Meeting With Property Owners - Property Management Pete

How to present your property management services when meeting with property owners.

Meeting with property owners and investors is different from your typical listing appointment. It’s a very different type of transaction and they will want to hear certain things from you regarding your services. In this article, we will cover the possible various needs your client might have and how to inform them regarding how you will be of service. There may also be a slight difference between a homeowner who wants to rent out a house they own or live in, vs. a professional investor who owns properties for the sole purpose of renting them out for income. I will break these individuals into two categories and address each one. They may have different goals and ideas about what it means to have a property management company handling their property. Identify which category your client falls into, and be sure you are offering the correct support to their situation. Obviously there will be many similarities in the service and the basic principles of property management will always apply. The differences, however, will most likely be in terms of mindset, and how you communicate certain ideas will be the biggest difference. For example, if your client is a homeowner turned landlord, this could be the first time they have ever dealt with renting out real estate, and they may also have certain attachments to the home that an investor owner would not. Knowing what words and language to use will be key. Most importantly, is to ask questions and listen to the needs of your client. Understanding their goals and providing solutions is the recipe for success in any business relationship.

Property Owners/Homeowners –

More and more we are meeting with people who are first time landlords, often called “accidental landlords.” This is a term for people who may have a home that they purchased years ago and then lost their equity in the real estate crash of 2009 or through some other financial hardship. They find themselves in a situation where they can’t sell the house, so they decide to rent it out instead. Other times we see individuals who purchased a home but are forced to relocate due to family, or a job or even military service. They may not want to sell the home because they plan on moving back to the area later or they got a good deal on the house and feel that renting it out will allow them to cover the payments without coming out of pocket, and possibly even net a few extra dollars every month, without actually having to sell it. If you know what kind of situation your client is facing it will help you to better serve their needs. All clients want to know that you will preserve their property and in fact, it is your duty as a property manager to do so. But when it comes to a homeowner who is renting out their house for the first time they may have some special requests that a typical investor won’t. Pay attention to what their concerns are and be sure to address them during your meeting. The most important thing is to set clear expectations so that your owner understands exactly how the process works as this will likely be the first time they have used a property management company. For example, I remember an owner calling us one time and wanting to know why the rent was late. It was the 2nd day of the month and the tenant had actually paid a couple of days early, so I was confused at why the owner thought the rent was late. But what they meant was, why wasn’t the rent in their account by the second day of the month… But had the agreement been more carefully reviewed with the owner they would have known that owners are generally paid out around the 10th of the month. But they thought that rent should have been immediately sent into their account. They were a first-time rental owner and they were not clear on how the process worked. What I didn’t know, and came to realize, was that they had their mortgage payment due on the first. They had recently been relocated by their employer, and between rent on the new place and the mortgage on the house they owned, the money was short every month without the rent income. I had not been aware of this until now. But it did present a potential problem. While I was able to arrange to have the rent payments rushed processed every month to help reduce the lag time between payments, there was nothing I would be able to do about unexpected repairs and maintenance. When it comes to owning rental properties, repairs and maintenance are an eventual certainty and if the owner doesn’t have any reserves to take care of these problems things can quickly go downhill. Especially if the repairs are something that is required by law. If they are left undone, the owner and you as the property manager can be held liable. So, the lesson here is to make sure your owners are one hundred percent clear on what having a rental property will be like. Try to cover possible scenarios and prepare them for how the process will work and what is required of them as landlords. A few things that you will want to remember is, like we covered in the above example, know what their situation is and why they are deciding to rent out their home. Have a clear breakdown of what the costs will be to a homeowner not just for your service fees, but have estimates of what certain things could cost when they need repair or replacement. Do a good walkthrough with the owner and point out anything that you think may need addressing sooner than later. Expectations will be everything for new owners and accidental landlords, do your best to set them up for success.

Investor Clients –

When it comes to owners and clients who are more experienced in dealing with rental property they may be wanting to hear certain things as well. These things will likely be based on prior experiences they may have had in dealing with tenants or other property managers. Be sure to ask them what they expect from the relationship.

Investors are generally here to make money. They weren’t forced into the situation based on circumstances. They have certain financial goals and metrics in mind. Find out what they are and determine if you can add value. Most recently I had a property owner who had always handled the property himself and wanted to know how we could add value. After discussing it we determined that it was taking him about twice as long to get a unit ready for rent than it would have taken us. Even though he was going to pay a little more to have the work done by us, we were going to save him thousands of dollars in the course of the year just by being able to get his units leased faster and reduce his vacancy rate.

Another case that comes to mind is an owner who had mortgage payments on his property. Or as investors refer to it, debt service. He told me that based on the cost of his debt service he couldn’t afford to pay a full-service management company and was looking for a discount option. After some digging around we found out that his units were underpriced based on the market. We were able to show him that by making some small improvements and increasing the rents he could make more money than he thought possible. This was going to improve his ROI (Return on Investment) in the long run and more than cover our fees.

When it comes to homeowners and accidental landlords they will want to feel comfortable that you will be taking care of their home and helping them through the process. When it comes to investors they tend to be more numbers-driven and want to know that you are keeping a close eye on the bottom line.

No matter what kind of owner you are serving, the number one most important factor that will set you apart from other managers is communication. Owners want to know that you are going to be keeping them informed with all matters. No one likes surprises, especially when you are in charge of handling someone’s most important asset(s). Communicating and being accountable will be factors that will make or break you a property manager.

Understanding what the goals of your owners are, understanding their challenges and communicating with them on all matters will ensure you are providing the best service possible.

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