The question that will come to mind as you read this is “who does that”? The unfortunate answer is too many people. We are in an industry full of talented people. Mostly.
If these mistakes are occurring with your assets it is probably time to look for new management, first to stop the damage and second to remedy the potential of on-going issues and the exposure they present. Suffice to say these are all ….. bad.
1. Allowing a danger to public safety to persist. Suspect electrical, known illegal drug use, endangerment of children, domestic abuse, violent behavior. No good choices here. All or any similar issues must be addressed in real time once known.
2. Creating, encouraging or allowing fraudulent acts. No one should be skimming off the top. PM is a business. If you cannot do the business without a very high level of integrity then get out of the business, please.
3. Keeping a bad hire. Other than fire or natural disasters keeping a bad hire is one of the costliest mistakes. It is one thing to make the mistake, quite another to allow it to persist and potentially cause more damage.
4. Bad tenant screening (or no tenant screening). Anymore, the expense of obtaining a background screening is really, really cheap insurance. Having this tool available and failing to implement is trouble waiting to happen.
5. Letting water run. Indoors. Out doors. Running water is seldom a positive. Find the pliers. Call the plumber, the roofer, the candle stick maker- whoever has the answer Get that water stopped. Same day.
6. Allowing insurance to lapse. ‘nough said. Murphy’s Law lives here.
7. Ignoring maintenance calls. News flash… they do not go away. Good will is hard to earn, easy to lose. If management doesn’t care about your customers who will?
8. Ignoring renewals. The number one objective to retaining a stable income stream is making sure your customers are staying with a proactive renewal policy. No renewals policy, no stable income.
9. Lack of record keeping. Uncle Sam eventually catches up and when he does it’s like an ocean wave hitting a single piece of sand. Keep good records. File tax documents on time using quality service providers.
10. Avoiding the telephone. There are varying policies regarding telephone etiquette and responsiveness. Implement a policy and stick with it Your customers and potential customers want consistency. Having the attitude of “they’ll call back” is self-deception. “They” (potential tenants) do not. They talk to the next person that picks up the phone.
10(a). Unavailability of Product (as commented by Vicki Sharp). “Having empty units with none available to show is an obvious candidate for being one of the seven deadly sins in property management. It’s one thing to be momentarily out of units during make-ready “season” yet quite another issue altogether to have zero units available for showings, because ____ (fill in blank). Livable space is our product. Having this livable space in condition for showing to potential paying customers is why property owners hire property managers. Granted, this sets financial considerations aside. To quote Malcolm X “by any means possible” try to have one unit available at all times”.
10(b). Lowering credit standards (as commented by Mark Dewey). “Reducing credit qualification standards during the application process. This gives an immediate bump to occupancy but at too high a costs. Reducing credit standards creates a “downward” spiral as collections and other similar activity increases. Basically, you are taking good product off-line only to see your average revenue per unit decrease over time”.
10(C). Under-estimating preventative maintenance costs (as commented by Terry Graves). Under estimating the need to do your monthly and quarterly preventative maintenance.
Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 – How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets.
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Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. For more information, visit: http://www.MultifamilyInsight.com