Gene owns a quiet 50-unit apartment property location with a park across the street. He lives out of town; his on-site managers keep him informed with a monthly report. Gene visits the property twice a year to review the books and just make sure the on-site managers are paying attention. His on-site managers have been with him for over five years.

His income has been steady over the past few years, but over the last six months he has had unusually high vacancies, the units have taken a long time to rent, and his machine income is down. So Gene decides to make a surprise visit to check things out again, but this time he plans ahead. He takes copies of the past year's rent roll and expense bills with him. He has a spreadsheet to track vacancies and maintenance costs.

Once he arrives, he asks managers to give him the current rent roll, inspects all apartments, and speak informally with individual tenants.

Gene spends the next few days inspecting all units. He see that a fourth of all maintenance requests were not completed: Doors were not installed, bathroom dry rot was not fixed, and carpets were filthy. The vacant units were not clean or painted; the landscaping was a mess. Equally bad, the managers had been pocketing the tenant's reservation fees.

What can he have done to prevent this nightmare?

At least annually, if not more often, Gene should inspect all of the units to make sure the maintenance has been completed.

He should also send out an annual survey to all tenants that includes the following elements:

  1. A cover letter and a self-addressed, stamped return envelope. The survey should be returned directly to the owner, not to managers.
  2. The tenant's name and address (to make sure the tenant is actually living there).
  3. A series of questions:
    A. Is your manager readily available to you?

    B. Is the manager courteous and helpful?

    C. Are you satisfied by the maintenance work being performed? If not, please explain.

    D. Are you satisfied with the landscaping?

    E. Do you feel your problems are solved promptly?

    F. Would you rent at this property again?

    G. Would you recommend this property to your friends?

    H. Do you now have any maintenance requests outstanding? Please explain.

    I. Please feel free to add additional comments.

Gene should have copies of the rental applications and rental agreements and randomly check to see that the tenants actually live in the apartments.

Finally, he should ask the tenants what they actually paid to the on-site manager and see if they have receipts to prove it.

How will Gene -- or you -- benefit from quality control?

Response rate to these kinds of surveys is usually close to 30 percent. The surveys, coupled with thorough inspections, help Gene meet the tenants, learn about their needs, and plan future repair programs, improvements, budget changes, and rent increases.

These quality control issues are also relevant for commercial properties. An owner cannot assume that a tenant will take care of the property in the same way an owner will. If you cannot be there at least once a year, hire someone to take pictures of the property and send them to you. It's worth sending out the tenant surveys at least once a year to get feedback -- but bear in mind that many tenants will not report problems to you because they think you will increase the rent.

Property management companies usually have these checks and balances built into their systems. When you interview a company, ask how they follow through on quality control.

Gene, of course, fired his on-site property manager and comes to visit more often now. But with quality control he now has less turnover and a better bottom line. So next time you have a chance, visit your investments and survey your tenants. There's much to be learned.

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