Not every investment property performs the way the investor imagined. Even in a hot market, rental properties can struggle to fill vacancies, leading to declining rental income and an inability to meet maintenance expectations.
Without proactive attention, such issues can erode profits and reduce the property’s desirability and long-term value.
That being said, not every troubled property is a bad investment. Sometimes, a little strategy and renewed focus on management can turn things around.
Professional property management can mean the difference between a struggling asset and a thriving investment.
Identifying why a property is underperforming, implementing plans to restore stability, and improving tenant relations will put the building back in the black.
What Causes Property Underperformance?
We could point to so many variables that contribute to underperforming properties. Poor maintenance, inadequate pricing structures, and weak systems will continually stress the investment, all driven by intrinsic inefficiencies that compound over time.
It’s not an unusual scenario: new owners may choose to save money by handling maintenance themselves and quickly get bogged down to the point where new tenant screening starts to slide, and rental pricing isn’t enough to cover rising costs.
A failing property can still generate income, but if it’s not living up to its potential, it’s likely costing you more in time and stress than you ought to accept.
Signs your property is underperforming include:
- High turnover
- Persistent vacancies
- Tenants are past due on their rent
- Maintenance falling behind
- Frequent complaints
- Operating expenses exceed income
- Safety concerns or non-compliance
These issues tend to feed on each other, and over time, the property becomes less desirable to the tenants you want to attract.
How Property Managers Turn an Underperforming Property Around
Like all winning game plans, a successful turnaround requires strategy. Los Angeles property management companies are experts at reviving property values. They approach each case by first identifying the root causes, addressing them, and then repositioning the property to meet market standards.
Step 1: Assessing the property
Properties are evaluated via the following criteria to assess their condition and financial performance:
- Financial records
- Operating expenses
- Maintenance history
- Vendor contracts
- Building systems inspections
- Compliance documentation
- Turnover trends
- Tenant complaints
This review will typically highlight why the building is underperforming. Based on the findings, the management team will be able to prioritize initiatives that will have the most significant impact on revenue and property values.
Step 2: Review maintenance records
Delayed or deferred maintenance can often lead to more costly issues down the road. For example, a leaky pipe can lead to structural damage. Inefficient HVAC increases operational costs and frequent tenant complaints. Poor maintenance, overall, can discourage good tenants.
Maintenance plans focus both on immediate needs and long-range preservation. Dealing with maintenance problems before they become huge issues will save a lot of money and aggravation in the long run, and ensure the property shows well to prospective tenants.
Step 3: Better tenant screening = better tenants
Weak screening protocols can lead to unfortunate situations, like late payments, conflicts with other tenants, lease violations, and worse. Excessive damage raises maintenance costs and may inspire good tenants to move elsewhere.
Property managers can establish and enforce consistent screening procedures that consider:
- Credit history
- Background checks
- Rental history
- Income and employment verification
- References
Filling vacancies may be the ultimate goal, but you want to ensure you’re filling them with the right people – or else you’re back at square one.
Step 4: Rental pricing must be adjusted to meet the market
Poor pricing strategies can lead to myriad issues. Pricing units too high will chase people away. Below-market pricing impacts your ability to keep up with maintenance and improvements. Either way, the result is the same: excessive vacancies and poor financial performance.
Property managers leverage market knowledge to ensure rental rates are in line with the market yet high enough to cover operational costs without going into the red.
Regular reviews are essential to maintain profitability and maximize opportunities. For many underperforming properties, a strategic rent increase can provide immediate value on the road to rehabilitation.
Step 5: Improve the tenant experience
It goes without saying that if tenants feel maligned or ignored, they will eventually move on. Turnover increases costs, while retention reduces them.
The best property managers prioritize clear communication, transparent policies, rapid responses to complaints and maintenance requests, and a continuous commitment to improving the property.
Tenants who feel supported are more likely to renew, making the building’s revenue more sustainable.
Step 6: Reduce costs without sacrificing quality
Yes, maintenance and repairs cost money. But they shouldn’t break the bank. Vendor relationships should be reviewed before contracts renew to ensure costs are in line with the market and that you’re not paying for services you do not need or use.
Property managers in Los Angeles have excellent relationships with vendors and service providers, and are well aware of benchmark rates across the board. Renegotiating these agreements may present opportunities to save money and increase service quality.
Step 7: Address compliance issues
Los Angeles rental property owners must comply with a regulatory environment that can be exceedingly complex, depending on the property’s location.
Rent control, fair housing legislation, health and safety standards, and jurisdictional tenant protections can expose property owners to legal risk and, potentially, fines and penalties. Professional property managers stay current on regulatory changes and can apply this knowledge to help owners protect their investment.
The Bottom Line: LA Property Managers Are in It for the Long-Term
If you have a distressed property, there are no “quick fixes.” Turning your investment around takes time, commitment, and the expertise that only a professional property manager can provide.
A successful rehabilitation can transform an underperforming property into a sustainable, high-value investment with stronger cash flow, lower vacancy rates, reduced operating costs, increased property values, and happier tenants.
If your rental property isn’t delivering the value you expect, it’s worth a quick call to see how we can help. Speak to the property experts at Belwood today, and let’s make this plot twist happen.
