When there’s a disconnect between operators and owners, effective property management becomes more difficult than it has to be
We’ve been on both sides of the owner/property management table. I was director of asset management for Aimco, which was the largest multifamily real estate investment trust (REIT) in the country at the time.
That said, I also started a property management company for a developer in Los Angeles and ran my own management company for a while after that. So I’ve been in the trenches on the management side too.
Property management is one of the most difficult career paths you can take. It’s an underappreciated profession. Community managers and service managers are expected to oversee assets with a level of expertise far beyond what most of them were trained for.
A lot of balls can get dropped for those reasons. That can happen for a period of time and without much of a detrimental effect. Sooner or later, though, one of those balls is going to drop, and it’s going to explode.
On-Site Guidance For Your Property Management & Operations Team
One or two months of neglected property management tasks can ruin a year’s worth of budgeted NOI for an owner. And there are a lot of ways things can go wrong.
It all boils down to whether or not the people operating the asset onsite are getting enough guidance. Are they getting the support they need? Do they know what they’re supposed to be doing and have the oversight to actually do it?
When I was running a management company, a lack of oversight and direction led to a couple of massive issues. We started Leonardo247 in part to address those problems in our own property management company. Now we leverage that experience and knowledge to help others.
Bringing Policies & Procedures to Life
Our industry has lots of regional property managers running around to fulfill this function. They give guidance for what should be happening on-site and help to make sure that those things actually happen.
But giving guidance is not enough. Having policies and procedures is not enough.
First, nobody’s reading your binder of policies and procedures. And those that are reading it aren’t remembering what’s in that binder of policies and procedures.
Second, there’s always a disconnect between what you, the asset manager or owner, tell the operations team they’re supposed to be doing and what actually happens.
Even if you set expectations for risk mitigation, preventative maintenance, or marketing, the chaos of onsite property operations can be overwhelming. Those things can fall victim to the dog barking in unit 301 and the angry resident who takes up your manager’s day to explain that they’re doing a terrible job. And that completely derails all of your process and procedure expectations.
You need a tool in place that provides consistency and accountability for the things that matter most in operating an asset no matter what.
A Preventative Maintenance Case Study
Here’s an example from a real client. This is an owner/asset manager and with a property built in the 1960s. They installed brand new HVAC systems across the entire property, 330-350 units. And in less than a year, those HVAC systems started to fail.
The owner immediately accused the property management company of not providing proper maintenance in the form of regular water treatment for the central plant. And the property management company had no way to prove that they were actually doing that.
If Leonardo247 was already in place, they would have been able to demonstrate that they were in compliance with the repair, maintenance, and water treatment program, and the problem lay elsewhere. And in this case, it turned out to be a manufacturing equipment problem. It wasn’t the property manager’s fault. But that relationship between the owner and the operator had soured because there were a lot of accusatory remarks that back and forth.
Accountability & Consistency
A property management tool like Leonardo247 can provide the consistency, accountability, and guidance that teams need on site. But it also can demonstrate that, when things inevitably do go wrong, your team took the right steps to mitigate the risk. Having the right guidance on-site, and evidence that maintenance was actually done, obviates 90% of what goes wrong in property management.
This can affect preventative maintenance, risk mitigation, slip-and-fall lawsuits, and other operating concerns. It can result in lost revenue when marketing activities aren’t happening or units aren’t being advertised or collections aren’t going out on a regular basis.
There are lots of ways in which failing to execute the basic policies and procedures can have an effect on the financial health of the asset. But if you provide a system for consistency and accountability, those things will go away.
This is why regional property managers often play such a key role in bridging that gap between what should be done and what is being done. But what if you didn’t need regional managers to travel around and ask about changing filters or adding water treatments? A tool like Leonardo can track all of that minutiae for you.
Then those regional property managers could spend their time on the things that actually improve the top line of the property, like marketing and leasing. They can focus on raising occupancy, not the minutiae of operations. Leonardo can take care of that and let you know when you have a problem. In the meantime, your best people in the field are able to make the best, most effective use of your property.
Are Property Management Systems and Asset Management Systems the Same?
Property management systems should not be confused with asset management. Property management applications are accounting-centric platforms that handle the resident life cycle.
A robust PM system is crucial for any competent operator, but it doesn’t integrate the tasks that are important to asset managers for the life cycle of their assets.
Yes, financial performance is important. Yes, pre-leases, average occupancy, economic occupancy, all of those things are important and are covered by a PM system. But there are a number of asset management components that simply can’t be addressed in an accounting-based platform. Those include the operational activities that are necessary throughout the days, weeks, and months when you’re not handling PM-related business.
Also, PM systems are reactive. When someone writes you a rent check, you need to account for it. If someone wants to lease a unit, you need to screen them. When someone has a work order, you need to record that.
Asset Management & Operational Tasks
But everything else at the property, the things you do to be a good steward of that asset, is proactive. These are operational tasks that don’t belong as work orders or aren’t accounting related. They include:
- Inspecting for trip hazards
- Lighting inspections
- Website updates
- Interior unit photo updates and posts
- Email and phone number updates
- Audits and internal reporting, including expenses and commission reports for the corporate office
These are asset management and operational tasks that you can only capture if you have a platform that tracks what people do on a regular basis.
That’s where Leonardo247 comes in. Preventative maintenance, risk mitigation, marketing, leasing, and operational tasks like walking the tour path to make sure that the model unit looks good. Those need to happen on a regular basis, and some may only happen if they’re monitored. Leonardo247 can be there to give them the guidance and then make sure that those tasks are actually happening.
Reporting & Evidence
When asset managers receive their financial reports, they also want evidence that all the other things in their policies and procedures manual are being done.
With this tool, you can include a report that shows all the inspections that you’ve done, or all the times the property was walked and checked for irrigation leaks. Those things aren’t always reflected in the top line, but they matter to managers who think about asset preservation. Preventative maintenance, for example, reduces the risk of equipment failure and lawsuits.
These tasks live outside of accounting platforms and until now, there hasn’t been a good way to track them. But a platform like Leonardo247 can track workflows, tasks, and document management. It also tracks communications between community managers or regional property managers and the people that report to them.
One platform can be the central source of truth for your operators on a daily basis. It tells them what they need to be doing, how to do it, and what to do if they need help. And that’s a game-changer for both sides of the property operations equation.
Property Management Companies that Take Operations Seriously
It’s impressive when a property management company really understands the importance of the operations side and takes it seriously.
Companies that place equal value on the operational, asset-centric tasks as well as leasing and marketing tend to be more proactive in nature. They’re aware of the inspections that mitigate risk or the preventive maintenance coming up, or they establish measurable standards for the tour path or model unit.
We have a couple of clients who exemplify this, and their reputation in the industry reflects that. Greystar was one of our early clients. Leonardo247 was one of the few pieces of software that they rolled out across their entire portfolio. They’re very aware of the risks in operating real estate because of the size of their portfolio.
Greystar is keenly aware of the responsibility they have to mitigate risk for their clients. And they go to great lengths to do that. They have an internal committee that looks at operating procedures on a regular basis and is constantly revisiting ways to improve those.
With a tool like Leonardo247, they can roll those policies and procedures into something actionable throughout their entire portfolio across the country instantly. And it really makes a difference in terms of the quality of their operations.
Bozzuto is another great example. They have a tremendous reputation in the industry because they care greatly about the quality of their operations, not just what their occupancy reads across the line.
Bozzuto embraced Leonardo247’s ability to apply their core values at every property across the country, no matter who the manager is or how long they’ve been with Bozzuto. They care greatly about doing what is necessary to preserve asset value. In other words, they’re mitigating risk, and it shows.
Leonardo247 can give managers and operators the guidance that Bozzuto wants them to have so they’re in compliance with their own internal standards, policies, and procedures. By doing that, we create consistency, accountability, and trust between Bozzuto and their third-party clients.
Onboarding a Property Management Tool
Other clients who aren’t so dedicated to that process take longer to get up and running with Leo. And you can tell that they’re not used to the same standard of operations.
That doesn’t mean that they’re not doing a good job for their clients. But it can mean that the tasks aren’t always happening on a consistent basis. Or maybe there are holes on the operation side that nobody noticed, or maybe it’s not conducted by anybody yet, but there’s exposure there.
By putting Leonardo247 in place, our clients can mitigate that exposure. Clients can raise the level of their operations to the level of some of the best operators in the country, who think constantly about accountability and quality of operations.
Interested in learning about how to run a property management company the right way with Leonardo247? Click here to contact us, or get started with a demo now!