Chris:
Okay. This is Property Management Bootcamp, episode number three. Today we are talking about the leasing process and I've got Taylor here and we are going to talk about what happens right before, during and after we market a property for rent and the things that we need to be aware of.
Taylor:
Yeah. Well, the leasing process starts when we receive a rent-ready or almost rent-ready unit, property, townhouse, et cetera. The next step is to communicate with the owner, find out what their goals are going forward. This is going to impact how we develop marketing, how we write some of the marketing copy. The very next step, in culmination at the same time, is to schedule professional photos of the property. This will also help document the property and its state.
Chris:
The professional photos, this touches on one of the most important aspects of the leasing process, which is the prospective tenants first impression. Generally, the first impression that a prospective tenant has is going to be on the internet. It is going to be that first photo that they see. If they see a fantastic first photo, then they're going to want to keep looking and that is why we use professional photography and that is a key piece to our marketing strategy.
Taylor:
Absolutely. After we've communicated with the owner, developed some marketing and communicated that with the owner, and scheduled the professional photos, we're going to generate a price and this will be done using some comparables of like units that are very close proximity to our property. After the owner has okayed the price, we're going to start showing the property. What this looks like is finding prospective quality tenants and showing them the property and finding out what they think of the property. Sometimes new things are brought to light that has not been thought of before as ideas to get the property rented out sooner. We're going to be communicating with these prospective tenants throughout the entire process. Lastly, we receive applications. That's from the just before rent-ready to rent-ready states all the way to receiving applications. You need to develop marketing. Communicate that with the owners. Schedule photos.
Chris:
Yeah. Let's take a scenario. Let's say that we have a new property from a new client. We have tenants that are moving out in a week. Let's look at this in three different scenarios. One is that the property owner has been marketing it himself. He's a realtor. He has professional photography. He has a marketing description and he's like, "Here, let's get this online. I just don't want to have to deal with the hassle of talking to prospective tenants." With the tenants moving out shortly, what would you do in that situation?
Taylor:
Well, I need to figure out if the property is in a rent-ready condition right now. That's going to look like a little bit of communication with these current tenants, but it's also going to involve a lot of communication with this owner to find out how are they currently marketing it? What kind of price are they marketing at? How good are their photos? And just doing a quick audit of their current marketing process. If that checks out well and they just don't want to handle the communication with prospective tenants, that's fantastic. What I will do then is communicate on their behalf with these prospects.
Chris:
The tenants are moving out shortly, when would you have the marketing go live?
Taylor:
I would like to see the marketing go live seven to 14 days before I know the property is totally rent-ready.
Chris:
Okay. Let's just assume that this is going to be an A turnover. It's going to be a slam dunk. All we need to do is get the cleaners in there to do a touch-up.
Taylor:
Fantastic. In this scenario, I would market as soon as possible in order to gain and garner interest from prospective tenants. This also starts the screening process because it takes... I mean, I would say as many as three out of five prospects are probably not the right fit for a property. We have to play the numbers game when we're talking to these potential prospects. The sooner we can start marketing, the more qualified prospects we could find and start showing the property to or at least schedule showings to.
Chris:
Okay. With this new potential client, this hypothetical situation where we've got tenants moving out pretty quickly, new clients, you did your marketing audit, it turned out great. You would, after that marketing audit, you would immediately list the property knowing that it's going to be an A turnover?
Taylor:
Yes, that's right.
Chris:
Then at what point in the process would you start showings at the property?
Taylor:
I would start showings as soon as possible. There have been many occasions where I've arranged showings with prospects while the tenant is still even in the property. What this looks like is a lot of communication between that tenant and myself and see if there are times in your schedule that would allow for me to show the property quickly. This is really the best way to eliminate vacancy, but it also requires a high degree of rapport with the tenant and you have to really respect their space because this is, at the moment, this is their home but in an ideal world, you can get in and show the property while the tenant is still in there. That is so-
Chris:
Awesome. How do you determine which prospective tenant gets to view the property prior to other tenants move out? Do all of the prospective tenants get to come?
Taylor:
All prospective tenants are welcome if they show signs of eagerness, willingness and ability, but they have to show those three things and they have to be in great communication and show that they're eager and they have to show that they are willing to move at a very good date. We'd like to see tenants move in within two weeks of submitting applications. Then we also like to see that they are... Ability. They have the ability to do that.
Chris:
Yup. Yup. I feel like a good hard and fast rule for this scenario of showing tenants the property prior to our previous tenant moving out is that they filled out an application and that they are qualified. We would have to pre-qualify them and in that type of situation, to save the owner vacancy, we would run their credit reports. If they have good credit and they seem like a fit, then yes we can get them in there. If they don't, then we're happy to refund their applications just because it creates that speed.
Taylor:
Right.
Chris:
If you know you've got a great property, you list it and when you list it, you put it up for that 72 hour waiting period.
Taylor:
Right.
Chris:Speaker 1:
That's a new city of Portland rule where we have to announce a property is coming of availability and it needs a 72 hour waiting period before applications go live. But yeah, that's that one scenario. Let's look at another scenario. I guess the opposite scenario where we have a property that was self-managed and there are no photos, it's in pretty rough shape and you've already been out and done a scope of work inspection. You think it's going to be a C minus and we've got a good scope of work but it's going to take two to three weeks before everything can get done. How would you approach that marketing scenario?
Taylor:
I would approach this scenario reaching out to the owner and making sure they are aware of the time period. After I've done that, I'm going to very similar, since there's no marketing whatsoever, I'm going to develop marketing. I'm going to generate a price through some comparables and schedule photos for our projected photo-ready date. After we have developed the marketing and communicated it with the owner, I will start marketing right about the 10 to 14 days out from the finish date and hopefully start to generate buzz. We like to see one to two inquiries per day just to let us know that marketing is receiving good traction. But if I'm getting a property and I know it's in rough shape and I know we've already done the scope of work, the next steps are to bring the property to a rent-ready state, which I know our turnover team is handling, and it then is to market the property in order to eliminate the vacancy as much as possible.
Taylor:
A lot of that comes down to communicating with the owner, with the marketing and also the turnover team so I know exactly when I can get photos because nine out of 10 people are looking at properties online these days, if not more than that.
Chris:
A couple of things here. When is the exact point in which you would list the unit online?
Taylor:
The exact point at which I would list the unit online is two weeks from the projected finish date.
Chris:
What do you need to have to make sure that your marketing is going to be successful?
Taylor:
What I need to have to make sure the marketing is going to be successful are photos and a good description of the unit.
Chris:
And a price.
Taylor:
Of course, and a price.
Chris:
Okay. A lot of times the property is not going to be ready for photos two weeks prior to it being rent-ready. Generally, once we get those photos is when we go live, right?
Taylor:
Well, yes, yes. That's obviously correct. If we have photos from a previous, then we can-
Chris:
Yeah. Yeah. We're talking about this hypothetical scenario where it's a C minus turnover. We don't have photos and we are working hard to get it photo-ready.
Taylor:
Sure, sure. Well, in this case, we really need to wait until we get photos in order to launch the marketing. I'm already going to be communicating with the owners to make sure that they're okay with the price and the description so that really just waiting on the photos so that we can launch the marketing as soon as possible. When I know, after communicating with the turnover team, when I know when the photos can absolutely be taken, I will get the photos back the same day from our professional photographer and go live with that marketing.
Chris:
The reason why we wait to go live, it's because the first impression of the property is of utmost importance, and that's really where our company adds value is we are making sure that that marketing is dialed in and that those photos look fantastic. We want them to be eye-catching and we want them to be totally dialed in.
Taylor:
Absolutely.
Chris:
That's why we wait. That is the key to successful marketing.
Taylor:
Yup. Photos are really the most important thing.
Chris:
Okay. Let's say that we go live, but we aren't getting the number of leads that we need.
Taylor:
Absolutely.
Chris:
What do we do in that situation?
Taylor:
Well, the first thing we need to do if we're seeing a lack of leads is to give ourselves a marketing audit and make sure that everything is being presented in the way it is supposed to be presented. What this looks like is checking all of our marketing sites to make sure that it's indeed live on all of them. Sometimes that looks like communicating with the company in charge of the site to make sure that it is happening. But if everything checks out and your marketing audits and your photos look good, you have a good presence online, there's just no bugaboos or anything like that. We need to check the... Go ahead.
Chris:
Nope, go.
Taylor:
We need to check the market and see how we're looked at in a competitive sense because prospective tenants, they shop based on value and comparables. If there is a property down the street from us pretty much identical to what we have on the market for a better price, all we are going to do is help that property rent out sooner if our price is higher. Then we can take this information to the property owner and say, "This is what we're seeing and our solution might be to drop the price a bit or reduce the price." Because of course vacancy is the most expensive part of a rental and eliminating it should at least be a top priority for folks.
Chris:
Absolutely. The vacancy is the most expensive thing when it comes to... It's the biggest cost. It's the thing we want to avoid the most and that is one of the reasons why we want to list our properties just below the market. Creating this communication with the property owner of we want to list the property below market and the answer of why do we want to do that is because it helps not only the property owner but it increases tenant satisfaction and that tenant satisfaction is one of the top priorities of our job as property managers. Everybody is way happier if our tenants are happy and they're happy if they feel like they're getting a good deal.
Taylor:
That's right.
Chris:
If they feel like they're getting a good deal, then they're going to stay at the property longer. That increases our lease renewal rate and that is, in turn, it's going to reduce vacancy and it reduces turnover costs because there's less turnover.
Taylor:
That is such a good point.
Chris:
That is one of the key communications that we need to have with our property owners.
Taylor:
Yes. One more thing to touch on that. It's a little bit of a catch-22 because folks who are your most highly desirable tenant is somebody who has a lot of options. Someone with options has the freedom to shop more and if you have the most appealing option, you're going to attract the most quality tenant. There's a lot of benefits in being just below the market when it comes to pricing your unit because a lot of times you end up getting a tenant who is just much easier on your property. They have fewer headaches.
Chris:
More highly qualified.
Taylor:
Yes.
Chris:
Okay. We handled those two scenarios. Let's just do a quick recap of the marketing or the leasing process. Once we have a unit that is ready to be released out... Let's just say that we've got a rent-ready unit. Why don't you just do a quick rundown on the process?
Taylor:
Cool. We have a rent-ready unit. We need to develop a marketing description, develop a price, schedule photos, communicate the price, and the marketing description to the owner. Then we put all of this together and double-check with the owner one more time. After this, of course, we can go live with marketing and start showing. After we show the property, we communicate and follow up with prospects and we receive applications from these prospects.
Chris:
Okay. And the point at which we go live is once we have high-quality professional photos that are going to put our best foot forward online.
Taylor:
Correct.
Chris:
That's not necessarily when the property is rent-ready. It is when we're going to be able to show the unit relatively soon. That might be when we get a notice from a tenant. If we've got fantastic photos and we know that the property is going to be in A turnover, we're going to list that one a lot sooner than the one that maybe we don't have photos or maybe the photos that we have just aren't that good and we need to do a full turnover on the property. We're probably going to wait until that unit is fully rent-ready and we've got our exterior landscaping done so that the front yard looks good. It's really got that curb appeal. Yeah, so when we go live with the marketing really depends on if we have photos so that we can go online. Now the next question we have is when do we start showing units?
Chris:
Earlier we talked about if we have qualified prospective tenants and they put in an application during that period prior to the other tenants moving out, we can set up and we run their credit and they're qualified. Then we can set up a showing prior to the other tenants moving out. Otherwise, we'll just wait until we have that unit turned over. Otherwise, we'll set up a code box at the property and we'll be doing self showings once the property is rent-ready and good to go.
Taylor:
Exactly.
Chris:
Okay. That is the leasing process.