Deposits are an administrative burden and cost center that has long been considered a "cost of doing business." Why? You have to comply with state regulations for each stage of the process: collecting the deposit; placing the funds in a separate account; informing the resident in which bank the funds have been placed; sending U.S. 1099 Interest Income forms to each resident annually; and refunding all, part or none of the deposit with an explanatory letter sent by certified mail. Each step in the process costs both time and money. You incur all the costs, and the banks profit from the easy money.
Solution. Offer alternative deposits.
How it works?
Resident (principal) buys a surety bond, that assures the owner that the resident will fulfill his obligations to the owner at the end of the lease term. If resident leaves a damaged apartment, or leaves with out paying the last month's rent, the surety will pay the owner on behalf of the resident. The surety will then seek reimbursement from the resident.
The one-time, non-refundable premium is paid by the resident at lease signing and remains in effect for as long as the resident lives in the apartment.
Residents benefit as well by keeping their cash. They can reduce their move-in costs and find better uses for their money when they need it most. Imagine how much traffic you could generate if the headline to your ads read, "No Security Deposit."
Leasing promotion ideas
o Include renters insurance in the rent
o Pay for instillation charges for the internet. Or, offer free wi-fi in the building.
When you are advertising a vacancy and potential tenants call inquiring about the apartment you should be prepared. When on the phone, don't just give price and hang tell them the strong points on why they should rent.
Ways to decrease vacancy:
o Move in specials.
o Gross leases.
o Tenant improvements.
Increasing occupancy by analyzing:
o Management.
o Comparable rents.
o Aesthetics of property.
o Retention programs.
o Review maintenance request files.
o Design and then review "move out questionnaires."
o Re-survey residents.
o Give personal attention to every resident.
Not all apartments offer great amenities, however, there is a way you can compensate. This is through forming alliances with local business in your area. You can also, make money if done right. Alliances may advertise in your newsletter, or give you coupons that you can use to keep/lure tenants to your property. Example, lets say when a new tenant moves in you, provide them with a complimentary pizza, provided by a local pizza parlor. The tenant is happy, the merchant gets to put them self in front of someone where they could get repeat business.
Ideas of merchant alliances
o Restaurants.
o Health club.
o Dry cleaners.
o Dentist.
o Office supply.
o Truck rental.
o Car wash.
o House cleaning.
o Beauty salon.
o Florist.
Showing unit with no leasing office
Not all apartments have a leasing office. If your property doesn't have one you should have an inexpensive fold-up table, colored tablecloth and chairs. Use this setting for signing the lease and answering questions. Have applications and other information available.
When a prospect leaves your property they should have:
o Folder of collateral.
o Flyer/pictures.
o Newsletter (if you have one).
o Collateral promoting stores in the neighborhood.
o Application or tell them to go online.
o A positive impression of you and property.
o A clear idea of which apartment suits their needs the best.
Retention program
"Real estate investing is a business and should be treated as a business." Most likely you have heard 80/20 rule. 80% of your sales comes from 20% of your clients. That means, a company's focus should go into the group who makes that 20%. With owning an apartment building, some may have plans and budgets, to find new tenants, plans and budgets to repair items on the property, but very few have a plan on keeping the current tenants happy and a satisfied customer. It is more expensive to find new residents rather keep what you have!
Market Research for apartments from http://www.satisfacts.net
This company has conducted a lot of surveys focused on the multi-family industry. Here are some of their findings:
"The research...with nearly 50,000 residents nationwide, shows there is no correlation stronger than that between outstanding work orders and satisfaction. Given the strong correlation between satisfaction and the likelihood to renew, it is clear more attention needs to be focused on service."
"Only 38% stated they were 'very likely' to renew their lease. When the remaining 62% of residents were asked why they were unsure or would not renew, the answers revealed many issues which are clearly under the property's control."
"When asked what could be done to improve the community, the issues were similar to why residents would not answer that they were "very likely" to renew their lease. Most of the issues are well within the property's control. In addition, despite having a significant number of Hispanic residents, respondents stated that nobody in the office speaks Spanish."
"Each year our resident satisfaction research confirms that what drives the likelihood to renew is the percent of residents with outstanding work orders, staff responsiveness, work quality, security , perceived value and residents pride in their apartment and community."
Top 20 Reasons on why not to renew (www.satisfacts.net):
o Buying a home 20.25%
o Relocation 17.9%
o Rent Increase 6.5%
o Rent to Value 5.4%
o Maintenance Responsiveness 4.9%
o Safety-Community 4.3%
o Office- Responsiveness 4.2%
o Neighbors 3.8%
o Maintenance work quality 3.5%
o Office courtesy 3.2%
o Office work quality 3.3%
o Safety Neighborhood 2.7%
o Moving home 2.6%
o Apartment condition 2.2%
o Community Clean 2.2%
o Community parking 2.1%
o Safety gate 2.0%
o Apartment need different size 1.8%
o Maintenance-courtesy 1.6%
o Location! overall 1.5%
Customer service when they 1st move in
Step 1. Stock unit prior to move in with toilet paper, liquid soap, ice, paper towels.
Step 2. When new tenant moves in buy them pizza and soda (how to do this is discussed later by hooking up a merchant alliance).
Step 3. Week after they move in personally visit them. Call ask if alright to visit. Give a plant as a gift.
Step 4. Give a welcome letter 1 month later, address them personally, use their name. "Hope you are enjoying your new home." Make it hand written, in this also include coupons to local vendors.
Step 5. Call tenants each month, make sure everything is ok, solicit for service requests.
Step 6. 90 days before renewal send letter extending them to renew. Get creative "like have a teddy bear, with "We cant BEAR to lose you!"
Step 7. Personal visit, this is the actual renewal to be signed, or do it online.
Bigger picture of maintenance
Maintenance servicing, increases tenant satisfaction, resident retention, equipment reliability, and increases life expectancy. You should have quarterly maintenance check ups to prevent huge surprises.
Customer Service Maintenance Survey.
o What was the request?
o Was our response satisfactory?
o Did they fix the problem?
o Was the work area left clean?
o Are you pleased with the overall service?
o Any suggestions?
When maintenance finishes.
Make a call back on completed service requests at end of the day make sure requests were completed to residents satisfaction.
Monitor the maintenance activity, will not only save on expense but can also improve the total operations on the property. You should:
o Perform proactive prevention by regularly servicing equipment (heating, plumbing and water heaters).
o Review the contracts of key suppliers quarterly. Costs may rise while the quality may not move in the same direction.
o Decide when to repair. Don't replace when something can be fixed. Learn when to trash it. At the same time know when to replace rather than fix. When repair cost exceed 50% get a new one.
o Charge them if they damage the property. If you rent a car and you damage it, you pay for it. Be sure to state what the policies are upfront and make sure they understand.
o Show them how to fix minor things.
o Hire for more than technical skills with maintenance. They leave an impression on your residents.
o Maintain good records is key to saving money. Keep records of all requests and contracts.
I REPEAT...It is more expensive to find a new resident than it is to keep your current ones.
Retention survey drawing
Here is an effective survey you can ask your tenants. I keep referring to having running an apartment like running a business. Tenants are customers. You goal is to keep satisfied and loyal customers. One way to gauge where you are and how much you are meeting their needs and wants, is by having a survey to give you the answers you need. Here is a survey you can use.
o Overall are you happy living here?
o Rate our staff 0-10.
o Would you recommend a friend to live here?
o What do you like most & least about living here?
o If there was one thing that we could change right now what should it be?
o How would you describe the apartment community in one sentence?
o What would be the one thing we could do to improve your quality living here?
o Have you thought about relocating lately? Yes or no. If yes, what would change your mind?
o Other thoughts you may have?
o If we were to have free seminars, social events would you attend. If so what day and times works best for you?
o Name optional
In customer service, you will always come across people who are disgruntled. How you respond and "put out fires" will determine if your customers come back, leave or tell others about you.
When tenants have complaints use this strategy:
1. I am glad you brought this to my attention...
2. Apologize for the situation. Never apologize for a team member.
3. Your goal is to listen and assist.
4. Ask probing questions, then repeat them back to make sure you understand.
5. Explain the steps that will be taken next to resolve the problem.
6. Ask for feedback.
7. Make a summary of the action steps to be taken.
Keeping the tenants informed
Newsletters are great way to keep your tenants abreast on news and things to know. If you do not have a newsletter have at least a bulletin board.
Ideas on what it can include:
o Property activities.
o Local events.
o Office hours.
o Staff profile.
o Note from management.
o Resident referral.
o Changes, reminders, new services.
o Ways to improve their lives, health and finances.
o Relevant articles.
o Recipes.
o Maintenance tips.
o Motivational quotes.
Depending on the size of your apartment building, you should offer activities to your tenants. Here are some ideas:
o CPR Classes.
o Organizational seminar.
o Computer Training.
o Host a car wash to raise money for property's tenants to go on a day trip (the money will pay for people to go).
o Ask a masseuse to come and give free massages.
o Clubs (walking, crafts, etc).
o Informational seminars.
