The key to maximizing returns in rental property investing is a low vacancy, and the key to low vacancies is keeping your residents in place. But, how can a landlord raise rent to match market values? The secret lies in strategic rental property management.
That’s why we interviewed Kate Taylor, who works as JWB’s Property Management Supervisor, on today’s Not Your Average Investor Show to teach the Art of the Leasing Renewal!
In this NYAI episode, Kate shared with us:
- How to structure increases in a rapidly appreciating market
- When to reach out to residents to increase their likelihood for renewal
- How much does each lease renewal add to the ROI of the investor
Kate Taylor renews 1,000 leases every year, and the knowledge she shares will make you a WAY above-average investor!
What should rental property management do for the residents and investors?
A great landlord-tenant relationship is critical for good rental management. Collecting rent should be done automatically, so the rent payments do not get behind 30 days. Regular rent payments also make it easier to approve maintenance requests requested by the tenants.
Real estate investors who want positive cash flow should have a system where the rental property management group requests rental applications, does background checks and an excellent job of screening tenants and utilizes property management software to manage tenants.
When signing tenants up for long-term leases of 2-3 years, you avoid month-to-month rental agreements. While it is true that long-term leases decrease the frequency of rent increases, you can raise the rent at the end of the lease term.
How long has Kate Taylor been with JWB in the rental property management group?
Kate just celebrated four years of working at JWB. As we talk about the art of renewal, she is an expert. If you are a frequent member of the NYAI community, you’ll know that to have good ROI on your rental property, and you want the tenant to stay in your home to produce positive cash flow.
Kate’s team is very effective at renewals, and their average is 70%, which is fantastic!
What is the day-to-day life of a rental property manager?
The market is booming, and the rental market is appreciating right along with home sales and home appreciation. There’s an average of an 8% increase each year for rents. We are doing great in the current Jacksonville real estate market, as we see from the 70% renewal rate.
How do your rental property renewals work, and can landlords raise rent?
We base rent increases off of market rents. If we put the home on the market, what would it go for? We look at the market rent average, what we currently rent, and the variant between those two numbers. If the number is going up, we bring the rent up to benefit our investors. When we renew a resident, we are bringing them up to market rent no matter what.
How did JWB change the operations processes this year?
We started looking at market rent and looked at what the future trends are. If our average increase is $25 over two years, is there a gap that we are not capturing for our owners?
Our role at JWB is to provide an excellent Return On Investment for our clients. For some renters, the rent increases are significant, but we have managed this change well with our team and our residents through good communication.
What is the process for reaching out to residents before renewals?
We look at quarterly renewals, which means we start reaching out to our residents two quarters ahead. We check in with the resident, ask if there are any concerns, and see how everything is going. If any issues need to be resolved, we can handle them immediately. That way, when we call them two quarters later to renew their lease, they are more likely to stay in that home and rent for another term.
How does JWB incentivize renewals?
We prioritize our clients. What we are promising is a great ROI. When we make a decision, we look at how it will affect the ROI for the investors. It is better to keep someone in a home with a renewed lease than to find a new tenant.
What is the typical rent increase?
It averages an 8.3% increase, and we can renew 70% of our leases. We were scared of the rent increases. We found that 68% of our residents had an increase of over $100 per month.
We didn’t want to lose our residents, but we found they wanted to stay for the most part. The prices for other homes are rising in the neighborhoods, so the tenants understand that they’ll be paying more no matter where they go.
How much communication goes on with the homeowner while the renewal process is going on?
JWB is very good at letting the homeowners and the tenants know what is going on with the renewals. We do not want to surprise anyone. That is why we notify the homeowners in advance that the renewal is coming up and plan for a vacancy if needed.
JWB is renewing 1000+ leases per year. How much staffing does that take?
JWB has three supervisors & 10 property managers, and most of their job is to renew leases. When you break it down, we are doing 23-25 lease renewals every week. We are proactively reaching out to residents who have a lease coming to an end.
A lot of energy goes into each lease renewal, and we celebrate with our little red “hype button” when a resident renews their lease. The “bell” has a “whann-whann-whaaaaaa” sound, and everyone claps! So fun!
How does the rental property management group operate?
Of the ten rental property managers, we have between 400 – 500 properties per manager. In addition, we have specialty roles like admins and maintenance coordinators. Currently, JWB has 4000+ houses to manage, and that number is growing as we sell more newly constructed homes to investors!
Do tenants try to negotiate zero rent increases or give pushback?
Yes, they try to keep their rents the same, but that is not our business role. Our property managers are not salespeople. We call the residents and provide them with their options. Sometimes we get pushback, and we have to navigate the situation with honesty. We inform them that the market rents are rising, and we are not trying to rip them off by any means.
We pull comps, show them what the rents are going for in their neighborhood, and show the residents that the prices are incredibly fair. If they want a similar home to where they currently live, they will have to pay deposit money for a new rental upfront and get ready to move. So, many residents decide to stay after all because they don’t want to deal with having to move.
Most of our residents see that staying in their JWB property is the best choice. They receive good service, excellent communication, and they like the homes where they live. To set everyone up for success, we try to renew as much as we can a quarter ahead of schedule so the residents can get a small discount of $25 off their rent rate. It’s a win-win-win solution.
How does JWB qualify residents?
We have a pretty strict qualification process, and we discussed it in a previous podcast. Check here if you’d like to hear more about how JWB qualifies tenants to live in the single-family homes we rent. Read the blog: How To Find Good Tenants For Your Rental Property for further information.
How does JWB market the rental homes?
JWB has a very sophisticated marketing engine that they have in place for finding residents. But it helps that JWB has the best product in town, and we offer the best homes for that asset class. It equates to a long waiting list of people who want to live in JWB properties.
How does Kate manage 2-3 year leases?
We offer a 1-year renewal, but we always push for a 2-3 year renewal. We have the advantage with how we offer increases to the residents. Suppose you want to stay longer and lock yourself in with guaranteed rent numbers, including the 8% rent increase. Therefore, if the market rent goes up 20%, the residents still live in the homes for less than market value when they sign up for a more extended 2-3 year lease agreement.
How did the rent increase structure change affect the JWB team?
Kate said that it’s a significant change, but the team embraced those changes because the market numbers show that we’re following the trends. We want to do right by our clients and our residents, so we revisit our processes every quarter to ensure we are still on target.
What about rental homes that have below-market rents?
Even if your home is a little under-rented at 3%, it’s still ideal for keeping that tenant in your home that you own because it’s constant cash flow versus having a vacancy and finding a new tenant.
Most of the homes JWB rents are between $1000 – $1200 per month, and it is much more profitable to keep the tenant in that home long term. If your tenant moves out, you are paying clean-up fees and minor renovations, plus the time the house is unoccupied, affecting your bottom line. Therefore, it’s better not to worry too much about lower rent increases.
How does JWB handle evictions?
We follow the eviction process very closely. We work closely with the resident to keep them in the home to catch up on payments. It is in everyone’s best interest to keep the resident in the house. But if they do not agree to a payment plan that goes through the courts, we will follow eviction protocol.
What makes JWB’s rental property management team unique?
JWB has a team culture, which, interestingly enough, attracts a bunch of athletes. Our company culture values teamwork and team effort, so it is no surprise that Kate and other JWB employees are active in various sports and know what it’s like to come together and move toward a goal.
At JWB, our goal is to create a win for everyone we work with, including our investors, our residents, and our team members. Plus, the Jacksonville community. That is why JWB is vertically integrated within JAX and doing our part to put this city on the map for rental property investment.
How Do I Find Out More About Investing In Turnkey Rentals With JWB?
Contact the JWB team to begin the discussion. If you want to invest in Jacksonville real estate, now is a great time to jump in. Go to www.ChatWithJWB.com and find out how we can help you reach your financial goals through turnkey single-family rental homes.
If you want to become part of the JWB online community, join us in the JWB Facebook Group at https://www.facebook.com/CashFlowProperties.
You can also go to www.JWBInventory.com to see what properties are currently available. We encourage you to contact the JWB team for a consultation to determine how our turnkey rental properties can deliver positive passive cash flow.
We hope you enjoyed hearing Kate Taylor share information about JWB’s rental property management group, the art of renewals, and how landlords can raise rent for tenants. The Jacksonville real estate market is an excellent opportunity for real estate investors.
Learn more about the incredible opportunities with JWB and contact us today at www.ChatWithJWB.com. The Jacksonville real estate market is experiencing a period of sustained growth, and JWB has a proven formula for helping investors enhance their wealth with turnkey single-family rental homes.
To Your Success,