How to Maximize Property Management Cost Savings
As any good real estate book will tell you, the formula for real estate investing success is some variation of the following: Maximize revenue + Minimize expenses = Maximum Profit. For example, a rent increase would obviously be a move to maximize revenue while price shopping maintenance vendors would be a cost-cutting one. How about paying for professional property management? A cost increase, right? Wrong! In many cases, hiring a Utah property management company to manage your rental property will actually provide you property management cost savings beyond what you pay in management fees! Let’s analyze how:
Establish Long Term Relationships With Your Renters To Increase The Profit From Your Rentals
Truth be told, long-term tenants are not “attracted” but rather “created”. Tenants who renew their lease year after year do so because their current living situation suits their needs. The moment it stops doing so they will move – guaranteed. So the answer to the question of how to create long-term tenants really becomes how to make sure your property continues to meet the needs of your residents.
Many owners new to rental property investing are surprised to hear that their single largest expense of ownership beyond the mortgage isn’t maintenance or repairs; it’s a vacancy. Every day your unit sits vacant you lose potential rental income. So if your Salt Lake City rental property receives $1,000 per month in rent, and it takes you thirty days or more to find a tenant, you just paid for professional property management. Aggressive marketing strategies, professional leasing agents and resident retention programs are just a few of the vacancies reducing benefits offered by professional property management.
So how is a property manager supposed to know how well a property meets the needs of their tenant? Simple, just listen to them. Every time you communicate with your residents, they are giving you clues about what is important to them. Pay attention, keep good notes and respond in a timely manner to tenant concerns and you will increase your renewal rate. Also, these tips will certainly help.
1) Treat your residents with respect. It’s easy to fall into the bad habit of treating your tenants like an inconvenience. After all, every time they call it’s to fix this or complain about that, right? Wrong. It’s an opportunity to listen to their needs. Professional property management companies in Salt Lake City pay attention to what’s important to their tenants and take steps to address their concerns.
2) Go the extra mile. Going above and beyond for your tenants is about the little things. Build goodwill by giving them a small gift at move-in, sending a holiday greeting card, or remembering to wish them a happy birthday. Small gestures like these add a personal touch to an otherwise all-business relationship and can mean the world to some people.
3) Find out what’s important and give it to them. Property management firms in Salt Lake City who put an emphasis on tenant retention usually keep excellent records. Go back through your notes and see what clues they’ve given you about what they value. If you find they’ve had problems with a stubborn appliance, offer to replace it when you reach out to discuss a lease renewal. They will certainly appreciate the gesture, and you’ll find that spending a few hundred dollars replacing an old dishwasher is far cheaper than finding new tenants.
By taking simple steps like these, many Salt Lake City property management companies are able to drastically increase their resident retention. Ask anyone who manages rentals for a living and they’ll tell you that an increase in resident retention equals an increase in your profitability.
Screening Tenants Who Are Qualified
Statistics show that once a tenant falls two weeks behind on rent, 50% will never catch up leaving you little choice but to evict. Utah evictions can be costly, plus you have the added expense of turnover, which averages $2,500 to $3,500 in Utah and could take three to four weeks! For this reason, it is vital that you screen tenants by conducting criminal background checks and pulling credit reports in addition to qualifying tenants financially. Hiring a qualified Utah property manager will ensure that your tenants undergo rigorous screening before being allowed to occupy your rental. Consider these tips in more detail:
1) Requesting an application from the potential tenant. Making a solid application can save you from future and financial headaches. You can conduct these screenings on your own by generating a simple rental application or using one you found online. Luckily, a property manager will take care of this for you. They will conduct screenings that will provide you valuable information including:
- Employment Status
- Income Level
- Personal Finances
- Contact Information Form Previous Landlords
- Lifestyle Information
2) Running a credit check to gauge financial responsibility. After you run their credit check, you’ll be able to view their credit history and debt. When analyzing their credit history, we look at their history of late payments, any bankruptcy’s, and collection payments. Additionally, we check their current debt to see if they have maxed out credit cards, have a lot of loans, or any unpaid balances. After analyzing these numbers as a whole, we can make an accurate judgment on how financially responsible this individual currently is.
3) Conduct a background check to see a report of a potential tenant’s past. Companies like StarPoint and ScreeningWorks will conduct this report for a fee and will include criminal, eviction, and credit history. If the potential tenant has been evicted recently, we might ask them for their reasons why and talk to their past landlord. If the eviction details seem valid, we may reconsider renting to that individual. Criminal records can not only protect you as a landlord but other tenants as well. While it’s easy to look past youthful crimes, if the individual has a lengthy or serious record, considering another applicant may be advantageous.
A professional property management company takes care of all these problems on your behalf. Since Wolfnest has years of experience dealing with tenants and placement, we have the resources and skills to find high-quality long-term tenants for your property.
How Property Managers Help You Save Money On Property Maintenance
As with other areas of life, hiring a professional is usually worth the added expense. For example, you most likely wouldn’t risk representing yourself in court without a law degree or attempt to fix your own car if you aren’t a mechanic. So, with so much as risk, why try to manage your own property without the necessary skills or training? Especially when it’s clear just how much more money you’ll make when your property is managed efficiently. Ways we help you are:
1) Property managers help owners continue to invest. Maintenance calls, filling vacancies or collecting rent takes a lot of time and money if you do it on your own. In order to maximize your rental investment and portfolio, you may want to outsource these services to a company that is an expert in these areas. And a property management company does just that. Let us handle the “dirty work” while you focus on building your portfolio and freeing up your time.
2) Property managers can get you a better service rate. When replacing a water heater or a new air conditioning unit, chances are you pay the retail price as a landlord. Not to mention a service fee for a professional to install it. A property management firm saves you money when it comes to these services because they partner with top-rated service professionals. That means when your tenants’ water heater breaks, the management team files, orders, and replaces the part without you ever having to lift a finger.
Hiring the right team for property management services can save you a lot of property management costs by managing your property, tenant’s relationships, and time. Wolfnest rental property management services allow you to have peace of mind and truly enjoy the outcomes of your investment.