Rent Sense: CRM

Rent Sense: CRM
By Neil Fjellestad and Chris De Marco
FBS Property Management

Is your apartment community a revolving door?

Some multi-housing specialists have estimated that it costs five times as much to re-rent an apartment home as it does to keep an existing resident. Multiply the cost to turn an apartment by the number of apartments in your community and multiply that result by the national average for resident turnover of 60 percent. This will give a ballpark figure of what vacancies could be costing your community annually.

Let’s say for example that the average estimated costs to turn an apartment home are between $2500 and $3000 (lost rent, clean up & replacement, advertising, time spent re-renting). Let’s take an apartment community with 125 homes. Multiply 125 by the lower estimate ($2500) and then multiply the result by 60 percent and the result is a potential $187,500 annually in lost revenue from turnover. It’s a lot cheaper to keep residents happy.

Customer relationship management (CRM) is key when it comes to keeping residents. Residents can be demanding with high, but generally reasonable expectations. They expect their grounds to be neat; their appliances, lighting and plumbing to work; their parking problems resolved; and a sense of being home. When there is a problem, they want a) management to be empathetic and b) everything resolved quickly with the minimum amount of inconvenience to them.

Service and convenience are the major reasons that customers choose rental housing and yet, studies have shown that a major reason residents leave is poor service. Ninety percent of residents say that there is room for improvement in the way that their communities handle their service requests. This is not something that residents will necessarily tell onsite management. Research shows that 95 percent of customers who are dissatisfied never complain to management.

The focus in the multihousing industry is generally on leasing, but it’s important that existing residents know that management still cares about them after the move-in process. Here are some suggestions to improve CRM:

• Create a Smooth Move-in Process – New residents should receive a signed copy of the lease and other documents. Everything in the apartment should be in good working order and “white-glove” clean. Consider giving new residents a “move-in” kit with helpful information, tips, coupons and contact numbers.
• Handle service requests quickly and have it done right the first time. Ask residents if there’s anything else you can do. Chances are that there is something else in the apartment that needs to be done and they forgot to tell you about it.
• Greet residents with a smile and a service attitude whenever you see them. Ask how things are with their homes. Resolve problems quickly and properly. Let residents know you’re happy to have them at the community. Treat everyone fairly and consistently.
• Residents are more likely to stay if they feel that they’re more than just “a name on the rent roll” to management.
• Survey existing residents to find out what’s going well and gather suggestions for improvement. Determine what services they would like to see. Some residents may also be more willing to give feedback if they have the option of remaining anonymous.
• Shop the Competition to know what alternative are offered in the market. It’s a good idea to know how your community measures up to the competition and check on any trends in the local market. For instance, are there any incentives or services that give other similar communities a competitive edge?
• Resident Meetings – Hold meetings at a time and place that’s convenient for most of the residents. Make it fun and offer incentives (such as free food) for attendance. This is a good opportunity to gather feedback and see what residents are thinking.
• Value Added Service – Are there any unique or special services by living at your community. Some communities offer discounted rates on or include cable, high-speed Internet access and/or other services. Another community might let residents use a vacant apartment to set up an onsite daycare center. Be creative.
• A Resident Newsletter is a great way to keep residents posted on community events and issues that might affect them.
• Resident Parties allow you to get to know and mingle with residents. This also fosters a sense of community.
• Renewal Rewards – Offer residents incentives to stay, this could include gift certificates, apartment upgrades (why should new residents get all the “good stuff”), and services.
• Intent to Vacate Interviews – Find out whether the reason a resident is leaving is something that management could easily resolve. The resident may be more willing to stay if management is able to work with them.
• Pay Attention to Frequent Complaints – Resolve these problems quickly. For instance when one manager failed to resolve parking problems, the result was a meeting planned and held by several angry residents that, besides discussing the main problem, aired several other complaints about management. Some residents threatened to leave over the issue.
• Conduct Exit Interviews – Know why your residents are leaving. This is crucial to pinpointing problems. Take a move-out gift to their place of employment. Imagine the impact on their co-workers.
• Train Your Team – A resident retention program cannot be effective if the front-line team is not properly trained to implement it.

The primary goal of property management should be to keep existing residents happy. There will always be some reasons why residents leave that can’t be controlled (buying a home, job transfers, etc.), but practicing CRM can help minimize the number of residents that leave.

Reducing turnover spells relief for your service team and allows your leasing to keep up maximum occupancy. This translates to better attitude onsite along with the time and energy to continue to provide excellent service. It doesn’t take long for consistent excellent service to brand an apartment community as a “great place to call home.”

College Area Property of the Week!

Mission Valley Madness

Rent Sense: Where your home matters

By Neil Fjellestad and Chris De Marco
FBS Property Management

Often rental owners are not as informed as they need to be in order to understand what defines appropriate behavior as landlords. Usually their property was their home before it was their rental and they have emotional attachment. There is a feeling of entitlement that accompanies their ownership attitude. We need to emphasize that though it is their property it is the renter’s residence. It is this resident that decorates, maintains and cares for their home. It matters little whether their legal rights are spelled out in a lease document or limited by a trust deed these rights are sufficient to support the emotional ownership of a home. Our home matters to us. It is our most significant financial obligation and at the center of our lifestyle.

Any landlord behavior that does not support the security, privacy and convenience of the resident will be met by an emotionally charged response. However this response plays out rental owners can be assured that it will be in a way that is counterproductive to their success in the rental business.

Let’s reference some stories from our experience –

• An owner leaves personal effects or parks a vehicle at the rented premises without renter regard or compensation. In one case a large family has the owner’s car in their garage. It hasn’t moved for two years.
• The owner insists on personally performing or assigning to friends property repairs and maintenance routines but does not ensure that accountability for timeliness and workmanship are consistently achieved. On a Sunday one owner along with friend spent 6 hours accomplishing less than one hour’s worth of work.
• The owner rents out the property with appliances/equipment (operating remotes, pool cover, freezer, washer/dryer, yard care equipment) in place because it is convenient but does not choose to repair or replace when it is not convenient. This is done without renter regard or compensation.
• The owner and/or family member show up to inspect the premises without proper renter notice or regard.
• The owner and or their family member show up to enjoy some aspect of the rented property without renter notice regard or compensation. Example includes- use a workshop, enjoy a swim in the pool, or pick fruit from a favorite tree.

Rental ownership is a business. It requires the owner to disregard their personal attachment. Rather, learn everyone’s contractual rights and accept the natural emotional attachment of a responsible renter.

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Rent Sense: What Renters Want

Rent Sense: What Renters Want
By Neil Fjellestad and Chris De Marco
FBS Property Management
We can’t tell you how often a rental owner comes to us with a vacancy problem and wants to tell us what the rent will be and/or their specifications for a qualified renter at that rate. Perhaps in no other industry do small businesses (independent housing providers) of goods (rental homes) and services (renter services) spend so little time responding to their customers or even asking what priorities do their renters deem important?
On the other hand, property management companies are very concerned about what our rental customers want and we talk to them a lot to find out. If we don’t keep our finger on the pulse of renter requirements and preferences how can we continue to produce optimum results for the independent rental owners we have represented for over four decades.
Certainly, there is a myriad of concerns when a potential renter looks at one rental property and compares it with another as they work out the best solutions to their financial and lifestyle requirements. These concerns have been addressed in past columns.
There are also concerns a renter has when considering doing business with one housing provider compared to another.
Here are a few priorities-
•    The rent payment needs to be securely handled with accuracy every time.  Scams flourish that somehow extract rent from a trusting potential renter without delivering product or avoid total accountability for rents, fees, and deposits upon move out. Most qualified renters prefer (68%) paying their rent to a regular rental management company versus an individual landlord.
•    All renters want their security deposit held in a separate account where these funds are subject to reasonable review.
•    The rent payment is time sensitive and should be subject to late penalties. Having said that, qualified renters are busy and over loaded. Most renters (59%) want to utilize an online rent payment option for speed, convenience and financial security.
•    Renters want an emergency contact available at all times for possible property issues that need immediate attention. In addition, renters rely on smart phones and the internet to convey their routine maintenance concerns at their convenience.
•    Financially concerned renters want the handling of their move-out:  inspection of condition, returning keys and refund of security deposits to be transparent, direct and fair.

May Legal Questions Part 3

11. Question:
I am the resident manager of an apartment complex where we only offer one year leases. After
six months, one of our residents gave me a thirty-day notice because he lost his job. I informed
him that a thirty-day notice is not effective during a long term lease, so he wrote me a letter
saying he was leaving because of the loud noise coming from the swimming pool late at night.
He said his attorney said he could legally do this. Is this true?

Answer:

It appears that the real reason for leaving is his inability to continue to pay rent, but even if there
was disruptive behavior in the swimming pool, he could not legally quit the premises unless he
could prove that you were negligent in maintaining peace and quiet in the apartment community.
If you took reasonable steps to maintain the quiet enjoyment of the property, the resident is
required to pay you for the remainder of the lease term.

12. Question:
Are the laws any different between “motels” and “apartments”? Where could I get a booklet or
more information on this matter?

Answer:

The laws are significantly different between motels and rental housing. For instance if a motel
customer fails to pay, the police can be immediately called to remove the customer. In a
residential rental dwelling such as an apartment, however, the owner must go through the
tenant eviction process to regain possession. You may be able to obtain information from the
California Lodging Association and the California Apartment Association.

13. Question:
Can I legally “fax” a three-day notice to pay rent or quit to my tenant at his work?

Answer:

California law specifically identifies the legal methods of service of process for a legal notice.
The methods are personal service, post and mail and substituted service. Faxing a copy is not
a valid service and is not recommended. If the tenant actually receives the notice, however,
there is case law to support the claim that if there is actual service, the method of service is
irrelevant.

14. Question:
I am an owner of several small apartment buildings. What legal responsibility and liability does
an owner have for changing locks when changing tenants?

Answer:

An owner or manager of rental property is held to the same standard of care that would be
required by a reasonable and prudent owner or manager in like circumstances. In other words,
if one of your residents claims they were robbed or injured by someone who had a key to their
apartment, they could claim you were responsible. They could prevail in court if the trier of fact
believed that a reasonably prudent owner/manager would have changed the locks when the
former resident vacated the rental unit.

15. Question:
I have been asked by another property manager if a former tenant of mine caused any problems
and if I would rent to him again. I suspected that he was a drug dealer or at least a drug user
but I cannot prove it. What can I tell her?

Answer:

If you are unsure, you should remain silent. From a legal point of view, it is always safest to say
nothing. However, if you choose to do so, you should only reveal information, if any, that you
know to be true and can be documented. When making a recommendation, you are always
running the risk that the person you are referring to believes you are defaming their good name.
Making timely notes of what you said and who you spoke to, will be valuable if you are
questioned about the conversation in the future. Discuss only facts that pertain to compliance
with your lease or rental agreement.

16. Question:
I suspect there are at least five people living in a one-bedroom apartment in one of our units.
The lease only allows three persons and they have not paid rent. I want to serve a three-day
notice to pay rent or quit, but I do not know all of their names. What should I do?

Answer:

If you serve a three-day notice, address it to the occupants for which you have the names and
also to “all others in possession.” If they pay the rent, however, you may have agreed to the
additional people living there. If you do not intend to allow their occupancy, you could also
serve a three-day notice to perform conditions and/or covenants or quit requiring that the
additional people vacate within three days. If either or both of the notices are not complied with,
you can commence with an eviction in court.

17. Question:
A tenant of three years recently vacated with only a verbal two-week notice. Can she be
charged for unpaid rent? She did not have a lease agreement and never signed anything
stating that she would give a thirty-day notice.

Answer:

If the rent is paid monthly and there is no term stated in the lease, written or verbal, the law
presumes you are under a month-to-month agreement which requires a thirty-day notice to
terminate. If no notice was given, the former tenant owes rent up to thirty days or until the time
you relet the premises (you have to try), whichever occurs first.

Ted Kimball is a partner with Kimball, Tirey & St. John LLP. The law firm specializes in landlord/tenant,
collections, fair housing and business and real estate, with offices throughout California. Property
owner’s and manager’s with questions regarding the contents of this article, please call 800.338.6039.

© 2012 Kimball, Tirey and St. John LLP

Rent Sense: Value of Rental Ownership

Rent Sense: Value of Rental Ownership
By: Neil Fjellestad and Chris De Marco
FBS Property Management
Rental ownership has a long history of satisfying the primary investment priorities of personal financial independence: safety of capital, inflation hedge and tax-favored income. Traditionally, if the detailed financial statements of the wealthy are available for review it becomes apparent that long-term income producing real estate assets directly or indirectly contribute substantially to their net worth.
Certainly there are exceptions that get the notoriety. There are the entrepreneurs that hit the jackpot with a new invention, the right innovation at the right time and/or the market control of a needed commodity. Then there are the speculators that successfully capture the benefits of leveraged capital, cheap labor or some windfall in the short-term that cannot be repeated with consistency.
However, forget the outliers and the top one-percent and concentrate on the basics of what has worked for the top twenty-percent.  Locally understood and available rental properties purchased carefully one at a time consistently becomes the safest real asset to own. Note that a small share in a national real estate investment trust may seem like a “safe way to get the benefits of real estate ownership” but in fact, this is just another financial asset with the same characteristics and historically similar results as any other stock market investment.
Well-located, rental-producing real estate has usually fared better as a long-term hedge against inflation when compared to financial investments. The closer your investment resembles a small business serving customers with an essential part of daily life the more likely that its operations and value are going to keep up with the cost of living.
Though assets may hold value no reliable income is produced. Equity in your personal residence is its own goal providing a sense of financial well-being, a source of emergency funds and a reduction of household expense as you approach retirement; but no income. However, a well maintained and managed rental (house, condo, duplex, and apartments, commercial) that is held free of debt produces tax-favored income on a consistent basis.
Finally, providing ongoing rental housing for households and/or businesses within your community is socially responsible and should be a greater source of personal satisfaction and connection compared to institutional financial investments.

Rent Sense: Credit Considerations

Rent Sense: Credit Considerations
By Neil Fjellestad and Chris De Marco
FBS Property Management
If you’re looking for a rental home, condo or apartment you know what is acceptable or not about the location, condition and rental rate. What you might not know what is acceptable or not about your credit report when your rental application is considered.
Here are some guidelines that we apply to the credit reports we review:
Low Risk (726-830): Excellent credit rating, pay their bills on time, no collections or negative notations on credit history. We like these applications.
Medium-Low Risk (700-725): Very good credit rating, pay their bills on time, no collections or negative notations on credit history, may have a couple of aged slow pays or applied for a loan or credit recently that dropped the score a bit. We like these applications too!
Medium Risk (626-699): Decent credit rating, pay most bills on time, no collections or negative notation on the credit history, may have a couple of aged slow pays or applied for a loan or credit recently that dropped the score a bit. They probably have a couple of disputable items on the credit report, old medical bills, student loans, or defaults in the past. Close check of rental references and length of employment can keep this application doable but will probably need co-signer or additional deposit.
Medium- High Risk (551-626): Marginal credit rating, slow to pay on some bills and on time on some bills. Probably have a collections or negative notations on the credit history. Additional explanation is required.  Generally have applied for a loan or credit recently, as well as multiple credit inquires, that dropped the score a bit. They probably have a several disputed items that are in fact accurate. Double check for aliases, or abbreviated names, check and verify social security number, check rental references more closely, verify length of employment with pay stubs or payroll clerk and the outlook for continued employment. These applications need a co-signor and/or additional deposit to be considered at all.
High Risk (330-550): Poor credit rating; do not pay bills on time, multiple collection activity and negative notations on file. These conditions will usually not allow consideration of this application.  Rental and employment references might allow consideration if roommates demonstrate very strong credit and are willing and able to take financial responsibility with co-signers and by depositing additional funds.

Our advice to renters:
Be straight forward and upfront. If there is a problem, explain it before we run the report. If the report gives us a reason to not accept your rental application be prepared to give us business reasons why we should.
Ask the property manager in advance.

If you have questions about this Rent Sense topic or you have another renter question please email melissa@fbs-pm.com.