Blake Ratcliff's Blog

Research shows that employees view evaluations more fairly if they have a role in the  evaluation.  This may sound strange to some, but the benefit is a happier more stable employee base and therefore worth the effort.

Implementation is much more simple than you might think.

A simple implementation is:

• Provide employee written responsibility and evaluation criteria.
• Allow and encourage employees to provide information that will support the criteria.  This not only involves them, but also gives them a strong concrete means to improve their performance.
• Provide a written summary of your evaluation to the employee and allow them to respond in writing while the evaluation is in "Draft" format.
• During the evaluation review the submitted information and responses while providing your final assessment.

As an industry, we have been to lackadaisical completing due diligence.  Too often we are too focused on our debt source and not enough on our own requirements.  2010 is a good year for us to determine that we will be thorough and measured completing due diligence for our own interal  uses.

 Taking this step will go far to:

• assure properly funded projects,
• prevent future defaults,
• improve long term and short term results, and
• avoid poor  investments

How will you spend your money and time preparing for the purpose?  The wise investors will not go cheap on due diligence.

Spending time and money  putting together the complete plan can go far to assure the success of the purpose.

The wise investor will know and have a plan to deal with physical issues, economic factors, residents, and on and on.  The plan should seek to increase revenue, to cut cost, and to increase profit.

If you are in the market for new complexes the current environment offers the best opportunities in a generation.  A strong due diligence plan coupled with excellent business plan development is a key component to executing and acquisition strategy currently.

With that in mind, what are the key  due diligence factors you should be considering?

• Market analysis,
• Submarket analysis,
• Property condition,
• Rent role and resident analysis,
• Local and property specific crime factors,
•  Local Tenant Rights Laws,
• The Actual Local Evictions Process,
• Report and Appraisal Support and Analysis,
• Local Market Labor Conditions

Lost among the hoopla of the growing importance of the  Internet as the best marketing for apartments is  signage.  The Small Business Administration notes signage as the most effective form of marketing.  As we drive down our local roads and highways the importance of signage must be important as they are everywhere and growing more high tech every day.  And yet, apartment communities often only have their specific property sign when so much more can be done by owners.

We have a recently purchased property that struggled along with a small obscure sign until we replaced it with a larger, better conceived bold sign.  Within 60 days, the project was fully rented up.

another community in our portfolio enjoys a sign on a major thoroughfare and has on  some days (without additional advertising) had as many as 25 visitors and even more calls.  In the slowest of times, the  community sees 3 to 5 visitors from the sign.

The industry is known for suffering high turn over rates.  Effective apartment companies have strong operating procedures.  How good are yours?

Good procedures offer step by  step, situation by situation guidance.  The  effective management company should not only have the procedures, but also establish a process to assure:

• that procedures are current,
• that procedures if followed result in an  accurate complete result,
• that staff is  using the  procedures,
• that procedures are evolving with business conditions. 

If you are an investor verifying the presence and  effective application of procedures should be a priority.

I read a presentation from the Apartment Internet Marketing group that presented some very interesting facts.  The eye catching facts were:

• 20% of prospects will visit over Saturday and Sunday.
• 46% of leads will attempt to contact an apartment community after 5:oopm to and before 8:00am.

Combine this information with followup data and the question is more interesting.  Consider:

• Over 90% of internet contacts followed up within an hour move to the next step toward leasing and that over 80% fail in the 2nd hour.
• Also, consider that after the third follow up additional renting is negligible. 

Clearly, the old 9-5, Mon-Fri paradigm leaves much to be desired.  Essentially, this implies we fail to address about 66% of our potential opportunity to close prospects.  For our business, we plan to increase coverage over the next few months to capture this opportunity.  We can provide phone and Internet  coverage for every property from 8am to 9pm M-F and provide 15 hours of weekend coverage by adding a single staff member.  For 900 apartments at a cost of $2.50per month per unit, we can increase our potential lease opportunity by more than 60%.

The economy is tough.  Traffic is slow.  I'd say it is time to get back to basics.

The fact is taking care of business is not that complex.  Each day is spent on a short list of a few activities:

1. Inspecting the condition of the property and correcting issues as discovered including coordinating  supplies and  vendor support.
2. Spend time on traffic generation, improving sales skills, and closing/following up on emails, text contacts, calls and visits.
3. Updating Yardi with current information on all tenants and market rates.
4. Aggressively but politely collecting rents and fees from tenants.
5. Ensure your tenants are well treated and satisfied.

There are many other responsibilities that property management must see to, but if these are handled the property will be in good condition, leasing should be brisk, the books and records should  be should be solid, and customer satisfaction should be high.

I've read a number of reports predicting multifamily will lead the way out of the recession for commercial property.  I've also seen and posted a few blogs on the subject of how renting patterns will change (Lori Snyder's "Boomer Rising" is a good example).  At the same time, I can't deny that the bad news is not over.  I saw a national report saying rental rates had dropped nationally yesterday.  Today, another  group published a report echoing that result.  At the same time, I am seeing huge numbers of properties for sale from foreclosure.

Still, not all is lost.  Today, Michael Cunningham gave a positive review on core absorption in Atlanta.  MSNBC ran a report showing 79 metropolitan areas in recovery and 270 stabilizing.

I believe that for the coming year we will see property  performance gradually and with some acceleration trend upward.  Rent reductions should be off the table by late next year.  At the  same time, I believe we will see an increasing tide of projects in foreclosure even as demand picks up.  Many of these will be victims of loans made on the basis of "rent growth  opportunity" that has failed to materilize.

With 300,000,000 users on Facebook and with lots of info about them readily available, I am convinced the renters I am looking for are located there.  Unfortunately, I cannot get at them.

 We have set up a fan page for our properties.  Many of the team are actively involved, but we can't seem to unlock the secret juju t0 reach out and convert prospective residents from the system.

I guess we will have to keep playing farmville and searching around until the answer becomes more obvious, but right now I am convinced the value is much more perceived than real.