For me, underperforming property managers has always been a chronic problem for many multifamily syndications. Your aim is to generate a consistent cash flow which you will have to give out to your investors on a monthly or quarterly basis. This would depend on how your assets are being managed. No doubt, underperforming property managers can hinder you from maintaining a strong income stream for your syndication.
Indeed, being in the multifamily sector for quite some time now, I have grown familiar with the pressing problems that many investors and sponsors face. In fact, I have had my own share of experiences with bad property management.
Oftentimes, you feel like you don’t have control of everything that’s happening on the ground. In my case, I got around critical problems such as poor occupancy and complaints from residents (which is a word we use in place of “tenants”) by assessing each situation, coming up with a solution with my top team members, and using the experience as a point of reference for future property acquisitions.
Sure enough, the bad experiences I had with previous property managers enabled me to come up with the necessary action plans.
I’m going to share with you the methods I use in dealing with underperforming property (community) managers for MONEIL PREMIUM COMMUNITIES.
1. Assess the situation
Leasing agents are essential to property management. After all, their main responsibility is to help bring more residents. They will need to promote the property, build rapport with prospects, and set up open house showings to potential occupants.
To ensure that your leasing agents are doing a great job, you can ask someone you know to secretly pose as a potential buyer (it’s called to SHOP the community). Have them approach your leasing agents and report on how these agents perform. Do the agents show enthusiasm when talking to a prospect? Moreover, do they stand up and greet warmly the prospects? Do they provide essential information about the property and arrange open house showings?
If the agents fail in these areas, then you might want to call the attention of your property managers and discuss this issue with them.
2. Conduct proper training
Right from the start, it’s important to build an investing team consisting of individuals you can trust. More importantly, you will need to invite people who have substantial knowledge of the multifamily sector.
The problem is not only a lack of people skills but a lack of experience and knowledge as well. You will need to have competent people on board, so it’s essential to conduct extensive training for your property managers. You will have to teach them how to prepare financial reports, deal with difficult residents, and keep the multifamily property in tip-top shape.
3. Do a lot of marketing
A multifamily investment property that has an occupancy rate of under 70% raises a lot of red flags. You will have to step in, intervene, and determine the factors that resulted in this situation.
In many cases, an underperforming property is often the result of poor marketing. To achieve a consistent cash flow, it’s important to fill up every unit, and the best way to go about it is to market the property.
For this, you might want to set up billboards or distribute flyers. You can also promote using social media and traditional methods such as print ads. Another great way to attract potential residents is to create attractive referral programs. We have a resident referral program in which we give out $200 to people who can refer others to the property. More importantly, you will need to make sure that the property is well-maintained. Renovation projects can help you attract more prospects as much as they can help in improving the value of your multifamily investment property.
The bottom line here is that you need to keep your people happy in order to maintain a high occupancy rate. Underperforming property managers can easily be addressed as long as you place the happiness of your clients first!
You can learn more about enhancing the resident experience by enrolling in my Multifamily Syndication Academy. Click here to learn more.