When Matt and I began investing 11 years ago, we took all the courses and read all the books – as most newbies do! We did everything we possibly could to avoid making mistakes as newbie landlords. However, no matter how prepared we tried to be, we did end up making plenty of mistakes. And hey, that is okay. We learned from these mistakes and continue to learn.
Hi, all! Liz is back this week to discuss some simple yet powerful strategies that have helped us be more effective landlords. As many of you would agree, property management is not easy. I don’t know any landlord who is perfect and thinks of everything. Recently we revised and updated our “policies and procedures” for property management. As I was reviewing all of the things we do during this process, I thought it would be helpful to share the things that most landlords don’t actually do — but that, if done, dramatically help out business. I hope you enjoy this list!
6 Simple, Profitable Strategies Most Landlords Don’t Use (But Really Should!)
1. Provide a Tenant Appreciation Program
Although we did not begin this program until last year, it has been one of the best things we have ever done. How the program works is that during the tenant on-boarding process, we give the new tenant a document (among other documents) that explains this “tenant incentive.” We run this program on a quarterly and yearly basis. Each quarter, we pick a name out of a hat of a tenant who has paid their rent on time for every month of that quarter. The name that is drawn gets a $50 Visa gift card. Then on a yearly basis, we have one big contest and put in the names of every tenant who has paid their rent on time for the entire year.
About a month ago, we drew the name of the winner for 2014, and the yearly winner received a 42 inch flat screen TV. It was one of our tenants who has been with us the longest. Ironically, this was a tenant who was having a lot of financial difficulty a couple of years ago. We worked with her and put her on a payment plan. We are very clear with our tenants what happens if they miss this payment plan. However, she never did. She got herself current and has paid her rent on time ever since. The coolest part about this story was that she owned a very small (and almost broken) TV. When she found out the award was a brand new flat screen TV and that she had won, she cried. When our team delivered her the brand new flat screen TV, she was so thankful and appreciative.
As a result of implementing this program, tenant retention and communication has increased and tenant loyalty has improved. Not bad for a $500 investment!
2. Create a Video Walkthrough
Another strategy that I wished we had implemented when we started is using video walkthroughs as a marketing strategy. I don’t need to tell you how powerful video is. But I did find some research and came across some fairly powerful statistics from a website called DigitalSherpa:
- Videos increase people’s understanding of your product or service by 74%.
- YouTube is the number two search engine in the world.
- A third of all online activity is spent watching video.
- The average internet user is exposed to an average of 32.2 videos in a month.
- Every day 100 million internet users watch an online video.
All I have to say is “wow!” Finding these statistics makes me want to use video even more in every aspect of our business. What we have been doing from a marketing perspective is creating a 2 minute video walkthrough of the unit. Then we upload the video to YouTube and put the link in all of our marketing flyers and craigslist/online ads. I can tell you — it helps. I had one woman who called and was excited to schedule a showing to see the unit. She immediately told me on the phone that she was impressed with the unit after watching the video walkthrough. If you are not technically competent, don’t worry. I am not either, and I figured out how to do this! So can you!
3. Measure Leasing Effectiveness
Since the last six months, we have been measuring the effectiveness of leasing units. We have been keeping a record of the following data for each unit that we need to lease:
- Date unit is listed (online and offline)
- Contacts: How many calls/emails received
- Showings: How many showings and/or attendees of open houses
- Applications: How many applications received
We have been working hard to capture this data for each unit and building, so we can begin to have a clear indication of our numbers. Our goal is to lease a vacant unit within 30 days. As a result of recording these numbers, we have also been able to determine how well we are doing with leasing. Bottom line, this helps the manager/landlord keep a real eye on their leasing strategies and have real data to change course quickly to get a unit leased with great tenants.
4. Contact Previous Landlords & Current Employer
I have seen a lot of landlords on BP discuss the importance of this step. But I have also seen a lot of landlords skip this step in a rush to get a unit leased! Over the years, we have been guilty of this, too! However, this step is critical and is a step we have not been skipping lately. The key is to not only call the previous landlord(s), but to also call the current employer. I know the good hearted landlords out there want to believe that these prospective tenants tell us the truth. However, the key in evaluating tenants is to ensure they are giving you accurate and truthful information.
Most recently, we received an application for a single family home we own in Trenton, NJ. The tenant looked good on paper and actually made acceptable income based on the employment information. She came in with the application completed and a deposit to hold the unit. When my husband called the “previous landlord,” the woman on the other line did not sound like a landlord and sounded more like this prospective tenant’s friend (acting as a landlord). After running this person’s credit report, two evictions came up on her report. Based on our criteria, we ended up not accepting her application. I can’t stress it enough: Never cut corners when evaluating tenants!
5. Follow Up With Tenants Right After Move In
Like most landlords, you can get very busy putting out fires and dealing with maintenance requests from tenants. It is very easy to forget to follow up with new tenants unless you have something to tell them or they call with some problem. Our team has been implementing a two part follow up process, and it has been working out really well. The first proactive follow up is one week after the tenant moves in. The purpose of this call is to simply ask the tenant how things are going.
We actually have created a script for our team. Here are the questions we ask:
- How did your move go?
- Have you transferred your utilities?
- Do you have any questions about any of the documents in the lease package?
- Do you need anything from us?
The other purpose of this call is to check in with the tenant in case there is anything outstanding that they need to get to us. The next follow up that we schedule for every new tenant is sending out a 4 week follow up letter. The purpose of this letter is to remind them of the most common rules that tenants break (noise, smoking, not transferring utilities to their name, etc.). With both of these proactive communication follow ups, the key is to stay in front of new tenants and ensure they understand the rules (before they have had time to break them) and that they feel taken care of. Most landlords do a terrible job of following up with their tenants. This strategy will help you stand apart from these landlords.
6. Offer Multi-Year Renewals
We only began offering multi-year lease renewals recently, and we are kicking ourselves for not doing this sooner. The only reason we began offering multi-year leases is because we had a tenant ask us if we offered them. We told her that we had never done that before, but were open to it. We signed a 3 year lease with her and then decided to offer this to all tenants during renewal. Here is how we approach it:
- We send a 90 day letter informing them that their lease will expire on X date. We then offer three options for renewal – 1 year, 2 year, or 3 year. If they go with the 1 year renewal option, they will get a 3% increase (which is already stated in their lease). If they sign up for the 2 year renewal, the increase drops to 2.5%. And if they sign up for the 3 year lease, the increase drops to 2%.
- If we have not heard back from the tenant by 60 days, we send out another letter reminding them we need an answer.
- If we have not heard back from them by 30 days, we send another letter and call them to determine their intentions.
- On the renewal date, we send an “automatic renewal notice.”
Over the last few months, we expected to get a small percentage of tenants who would sign up for the 2 or 3 year renewal. However, our team was shocked at how many multiyear renewals we have received. Remember, people love to save money. Give them a reason to save money, and they will likely take you up on it!
I hope one or more of these ideas will help you as you become even more effective as a landlord. I would love to hear from you!
What other strategies do you do that most landlords do not?
Leave your best tips and stories below!