My wife and I spent Sunday morning scrubbing one of our multifamily units in preparation for a showing. After realizing the unit had no electricity, we found stains on the wall, nasty gunk in the sink and dead roaches on the floor, and even a few in the refrigerator. It was gross. It's the exact reason investors decide to hire property managers. What’s worse is we actually have property management in place at that property.
So why in the world were we showing the unit and cleaning up extermination remains instead of the property management company? Well, it certainly wasn’t to hold a final farewell for those creepy crawlers. We were only planning on showing the unit to renters, but we found the unit unsuitable for showings when we got there.
Over the last six months, the property has simply underperformed. We dive into the financial performance with the property manager each month, prodding to understand what’s driving the issues. Most recently, we’ve had two new tenants placed, but one demanded to break her lease, while the other is being evicted. Both happened in less than 90 days of moving in.
This was alarming and the explanation we received from the property manager did little to comfort us. Furthermore, the property manager actually receives the first month’s rent when they place a tenant so this was not as alarming for them and was actually going to make them more money.
Given the overall performance issues and recent tenant problems, we decided it was time to take a more hands-on approach. Ultimately, we needed to determine if we were having people issues or process issues to take the appropriate next steps.
Investors of all sizes struggle to find good property managers, yet alone great ones. And it would do us little good to switch property managers just to run into the same issues down the road. That doesn’t mean we lower our standards, but we can raise the floor for performance by creating key processes and implementing systems to consistently deliver great results.
We spent that Sunday walking through the property as a prospective tenant to identify the shortcomings, correct them and then standardize the process for optimal performance going forward. This was geared towards removing subjectivity so the results were sustainable and consistent.
Creating this process meant diving into the weeds to specifically detail key steps where there may have been vague direction. It required an assessment of the operations and laying out solutions to drive performance. It required the sacrifice of one Sunday morning and even my appetite for a few hours. But most important, it required the type of leadership that sets the standard and expectation going forward to create consistent, sustainable success through the property’s operations.