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As the rental market continues to tighten, demand is far outweighing supply. Those within the industry will be fully aware of the impact this has on the day-to-day operations of property management, and the increasing competitiveness that comes with it.
To best navigate these market fluctuations, property managers must put greater focus on understanding the performance of their current rent roll and implementing strategies to safeguard its performance.
This is particularly important when it comes to mitigating landlord or property churn. The natural rate of churn means that properties can be lost from your portfolio irrespective of how good your service is. Perhaps the owner has decided to sell their property, or they may simply want to take it off the rental market for personal reasons. While you have to make allowances for situations that are out of your control, most can be pre-empted and more importantly, prevented.
Starting off on the right foot
Understanding your rent roll’s average turnover rate, how it will affect your business, and what you can do to balance turnover costs are key lessons that all agencies must learn. Having spent over 16 years in the industry, I was surprised to find property or landlord retention is often measured very lightly — particularly in smaller and traditional agencies. If you want to keep your churn low, it is essential to measure it.
The very first step is to set a standard or goal to work towards. I’m a firm believer that every agency should strive towards a 0.5 per cent churn rate, or less. Achieving this starts with an honest review of current practices and how they are working. Create a clear overview of your rent roll and identify areas where key issues may be arising. For example, where maintenance takes a long time to close, if clients haven’t been communicated with in a timely manner, rent payments have been delayed or where there are tenancy vacancies.
Adding to this, it can be helpful to conduct regular customer surveys that assess your landlord’s satisfaction levels. What is driving their happiness with the service being provided, what causes any potential unhappiness and what could make them consider a change in the management of their properties?
These insights can help agencies to shape a more impactful churn strategy, addressing core issues that may exist. From there, implementation is key.
Putting learnings into practice
To see tangible results in the number of properties you keep on the roster, it takes a two-pronged approach. The first is reactive, requiring property managers to make direct changes to their processes based on what they’ve learned, correcting the issues contributing to churn.
The second is a more proactive approach. This involves implementing ways of working that ensures you are actively monitoring rent roll performance on an ongoing basis. The aim is to identify challenges before they even arise. Forecasting which properties are likely to have upcoming maintenance requests, scheduling regular check-ins with the owners and pre-empting any financial changes in advance can help to show that you are on the front foot.
Taking a communication-centric approach
I think you can keep a customer happy forever if you communicate with them. Even if the message is not good. If you communicate with a customer and you’ve built that relationship on open conversation, then you can deliver a negative message without a negative reaction.
A simple example is if a tenant’s rent is delayed. If the property manager fails to proactively relay this update to the owner, or the owner has to follow up, you leave them with very little options to prepare. That’s when you risk losing them. Whereas, if you call an owner and inform them that the tenant hasn’t paid and you tell them how you’re planning to solve it, they tend to be more understanding and appreciative.
A good property manager and landlord relationship is built on trust. Clear and honest communication helps to achieve this. Most landlords have a strong emotional attachment to their property and their primary concern is how you take care of it. Don’t neglect keeping them up to date.
Ensuring tenant satisfaction
The final piece of advice I’d give is to ensure you don’t overlook tenant satisfaction.
There is an evident correlation between lease renewals and owner renewals. Retaining a tenant shows a landlord that their property and tenants, are being cared for. It also helps owners to save financially as it reduces inspection costs, outbound repairs and replacements, and potential gaps in vacancy.
Tenants who are unhappy are less likely to stay in a property leading to higher turnover rates. This is when most property owners will start to question their property management services.
If you’d like to learn more about your own rent roll performance, you can avail of :Different’s free rent roll performance, check here.
Danielle Bunton is the head of customer advocacy at :Different
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