6 Tips for Setting Rents, Winston Rowe and Associates

If your rent is set too high, the property can sit on the market and you will miss out on monthly rental income.  And if the rent is set lower than the competition, simply put, you will leave money on the table.

Whether you own or manage one rental property or hundreds of rentals across the country, you need to be able to set fair market rents confidently.

As we know, rents vary greatly from market to market, but can even differ from one street to the next within a single neighborhood.  Obviously, numerous variables impact the rent you can charge for your rental unit, including location, type of building (duplex, apartment building, etc.), size/square feet, age of unit, number of beds/baths, and amenities (i.e. parking, AC, pool, roof deck, and so on.)

Don’t be fooled that any one rent comp, property manager, or local real estate agent can tell you the perfect fair market rent for your property.  We recommend that you tap into a handful of resources to help you set rents confidently.

1. Find some rent comps to give you a starting point

Check local apartment listings using the local newspaper, online apartment guides, or websites like Craigslist and Rentometer to get a feel for the “going rents.”  Rentometer can give you historical rent trends for the area and a good starting-point rent.  You can further refine the rent from there by using some of the suggestions listed below.

2. Stay up to date on the economic and business activity in the local market

Is it thriving? Are stores closing down?  Economic activity is one of the key drivers of rental housing demand and it can affect the rental market in unique ways. For example the current economy in Boston, Mass., is hot! Rental housing is in high demand, leading many renters to forgo amenities and perks in favor of securing a lease. This means that landlords can afford to make fewer concessions when negotiating.

3. Check occupancy rates for your area

Are the occupancy rates trending upward? Good! The stronger the desirability of a rental, or neighborhood, typically the higher the occupancy rate – and higher market rent. It’s a question of supply and demand.  Factors that can affect occupancy rates include local millennial population, employment trends, housing supply, and new construction growth, rent prices, and the location and  condition of the rental property.

4. Chat with a local real-estate professional

Talk with an industry professional about their take on the market or a specific neighborhood. Local experts (property managers, brokers, agents, appraisers, and lenders) are especially good at identifying the drivers of housing supply and demand unique to your market – jobs, local ordinances, building permits, zoning for a new apartment building, etc.

5. Use “rent per square foot”

Whenever possible use square footage as a benchmark for searching rent comps. This allows you to encapsulate into a single number all the subjective variables of rent, and provides you with a basis for comparison across different units, locations, amenities, and so forth.

6. Check your local apartment or rental-housing association

These are great resources for research. They may provide information about local rent levels – past, present, and future. This is especially important for real-estate investors and developers.

Making sure your property is renting at (or close to) fair market rent is as much of an art as it is a science.  However, with the 6 tips for setting rents along with good current and historical rental data and a thorough understanding of the local market and market conditions, you can set rents with confidence!

A Comprehensive Guide for Apartment Manager

Apartment Building Lending No Up Front Fees Winston Rowe and Associates

With growing sizes of building complexes, apartment management is becoming one of the most challenging jobs. As an apartment manager, you are not only responsible for maintaining the building but the owner and tenants as well.

The main task of an apartment manager is to improve the client-tenant living experience. They need to reduce costs and increase profit whenever possible.

Many property managers often face many challenges when trying to manage rental property. It’s essential that the management of a property run smoothly just like any other business.

If you are an apartment manager or owner struggling to do your job, these quick tips will guide you through managing an apartment efficiently. So let’s begin then.

Important Points to Consider for Apartment Manager

1. Following the Housing Laws and Policies

2. Securing Your Property

3. Making the Apartment Desirable

4. Selecting the Right Tenant

5. Maintaining and Upkeeping the Society

6. Resolving Resident Complaints Immediately

Important Points to Consider for Apartment Manager

1. Following the Housing Laws and Policies

Some specific laws and regulations govern the professionals responsible for managing properties. Every state has its own set of rules and regulations which needs to be strictly followed.

In recent years, there have been reported cases of property managers where their actions have resulted in the unauthorized practice of law. That’s why apartment managers should work closely with legal counsel. It will ensure that they don’t unintentionally violate the law.

Get in touch with the lawyers who are familiar with the housing field. They will guide you through relevant policies. Let them know about your intentions and what you plan to do with the property.

Furthermore, take advice on tax liabilities and potential credits related to renting properties.

We would suggest that meet two to three lawyers in the beginning. Talk to them about your renting plans and then,  decide with whom you can work for a long time.

Hiring a good lawyer will ensure that you always stay on the right side of the law.

2. Securing Your Property

Owning a residential rental property is a wise investment. But at the same time, it can be quite risky especially if you are new to this field. Without the right building insurance, you can face severe financial loss if something goes wrong.

The primary concern for any apartment manager or owner is the protection of the property from catastrophic events. Your apartment complex insurance should protect you against losses, damages, liability claims, and other issues.

Property insurance can seem complicated at first. But you can always take the help of your lawyer and insurance agent to guide you through.

Also, you should know that the insurance coverage and its cost vary. It depends on factors like the building’s location, type of construction, and more.

Some of the risks that apartment building managers/owners have to deal with:

    Liability for tenant, employee, and visitor injuries

    Theft or vandalism

    Advertising liability

    Fire, storms, and other catastrophic damage

    Invading the right to privacy

    Loss of rental income

    Discrimination lawsuit filed by disgruntled tenants

    Any allegations of fraud or misconduct by tenants

You can tailor the insurance policies to one’s need to address the risks as mentioned above.

3. Making the Apartment Desirable

You can’t ignore the fact that for each day your property stays vacant, you lose potential rental income. If you want to attract quality tenants, make your apartment as desirable as possible.

How do you do that? A few simple fixes to help you make your property desirable to prospective tenants.

    The first thing any tenant would look at is the exterior paint. If it is not at par, the tenant may not even want to come inside. A few ways how you can fix it:

        Add some quality landscaping to increase the property’s curb appeal

        Remove chipped paint and get a new coat of exterior paint

        Repair broken banisters and replace torn window screens

        Keep the compound clean. Remove trash, weeds, and debris

        Make sure the lawn and shrubbery are well-manicured

    If you want to charge a hefty amount in monthly rent, then, of course, you would have to go the extra mile. Provide luxuries that many tenants would be gladly willing to pay for. For instance, you can consider adding an in-house dryer, energy-efficient appliances and more.

These small tricks will help bring in the quality of applicants.

4. Selecting the Right Tenant

The next step in the apartment management process is selecting the right tenant.

Renting out apartments can be stress-free only if you have the right tenants. For that, you would need to advertise the vacancy to let people know about your rental space.

I. Advertise the Empty Space

Even in places with high housing demands, advertise your space stating all the facts and your requirements. This will help draw the right kind of applicants to your rental house.

The ad should contain information such as your contact number, details about your apartment, and what up are looking for. Some of the places where you can advertise it are:

    Post it on newspaper

    Display it on Internet classified sites

    Connect with a real estate broker

II. Screen Tenants

Of course, you are not allowed to discriminate your tenants based on caste, creed, race, sex, etc.

However, you should screen tenants before renting your apartment to anyone. Make sure that they are financially sound to pay your rent and do not have any criminal background.

Otherwise, unsystematic screening and tenant selection often result in some significant headaches. You might end up with a tenant who pays the rent late or not at all and poorly maintained the place.

Your screening criteria should be the same for all. It should include:

    Run a background check on each applicant to ensure that they won’t conduct any illegal activities in your apartment

    Obtain a credit report to see if they can afford your rent and will be able to pay your rent on time

    Ask for references from previous landlords or other personal references if any

III. Get it in Writing

Once you have chosen your tenant, make sure that you have a lease agreement in place. It should contain all the terms and conditions agreed by both the parties.

Having it in writing will protect both you and your tenants in case of any conflict in the future. The rental agreement helps create good relation by specifying things. It includes clauses like how and when you handle tenant complaints and repair problems, notice period if the tenant decides to leave, and more.

The lease agreement should contain the following information:

    The names and signatures of the tenant(s) and landlord

    The starting and ending dates that the property will be rented

    Rent costs and due dates

    Policies on security deposits and lease termination

    The tenant’s responsibility to maintain the unit and pay for damage caused by any neglect

    Strategy and procedure for dealing with tenant’s complaints and repair request

    Mention the restrictions if any on tenant alterations on their apartment without your permission

    Information on any environmental hazards present at the property

    Other optional policies as required

You can always find lease templates online or even talk to your lawyer about what information to put in one.

Furthermore, a written agreement helps in running the property smoothly and enhance resale value. Make sure that the tenants are aware of all the clauses included before signing the lease.

IV. Ask For Security Deposits

Security deposits are used to cover the expenses in the event of any damages or other faults with the apartments when a tenant moves out. To avoid any dispute over the security deposit when the tenant moves out, it’s better to inspect and document the condition of the unit before they move in.

Specific regulations are governing the policies regarding security deposits. With the help of a lawyer, establish a system of setting, collecting, holding, and returning security deposits.

Also, check with your state’s Landlord Tenant Act to know how long before you can return the deposit and/or a settlement statement.

5. Maintaining and Upkeeping the Society

At times it may become difficult for the apartment manager to choose between areas which need more focus than others. But thanks to the technological advancement, the apartment management software that comes to our rescue.

Using society software, you can streamline all operations and handle it from a single place. Following these five quick tips will help in a better apartment management system:

I. Automate Society Billing & Accounting

Financial issues are always a serious matter. When the apartment size keeps getting bigger, maintaining accounts can get too time-consuming and challenging at times.

The process of accounting and bookkeeping, penalty calculation, and income and expense tracking should be streamlined for smooth functioning. The best way to do that is to employ a society management software that automates your billing and collection efforts.

Some of the essential modules of tenant management include document depository, penalty calculation, maintenance charge payment, payment gateway, request for quotation, and more. It integrates with the current system in place without disrupting the whole operation.

II. Communicate With Your Tenants Effectively

As an apartment manager, it’s essential that you maintain a healthy relationship with all your tenants. For that, you need to find an effective way of communication.

The smart move would be to incorporate an apartment management software that offers communication tools. These tools can post notices and reach out to everyone. Furthermore, it assists in other activities like securely sharing pictures from community events, broadcasting essential messages, and maintaining functions calendar.

You can also create and publish articles on waste management guidelines, festival celebration forums, and more. It will help you create one active community with the ease of the housing software.

III. Manage Apartment Facilities and Staff Smartly

Again, you will often find complaints about how the apartment facilities are not well maintained.

You can save yourself some time by automating all your task such as asset tracking, inventory management, maintenance staff, and more. With the help of society management software, you can save yourself the pain of manually overlooking every activity.

Moreover, the software will also empower your tenants to book an apartment facility online. You can keep records of visitors for security purpose. These are a few of the many benefits a useful apartment management software has to offer.

Provide a superior experience to residents by managing all apartment facilities smartly.

IV. Skillfully Manage Society Data

One of the many benefits of using society maintenance software is that you can easily centralize all your data in one place.

You need to maintain a directory of residents, the number of flats in the apartments and more, to systematically reach out to them. Using maintenance software will save you a lot of time and help effectively manage the condo.

6. Resolving Resident Complaints Immediately

Resident complaints will always be an issue for apartment managers. It is therefore essential to have a system in place that will help resolve their problems immediately.

Having a central tracking of resident complaints or suggestions can be a good idea for efficient management. That’s why the whole process of filing complaints and the manager resolving the issue needs to be automated.

To immediately attend to the tenant’s problem, you can do the following:

    Use software that will help you track the complaints at various stages. It should also send alerts in case of unresolved complaints

    Give tenants a number where they can reach the management department 24/7, to handle any emergencies

    Always have a few handymen on standby who can repair your apartments when need be

It will help you manage the apartment much better and increase resident satisfaction. Thus, it will enhance their faith in the management committee.

Wrapping it up

Apartment management may seem like a daunting task at first. Especially when there are tenants who try to create menace in society.

Sometime you would also need to take legal actions when necessary. Some tenants do not pay rent on time or conduct illegal activities on the premises. Sometimes, they even cause damage to the property or violate the lease agreement. In such cases, talk with your lawyer and proceed in the right way.

Or you can take the help of a mediator to work with you and your tenant to reach out a settlement on the issue. Either way, make sure that other residents in society do not face any inconvenience.

5 Ways to Spot Fake Landlord References

One of the most crucial aspects in tenant screening is that of checking your prospective tenant’s landlord references, so here are 5 ways to spot fake landlord references.

Unfortunately, some tenants have been known to make up references or list friends or family members as previous landlords. There are even companies that hire themselves out to pose as landlords.

As a property manager, you are bound to receive landlord references day in and day out. Some are beautifully written testaments to the incredible nature of these individuals looking to rent, while others are simply fake, with bogus testimonials about the tenant.

5 ways to spot fake landlord references

No. 1 – Call the references yourself

For starters, on most landlord references, they will provide a phone number.

One of the first things you can do to tell if the reference is a fake is to call the number inquiring about a rental. If it is fake, the number either won’t work or will lead to a completely different person or place.

In rare instances, a fake number does lead to an individual, but they may seem to be either untruthful or not detailed in their answers.

No. 2 – Check up on the reference’s name

Go online and Google the reference’s name and look them up on social-media platforms.

Check to see if this person is tied to the potential tenant through tagged pictures and/or posts. If there is a lot of overlap in the people’s profiles, these individuals may have a personal relationship and not a tenant/landlord relationship.

No. 3- Look at tax records

The tax records for all property owners are in the public domain. All you have to do is look up the records for the address where the applicant claims to have lived.

The name on the tax record should match the name you’ve been given. Double-check that the property hasn’t been sold, but otherwise this is a great way to spot a fake.

No. 4 – Analyze a reference’s answers

It’s best to always fall back on your knowledge as a landlord and analyze the answers that the potentially fake landlord reference has given you.

If their answers are vague and don’t have details then it’s likely that they aren’t a real landlord and are instead a friend or family member of the person who is trying to rent from you.

No. 5 – Ask for advice from the reference

Landlords tend to have the same frustrations, interests, and problems.

It wouldn’t be at all unusual for you as a property manager to ask for some advice from another landlord while calling for a reference. Ask for their procedure for getting rid of a tenant who doesn’t pay, for instance.

A real landlord will have an actual answer, even if they’re not interested in spending much time on the phone with you. A fake, on the other hand, will likely have nothing specific to say. This can help you further determine whether the person on the other line is a real landlord, or someone just posing as such.

In conclusion

As a property manager, a significant part of your job involves filling properties with quality, long-term tenants. Including thorough reference verification as part of your tenant screening process, such as the strategies above, can help you avoid costly mistakes and keep you a few steps ahead of the game.

For Multifamily Commercial Real Estate Financing Contact Winston Rowe and Associates No Upfront Fee Commercial Loans

How to Set Rent Specials

Apartment Building Investing

When times get rough at a property, the savvy property manager fixes the problem with… a rent special.

Or, at least, that’s how it often works out in our industry, isn’t it?

But this solution isn’t altogether satisfying.

It takes money out of your community, makes you look desperate, and, worst of all, may not even produce the effect you’re looking for.

In this post we want to first share a framework for thinking about revenue and rental rates. Then we want to talk about how to set effective rent specials that do what you need them to do. Finally, we will talk about when you can safely end a rent special.

How should you think about rent specials?

The multifamily industry frequently runs in a compartmentalized, siloed style that leads to revenue management questions being isolated from marketing and leasing.

As a result, when occupancy dips to a certain point, communities often find themselves looking to pull a single lever to fix the problem when really, they should be reevaluating their entire system of managing the property. More often, however, communities simply try to pull a marketing lever (more money to the ILS’s!) or a leasing lever (hire more leasing agents!) or a revenue lever (offer rent specials!) in hopes that doing so will fix the problem.

In the short run, of course, you might fix the problem with this sort of reactive move. But at best you’re simply going to be solving it for a short window of time, only to have the issue recur in the not-that-distant future.

There is a better way of managing this.

The alternative begins with recognizing that marketing, leasing, and revenue should all be working together rather than separately. With that baseline idea, we can begin to imagine a different model that will quite often free you from the need to use rent specials at all.

Briefly, the system works by recognizing the relationship between your rental rates (revenue management), your supply of apartments, and the demand for your units (marketing). You can anticipate supply by simply tracking units on notice as part of your vacancy rate. When you see your vacancy rate trending in a troubling direction—meaning you expect your supply to exceed demand by enough that you’ll need to do something drastic to make up for the difference—you begin making decisive adjustments to head off trouble before it begins.

This means doing two things:

First, you need to begin advertising heavily on Google, Facebook, or both. This will only cost you hundreds per month in most cases and if you only need to run the campaigns for a few weeks even less than that.

Second, you may consider some more pronounced reductions in rent on a select number of units in order to incentivize prospects to sign a lease more quickly.

Using these two tactics will cost you some money, of course. But typically, the advertising spend will not be that significant, especially when compared to the cost of having units sitting vacant. And even if you radically slashed rent by 8 or 10% on certain floorplans in order to turn them quickly, you probably will only rent a small number of units at the discounted rate, perhaps even just three or four depending on the size of community and size of the problem.

Meanwhile, by making these decisive steps you will have addressed your vacancy problem before it really gets out of hand. That puts you in a stronger position going forward to demand higher rent from new residents and to raise rents across the board on a year-over-year basis.

Generally speaking, if you manage occupancy well by monitoring units on notice and making decisive steps with advertising to manufacture demand as required, we have found that rent specials may not even be necessary.

If I do need to use rent specials, how should I do that? What makes a good rent special?

A good rent special is going to do two things:

It will offer the prospect something valuable enough to motivate them to rent.

It will minimize the damage done to your bottom line both by long-term vacancy and by the special itself.

Because of the different needs of different properties, it is hard to be more specific than that in terms of defining a good rent special. However, there are three questions we generally recommend client communities ask themselves when they are trying to move from a general idea of a good rent special to a specific special, they wish to offer.

What are you offering as incentive?

You can dangle any number of different carrots as rent specials in order to attract prospects. What specific thing does your community have to offer?

There are many possible answers to this question:

Temporary rent reduction

Waived deposit

Waived application fee

Waived pet deposit

Free month of rent

Free offers:

cable

internet

parking

Special offer:

Gift card to area business

Discounted membership at a local gym

These are just some ideas as to what you could offer. But it is good to identify all the options and then work backwards by asking yourself what is the easiest for your community to offer and what would be most valued by your residents. When you identify the offer that checks both of those boxes, you probably have identified the benefit you should offer as part of the special.

Does this incentive apply to specific floor plans or units?

Rent specials can become very expensive if you offer them on all vacant units in your community. On the other hand, they can become very complex and lose their appeal if you offer them more narrowly. So, figuring out what units to offer the special on is an important question for every community to figure out.

Again, in an ideal scenario you may not even need to ask this question. If you are using online advertising effectively, your vacancy should never get so high that you need to offer community-wide specials. Also, if your advertising is being used well you can use that to drive traffic to problem floorplans instead of relying on floorplan-specific rent specials.

That being said, if you are at a point where you need a rent special, you will need to decide how to answer this question: Does the special apply for all new residents or only for new residents who lease specific units?

When does the rent special end?

This question often ends up being more complex than it needs to be. In a community with clearly defined revenue and occupancy targets, the question answers itself: Once we hit our goal for the special, the special ends. But if you are not clear on your goals or, worse still, on why you are experiencing vacancy problems, then the question becomes much harder.

You might think of a rent special as being something like a personal savings account you have as part of your personal financial life. If you are having to dip into the savings account every month to make ends meet, that tells you something needs to change in your monthly budget. Likewise, if you are having to regularly use rent specials or run rent specials for long periods of time, then you have larger problems at your property that you need to diagnose.

That being said, if you have a system for tracking occupancy that accounts for both currently occupied units on notice and vacant units that are leased but not yet occupied, then you will have an accurate picture of your occupancy situation at the community. With that information in hand, you can make informed, sound decisions about when you need a rent special and when you do not, which also means you will know when you can stop using a given rent special.

Conclusion

Rent specials can be a powerful tool to help make fast changes at a struggling property. But it’s an emergency option rather than something you should be leaning on regularly. So, make sure you are doing the work to manage occupancy, to set reasonable rent rates, and to serve your residents well. If you are doing these things, then hopefully you will not need to use rent specials because you will never find yourself in a position where they will appear necessary.

That being said, things happen. Perhaps you’ve gone through some unexpected transition at the property or you are taking over a property that was badly managed by the former owner. Whatever the case may be, it is likely that you will at some point find yourself needing a quick fix of the sort that a good rent special can offer. When that time comes, you’ll want to make sure you’re setting the right specials in the right way. If you are following the tips in this post, they should set you on the right path both toward fixing your short-term problem and toward getting your community on firmer footing long term.