Managing risk in multifamily is becoming more critical than ever. Rising insurance costs and increased liability exposures make it imperative for property owners and operators to adopt strong risk management practices.
However, many still fall prey to common mistakes that can lead to costly repercussions. In this blog post we’ll delve into six frequent multifamily risk management mistakes and offer practical advice on how to avoid them. By addressing these issues proactively, you can mitigate risks, lower insurance costs, and ensure a safer environment for your residents.
1. Lack of a Proactive Risk Management Inspection Program
One of the most common mistakes is failing to establish a proactive risk management inspection program. Regular inspections are essential for identifying potential hazards before they become major issues. Without a structured program, small problems can escalate, leading to costly repairs and liability claims.
How to Avoid: Implement a routine inspection schedule and utilize a comprehensive checklist to ensure all areas are covered. Leverage technology to track inspection results and follow up on necessary actions.
2. Inadequate Tracking of Risk Management Procedures
Not tracking risk management procedures effectively can result in missed opportunities to mitigate risks. It’s essential to have a system in place that monitors the implementation and effectiveness of your risk management strategies.
How to Avoid: Use a centralized platform to document and monitor all risk management activities. Regularly review and update these records to ensure compliance and effectiveness.
3. Insufficient Training for On-Site Personnel
Your on-site staff plays a critical role in risk management. However, employee turnover in the industry continues to be a problem. According to the National Apartment Association, the employee turnover rate in property management is 33 percent. How do you prevent employee turnover?
How to Avoid: Develop a comprehensive training program that includes initial onboarding as well as ongoing education. In addition, recognize good work and invest in improving the tools available to your on-site staff. They’re all too often still working with paper and spreadsheets in a world of smartphones and cloud computing. Giving them the tools and technology to allow them to be successful is key to morale and a sense of achievement. Focus on reinforcing a proactive risk management mindset and practical skills for identifying and addressing risks.
4. Failure to Track On-Site Incidents
One of the hazards of owning and operating a multifamily property is – no matter how much you prepare – eventually something is going to happen (maybe a leaky roof, or a slip and fall accident?). This makes incident tracking vital for understanding and mitigating risks. Failing to keep a detailed record of on-site incidents can lead to repeated issues and increased liability.
How to Avoid: Implement a robust incident tracking system that logs all occurrences, from minor accidents to major incidents. Analyze the data regularly to identify patterns and implement corrective actions.
5. Ignoring Compliance with Regulatory Standards
Compliance with federal, state, and local regulations is non-negotiable in multifamily property management. Ignoring these standards can result in severe penalties and legal issues. However, code changes can be difficult to find. They can be buried in sets of regulations that are thousands of pages long. And when you do find a municipal code that might apply, you have to determine if that code applies to real estate, residential operators generally, apartment operators, or commercial operators.
How to Avoid: Stay informed about relevant regulations and ensure your risk management practices are in full compliance. Consider using a code compliance management tool to keep track of changes in regulations and required actions. Leonardo247’s Code Compliance tool, monitors and rereads the codes and looks for changes on a regular basis.
6. Overlooking Preventative Maintenance
Property managers have competing priorities, often prioritizing urgent matters over preventative maintenance. Furthermore, while your maintenance technicians are expected to possess some knowledge of critical preventative maintenance procedures, it’s unrealistic to expect them to consistently remember all tasks for all kinds of equipment and their proper timing. Neglecting routine maintenance tasks can lead to equipment failures, safety hazards, and increased repair costs.
How to Avoid: Establish a preventative maintenance schedule that includes regular checks and servicing of key systems and equipment. Use a property maintenance management platform to automate reminders and track completed tasks.
Avoiding these common multifamily risk management mistakes can significantly enhance the safety and efficiency of your property operations. By implementing proactive inspection programs, tracking procedures, providing ongoing training, maintaining diligent documentation, and prioritizing preventative maintenance, you can mitigate risks effectively and protect your assets. A proactive approach to risk management not only safeguards your properties but also contributes to a positive living environment for your residents and helps control rising insurance costs.