The Importance of Defining Systems and Processes When Managing Multifamily Properties

Managing multifamily properties is no easy task and with scale, it only becomes more difficult. What makes the management process easier is establishing a clear set of systems and procedures/processes (hereafter abbreviated to S&Ps as necessary) in which you can streamline everything that goes along with property management (PM) from maintenance requests to leasing. Systems and procedures as they relate to PM can be defined as the combination of software (systems) and plans of action (processes) to keep a property organized, maintained, and efficient. The goal at the end of the day is for your property to produce the highest return possible and that can typically only be realized by maximizing rental income while limiting expenses as much as possible.

At JT Acquisitions, we’ve managed our properties since the founding of our company and continue to learn and adapt as we scale. Due to the nature of the syndication business and having investors trust us with their capital, our property management team is especially focused on making sure they efficiently organize all aspects relating to property operations. That being said, the purpose of this post is twofold and it will be divided into two sections. In the first section, we will discuss why S&Ps are crucial. Secondly, I will touch on some software and best practices that we’ve implemented or are in the process of implementing in our PM workflow at our company.

The Significance of Implementing Systems and Processes

Property managers play a crucial role in overseeing the day-to-day operations and long-term success of the properties they manage. To put things into perspective, here is a breakdown of many of the tasks that property managers are responsible for:

1. Tenant Relations (tenant screenings, lease negotiation, rent collection, etc.)
2. Property Maintenance (inspections, repairs and maintenance, and emergency responses)
3. Financial Management (rent setting, budgeting, financial reporting)
4. Marketing and Advertising (vacancy management, showings, promotions/concessions)
5. Legal Compliance (understanding laws and regulations)
6. Risk Management (security, insurance maintenance, etc.)
7. Evictions

As we can see, PMs have a ton of responsibilities and as a result, they need to stay organized to manage everything. With scale, staying organized becomes increasingly difficult without the use of systems and processes. S&Ps allow property managers to organize the tasks they have to do and record them so they can maximize the efficiency of the properties they manage. Software allows property managers to benchmark their performance by tracking key performance indicators such as occupancy rates, rental income goals, expense management goals, and many more. Additionally, software can be used for many of the tasks associated with tenant relations, maintenance request logging, and financial management. Established processes on the other hand make it easy for PMs to know exactly what they must do on a daily, weekly, and monthly basis which in turn can provide them with peace of mind knowing their tasks are compartmentalized.

S&Ps also make it easier for PM teams to collaborate and work well as a unit. PM teams can consist of property managers, assistant managers, maintenance personnel, leasing agents, and other team members. Having a centralized property management system/software allows all the individuals on a PM team to log the progress they’ve made, communicate with one another, track KPIs (as mentioned earlier), and more. On the other hand, when everyone understands the routine set of processes that have been established, then no one is stepping over anyone else because they know their roles and positions. Therefore, all the team members can predict what needs to be done and how it will get done. If there is a misstep or situation, the team should be able to quickly resolve the issue assuming their S&Ps are streamlined and the issue isn’t too unorthodox. Overall, S&Ps enhance efficiency, reduce risks, and contribute to a positive overall experience for property managers, tenants, and other people involved in the management of a property.

Software and Best Practices

At JT Acquisitions, we’ve been testing and playing around with various software and ways of going about the tasks associated with property management. The end goal with any software or system we implement is to reach the outcome we want in as few steps as possible and involving the least amount of work while being as accurate as possible. In terms of software, from the start we’ve used Excel and are in the process of integrating the PM software called Innago. Within Excel, we’ve created what we call an asset management model that tracks rent collection, expenses, investor distributions, capital expenditures, and a multitude of KPIs. Additionally, the model makes it easy to forecast future financials and create cash flow tables which we use for our monthly investor updates. Regarding Innago, that software will allow us to have one comprehensive dashboard for property management in which we conduct property-level accounting, manage work orders, streamline tenant communications, track KPIs, and much more. While there will be some overlap in terms of the capabilities of the asset management model and Innago, they have slightly different capabilities which make both applications useful. In addition to these two software, we previously used Quickbooks for accounting purposes but found that Wave was a better and much cheaper alternative. Finally, I want to mention that we use Microsoft OneDrive to house the majority of our documents, but there is a multitude of other platforms such as Google Drive or DropBox that serve the same function. The combination of these software helps us to stay organized, diligent, and communicate well amongst the members of our team.

In terms of best practices, we have many but I’ll describe a few and put them in a list for the sake of not making this blog post too long and for ease of readability.

1. Keeping track of maintenance requests and value-add projects: Our property manager will create a list and timeline for any maintenance requests that need to be completed for any given week and month. Each task is assigned to the appropriate maintenance team member and that way everyone understands what must be done and by when.
2. Tracking financial performance: To keep our property-level financials organized, our property manager will categorize each expense on our financial software as they arise. This process will soon shift to being done in Innago.
3. Rent collection/tracking: To track all data related to rent collection, we have a twofold process in which our PM will update our asset management model as well as input the data into a separate rent roll document. Soon enough Innago will allow us to track and collect rent.

These 3 practices listed above are just a few ways we make sure that our properties are managed properly on behalf of our investors. As you might expect, every company or individual has their own set of software and systems that work for them. At the end of the day, it’s what works best for you.

Conclusion

In summary, systems and processes are integral to the successful management of multifamily properties. They play a fundamental role in ensuring efficient operations, maximizing profitability, and providing a positive experience for all parties associated with a given property. At JT Acquisitions, we continuously evaluate and refine our systems to adapt to changing needs and industry best practices. Ultimately, all property managers should constantly be looking for ways they can improve and provide more value.

One final thing worth mentioning is that many firms are reluctant to share with others how they go about managing their properties. As previously stated in other blog posts, our team at JT Acquisitions believes in being transparent with how we conduct our operations and hopes that by sharing our knowledge we can help others learn. Well-known billionaire investor and hedge fund manager Ray Dalio perhaps stated the importance of transparency best when he said, “There is nothing better than (to) be on a shared mission with extraordinary people who can be radically truthful and radically transparent with each other.”

If you have any questions regarding the terms and concepts in this post or previous ones, please reach out to either me (tedi.nati@jtacquisitions.com) or someone on our team so we can help explain further. If you’re interested in investing with us at JT Acquisitions, you can contact us via our contact form, by emailing a member of our team, LinkedIn, or our investor portal to set up a meeting.

As always, I hope you enjoyed reading this post as much as I have writing it. Best of luck!