Advanced Property Management, Part IIa: The Tenant Lifecycle
Not to be confused with the Tenant Bicycle — that’s something entirely different.
In Part I of the Advanced Property Management series, we talked about how important it is to ‘think like the owner.’ Today, we’re going into a significantly more technical subject: how to manage the lifecycle of a tenant.
The Tenant Lifecycle
- Profiling: It’s important to understand the type of tenant(s) most likely to rent a specific property, so that marketing efforts are properly targeted and are therefore efficient. What are the most attractive features of the property?
- Marketing: The property manager (PM) creates advertisements detailing all of features and potential benefits of the property, and distributes those advertisements on a number of channels.
- Initial Contact & Screening: Interested prospects contact the property manager via phone, internet, text, etc. and the PM agents screen these prospects (complying with Fair Housing laws) to make sure they are qualified.
- Showing: Prescreened prospects are shown the property, and introduced to the basic rules and realities of being a tenant there. Those who find the property attractive complete an application and, if required, pay an application fee to move forward.
- Prospect Screening: The PM performs background & credit checks, verifies history with past landlords, income, employment, etc. Qualified prospects are approved.
- Lease Signing: A prospect signs a lease and pays the amount needed to move in, becoming a tenant, a move-in inspection is performed, and the new tenant is given keys.
- Tenant Maintenance: Each month, the property manager collects rent, responds to maintenance issues, and addresses any other concerns the tenant may have.
- Notice Given/Eviction Declared: Eventually, either the tenant will give notice of their intent to move out, or they may stop paying or otherwise break the terms of their lease leading to eviction.
- Move-Out: After the tenant vacates the property a move-out inspection is performed and any deposits not consumed are returned to the tenant.
- Cleaning/Rehabilitation: Between tenants, the property is prepped for the next cycle, which usually includes cleaning and minor repairs. Sometimes major repairs are needed if the tenant abused the property. The owner may also decide to take the opportunity for major renovations to increase the value of the property and/or rent.
The vast majority of what a property manager does all day is consumed in the process of managing scores or hundreds of these cycles. Rather than go into details on any particular step — each one could well be a chapter, if not a book all its own — we’ll talk a bit about the overarching principles behind managing this cycle.
Think (and when possible, Act) A Few Steps Ahead
The most obvious example of this principle happens around step 8 — that’s when a skilled property manager will contact their advertising department and tell them to prepare a new ad (or update a previous ad) for the property and get it online. Worst case scenario, the property needs a complete overhaul and you have to tell the people who call that it’s been taken already. Best case scenario, you’ll have a new tenant ready to move in right away.
Keep Your Eye on Client ROI
It’s easy, as you move through the cycle, to take all of the requisite actions as they crop up and accept the results that you get. But easy isn’t ‘thinking like the owner.’ At each step, there are things you can do to reduce costs (screen tenants carefully, oversee cleanup closely, etc.) and things you can do to increase revenues (offer a good tenant that has given notice a ‘stick around bonus’ if they change their mind, advertise on channels used often by higher-credit prospects, and so on.) By keeping your focus on the impact each of these steps has on the bottom line, you’ll build a reputation as the kind of PM that investors want on their side — which means more (and better) clients for you!
Outsourcing vs. In-Housing Each Step of the Cycle
Often, you can achieve a higher ROI for your clients and reduce your workload at the same time by outsourcing parts of this process to experts outside of the property management industry — but at the same time, there are definitely some people who need to be in-house to be of benefit. By outsourcing those jobs that are only needed irregularly (advertising, building inspection, legal work), and in-housing those jobs that are constant (showing, tenant screening, inspections), you can minimize costs without losing efficacy.
Next week, we’ll look at the lifecycle of a property as a whole, of which the tenant lifecycle is just one step.