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“12 MUST HAVE Qualities of an On Site Manager”

AOA Magazine: December 2011 / by Shaya Stauber

 

Having an onsite manager can be extremely effective even when not required by law. It is crucial to hire the right person, or they can be a waste of money and can cause serious harm. Here are 12 things to look for when hiring an onsite manager.

1.      Polite, Kind and Patient:

They should be enjoyable to speak with and someone you would want as your neighbor, because that is how tenants think when meeting them.

2.      Punctual:

Tenants are busy and if the onsite manager is late to show a unit, the tenant will leave and not give the building a second chance.

 3.      Computer literate:

They don’t need to be computer programmers, but they should be competent with email, Microsoft Office and able to learn a new program if necessary. Having a manager that doesn’t use email or a computer can make your job twice as hard.

 4.       Job History:

You want to make sure they currently have responsibility and know how to handle different situations. Call their current employer to get a sense of their work ethic. (Also, be sure to run a credit ad eviction report as you would on a regular tenant.)

 5.      Enthusiastic About Work:

This is like any job; the happier they are, the better they perform. You don’t want someone who is only doing this for a paycheck, because they will grow tired of it and it will affect their performance. You want a person who love interacting with people and is enthusiastic about it.

 6.      Have Flexible Hours:

If they can show a unit in the middle of the day on short notice, or meet a repairman for an emergency it will be very helpful. Having managers that have rigid schedules with little flexibility makes it difficult to manage a building where anything can happen at any time.

 7.      A Couple Where One Spouse Stays Home:

This is the ultimate flexibility and being able to show units on short notice will help rent vacancies quicker. When the onsite manager is usually on the property it gives the property an advantage over other buildings where a prospect needs to wait to see a unit. It also makes residents feel more comfortable having someone there watching the building.

 8.      Handy:

Having someone who knows how to change a switch or put a washer on a sink will save time and money. Not having to call someone every time will keep both you and the tenant happy. This isn’t a requirement, but will be extremely helpful and cost effective.

9.      Stays Calm Under Pressure:

Managing a building can be stressful and things always come up, so they need to be able to keep a level head and make the correct decisions. Many times managers are yelled at by tenants, and they need to answer politely, handle it with professionalism and not exacerbate an already tense situation.

 10.  Bilingual:

This will not only help with potential tenants, but allows them to communicate with current tenants. In some buildings where most tenants don’t speak English, this should be a requirement. Trying to have a tenant explain a leaky sink in broken English can be frustrating for both parties and will often lead to a miscommunication where the problem is not resolved.

 11.  Speaks Clearly:

This may sound obvious or trivial, but the first interaction a potential tenant has is on the phone. If the manager is speaking quickly or unclearly the tenant will probably give up and move onto the next building.  I have seen managers mumble or speak so fast you can’t understand them and it makes leasing a unit difficult.

12.  Follows Orders:

Many times people feel they know how to do it best, or their way is the right way, and this can be problematic. You want a manager who will give you their opinion, but follow what you instruct them, even if they don’t agree. I have seen managers do the opposite of what they are told and this can’t happen.

Having an onsite manager can either make your building a real community where no one wants to leave or a place where every tenant will leave the second their lease is over.  It’s all about getting the right person for the job. There are no guarentees, but these tips should help you find the right one for the job.

Shaya Stauber is a principal with Ratner Property Management – R.E. License 01385202. Ratner Property Management has been managing properties in Southern California for over 90 years. For more information, call (818) 767-4750 or email  info@ratnerpropertymanagement.com


“10 Suggestions When Qualifying a Tenant”

AOA Magazine: September 2010 / by Shaya Stauber

 

In today market it is a challenge to find a new tenant, but you don’t want to act desperate and accept the wrong one. Here are ten things to do when screening a potential tenant. Many landlords will make rules about credit scores and say anyone with a score below 600 is bad and anyone above 700 is great. Unfortunately, both of those statements can be incorrect. Some tenants with low scores had tough times in years past, but are stable now and some with great credits are currently struggling and might not be able to pay rent.

The credit and eviction reports from AOA are great and provide a lot of data that can be used to evaluate the tenant beyond the score. Every situation is unique, so treat each tenant accordingly, but these suggestions can be applied to most situations. When qualifying a tenant these should be the landlords primary concerns:

  • Can the tenant pay the rent on time?
  • Will the tenant be a good neighbor?
  • Will the tenant maintain the apartment?

It can be tricky balancing their ability to pay and if they will be a good resident, so you have to decide what is most important to you.

1) Look deeper than the credit score for the root of the problem. Evictions and bankruptcy are bad, but a foreclosure or a collection can have a reasonable explanation. A late payment will affect the credit score the same regardless of when it was in the past few years, but from a landlord’s perspective, it will make a difference if it happened years ago or last month. The difference being if the problem just started  or if it is behind them. The credit score may be the same for two different people but for completely different reasons, so you need to research the underlying information to know what happened. Look at each negative event individually to find the root of the score.

2) Look at the employer, the industry and the length of time they have been at their job. If their industry has downsized recently they might be in trouble, but if they are in a more secure field, like a nurse, they have more security. Decide for yourself which jobs and industries are safe. Talk to their employer to get a sense of their job performance. Their job is what allows them to pay the rent, but equally important it tells you about the person.  Good work habits and workplace responsibility are the makings of a good tenant. Listen to the tone of the employer since they might not be allowed to say anything negative, but their voice might tell you what they are really thinking. Obviously, look at their income after deducting expenses to ensure there is a cushion to pay the rent. Look at the physical location of their workplace; the closer they are to your apartment, the less of a chance they will vacate after their lease is up. If they are far, they will probably try to find a closer place to work with all else being equal. The employer can be a great source of information; you just need to know which questions to ask and how to interpret the answers.

3) Check where they live currently as well as in the past. Many landlords will only look at the current residence, but look as far back as possible. Often a tenant is a good tenant in their current building but a disaster in the apartment before that one. Use the credit report and application to find their previous addresses. After sending the standard written questionnaires about the tenant to the current manager, follow up with a call and ask what type of tenant they were, and as many questions as you can to learn more about the applicant. A red flag is if the tenant has moved often. It might be nothing but this should alert you to look deeper. It can happen that a tenant gives you a fiends number and says they are the building manager and you may never know. There are two ways to try and catch someone who is doing this. Ask the alleged manager random questions to see if they hesitate or get nervous. Use industry related language such as “Have you ever issued them a three day?” If they don’t know what a three days notice is, they are clearly not the real manager.

Second, try and verify the number of the manger independently by searching the internet or doing a drive past the building. By getting the number yourself, you can assure you are talking to the real manager. This doesn’t happen often, but if you have any suspicions it doesn’t hurt to verify.

4) Check the local court for any lawsuits naming the tenant as a defendant or plaintiff. Credit reports will show evictions but will not show if a tenant has sued or been sued by a landlord. i encountered a tenant that was kicked out of his two prior apartments, but was never evicted because he sued the landlord and a n out of court settlement allowed him to leave the building with an unpaid balance. This didn’t show up on the credit or eviction report, but by checking the court records, it was clear that this person was a problem. Check to see if they also sued or were sued by other residents. At the very least you can ask them to explain and decide if you believe their answer. I am not saying not to rent to a tenant who has sued or been sued, but it will give you a good indication to them as a tenant.

5) Check the type of car they drive and compare it to their income and their anticipated rent. Ideally, you would like a tenant to drive a car that is well within their means and cost 20% of their rental payment. If the car payment is 20% of their income, then that is a problem. Looking at their car may seem superficial, but it gives good insight into what type of person they are and their level of responsibility. You want a tenant that cares more about getting from point A to point B and paying their bills, than how they look behind the wheel of a car. This is not to say that someone with a nice car won’t be a great tenant, but if they drive a car they can’t afford, they are choosing vanity over practicality which can be dangerous.

6) Check their checking and savings accounts to gauge their financial responsibility. In my experience, people who are financially responsible are more likely to take care of the apartment and pay the rent, financial planners say you should have six months of living expenses in cash, so this is the ideal situation. This doesn’t mean if they have less it is a deal breaker, but the more savings, the more security. Beyond just indicating their level of responsibility, the more they have in their bank, the more they have to lose if they breach their contract or damage the building.

7) Check credit card balances to see if they are over extended or have acceptable amounts of debt relative to their income. This will tell you if they live within their means or if they spend first and worry about the consequences later. Someone that has high balances is more likely to sign the lease for an apartment they can’t afford and not live up to their obligation. You want someone who has a manageable amount of debt, which they can pay back over a small amount of time, but not someone that based on their current income and debt, will never be able to pay off their balances, short of winning the lottery.

8) See if the tenant has family or friends living in the building or immediate area. The rental application should have a place for personal references to obtain this information. If the tenant has family or friends nearby or in the building, they are more likely to stay than if they didn’t know anyone. Finding someone who knows current tenants is ideal and will help build a community that should translate into lower turnover. If they don’t know people in the immediate area, they are more likely to move closer to friends or family after their lease expires. This is helpful if you have equally qualified tenants to use as a tie breaker.

9) If you are unsure about the tenant or something doesn’t feel right, meet the person face to face. You can learn a lot about a person from a meeting that can’t be found on a piece of paper or from other people’s opinions. A personal meeting can be crucial and that is why so many deals get done with a handshake or on the golf course.  There is something to be said for looking someone in the eye before making a deal. A meeting is the ideal situation, but many times it’s not practical which is why I suggest using it only when you have a funny feeling or something doesn’t smell right.

10) Consider if the tenant is downgrading or upgrading from their past residence. It is preferable if they are moving up in quality or size. Today it is common to see people moving from a home to an apartment, and while it is a concern, it shouldn’t be a deal breaker.  If someone is downgrading from a better building in a better area, this usually indicates they are going through tough times and their ability to pay rent is in question. If you have an option, choose the tenant that is upgrading.

Qualifying a tenant is like painting. Each piece of information is like a color that can be used. The more information you have at your disposal, the more color options you have to create you art. It is possible to paint a picture with only two colors, but more colors will translate to a better picture. This may seem like a lot of work to qualify one tenant, but imagine the work needed for an eviction. You just need to know what to look for and what to ask to gather the necessary information. If you pick the right tenant, you may not need to do this work for that unit for many more years.

Shaya Stauber is a principal with Ratner Property Management – R.E. License 01385202. Ratner Property Management has been managing properties in Southern California for over 90 years. For more information, call (818) 767-4750 or email  info@ratnerpropertymanagement.com


“When Does Spending Increase Profits?”

AOA Magazine: April 2010 / by Shaya Stauber

 

Rents are down, vacancies are up and there is no sign the market will get better in the near future. The natural reaction when times are tough is to cut spending, but you need to fight this urge and spend more. Increase spending on things that improve the value of the building, attract new tenants and retain current tenants. This may sound ludicrous in a time when, (rents have dropped in some areas up to 50%,) many owners are barely making their mortgage payment and vacancies are destroying the bottom line, rather just the opposite.

The way to improve the bottom line is through spending. Why do landlords spend money when times are good? Many landlords were willing to throw money around two years ago when money was coming in and rents were at the peak. This was at a time when you had your pick of tenants and a vacancy had multiple applicants. Landlords were spending just because they had it not because it would increase profits or occupancy. If your pipes are working perfectly would you fix them just because you had money in the bank, and if they are broken – not fix them if money was short? There was nothing wrong with spending money when you had it, but to skimp when times are tough is shortsighted.

Spend when you need to – not just when you have extra money. Microsoft didn’t have commercials before Apple started doing well and began advertising the MAC. Microsoft was the market leader and had plenty of money to spend, but they waited until it was necessary to start spending. Now they have real competition and they need to spend and even though times are tough, they are spending more.

Especially now, when times are tough – it may be necessary to spend some money marketing your building and keeping your clients (tenants) happy.

Upgrades and Amenities

There are many vacancies on the market so you need to set yourself apart without getting in a price war and lowering the rents. If the rent is dropped too low in a rent controlled building, it might take years to get them back to market. The trick is to set your building apart without lowering the rent.

Accomplish this by making upgrades to the units like new appliances, new paint on the cabinets, granite, new carpet, new landscaping, and other common area upgrades. Some of these items are expensive, but remember these are upgrades to the building, which will increase the value.

It’s a numbers game and the more people who see the vacancy, the better the chances are of renting it. Having pictures and a floor plan/virtual tour available online will allow more people to easily view the unit. This is a one-time expense per unit type and it lasts forever. Offer an incentive for anyone who comes to see the unit – like a raffle, with the prize being movie tickets all the way up to a TV.

Once your potential tenants are looking at the apartment, make sure that it stands above the competition. Have amenities to offer for lease or as part of the unit. Some amenities you can offer are a TV, refrigerator or a fully furnished unit. These items may be expensive but they create value and help rent the units quicker and without lowering the price. There are many possible upgrades for the complex and the unit, and each building is unique, so look at your building to see where upgrades can be made. There are also some services you can offer in your building:

  • Have a mobile car wash come to the building at night to wash cars;
  • Have a local dry cleaner offer pickup and drop off for tenants or
  • Add a vending machine.

Be sure to let the tenants know that these are amenities, and that the landlord is not responsible for the product. They should speak to each vendor if there is an issue. Don’t let it become a headache but offer as many amenities as possible.

The ideal scenario is to stop a problem before it starts, like going to the dentist for a cleaning to avoid cavities. This is accomplished by retaining your existing tenants. Don’t ignore existing tenants with the thinking that “my tenants aren’t going anywhere – nobody likes to move”. Tenants WILL move! There will then be down time and an avoidable vacancy. Be proactive; don’t wait for your tenants to ask for a rent reduction. Tenants know the market, so first try to keep them happy without lowering the rent. The same advice goes for this – perhaps an updated kitchen or some other upgrade that sets you above the rest. Money spent on the building will increase the value if it’s spent wisely. (Always try to get a lease extension in exchange for the work being done.)

Build Relationships With Your Tenants

Let your tenants know that you care. When a tenant feels like a person and not just a number on a rent roll, they will show more loyalty. A few ways to accomplish this is with holiday cards, a holiday party or some form of raffle for all tenants that pay rent on time. If tenants feel they have a relationship with the landlord, it will be harder for them to leave. Recognize how tough it is financially for most tenants and be as accommodating as possible. Don’t have rules across the board that can’t be broken; evaluate each tenant individually. If a tenant has a job that pays on the 5th, let him pay on the 7th. As long as the tenant is paying consistently on the same day and the money is not needed for the mortgage, be flexible. Offer credit card payments for rent. There are companies that provide this service and the credit card fee is paid by the tenant. This will allow the tenants to have up to a month to pay the credit card company and alleviate some pressure.

Create a Community

Having a community and not just a building will help retain tenants. If tenants are close to their neighbors and socialize with them, wouldn’t they be more likely to stay than tenants who don’t know anyone and have no ties to the building? Most interaction today is online, so people crave personal, face to face contact and the landlord needs to create a community to offer this desired interaction. Landlords can create the initial contact since so many tenants are uncomfortable doing it on their own.

  • Throw a building party where the tenants can meet neighbors in a relaxed environment
  • Start a small craigslist style blog where tenants can sell, buy and barter with each other or share DVD’s
  • Offer a rent credit to any tenant that refers someone who signs a lease. This will lead to more tenants knowing their neighbors.

There are many other creative and inexpensive ways to get tenants together. Anything that gets tenants interacting in a positive way will help to keep the building occupied.

Know Your Market

The solution for a tenant who is paying significantly above market is to lower the rent. Many landlords won’t lower rents or make improvements for existing tenants because they feel it is giving money back that is already in their pockets, but this is wrong. It is tough to convince a tenant to stay if they are paying $1,700 for an apartment that is worth $1,200. What will happen if the tenant moves out? What rent would you get for that unit, what improvements would need to be done and how much down time would there be? If the rent decrease is warranted don’t let pride or reluctance to change with the market stop you from making a sound business decision. If you do lower the rent to keep a good tenant, have the tenant sign a confidentiality agreement to avoid conflicts that may arise from having tenants compare their rents.

Landlords need to see their building and their neighboring market from a tenant’s perspective. Pretend to be a tenant who keeps hearing how rents are going down everywhere and that “it’s a tenant’s market out there.” Look at other buildings in the area and see the competition; compare market rents and what amenities other buildings are offering. After seeing other buildings, be honest and ask yourself “Would I want to live in my building or in the one down the street?” This will help you determine the current rental value and/or any necessary building upgrades. If it’s impossible for you to remain impartial, ask a friend to do it for you. A property manager can be impartial and honest since they are a neutral third party. So the next time a tenant calls for a rent reduction, you will know if it’s truly warranted or if the tenant is just fishing.

Summary

The ideal situation is to retain current tenants avoiding costly and timely vacancies. Accomplish this by being accommodating and understanding to the tenant’s situation. Assume tenants are looking around and go see firsthand what is on the market, then compare it to your building in both price and quality. Try to offer free or inexpensive amenities for the building to keep tenants happy and to build a community. When necessary, don’t be afraid to spend money on the building or lower a tenant’s rent. The money is not wasted since it will be improving the quality and value of your property. The key is to survive these trying times and wait until it gets better. Real estate is a long-term investment, don’t panic and cut corners. This is merely a bump in the road on a long journey. Do what’s necessary to improve your building, occupancy and profits.

Shaya Stauber is a principal with Ratner Property Management – R.E. License 01385202. Ratner Property Management has been managing properties in Southern California for over 90 years. For more information, call (818) 767-4750 or email info@ratnerpropertymanagement.com