. However, inspection of occupied units is usually not appreciated by tenants, and must be handled carefully.
Provide Prior Notice of the Inspection
The lease should have a clear clause stating that property management will be carrying out annual inspection of the unit. Even with such a clause, the property manager will have to provide prior notice before inspecting the unit. Surprise inspections are to be avoided, unless there is suspicion of the tenant violating the lease agreement or general restrictions. Even in such cases, one has to be careful, as the law requires you to provide advance notice before inspection.
Make Tenants Understand the Importance of Inspection
Proper functioning of appliances, electrical systems, and structural integrity is important for the tenant and for property management as well. From a small thing like a tile chipped in the bathroom, to a maintenance check of the HVAC system, all issues can be sorted out efficiently by annual inspections. Hence, make the tenant understand that the inspection will prove to be mutually beneficial, and there is no need to be opposed to the process.
Tenant should be Present During an Inspection
Make sure at least one of the tenants occupying the particular unit is present when the inspection is being carried out. This will not only prevent any accusations later about theft and so on, but also you will have the chance of inquiring about any potential issues or complaints the tenant might have with systems, appliances, plumbing, and structural integrity of the unit. Most tenants are happy about the inspection, since they acquire a chance to air their grievances or suggestions.
Do not Photograph Personal Items
Property manager might want to take a photo of the bent windowpane or of the chipped flooring, to show it to the maintenance staff. This is fine, provided the photo does not include any of the personal items of the tenant. According to rules, property manager is not permitted to take photos of personal items such as valuables, family photos, pets, computers, and even pictures of the tenants.
During inspection, the property manager might come across units that are very badly kept or the tenant might even have caused considerable damage. However, it is not a terrific idea to confront the tenant about such issues face to face, but rather send a written notice. The manager will have to document and enumerate each issue clearly during the inspection, and then put it all in a letter, stating the terms and conditions of the lease agreement that are being violated.
With improved technology and advanced online applications, the task of protecting privacy and personal information of residents has become more challenging for property management. The task of securing online personal data is in itself a major worry, and there is no foolproof way of ensuring privacy. However, by implementing proper policies the data of your tenants can be protected for the most part.
A Noble Campaign
Marketing strategies for the property are now mainly aimed at creating a brand image and in creating a personalized experience. This translates into happier tenants, lower vacancies, and a better retention of fantastic tenants. To implement the marketing strategies, a property manager will have to design advanced techniques for collecting information and generate effective mobile campaigns. This will not only help in retaining old tenants but also help in finding new prospects.
As if it was Your Own
Property management gains immensely by integrating collection of data and developing personalized strategies. However, along with the advantages of such techniques, the risk of personal data being breached also increases tremendously. Even though these risks exist, most of it can be mitigated by providing proper training to the staff and effectively managing information collecting techniques.
Property management can include some effective strategies such as:
- oDesign strict internal policies to ensure protection of tenant privacy.
- oRestrict access of employees to sensitive paper as well as electronic information. Routing of information should take place in a way, where private information is available only to select designated personnel.
- oRoutinely change PIN numbers and passwords once a month, and especially when a key staff member is terminated, retired, or transferred.
- oAll digital information should be protected by passwords and online data should be protected by specialized software that prevents spying and hacking.
- oDigital storage media and printed documents should always be secured in locked cabinets, and access should be restricted to few responsible staff members.
- oIt is best to have a shredder in the office for disposing outdated documents.
- oDevise safe policies for social media engagement and the information routed through these channels.
Apart from digital and online security, property management should not ignore the advantages of having a separate space that is designated mainly for meeting with tenants and prospects. Conversations taking place between property manager and tenants should be kept private and therefore having a separate office space or meeting area is critical.
Leasing or renting procedures, especially applications and renewals will generate lot of personal information. Employees should be trained to protect this sensitive information, and when separate space is not available employees should be instructed not to state social security numbers, phone numbers, and other types of sensitive information aloud, but rather point it out on the document.
While training employees for protecting personal information, property management should focus on how the employees should respond to information requests from:
- Other employees
- Law enforcement agencies
- In case of emergencies
Protecting privacy and personal information will require proper planning and a coordinated effort of the whole property management team.
Taking regular inventory is critical for having proper control over assets. This also holds true for property management, who not only have to keep track of inventory but also need to implement strategies for maintaining a respectable return from their assets. Properties should have a policy of conducting an annual inventory, which will provide the property manager adequate information to review and control the assets. Here are the main advantages of the annual property inventory.
Estimating Replacement and Insurance Costs
Inventory will provide detailed information about assets that includes supplies, fixtures, and furnishings. This information will help the property manager in making a decision about the type of insurance required and the coverage limits. Secondly, for taking insurance itself, you need to provide an accurate inventory of the assets to the insurance company. Failure to accept the proper coverage will mean increased risks, while paying for coverage on nonexistent assets will be a waste.
Reviewing each unit annually for the inventory will also help the property manager in detecting potential issues early, and repairs can be done immediately to prevent expensive breakdowns. For instance, timely cleaning of the HVAC unit could mitigate costly damages and replacements. While taking inventory, the usual checklist for units should include:
- §Bathroom fixtures
- §Window treatments
If the units are fully furnished, then convenience items like dishes and linens will also be included.
Preserving the Image of the Property
Appliances and property tend to become damaged, succumb to time and decay, or they simply seem to disappear over time, especially in the high frequent areas. This will make the property look quite shabby as years go by. Regular inventory will help property management detect items that are missing or damaged. Replacement of damaged or old items such as trash receptacles, flowerpots, and decorative fixtures can improve the image of the property substantially. With regular inventories, the property manager can figure out items that require frequent replacements and repairs. Such items can be replaced with things that are more durable, or they could be shifted to places where the traffic is not heavy.
Control over the Budget
Annual inventory covering the whole property will provide critical information that can be used for maintaining better control over spending and overall budget for the next year. Costly items such as digital devices, maintenance tools, and office equipment should be tagged with identification codes that will help in monitoring and tracking them more closely. Regular inventory will also promote a better program for asset management, which will be able to identify wasteful spending. Inventory will also help property management to record losses while filing tax returns and valuable data will be available for making more accurate budget estimates.
Forming a policy and introducing an effective system for taking inventory every year has many advantages for property management. The property manager will be able to exercise tighter control over the budget, and reduce wasteful spending which in this recession, could be the difference of creating strong financial health or insolvency. Damaged and old stuff can be repaired or replaced in time to avoid and more expenditures and to avoid a reputational hit, while the image of the property can remain unblemished.
Almost all property owners like to have a security deposit from their tenants. This deposit is used for repairs if the unit is damaged by the tenant. The money is kept in a separate account and returned at the end of the tenant's lease. However, the security deposit has always been a contentious issue between tenants and property management or property owners.
In certain instances, where the property owner has not returned the deposit, the court has awarded twice the amount of the deposit as damages to the tenant. Therefore, the property management has to be very careful while handling matters concerning security deposits and here are some pointers that can make this task easier.
Know State Laws
Property management should be clear about the state laws regarding following aspects:
- §How much amount can be collected as a security deposit
- §After receiving such a deposit, how fast it should be deposited in the required account
- §Whether any interest has to be paid to the tenant, and how such payment should be made
- §Whether any reports need to be generated regarding the deposits
When it is a residential property, all state laws are clear about equal treatment, and being nondiscriminatory in charging these deposits.
Do not Categorize it as a Type of Rent
Security deposits have to be returned to the tenants at the end of their lease provided they have not caused any damage. Therefore, they should be treated as a deposit and not categorized under rent.
Charging Less is not a Marvelous Idea
Some property managers think of charging a lesser security deposit than what is legally allowed, in order to attract more tenants. However, this is a big risk, and it can cause many issues in the end, which can cause more loss compared to having lesser tenants. By charging an adequate security deposit, property management can:
- Weed out prospective tenants who are financially unstable
- Create a hedge against default in rents
- Create a protection against unannounced departure of tenants
Open Separate Trust Account
The bank where the amount is deposited, should know the money is for escrow or trust funds. Such funds are not forfeited, even when the property owner or property management is encountering legal problems. Secondly, even when the state laws permit mixing the security deposit amount with a rent account, it is always better to open a separate account, since that will keep the amount safe from accidental spending.
Record it on Video
A security deposit is the most contested issue, and therefore it would be wise to take a video recording of the condition of the unit when the tenant is moving in, since this provides strong evidence if the tenant takes the matter to court. In fact, the tenant can be provided a copy of the recording or a link to the video, which will help in resolving any issues, even before they start.
Inform the Property Owner about Policies
The property managers should inform the property owner about the policies adopted regarding security deposits, since there should not be any inconsistencies in this regard, when issues arise. And they most certainly will!
One of the most important jobs of property management is to get tenants to pay their full rents on time. This is quite a tricky task, even when you have a friendly reminding strategy and stringent measures in place to punish delinquencies. Certain studies that were conducted, found that tenants were more likely to pay their rents on time when they had access to multiple and convenient payment options.
Digital Payment Options are Preferred
These studies also revealed some interesting facts about the preferences of most tenants. Apart from having multiple payment options, most tenants now prefer the convenience of online transactions and ability to pay their rent through mobile channels. The study revealed the emergence of the following trends:
- More than three quarters of tenants use more than one payment option every month
- Tenants feel it is important for them to have multiple options for getting their bills and making payments
- Tenants who were provided with the facility of electronic billing, found they were able to manage finances much better
- People who pay their bills through their mobile phone has increased by about 50% in the last couple of years
- More than 70% people, who are online even once a week, prefer to pay their monthly bills online.
This study has revealed the shift in preferences on how people choose to pay their bills. Therefore, it is important for property management to provide the options that their tenants now prefer. The study also revealed that tenants who paid their rents online were much less likely to be late with their payments compared to tenants who paid the rent through the mail or any other offline method. Hence, the best strategy would be to provide not only online payment options, but also to encourage tenants to use this mode of payment.
What Tenants think of Online or Mobile Payment Options?
It is interesting to note, why tenants like to pay their bills through online or mobile channels. According to the study, more than half the people said that they preferred these payment options since they saved time, while 45% people preferred them because they could access it anytime and from anywhere. However, the majority agreed that electronic billing and online payment options were very convenient, considering their busy schedules, and it enabled them to make payments when they were on the go.
Additionally, over 90% of the tenants like paying their rent online, because they were able to receive email reminders when their rents were about to be due, and were able to attain an immediate acknowledgement when they made the payment online.
Making Life Easier
From the point of view of property management, online options have several advantages, apart from the fact that it makes tenants pay their rents on time. Once the system is in place, the billing process and payment procedures are streamlined, hardly requiring any effort or time of the administrative staff. Hence, from every angle, property management can greatly benefit, when they are able to provide multiple online and mobile payment options.
On top of this, property management was able to keep less people from trafficking in and out of the office. Convenience counts!
More and more people are starting to appreciate green initiatives, and certain tenants are not averse to paying more rent for properties that are focused on saving the environment. However, property management still has to tread carefully before committing to going totally green, as there is a substantial percentage of people who would not want to be inconvenienced, or pay more for green properties. Green initiatives can be brought in gradually, and it can be implemented in certain properties that have a local demand for such measures. Here are certain steps that can help the property implement green solutions.
Installing equipment to meter utilities can help property management keep track of consumption, and maintain efficiency standards. This might attract a proactive crowd of tenants who have similar ideas for protecting environment and saving resources. Prospective tenants who search for such properties will be more inclined to manage their energy usage optimally, which will bring down shared costs of utility in apartment complexes.
Focus on Recycling
Start with the property management office, where program for recycling paper and ink cartridges can be initiated. Make the recycling program known to everybody, by displaying a prominent sign. Take this initiative further by encouraging tenants to do the same by placing convenient bins that will help to recycle cardboard, paper, aluminum, and plastic. If the recyclable material fetches money, it can be used towards purchasing eco-friendly lighting and other environmentally beneficial initiatives.
Steps should be taken to phase out incandescent lighting, and switch to CFL and LED lamps, which are, much more energy efficient. Incandescent lamps are available cheaply, as they have been overstocked, but they work out more expensive in the end. In fact, many prospects now ask the property manager, why olden type bulbs are still being used, when they are touring the property.
There could be certain practices existing on the property that may seem not so eco-friendly, and this might discourage "green" prospects. Here are certain aspects to consider, when you are trying to build a green reputation for the property.
- oIf the property has a nice pool with beautiful surroundings, it is definitely going to attract prospects. However, make sure there is not any strong odor of chlorine or any toxic chemicals emanating from the water. Such odors might indicate, property management does not care about what they use to keep the pool water clean.
- oAnother major attraction for tenants in any property is the landscaping and the well-manicured lawn. However, make sure the service vendor sticks to sustainable eco-friendly practices. This would include use of proper fertilizers that are mainly organic, growing only those plants that need lesser water, especially in arid areas, and energy-efficient equipment and vehicles.
- oWhile inviting prospects, a delectable layout is always welcome on the refreshment table. However, make sure to avoid Styrofoam cups and plates, since that does not provide a green impression.
Taking care of these smaller details will make a sunny impression on prospective tenants, who are looking for eco-friendly properties. Additionally, make sure to communicate and advertise your stance on the environment through newsletters and Facebook postings.
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