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Asset Management

HVAC Preventative Maintenance

Identify Problems Before They Become Costly Emergencies By Ray Hespen The extreme swings of cold, heat, and humidity can cause stress to heat and cooling equipment. Preventative maintenance on your HVAC systems is often held off for the summer months when residents turn off their A/C unit for the winter. However, there is a better way to protect your investment in equipment. What is HVAC preventative maintenance? HVAC, which means “heating, ventilation, and air conditioning,” is the system that keeps your home and rental units at optimal temperatures. It keeps your home warm in the brutal winters and cool in the sweltering summer months. HVAC preventative maintenance is cleaning and assessing the system’s components to ensure it is operating correctly to avoid future problems. For example, not changing HVAC filters or coils regularly can lead to leaks that will wreak havoc on your HVAC system. Why is HVAC preventative maintenance essential? Improves the overall health of the home Consider your HVAC equipment as the main artery that keeps the heart of a home beating. When the cooling and heating system operates efficiently, the entire home benefits. Alternatively, poor equipment can result in increased negative impacts. For example, if your heater is not running correctly in cold temperatures, you risk other major, costly home issues. So why can’t you turn it off once in a while to prolong its life? There is a high chance that when you turn off your heater, the temperature can dramaticallydrop and ultimately freeze your pipes. How is that possible? According to Mid Atlantic HVAC, the frozen water in the pipes can expand, burst, and even flood the home. Water damage will cost you more than paying the heating bill. Preventative maintenance routines can reduce the risk of costly maintenance issues by 95%. Imagine being able to tell your property owner that you are extending the life of their assets while saving them money. Improves owner satisfaction and retention Speaking of property owners, keeping their property in optimal shape is essential to owner satisfaction and retention. Your owner’s property is an investment, and they trust you to ensure that their investment is maintained. Save thousands of dollars lost in HVAC repairs and avoid owner churn by spending a little time and money to do routine inspections. Improves resident satisfaction and happiness It is no secret that a smooth-running HVAC system keeps your residents happy. At Property Meld, data shows that satisfaction ratings and maintenance issues are inversely related; when problems arise, ratings drop, and when issues drop, ratings rise. The length of time you have to repair an HVAC issue before a resident becomes disgruntled — and leaves a negative review — is shorter than with any other common maintenance issue. Our data shows that property management companies have just 72 hours to fix an HVAC issue. If it takes any longer to repair, the chances of a resident writing a negative review skyrocket. Regular preventative maintenance ensures that everything will run smoothly, reducing the chance of resident churn and negative reviews. Decreases cost of repair in high demand seasons If you want to keep your maintenance costs down, your best bet is to avoid emergency repairs in high-demand seasons. When there is high demand for a vendor or technician, the price of their work will likely increase as well. In addition, if a priority maintenance issue occurs, you have little choice but to hire a technician regardless of the timing or price. Implementing regular check-ups for your equipment will save you hundreds and thousands of dollars from emergency repairs during peak seasons. Less stress on internal staff Many businesses are experiencing inadequate staffing levels. The last thing your property management company needs is a flood of residents calling simultaneously about their AC unit breaking down. By simply taking preventative measures with regular inspections, your staff can put their efforts and time towards tasks that profit your company. HVAC Issues by Season and Region HVAC issues by season When you think of the worst time for HVAC repairs, you probably imagine a sweltering early June day when thousands of air conditioners kick on for the first time of the year. However, according to our data, the most expensive month for maintenance repairs is September. The average HVAC repair invoice is $435 — 21% higher than the average repair cost. The second most expensive month is February, where the average invoice is $416 — 15% higher than the average cost. That sweltering June day? It comes in at third, with an average invoice equaling $407. HVAC issues by region In addition to seasonal issues, each region is unique and can experience different fluctuations in repair costs depending on HVAC vendor demand. Southern United States: 50% of all HVAC service issues in the south happen during the summer. In addition, the monthly repair request invoice is 123% higher than off-season invoices! Northern United States: The monthly average repair request invoice is 61% higher than an off-season invoice during the winter months. HVAC Preventative Maintenance Tips and Checklist Preventative programs emphasizing routine inspections are a great place to start. When you create a system of regular check-ups for your property and assets, you are able to identify problems before they become costly emergencies.  »         Perform spring cleaning. We recommend cleaning the HVAC system’s air condensers and filters. This work will come at a cost to your company. Still, it will avoid expensive emergency repairs duringthe peak season.  »         Consider charging an administration fee for preventive maintenance. It is reasonable and fair to charge an annual administration fee for HVAC preventative maintenance. The additional revenue will come in handy to invest in replacing new units down the road.  »         Perform an inspection during a resident turnover. Another tip is to integrate HVAC inspections into your resident turnover program.

Property Management

How Resident Satisfaction Impacts Net Operating Income

Have you considered the role your maintenance process plays? Of the various approaches to maximizing net operating income (NOI) for a rental property, improving resident satisfaction is often overlooked. This is largely because it feels like a qualitative measure when compared to other more historically quantifiable expenses that directly impact the bottom line. This is also precisely why improving resident satisfaction may be the key to improving your NOI. First, let’s talk key performance indicators. More specifically, let’s talkleading versus lagging indicators. Leading indicators tell us what will happen; lagging indicators tell us what has already happened. Both are essential in managing any investment. Most of us tend to focus on lagging indicators, often because they’re more readily identifiable and available. However, both leading and lagging indicators are essential in predicting and verifying quality of outcomes. Another important distinction to consider is that an indicator can be both a leading indicator in one context, and a lagging indicator in another. Such is the case with resident satisfaction. One way to maximize NOI is to minimize resident turnover. The reason has as much to do with transaction cost, as anything. Put simply, regardless of length of residency, when a resident decides not to renew a lease, a number of tasks must be completed before the next renter moves in: move-out inspections, deposit disputes, turnover repairs and cleaning, marketing the property, showing and leasing the property, move-in inspection and others. These tasks create costs for the property’s owner and to the property manager. One key factor in minimizing turnover is resident satisfaction. It stands to reason that residents who are satisfied with the quality of their home are less likely to move. Controlling the Controllable A variety of factors affect leasing churn. Property managers have control over some of them (e.g., rent price and overall experience). Other factors, such as job loss or transfer, are outside the property manager’s scope of influence. In any business, the higher the cost of customer acquisition, the greater the impact on the bottom line. Any business owner will tell you it costs far less to retain an existing customer than to acquire a new one. A resident’s maintenance experience can have a meaningful impact on their decision to renew their lease—nearly a third of nonrenewals list lackluster maintenance as one of the primary drivers for not signing a renewal. Data Helps Residents’ maintenance experience comes down to two core needs: speed and transparency (in that order). Data is available to help identify some of the common elements of a happy resident. One of those is the speed of a repair. When you ask someone in the industry what defines an excellent maintenance experience, you might hear phrases like “personal touch” or a “human experience.” Data tells a different story. Residents weigh speed heavily on the repair, and the data confirms just that. Here is some broad guidance based on statistical information: HVAC repairs should be completed in less than three days. Plumbing repairs should be completed in less than 4.5 days. Electrical repairs should be completed in less than five days. If your repair times start stretching beyond that, the statistical likelihood of a happy resident falls drastically. How to Control the Outcome Property management is seeing some of the most impressive growth of any industry and demonstrating incredible resiliency. Much like other rapidly growing sectors, there are learning opportunities. Among these is clarifying the most relevant key performance indicators (KPIs), specifically those that correlate with lease renewals. Among these are two that, at a minimum, you should monitor closely: Speed of repair measures the time from the submission of the repair request to the time the repair is complete. Some firms track the entire length of time a work order is open (to include time waiting on an invoice). This muddies the waters a bit and makes the indicator less useful for gauging resident satisfaction. Practically speaking, there are reasons to also measure the time a work order is submitted until it is closed at receipt of an invoice. This is a different KPI and more useful in gauging the cashflow cycle impact and process flow with the billing department. It will not predict resident satisfaction. Tracking time to completion from a resident perspective can help the property manager better understand its impact on resident satisfaction. Standardizing the methodology to exclusively measure time of repair will also help you benchmark your operation against others more effectively. Resident satisfaction is the average satisfaction score residents provide, based on maintenance activities. Once again, measurement methodology is critical. If you allow this KPI to become a marketing exercise, wherein the system is gamed to ensure the highest score, you’ve already lost. You want to understand your actual resident satisfaction, not your opinion of your resident satisfaction. A good KPI sets the standard. The goal is not to adjust the KPI to meet your standards. The goal is to adjust your processes and thereby raise your standards to meet those set by the KPI. Resident satisfaction should be checked within 24 hours of the repair completion and must be requested for all repairs. If you pollute your measurements with subjectivity, omitting repairs that may mess up your data, the KPI is meaningless. Automating this process prevents subjectivity from creeping into the process. Automating this process gives you consistency. Consistency gives you an honest score. Both metrics are critical for creating a measurement process that includes both leading and lagging indicators. In terms of the repair itself, speed of repair is the leading indicator, and is verified by resident satisfaction as the lagging indicator (note that resident satisfaction also acts as a leading indicator in predicting resident turnover). If your team has visibility into repairs lasting more than five days, they have an opportunity to improve processes (control their controllables) to reduce these repair times, which improves the likelihood of a renewed lease. Viewed through this lens, maintenance is much less the “set it and forget it” process of

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