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Why banks need to understand landlords and property managers.

Rental property

Why property managers and landlords make great commercial banking clients.

In short:  they bring in low-cost core deposits and can drive excellent growth on the loan side of the balance sheet.


Their businesses are robust, with recurring monthly revenue and lots of financial activity. Once you gain a foothold in the property management space, there are a lot of ways that your institution can help and benefit:

  • Real estate loans
  • Construction loans
  • 1031 exchanges
  • Brokered transactions
  • Renter’s insurance
  • Security deposits
  • Operating accounts
  • Transaction fees


A landlord and a property manager aren’t always the same thing.

A landlord is a person or entity who owns the building and leases it or part of it to someone else.


A tenant is a person who leases the building or space within the building.


A property manager is a person or company that manages the building. They often act in the interest of the landlord and may facilitate virtually all interactions with the tenant, including leasing paperwork, rent collection, repairs, eviction, and more.


Some landlords also manage their own properties, and some property managers may own some of the properties they manage, but not all of them. Property managers do have legal limitations on what they can do on behalf of the landlord/owner. Many landlords prefer to pay property management companies to handle their properties because they live far away from the rental location or because they would prefer minimal involvement.

They’re looking for banking partners who understand their needs.

We conducted some primary research to learn more about what landlords and property managers are struggling with day-to-day and what they look for in a financial institution partner.
The range of concerns they voiced fell into a handful of categories:

  • Keeping up with maintenance
  • Finding reliable vendors
  • Paying vendors
  • Managing compliance and liability
  • Bookkeeping (especially smaller organizations or those with overlapping businesses)



Our interview subjects also provided valuable insight into ways that financial institutions could meet their industry.

  1. The next generation of property managers wants guidance on compliance and liability.
    Whether through inheritance or necessity, a new generation of people is moving into property management. The next generation will need help navigating their new burden of compliance and liability. What tools, advice, or recommendations can your institution provide to them?

  2. Speed of payment is a competitive advantage for them.
    Incoming rent, outgoing payments to owners, any time money gets slowed down in transit, there is a person anxiously waiting for it. Of course, you have fraud due diligence to consider, but revisit your policies and procedures – maybe there are ways to speed things up that only you are aware of.

  3. Explore creative pricing and lending solutions with them.
    Property managers offer a service to both tenants and owners. Brainstorm ways that you can help add value to that service in exchange for justifiable fees.

  4. Small openings can lead to deeper relationships
    Whether through deposits or lending, once you open the door to a relationship, you can work on growing it.

  5. Offer tools that complement their operation.
    You don’t need to replace the property management tech providers. Look for tools that simplify or complement what clients already have

  6. Use your network to help fill vendor/tenant/client gaps.
    The more connected you are in your community, the easier it is to recommend vendors, clients, and tenants. Do whatever you can to become a referral engine for your banking clients.

 

Prepare, understand them, and be generous.

Although property managers and landlords can share concerns, needs, and aspirations for their businesses, they also face unique challenges. Compliance and liability vary by state and by municipality in some cases.

Take the time to learn about their industry, listen to their specific needs, and be generous with your time and expertise. You’ll find the more you invest in building relationships, the more loyalty and opportunity you’ll create that contributes to your commercial portfolio.