Tag: tenant

Systems & Procedures

According to the Oxford English Dictionary a system is:

  1. A set of things working together as parts of a mechanism or an interconnecting network; a complex whole.
  2. A set of principles or procedures according to which something is done; an organized scheme or method.

Many people say that they have a system in place for their property business but when you ask questions about their systems and dig down it turns out what they really have are processes and tools that help them carry out things like analysis of an area or a deal, so it becomes a bit of a shock when you tell them that these are not systems. To understand this, here is a simple definition of a process and a system:

  • Taking an egg and converting it to an omelette is a process
  • A system is a series of processes where the output of one process becomes the input of the next process. An example of this is baking a cake, where you have equipment, correct ingredients, following an exact recipe, applying the method, utilisation of the equipment, transformation into a cake, adding value by adding a filling, presentation.

So why do we need systems?

Well if you want to be successful then you need systems and procedures as this will allow you to work on your business and not in your business. Some of you may be thinking that you got out of the corporate world because you were restricted by all of the red tape of systems; after all you are an entrepreneur. However the reality is whether you’re a one man/woman company or employ fifty people plus, you will need systems and procedures to free up your time and make you money.

Some of you may be thinking that you are just starting out and therefore until you get going you will just wing it for the moment. That would be a big mistake, it is in fact far easier to put systems and procedures in place at the start of your journey rather than leave it until later as it will take you a lot longer to do and in the meantime will have lost time, energy and potentially money, so take heed.

From a business point of you what do we mean by systems and procedures? The short version would be a step guide to perform any function within your business. Examples of this may include but is not limited to the following:

  1. What do you do/say when you are contacted by a vendor?
  2. What are the steps do you take when screening a potential tenant?
  3. What are the roles and responsibilities of your team?
  4. How do you get paid?
  5. How do you pay your suppliers?
  6. How do you run the back office? (Administration, Accounts, etc.)
  7. How do you draw up a contract with your suppliers? (Architect, planners, builders, etc.)
  8. What are your “Opening” and “Closed” hours and what happens when “Out of Hours” is required?
  9. What are your policy and procedures for joint ventures?
  10. What is your strategy and how do you communicate this to your team, joint venture partner, Angel investor etc.?
  11. What are your objectives?

As can be seen by the above examples systems and procedures are required to handle these sorts of questions. Do not be deterred by thinking that you need to write a massive manual documenting everything. Keep it simple and easy to follow, use pictures, diagrams, screenshots etc. if this helps to describe your processes. Where there are regulations that needs to be understood within a procedure e.g. HMO requirements, break it down and strip out all of the things that are not necessary and bullet point those that are needed so it is easy to read.

Advantages of Systems & Procedures

The advantages of having systems and procedures in place are as follows:

  1. Productivity will increase as you will not have to re-invent the wheel every time you do something.
  2. It can give you a perspective as now you can have an overview of your business, and the competition so now you can make informed decisions.
  3. There will be consistency in your work as things will be done exactly the same way each time.
  4. Reduced risks as you will have agreements etc. in place that spells out exactly what is expected.
  5. Quality will increase as you will have a framework in place to deal with builders, vendors, tenants etc.
  6. Growth can take place as you can use your systems and procedures to train people.
  7. You will have continuity because if someone is away on holiday, ill, or leaves then you are not reliant on that person as the systems and procedures will kick in.
  8. You will find freedom as now you can work on your business and not in your business, also it will allow you to be away from the business as it will run without you.

Take action now and put systems and procedures in place, once done these will just need to be kept updated as your business evolves.

 

Recommended Reading:

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It. By Michael E. Gerber

Scaling Up. By Verne Harnish

Right First Time Property Investing. By John A Foster

Landlords Losing Money

One of the principles of quality in industry is customer focus, and this is something that most landlords do not even consider, as all they are interested in is filling voids. It is in the interest of landlords to keep their tenants as long as possible in their property because in the long run it saves the landlord money as there is a regular cash flow going into the bank account. Landlords can go a long way to ensure that they not only help their tenants but also themselves. The following are but a few suggestions that landlords should consider if they want to keep their tenant and in some cases be able to charge a premium for what they are offering.

Tenants are not money trees they too need to earn and save to pay the rent; however, it is becoming increasingly difficult for them as their wages are below inflation. This means that bills have got higher, so they are trying to cut down wherever possible to make ends meet. As landlords you can help them, not by reducing the rent, but by helping them reduce their bills. Consider for instance of replacing all bulbs with LED bulbs, replacing shower heads with water efficient ones. from the 1st April 2018 there will be a change to the Energy Efficiency Standard Regulations to ensure that any property that is privately rented will have to have the minimum performance rating of ‘E’ on an Energy Performance Certificate (EPC). So, if you must update it go beyond the ‘E’ rating and make it even more efficient.

Customer focus is not all about helping the tenant reduce bills, its also about being responsive when a tenant reports a problem. How many times have we seen a tenant report an issue only for the landlord to ignore it until the tenant has made several complaints. Gone are the days where a landlord could afford to do this as the tenants today are much savvier and will take to social media to tell everyone about the issue and the poor response. It does not take long for a landlord’s reputation to be ruined and it will take a very long time for that reputation to be built up again, and in the meantime the landlord may have lost the tenant and find it difficult to fill the void.

Landlords also need to consider their tenant’s needs, for instance tenants may want to have pets, and are willing to pay either slightly higher rents or a bigger deposit in order that they can have their beloved animals. They may want to paint walls different colours so that it feels homelier for them, the landlord should allow them to do this on the understanding that it is returned to the original colour at the end of the tenancy. Let the tenants hang pictures again on the understanding that the tenant will make good any walls where he has made holes. Consider freshening up the property every few years with some paint, either paint it for them, or give the tenant the paint so that they can do it themselves. As tenants are often busy people, especially the professional tenant, then the landlord should consider offering services such as gardening, window cleaning etc. the tenant will often pay a higher premium for such a service.

Landlords who self-manage could also make it easier for tenants to report an issue by being able to do it online rather than having to phone, as quite often the tenant only has the time to report things out of office hours due to their own workload. So, give the tenant their own portal so that they can report and track the issue that they have reported. The landlord can also use the same portal to inform the tenant in advance when inspections are due, therefore allowing the tenant to arrange for someone to be in attendance.

By doing these little things not only will landlords keep their tenants for longer they will also have happier tenants who will become the advocate for the landlord and help find tenants for other or future properties that the landlord may have.

In summary by focusing on your customer you will enhance your reputation as a landlord and you will find opportunities to be able to charge a premium rate.