In our "Big Ideas for Owners with Small Portfolios" series, we share how successful IROs, such as Hains, Bryson and Ridgway, operate their properties. This is the third article in the series. Links to the rest of the series articles can be found below.
By providing excellent customer service, incentivizing loyalty, providing resident rewards and being flexible, small rental owners can set their companies apart.
Many of the big apartment owners in major cities talk about offering a “concierge” level of service. That effort level is not new. For more than a decade, the rental housing industry has looked to the hotel sector for service inspiration.
But as Mark Hurley, President, Highland Commercial Properties, San Antonio, proves small owners can offer great customer service despite their portfolio size. In fact, by offering direct access to the owner, residents may receive care that is more personalized.
“A huge strength that smaller owners can provide is being directly available to their customers — the residents,” Hurley says.
Hurley conducts focus groups with his residents to help him better understand them and their concerns.
“We really do want to adequately address our customers’ needs,” he says. “We have taken time to identify our customers’ needs and then deliver on their values and what they value.”
For instance, Highland’s single-family and multifamily renters often have enough trust to leave a money order for their rent on the table in the living room and a company representative will come by to pick it up, eliminating a trip to the office.
“The big thing for us is to make our staff available to our residents and that they have the power to make immediate decisions that can cost us money,” Hurley says. “Delivering that one-on-one concierge-type service is really important. For owners who manage 10 houses, their residents are going to have your phone number. They are able to reach you. And when you respond, that proves to them that you will be there for them.”
Paying such a high level of attention leads to better retention, Hurley says.
“Turnover is so expensive,” Hurley says. “Having residents live with you for nine years is huge.”
Dan Lieberman, President of Berkeley, Calif., -based Milestone Properties and author of “The Effective Landlord,” uses another inducement offered by bigger apartment owners — resident loyalty programs. He offers points for length of residency, no late payments and resident referrals.
“Our reward program has always been a good thing; it has kept our turnover a lot lower,” Lieberman says.
Lieberman says that 70 percent of turnover is controllable. For example, he works to build a sense of community among his residents, which increases renewals.
“People are not going to leave a place where their friends live,” Lieberman says. “They may have a friend who walks their dogs or have neighbors with kids who go to the same school as theirs. In these cases, as long as you provide good service, they are not going to move out because of a small rent increase. People will pay to stay at a place they really enjoy and where they feel a part of the community.”
Another way to improve retention is through cleanliness. Regardless of a person’s income, Hurley says a clean home makes a positive difference.
“If we put them into a home of rubbish, they are going to cause damage,” he says.
Even still, ill-behaved residents will trash their apartments. Gary Wilson, Owner, of A.R. Wilson Realtors in Springfield, Mo., has seen property damaged during his many years in the business.
“You do what you can to manage residents, but sometimes even that is not enough,” Wilson says. “If a unit is destroyed and needs several thousands of dollars of repair, a lot of new rental owners cannot handle that expense.”
Lieberman has had good luck when renting to residents — even those who might have had problems qualifying for an apartment at larger communities managed by bigger companies.
In those cases, Lieberman asks the applicant to provide a guarantor who has good credit.
“For them, every time we had a problem, we called the guarantor,” Lieberman says. “The next day, the guarantor makes sure the money is paid.”
If you are an independent rental owner with a solution or story to share, please contact Les Shaver. For Big Ideas for Owners with Small Portfolios Series: There are Many Routes to Success for Small Portfolio Owners, Avoiding Maintenance Pitfalls & Vendors Can Provide More Than Just Products and Services.