Apartment Rent

Last week, I discussed what it would be like to be an exceptional apartment community, and how that would affect our view of our community, our confidence in our product, and our entire operational process.  I would like to expand upon one of the bigger elements:

Creating a community that truly provides a memorable experience shifts
work from a sales-oriented model to an experience-oriented model.

What does that truly mean, and why is it so difficult?  As I mentioned, if you have a scarce product, and you have high demand, sales happens easily on its own.  The problem is somewhat of a “chicken and the egg” scenario, however, because how do you allocate labor to creating an experience, when you need that labor to plug the holes from residents walking out the door? 

Small shifts in data tend to quickly make headlines and dominate conversations. Most recently, it’s the uptick in single-family home sales creating some news about apartment renters leaving to buy homes. But it’s not a big spike – and even if it was, that wouldn’t necessarily be a bad thing for the U.S. apartment industry. Greg Willett and Jay Parsons from MPF Research explain why in this video edition of Apartment Market Dynamics.

By Salvatore Friscia, San Diego Premier Property Management, San Diego, CA

It was just a few months ago when the tenants were in the office signing the one year lease agreement. The leasing agent followed the office procedures and made sure to review the lease terms and obligations prior to asking for binding signatures. Then with the swipe of a pen the property was considered off the market and occupied for the year.

A day in the life of a property manager is never boring. Between answering phone calls, showing units, following up on emails, managing service requests, and dealing with move-outs and renewals, there is never a dull moment. Smart property managers are always on the lookout for new ways to improve efficiency and free up time for important tasks.

Converting paper checks to electronic ACH payments is a great way to boost productivity by eliminating daily trips to the bank. Over the last decade, more and more property management companies have recognized this opportunity and deployed electronic payment solutions at their sites. By scanning paper checks to process as electronic ACH debits, on-site staff finds more time to serve residents, fill vacant units, and increase revenue.

By Carla Toebe, New Century Realty, Kennewick, WA

If you have decided to delve into the world of property management then the banking procedures will be a bit more involved than simply having a bank account, making your deposits and payments, and balancing the register at the end of the month. I want to stress that every state’s laws are different. Much of what I talk about in this article relates to the best practices specific to the state of Washington.

The first rule of business is to establish a trust account with your commercial bank. Oddly enough, once you have sat through the session to get this going, do some telephone banking and ask the representative what kind of account you have set up to make sure it was actually set up as a trust account. Just because they tell you that it is a trust account doesn't mean it is. You have to follow up to make sure that the personal banker did their job correctly. You could find out the hard way that this account was never in fact a trust even if you were told it was. If it isn’t a trust then it will not be protected from potential seizure in the event of bankruptcy or other issues with separate personal or business accounts. Do your due diligence and don't rely on the initial set up.

For quite a while I have been amassing a list of resources that compares the cost of renting an apartment versus buying a home, renting versus buying calculators, or other articles that detail the advantages of renting.  If you have any other “rent versus buy” resources, please add them in the comments.

CNN:  Renting: The new American dream?

New York Post:  Home Sweet Rental – No Longer Buying Into The American Dream

By Linda Day Harrison, Manager Labs, Chicago, IL

There are business models in all shapes and sizes. There are retail stores, medical and legal practices, cleaning companies, general contractors, grocery stores, etc. So when you think about a business, how many business models do you know of where the business owner outsources the entire business to another party? For instance, if you visit your local grocery store, is it managed by a grocery management company? How about a retail store management company? So what makes the residential real estate investment business any different? Why are there so many property management companies and outsourced service providers to the property industry?

According to a colleague of mine, the answer is quite simple, “It is not easy, there is so much at stake, and there are many moving parts.” Also, when you think about properties as investments, there are often multiple partners and joint venture groups who own the assets. In those cases, the managing partner realizes they do not have enough time or expertise to do all of the functions required of them to maximize the value of the asset. That is what outsourcing offers.

By Jo-Anne Oliveri, ireviloution intelligence, Brisbane, Australia

Recently, I have been involved in the sale and purchase of a rent roll. I had the rare opportunity of consulting for both the buyer and purchaser. Let me say, this was the smoothest and least stressful rent roll transfer I have ever witnessed!

Now some might say there is a conflict of interest by consulting to both the seller and the purchaser, and yes, I would agree! I definitely had my reservations about consulting and advising to both of them, but I discussed my dilemma with both parties. They both agreed they would retain me as the consultant and adviser through the negotiation, transfer, settlement, transition and retention period. In fact, I even conducted the inspection and overview on the selling rent-roll, and prepared the due diligence report.

By Steven Van Zile, Total Management, New York, NY

Within the past 24 hours, here are the maintenance issues I’ve experienced at the property where I reside: the maintenance person, loyal to this building for 33 years, responds to a clogged toilet by advising us to pour bleach down the toilet. Concurrently, the intercom buzzer is stuck and won’t shut off. And, of course, the elevator renovation that started out as a one week project actually turned into a three week project, providing 6^th floor tenants the opportunity to save money by cancelling their gym memberships.

It’s always seemed simple to me; as residents, we pay rent, maintenance fees, or mortgage payments and the property management staff provide services for the resident. Building and trust owners hire those property managers based on their abilities to keep churn rates low, vacancy at zero, and tenants happy all at or below a budget designed to re-invest in the property. So what happens when we tenants aren’t happy? Well, in today’s age of instant knowledge and access, a lot of renters turn to rating sites like Yelp or apartmentratings.com to spitefully pen scathing reviews in an attempt warn others. These sites might be seen as a threat, but if you’re really good at your job, more transparency can only help you, and reviews will actually help your business grow.

Accepting credit cards for rental payments has been a hotly contested item in the office since Twitter published its first tweet. I'd like to get your opinion on it - not because I want to win some office bet (1/2 day off!) but because I still think this is a sticking point for some companies. Let's clear the air, check the evidence and try to figure out what we should do.

Pay a convenience fee for being convenienced.

Quick math. If you collected $10 million dollars a month in rents and that was all paid by credit card at 2.5% per transaction that would be $250,000 a month you'd flush down the toilet. It isn't practical for our bottom lines to write these kinds of numbers off. (Shoot if it was, I'd process the transactions using some crayons and a phone and keep the $250,000 myself). Only way you can overcome these lopsided mathematics is to charge a convenience fee. The trouble is the laws regarding the fees are pretty convoluted and require a decoder ring and expensive lawyers to understand. 

Here's the skinny: Discover (the card that pays you back) doesn't care who you charge a convenience to just as long as it isn't higher than what they're charging you per transaction. MASTERCARD says: