As a result of COVID-19, 20.5 million jobs (and counting) were lost in April, and the unemployment rate increased to 14.7%. Landlords are wondering how to service a mountain of debt. No matter where the unemployment peaks, economists predict that it will take years to get the jobless rate back near pre-covid levels.
Unfortunately, many unemployed or underemployed individuals are resorting to financial documentation application fraud to gain access to apartments they otherwise would not qualify for. Application fraud is expected in the financial industry, but many property managers don’t realize that it’s widespread in the rental industry. Fraudsters are using sophisticated techniques to create fraudulent financial documents to use in rental applications. While tenants are trying to maintain a roof over their heads, landlords must find ways to protect their buildings.
Rental application fraud
Rental application fraud is purposely lying on a rental application. This does not include mistakes, which are bound to happen from time to time. It is a clear misrepresentation in the rental application. The intent is the differentiator. The availability of photo editing software, high-quality cameras, and personal scanning devices tempt even the average applicant to want to lie a bit here and increase their income a bit there.
There are different types of rental application fraud.
To slow fraud risk in the rental portfolios, property managers must be aware of the primary forms of fraud. First-party fraud, third-party fraud, and synthetic identity fraud are categories of attack types that differ in execution.
Most landlords prefer to set a rental due date on the first of the month. Sometimes, however, this does not align with the tenant’s move-in date. If tenants were to move in or out 10 days after the start of the month, charging a full month’s rent for those 20 or so remaining days wouldn’t make much sense, nor would it be very reasonable from the tenants’ perspective. This is where prorated rent comes into play. This article covers what proration means, how to calculate and collect it, and why it is an important feature for landlords and tenants alike.
What Is Prorated Rent?
Prorate is a vernacularized version of the Latin term “pro rata.” In both instances, it refers to reducing something proportionally, typically based on usage. In the context of a rental property, it means that a tenant is charged a rental amount based on the days of the month they occupy a property.
Here’s an example that may help clarify: If a tenant pays rent monthly on the first of the month, they are paying for the next thirty (or so) days of occupancy. However, if, for whatever reason, they don’t move into the property until the 16th of the month, they would be paying for 15 days they did not live there. In an effort to be fair to the tenant, many landlords will reduce the amount due for the tenant’s first month of occupancy. In this case, because the tenant is living there 15 out of 30 days (or half the……
It is no secret that property managers are not only responsible for their buildings, but also the safety of those inside of them. So, it makes sense that anyone managing a commercial or residential property is well-versed in access control systems. Since COVID-19, however, there has been a drastic shift in the way we approach building security. More emphasis is now placed on maintaining health, wellness, and safety. Property managers are faced with new challenges to create healthy environments without sacrificing safety and security. Recently, innovations in touchless access control have helped to solve that problem, benefiting both property managers, tenants, and visitors.
A Shift in the Access Control Industry
Since before the pandemic, there has been a subtle shift in the access control industry. Property managers and tenants want more accessible and flexible solutions to apartment building entry. Key cards and key fobs, which preceded the traditional lock and key, were already becoming outdated. Then, COVID-19 hit.
Those with legacy access control systems were feeling the heat, as dated systems did not align with the environment we suddenly found ourselves in. Social distancing rules made navigating lobbies, mailrooms, and other shared multi-tenant spaces almost impossible. Keys, door handles, and elevator buttons all harbored potentially transmissible disease. An access control system upgrade was no longer an amenity, it was a necessity.
Touchless Building Access
Touchless building access control has been a new concept and thus relatively unknown. In short, these solutions allow tenants to enter their residential building without physical……
Manual data entry of hundreds of numbers every day can make accountants and administrators more susceptible to errors. Data entry of invoices, bank details, account codes can be stressful, it’s very easy for numbers to become distorted especially when being inputted repeatedly. When mistakes are made in accounting the result can be inconsequential or cause a domino effect impacting the result of numbers and books.
Error of Original Entry
An error of original entry happens when the amount of a transaction is recorded incorrectly, this error is not confined to a single account or book, all the relevant accounts would show the same error of original entry appear so the books would be balanced but with the wrong amount.
Error of Duplication
An error of duplication occurs when the same record is mistakenly entered twice. This could be two debits or two credits that should in fact be one. An error of duplication isn’t necessarily limited to two repetitions of a single record, it could be any number of repeated entries that should only be documented once.
Error of Omission
An error of omission is simply an overlooked entry or a failure to record a transaction. This can happen easily if paper records of a purchase like receipts or invoices are misplaced. Errors of omissions can be partial or complete. A partial error of omission occurs when an entry is posted in only one space and not the other. A complete error of omission is when an entire transaction is missing fro……
When you rent your property to a tenant, they agree to pay you a certain amount of money in exchange for access to a living or working space. Rent is an obligation to pay money owed and, in this way, is just debt in another context. Understanding a renter’s history of paying past debts can indicate whether they will be able to pay the debt they owe to you. The most comprehensive, effective way to obtain this information is of course a credit report. But before you first start screening tenants and analyzing credit reports, you must understand and determine the method you’ll use to acquire your prospective tenant’s credit history. There are two types of inquiries: hard inquiries and soft inquiries (also called “pulls”). Some industries use only hard pulls and others use only soft, but landlords have the option of using either one. Therefore, understanding the differences and potential benefits of each can help you make the best screening decision for your business.
What are hard inquiries and how are they run?
When someone applies for credit of some kind, whether in the form of a mortgage, auto loan, or credit card, the lender obtains your credit report via a hard inquiry. Each of these hard inquiries is recorded on the credit report itself and typically has a negative impact on the subject’s credit score. After all, if you had a tenant that applied for fifteen personal loans last year, you may have some concerns with their ability to manage m……
The pandemic has adversely affected both renters and personnel working in the multifamily industry. In a recent survey exploring team morale, J Turner Research found a 24% differential between the onsite teams and executives’ rating of their satisfaction with their company’s handling of the pandemic.
The onsite teams were asked what their company could have done better to handle the pandemic, how the company had succeeded, and what ongoing challenges exist. In the open-ended comments, one recurring sentiment was that as essential, front-line workers, onsite team members felt disappointed with management’s lack of support, flexibility, and monetary compensation.
In analyzing the open-ended comments by onsite team members, the following themes emerged:
Lack of adequate compensation/hazard pay
Many respondents from the onsite group said they were inadequately compensated or should receive hazard pay for working additional hours and putting their lives in danger. They highlighted the effect of the pandemic on income in reduced bonuses and expressed the need for more paid time off.
Despite some associates achieving leasing renewal rates between 70 and 85%, many reported receiving no commission, as there was no rent increase.
Unfair treatment of staff with children
There was a general feeling of resentment and disappointment, particularly among staff members with young children. Many echoed that management had treated onsite team members with children unfairly — they did not offer flexible work schedules or childcare for such employees. Some reported an ongoing fear of losing their job, despite having young children to look after……
Automation is sometimes a scary word, often associated with robots and dystopian future. There’s a common fear that automation and robots will take over jobs and displace people which is actually not what technology is on track to do. Less than 10% of jobs can actually be fully automated, however automation can be a great help to office workers when leveraged by companies to help improve their staff performance and overall reputation.
Automation in customer service, marketing, and sales are all available to support property management companies, but how can automation benefit accounting?
Automation in accounting enhances the efficiencies of processes that otherwise are heavily manual. By streamlining time-intensive, accounting teams have more time and can accomplish more in less time. On average automation can saves one person up to an hour of work per day but can ultimately streamline multiple days of work if implemented across the entire department. Of all accounting tasks, accounting software can currently automate approximately 50% of work for property management companies, while accounting processes that are more labor intensive and stressful including payroll management and tax preparation is expected to be fully automated by the end of 2020.
Technology has a better margin of error than humans who are likely to make mistakes when dealing with lots of numbers at once and repetitive data entry. Software automation can help prevent errors especially when inputting numbers. This can boost data integrity and minimize employee stress of making mistakes. Automation facilitates boosts data integrity, minimizes employee stress of mistakes, and e……
Alright, let’s talk long-term changes.
I know long-term anything is really difficult to think about right now because a lot of us in this industry are trying to figure out how we’re going to survive the rest of 2020. But that’s what we thought back in March when COVID-19 launched itself into our lives and look at what we’re doing now — surviving.
So, we’ll survive.
But then what? What does property management, unit tours, apartment marketing, and leasing all look like in five years?
I feel like these are important things to discuss so we can begin to prepare and get ahead of the curve.
I definitely don’t have all the answers but here are my thoughts (feel free to comment yours down below):
Affordable Apartment Demand Will Triple
Unfortunately, it’s going to take years for our economy to bounce back from the pandemic. So many people have had a change in income and due to current job unpredictability, money isn’t as freely spent. We’ve established that renters are still renting and those who want to move are still moving, even during the pandemic.
However, I think within the next five years, the amount renters are willing (and able) to spend each month on rent will slowly decrease. The truth of this becomes even more clear when we factor in how long this pandemic could potentially last in the United States.
On top of that, due to the previously stated job unpredictability and the need to possibly move for a new job, I think th……
Seventy-four percent of Millennials don’t feel secure in their homes, according to a recent survey. Considering that 72% of Millennials live in apartment buildings, this statistic should be a wake-up call for those who own and manage long-term multifamily rental properties. It’s increasingly clear that the security measures most property managers have in place no longer cut it for a large portion of renters.
And it’s no wonder: Technology has advanced exponentially over the past decade, offering safer, more convenient options to old-school security methods. Physical keys and even slightly more advanced technologies such as key fobs and cards are no longer considered the secure option of choice when it comes to keys in multifamily buildings.
This might not be a big deal among Gen X or even Baby Boomer renters. But for younger, digital-first generations, it’s a different story. To keep tenants safe and ensure that Millennials and Gen Zers don’t look for other places to live, managers need to embrace more modern approaches to safety.
Why Safety Should Be a Top Priority for Managers
There’s no question that property owners and managers already know that tenant safety is important. After all, basic safety precautions such as deadbolts on doors, intercoms at building entrances, and working fire alarms have long been standard practice for rental properties. If this has been enough to keep tenants safe so far, is there really any benefit to changing things?
The answer is a resounding yes. It’s not enough for a landlord to think a place……
Resident retention is usually thought of in terms of what the landlord or property manager can do around the end of a resident’s tenancy to encourage them to stay: clear communication, responsiveness, concessions, a new appliance, and so forth. But in this article we take a position that resident retention should start much earlier in a tenancy. In fact, before it even begins. It should start with apartment marketing.
A resident can decide to vacate for any number of reasons, including significant life events or other rigid issues that cannot be negotiated away, no matter what rent concessions may be offered. But for other renters, it comes down to “fit”. Is the apartment the ideal aggregation of attributes, quirks, and benefits that they want in a home, given the rent, or not? Is it “best-fit” housing? On renter surveys, there is usually no option to cite “not a good fit” as a reason for moving out, but this reason can be disguised in the answers to other questions, most often ones that ask about rent. According to Zillow’s Consumer Housing Trends Report of 2019, 55% of renters nationwide say a rent increase contributed to their decision to move out. Moving out because of the rent or a rent increase, if not a strict budgetary decision, is just another way to say the apartment’s perceived value does not match up with the rent being paid. It is not a fit for the resident anymore. And that is an unfortunate reason to lose a resident, becau……