Reaching the Pinnacle of Success in Property Management
- Sep 03, 2018
Operating approximately 165,000 units across 30 states, Pinnacle Property Management Services is one of the country’s largest third-party multifamily management companies. In August, the firm landed the top spot in Multi-Housing News’ 2018 Top Property Managers ranking, based in part on its rapidly growing portfolio and the high average occupancy rate of its communities.
Larry Goodman, COO of Pinnacle, talked with MHN about some of the firm’s tricks of the trade in keeping residents happy, developing valuable human resources and harnessing operational data to add value to investors’ real estate portfolios.
What are some of Pinnacle’s operations and processes that give your portfolio an advantage?
Goodman: The property management business is not just about people—it’s about having the right people. Pinnacle’s greatest advantage is our ability to find those people who fit our organization and then encourage them to interact freely, provide input on company decisions and feel empowered to advance. To keep them motivated and sharp, we offer over 250 resource documents, courses and videos through the University of Pinnacle. On top of training, Pinnacle’s portfolio benefits from the operational strategies and key performance indicators that work in tandem to reduce expenses and enhance asset value.
What does Pinnacle do to improve tenant retention rates?
Goodman: Pinnacle takes a sensory approach to management, which starts by building a connection with prospective residents from their very first visit or tour. Then, we nurture their loyalty in a variety of ways.
Pinnacle utilizes surveys to evaluate resident needs and acts on this information to make proactive adjustments when needed. This is an important step. We send these surveys after a prospect tour, two weeks after move-in, after maintenance requests are completed, prior to renewal and during various other touchpoints throughout the lease to ensure satisfaction. In addition, we connect through marketing, community benefits and resident events, which are created specifically for the target demographic.
The icing on the cake, however, is how we make residents feel. As a philanthropic company, Pinnacle enables them to be a part of something bigger than themselves. Like other management firms, we provide opportunities for them to interact with their neighbors through activities, but we also allow them to become engrained in our community service efforts. And when our residents are the ones who need help, we help.
Earlier this year, Pinnacle launched a new program called Pinnacle Purpose that enhances our inherent need to connect with others. The program also serves as a lifeline for our residents who find themselves in a financial crisis through no fault of their own. Since the start of Pinnacle Purpose, we have saved around 10 resident households from homelessness by partnering with nonprofits who provide a rent bridge through difficult times.
How have the expectations of renters changed in recent years, and how has Pinnacle adapted to these changes?
Goodman: As we know, social media has changed the way we communicate in the world, and multifamily is no different. More than ever, the renter has the ability to significantly impact the success of a property by posting a review online, whether positive or negative, in an instant. Therefore, the need to provide the highest level of customer service today is more important than ever before. At Pinnacle, we spend a lot of time teaching these skills.
Amenities are another renter expectation that affects the decision-making process. Pinnacle participates in the NMHC/Kingsley Renters Preference study to help identify the most important community amenities that have an impact on renting. Along with our overall portfolio experience, we are able to make recommendations to our owners.
How has Pinnacle observed the shifting demand across its managed portfolio over the past five years, and how has this impacted your business strategy?
Goodman: As a national player managing all asset types, Pinnacle sees every market behave differently from a demand standpoint. There is one constant, however, that has impacted our strategy: The way a renter searches for an apartment has changed. Over the last five years, more than 90 percent of our prospects have migrated to using a smartphone during their search, which has altered how we market our communities. With over 230 million people using the same method to search for an apartment home, we have devoted a lot of time to enhancing websites and incorporating internet listing services into our online leasing strategy.
What are the best ways for an investor to maximize its returns in a community?
Goodman: When Pinnacle is invited to engage during the initial due diligence process, our teams have the ability to analyze an asset and make steadfast recommendations on how to maximize operations from day one. We become familiar with an investor’s property, see the advantages and disadvantages and get a jump start on budgeting, staffing and marketing prior to the onset of a management contract. This enables us to maximize their returns throughout the lifecycle of our engagement.
Investors benefit from Pinnacle’s early ability to put a strong reputation management strategy in place, make sure the property has competitive amenities, justify any needed value-add upgrades, minimize deferred maintenance through timely infusion of capital and set up technology for lead management and online leasing. Incorporating revenue management systems early on is also extremely advantageous.
What do you see as the largest opportunities in the nationwide multifamily market in the near- and long-term?
Goodman: In the near-term, developing a sound business intelligence strategy that can collect, interpret and report data will have a significant impact on how properties perform. This approach will also result in change management and require buy-in from the entire organization. Data-driven management is the future.
In the long-term, smart home technology is becoming the norm in Class A and many B properties and will be necessary to attract and retain residents. As better integration occurs with property management systems, functionality will increase and costs will go down. We also feel there will be an increase in short-term rentals, like Airbnb, for example, as many of the concerns currently associated with the models will be overcome. This method of leasing will become another income stream to maximize returns for owners.
What are some of the biggest challenges in the industry?
Goodman: The retention of talent has and will continue to be the biggest challenge in the industry, particularly with regard to maintenance and leasing positions. As an industry, we need to do a better job educating these positions on the benefits of building a career versus just getting a job. Finding qualified talent in an economy that has an unemployment rate under four percent—the lowest in the past 10 years—is difficult. To combat this, Pinnacle has remained extremely focused on building and promoting the culture of our organization, which has helped us to hire and retain top-tier talent.
What role does technology play in property management, and how do you see this trend evolving?
Goodman: While technology is essential to effective property management, it can also be extremely confusing. Typically pitched as something to make daily operations easier, there is often a steep learning curve involved with maximizing a new advancement.
There is no question that technology will continue to provide tremendous benefits. However, there has to be a methodical process in evaluating and launching products. Pinnacle has a product review committee to evaluate new technology and determine its viability. The process is fairly detailed and is heavily focused on understanding the implementation/integration process, ongoing support and customer service/training. Our goal is to provide solutions to the operations team that allow better performance for our clients.
How do you envision the role of property managers shifting over the next five years?
Goodman: There is an ongoing shift in the role and responsibility of managers, which requires them to be very data savvy. Their ability to interpret and make sound decisions using data will continue to have a growing impact on the performance of the asset. Business Intelligence (BI) is a current buzzword that has to do with gathering, analyzing and reporting business data. Every software tool today has some form of BI built in, and managers must become more sophisticated so they can gain very granular insight into the operation of the real estate.
A manager’s ability to be hands-on with reputation management is another important shift. A property’s reputation is not built by accident. It is formed online by residents who constantly solicit their feedback. To be effective, property managers need to be very proactive in monitoring social sites and then responding to comments or complaints in a very timely manner. Fortunately, there are tools today that allow the monitoring of multiple sites in one package.
Image courtesy of Pinnacle Property Management Services