Since this is our first post, we thought a great place to begin would be to share our foundation as a company, what we believe in, and our priorities.
Our Mission Statement is: Southern Property Management exists to care for all aspects of property on behalf of owners as if we are the owner. Our goal is to ensure the success of our client along with the well-being and value of their property.
It should be no secret that our primary concern is the property owner. Our 15+ years in existence is a testament to our loyalty to owners and the trust they place in us. We live our this mission statement, we do not hang our hats on words alone.
When we sign on a new client, we expect to hold their business in perpetuity. Our services, care and attention can be tailored to the needs of any owner in any scenario. Many of our owners have been with since the beginning. Some are only with us until the end of a particular investment. Whatever the case may be, no one should be in doubt of where out loyalty stands.
Enhancing Investments
The relationship between a property manager and an owner can take many forms. However, no one invests in real estate to lose money. Finances are at the core of the relationship. Why is this important to understand? We are handling the ownership’s money! This is an extremely delicate and important view into how we do our job. Rent collected is the owner’s money, tenant improvement allowances come from the owner’s pocket, capital improvements come from the owner’s pocket, and some repairs and maintenance are owner expenses, pending the lease language. A property management company should never be complacent when it comes to expenses. After all it’s not ‘our’ money.
Investment value can be maintained or created in a few ways:
• Savings
• Income
• Protection
Savings
If you don’t have a firm handle on your bills, vendors, and bank account, expenses can get out of hand. Contractors can rack up charges, the city can mis-handle bills or utilities, providers can slowly escalate service prices with no recourse, inefficient appliances an equipment can be used, etc.
Most owners probably do not want to spend the time to shop garbage providers or research what new energy efficient lightbulb outs out the best lighting but a property manager should. These costs savings can add up and enhance the performance of the asset.
It is our job to review bills upon receipt, monitor and dispute vendor charges, and ensure services are not out of control. This becomes especially important during depressed economic conditions. We are extremely cognizant of this because we are located in West Texas. The oil and gas industry plays a significant role in our real estate sector also. Since we do operate in such a volatile environment, we have gained knowledge and skills that allow us to perform at our peak in any economic condition.
Income
NOI (net operating income) is a foundational component when investors or buyers are deciding whether or not to make a real estate investment. It is crucial that income stays as close as possible to projections for the investment to meet expectations. Put even more simply, owners like cashflow.
How does a property generate income? Primarily, rent.
For starters, there has to be a tenant for there to be rental income. Enhancing the quality of the property, developing a relationship with the tenant, responding to tenant issues, and keeping expenses under control are all ways we as property managers can attract and keep tenants in place.
Tenant relationships are extremely important to us. This does not mean that we forget our allegiance. Remember, we work for the property owner, but keeping tenants happy is a major component of NOI. Regardless of the situation we always fall back on the lease. Situations involving tenants can be complicated and difficult to navigate. The lease is a legally binding document that keeps all parties honest.
Even though a tenant is in place, collecting rent can be a time-consuming ordeal. We have implemented an online payment portal but some still choose to pay with a check. Checks can get lost, hot checks can be written, etc. A property manager has to constantly follow-up with some tenants in order to maintain consistent income. This may lead to enforcement of lease provisions such as late fees or even removal from the premises.
In times of economic crisis, such as with the recent pandemic, it is not so black and white as either pay or get evicted. Deals need to be struck and sensitivity must be shown to businesses enduring hardship. Our goal is to work out deals that work for the tenant and owner while, again, maintaining our loyalty to the owner.
Protection
Insurance, preventative maintenance, and code compliance are cornerstones for the financial protection of our owners.
Preventative maintenance helps to ensure the long life of appliances, systems and equipment. Our property management calendar is flush with required preventative maintenance. HVAC maintenance is done each fall and spring for the turning of seasons, RO filters are changes, churn tests are performed, etc. These not only enhance the value of the property but prevent expenses due to deferred maintenance and decay.
Code compliance is an easy way to stay ahead of the game legally. If the property’s affairs are in order, then future claims and damages. Many codes are also in place to serve as preventative maintenance such as elevator tests and inspections. Next time you’re in an office building, take a look at the elevator inspection card that should be in each cab. You would be surprised how many are out of date.
Insurance should be comprehensive in nature. Depending on region, a comprehensive insurance plan can look completely different. In West Texas, many losses are a result of wind and hail. Insurance claims can be used to recoup losses and keep out of pocket repairs from crippling the bank account.
Strategies can also be used to manage insurance prices. Owners of more than one property can group them into one plan which allows for reduced pricing. Deductible buy-downs can be implemented to manage out-of-pocket deductibles and insurance brokers can shop for the best rates available to certain property types. While insurance can be overlooked, a property manager should employ all strategies to ensure the best protection for the property and the owner.
Communication
A property manager’s success in protecting an owners financial investment hinges on communication.
It is the property manager’s job to ensure the lines of communication between all relevant parties stay open and consistent. Because of the various parties involved, communication can look completely different one conversation to the next. In general, the parties can be split up into three categories:
• Property Owners
• Tenants
• Vendors
Property Owners
The communication maintained with property owners is the most important to maintain for the property manager. Each owner has their own communication style and preference that should be understood from the outset.
Some owners like frequent communication and others prefer only to receive monthly reporting. It is important to quickly determine what works best for the owner and ask for feedback from time to time to enhance your service.
Regardless of communication preference, over-communicate on important items. Everyone can handle bad news but surprises are never ideal. For items like tenant negotiations, lease terminations, etc. we ask the owner if they would like to determine the course and handle the issue appropriately. Some owners trust us to handle these issues without their intervention while others like to make each call along the way.
The monthly reporting is the one thing all owners receive and we place a great emphasis on this. These reports consist of a summary of maintenance activity, all tenants or business related activity, and the financial statements prepared by our accounting team. Details of all sizes are accounted for: using proper grammar, not using filler words or sentences, using consistent formatting, ensuring pages are oriented the right way, and not re-using content from old reports are small ways we can distinguish ourselves. If we are hired to manage financial investments, ignoring details in our monthly reporting can throw a red flag.
Tenants
Tenant relations are a complicated but important aspect of a property manager’s job. Some days it can feel like you work for the tenant. It is important to keep in context who you answer to while maintaining as good as a relationship with the tenant as possible.
Property managers often have to ensure tenants are keeping within the agreed upon terms of the lease. This means enforcing, correcting and reminding which can seemingly put you at odds with the tenant. Since keeping tenants in place and happy is crucial to your performance, this is a delicate line to walk.
Communication must always be professional between the tenant. You do not want to be the reason a tenant vacates the property. Enforcing lease provisions should be done to ensure proper boundaries are kept. However, no situation is cut and dry and discernment must be used in delicate discussions with the tenant.
For example, in the ever developing COVID-19 environment, giving rent reprieves, developing new payment schedules, and negotiating with tenants is paramount for the success of our owners. Everyone is struggling and care must be taken to ensure the success of the tenant through even the roughest of times while protecting the owner.
Vendors
The vendor relationships can be as equally as important for a property manager as tenant relationships. If you have great relationships with your vendors, they can and will jump through hoops to ensure work is done quickly and correctly. This helps projects and emergencies get handled with greater urgency.
What’s the best way to build a great relationship with your vendors? Pay them quickly when invoiced. A close second is to treat them with the utmost respect.
In our view, no one person is greater than another and all should be treated as such. We are proud of our vendor relationships and have maintained key relationships for over ten years in some cases.
At the same rate, it is crucial that communication become frequent especially when jobs are in progress. Checking on their work in person, calling foreman and project managers let’s everyone know this is being monitored. Most larger buildings have a published set of regulations that can be used to enforce standards during projects.
Physically visiting work spaces is a great way to gain knowledge as a property manager also. Asking questions of vendors and seeing the process can manage future projections, expectations, and budgets.
Conclusion
It is important to know where a property manager’s priorities lie before hiring one. Our loyalties lie with the property owner. We use this as a lens through which to make our decisions and manage our relationships.
Our track record would validate this as truth. Our goal is to provide this level of service across West Texas and beyond.