The profitability of property relies not only on its desirability and design, but also on two very important things: firstly, how well the current tenants are managed and secondly, the property's occupancy level.
The first and possibly most important step of tenant management is a solid screening process for tenants. Property managers need to be keenly aware of how they market, advertise, and select prospective tenants. Ideally, prospective occupants are willing to occupy the space long-term, possess the capacity to pay rent on time, and use their leased space responsibly. Credit checks and rental references are par for the course, as they are objective measurements of a potential client's financial situation. Another good way to assess a potential tenant is to invite them over for interviews. This way, property managers can get a proper sense of their potential tenant's as individuals. This is extremely important, as financial stability alone does not dictate whether the prospective tenant has the potential to cause trouble in the future, whether in the form of disruptive use of their leased space or even in missed rental payments.
Attention must never waver even when tenants are secured. Tenants not only require, but also appreciate, speedy and consistent responses to maintenance requests. If property managers ignore requests or take too long to respond, it communicates that the property managers are apathetic to their occupants.
Rent collection practices need to be implemented soundly and consistently. Property managers must specify in the lease agreement the date and time that rent is due, how and where the payment should be paid, and the possible sanctions if payment is not made as specified. This is not only for the benefit of property managers, but for tenants as well. Occupants of a leased space need to know the specificities of their rent so that they may avoid sanctions such as late fees, which generally accrue over time. Realistically, however, even tenants who have historically been punctual in paying their dues, can still encounter situations in which they may be unable to fulfill their rental agreements. In anticipation of such cases, property managers and tenants need to have an understanding of the acceptable latitude that can be awarded, especially to long-term tenants.
It is also vital to employ fair and consistent regulations and policies about the use of leased spaces as well as areas shared among occupants. In doing so property managers communicate that no occupant is valued over others while simultaneously demanding that tenants respect the space they occupy. This minimizes the loss of profits that come with repair of damaged space or utilities, high turnover due to poor management, and even bad publicity.
It is also a widely acceptable, not to mention ethical, practice for property managers to respect and safeguard their occupants' privacy. In the event that property managers need to enter any tenant's leased space, they should do so with due notice to the tenant.
The common thread with all these factors is the regular communication between tenants and property managers. Property managers can accurately assess tenants' contentment with their leased spaces if they take the time to pay attention to their tenants. In this way, the tenants remain happy and are more willing to renew their leases.
After tenants are screened and secured, a property manager inevitably turns to the second important function of property management -- management and maintenance of occupancy level.
Occupancy level is the percentage of units rented, leased, or occupied at a given time. A high occupancy level implies that there is a high percentage of rentable or leasable units being occupied, while a stable occupancy level implies that the number of leases remain the same over a certain period of time.
The acquisition of both balance and stability in occupancy level is difficult, but necessary. High occupancy and low stability means that the turnover rate -- the percentage of tenants leaving over a period of time -- is high. This means that resources have to spent on securing new tenants to occupy the abandoned units. Additionally, the longer the gap between a tenant leaving and another coming in, the more potential profit is lost. On the other hand, low occupancy and high stability is equally worrying because it implies that there are consistently few units being occupied over a long period of time.
The minimization of turnover and maximization of occupancy is therefore the key in occupancy level management. There are more and more property managers who go the extra mile to ensure that their tenants keep renewing their leases because of the understanding that long-term tenants are the best bets to high returns of investment.
Ultimately, both tenant and occupancy management rely on keeping the tenants of leased spaces happy. If the tenants feel secure, comfortable, and content with the management of the property as well as their units, they are more likely to renew their leases. The best and most reliable return of investment can be expected from tenants who are willing to occupy their leased space for the long-term.