Robust Demand Boosts Apartment Occupancy and Rents MPF Research starts rolling mid-year apartment market performance results this week, and we begin with a look at what preliminary figures show for the nation as a whole. The news is good any way you slice and dice the data. Initial calcs point to absorption of another 116,000 units during 2nd quarter, taking demand for the first six months of the year to nearly a quarter million units. We're now on pace for calendar 2010 demand to come in at the second strongest annual volume seen over the past couple of decades, exceeded only when Hurricane Katrina evacuees boosted the absorption tally in 2005. Obviously, the addition of some jobs is a big part of the demand story, but there's more to it than that. For example, renters are continuing to return to traditional apartments from individually-owned condos and single-family homes offered for lease. Also, some young adults who had combined into roommate living arrangement are splitting up into separate households. And an improving economy means that more parents are willing to guarantee leases in order to kick their perhaps under-employed kids out of the basement. A new element that seems to be emerging now is that some apartment demand is coming from folks who recently sold their homes. A lot of them were worried that they'd never be able to unload those units, so making another purchase right away is a pretty scary move. A really important thing to realize about the overall...

Demand for apartments in Orange County came in at about 2,200 units during the initial three months of 2010. Early 2010 actually marked the metro's third consecutive quarter of substantial apartment absorption, taking demand for the year-ending March to a decade high of nearly 6,800 units. With demand well surpassing completions during recent months, occupancy in Orange County's apartment base has recovered by nearly 2 full percentage points from the bottom reading seen in the middle of 2009. However, at 94.4 percent, March 2010 occupancy still was roughly 2 points under the metro's long-term historical norm. The bump in occupancy seen during early 2010 was enough to get rents basically stabilized. In MPF Research's same-store sample, effective rents as of March exactly matched the rates seen three months earlier. Effective pricing still was down on an annual basis, off by 3.8 percent, but that loss sure looked a lot better than the annual decline that earlier had gotten as deep as about 8 percent. While Orange County's apartment performance prospects now appear pretty encouraging in the big picture, the leasing environment for top-tier product certainly should be competitive over the next few months. Influencing that outlook, properties totaling some 2,500 units have scheduled completion dates during 2010's 2nd and 3rd quarters. A portion of the data used in this post is acquired through property management software, which provides property owners and managers the ability to report baseline statistics to county recorder's offices, news publications, and other reporting agencies. Improvements to property...

Portland's overall occupancy rate for apartments was at 94.8 percent as of March, looking good by national standards. Furthermore, the metro displayed strong momentum in recent months, with occupancy improving by nearly 2 percentage points just during the initial quarter of 2010. Most of Portland's individual properties, in fact, now are performing even better than those overall stats would suggest. Roughly two-thirds of Portland's individual properties that MPF Research surveyed in 1st quarter posted occupancy of at least 95 percent, and about two of every five individual projects were no more than 3 percent vacant. The metro's average occupancy in early 2010 was being held down a little by the rates seen in a pretty sizable block of recent completions still moving through the initial lease-up process. Portland added properties totaling about 2,200 units during calendar 2009 and the first three months of 2010. While most of these individual communities are leasing reasonably well, taken as a group, they registered occupancy of just 69 percent as of March. It will be interesting to see what ultimately happens to this recent block of completions in Portland. Almost all of the additions are found in the urban core, and several of them were intended to be for-sale condominiums when construction was initiated. That means rents are very high at some of the projects. The average for communities finished since the start of 2009 is more than $1,600 monthly, quite aggressive for a metro where the norm for the previous generation of product is...

If you've tried to rent an apartment from a large property management company, you may have been warned that the rent you've been offered might not be available tomorrow. Is the leasing person pressuring you with a hard selling technique, or could it possibly be true? If the property is using Lease Rent Optimization (LRO) software, the answer is that the rent probably won't be the same. It may go up, but it also might be less. LRO software is the multifamily industry's version of revenue management software, also called yield optimization software. Revenue management software was first used to maximize revenue in the airline industry, but it is now used by hotels, rental car companies, and even inter-city bus companies. If you live in Philadelphia, you've probably heard of the BoltBus, which also uses revenue management. On each trip, one ticket is offered from $1, and most tickets actually sell in the $5 - $25 range. The price varies depending on how far in advance you book your ticket, and how many people have already purchased theirs. Revenue management is now being explored in new industries, like the Philadelphia startup SeatGeek.com, which predicts with 85% accuracy whether sporting and event tickets available in the secondary market will go up or down. If you are looking for sold out Phillies tickets, you can imagine how handy that information might be. LRO software works in a similar way. Rents are set using a complicated mathematic model that evaluates the current and upcoming...

First impressions can either take you a long way or stop you before you’ve even passed go. And when it comes to clients (both potential business associates and potential tenants), their first impression of you may very well involve your office. While it’s not necessary to spend a ton of money creating a luxurious office setting, it is important that everything is functional and presentable. Following are some low-maintenance tips that will help you and your office put a professional first foot forward. 1. Clear signage.Your client’s first impression of your office may well begin before he even sets foot through your front door. Make sure that your office space is clearly marked from the exterior so that customers can easily identify it and start things off on the right note. 2. Showcase yourself.Your office is a great place to do some self-promotion. Lining your walls with professional looking photographs of some of your most appealing properties and any awards or certificates you have sends great visual cues to potential clients. 3. Make space.Even if your office is a small space that is occupied only by you, be sure that you have some sort of seating option for clients. This can be as simple as a single, comfortable chair on the opposite side of your desk. But it is important that there is a place—whether it be just a chair or a conference table—where your client can sit down and make herself comfortable. 4. Points for hospitality.Putting potential clients at ease and making them as comfortable as...

Juggling and staying on top of the frequently changing federal, state, and local laws that apply to rental housing is one of the trickiest tasks you’ll have to master as a property manager. At the top of the list of housing regulations you must abide by are equal housing rules and regulations as determined and enforced by the Office of Fair Housing and Equal Opportunity (FHEO). As always with rules and regulations, it’s imperative you stay on top of regulations as they’re subject to change. With that in mind, following are some basic equal opportunity housing rules and regulations that every landlord should be aware of. The Civil Rights and Fair Housing Act mandate that landlords may not discriminate against potential tenants based on their race, color, familial status, or handicap. It’s important to note that, under the Fair Housing Act, it is illegal to refuse rent to families with small children, based on that fact. (For more information and tips for renting to families with kids, check out our previous blog post.) The Equal Credit Opportunity Act also applies to landlords, as it makes discrimination unlawful “with respect to any aspects of a credit application on the basis of race, color, religion, national origin, sex, marital status, age, or because all or part of the applicant’s income derives from any public assistance program.” Additional anti-discrimination rules apply to those properties that have received federal funding. For instance, under Title II of the Americans with Disabilities Act of 1990, HUD enforces...

One of the biggest challenges for property managers is staying on top of all the tasks they have to do in a given day. What with unit inspections, apartment showings, incoming and outgoing payments, resolving maintenance requests, signing leases, and responding to various queries, it’s all too easy to look at the clock at the end of the day and wonder where all the time went. Following are a few tips to help you make the most of each and every day. 1. Stay Organized Sometimes it can feel like there’s no time to actually get organized. But the truth of the matter is, no matter how time-pressed you are, investing in organizational time is almost always worth it in the long run. Time saved trying to locate paperwork, contact information, financial records on your computer, or any other number of other items adds up quickly. Creating a system of organization (the more automated the better) will allow you to perform all your duties in a more streamlined fashion … which ultimately results in a whole lot of time saved. 2. Prioritize Some days you may have to choose between getting one or two time-consuming tasks done versus completing a number of smaller tasks. Whatever the case, it’s most important that you use your time wisely. Take stock of your task list and check items off not according to the amount of time they’ll take, but by which issues must be resolved most immediately. 3. Stay on Task There’s no doubt...

Demand for apartments in Dallas/Fort Worth is getting back on track. During the first three months of the year, renters absorbed 6,520 apartment units, the best quarterly demand performance seen since fall 2007. The occupied apartment count climbed by 9,970 units between March 2009 and March 2010. It appears that a stabilizing local economy is allowing apartment demand to pick up again. While the annual employment change numbers still look pretty bad, most of that loss actually occurred during 2009's first half. Stats for the past few individual months have been fairly steady. The other big factor in rebounding demand is a sharp reduction in pricing. Effective rents slipped another 0.8 percent during 1st quarter, taking the annual drop in prices to 4.7 percent. Those rent change figures take into account the impact of concessions that are rampant in the market. Rent giveaways were offered for 61 percent of Dallas/Fort Worth's apartment product as of March, with the typical discount equaling five to six weeks of free rent. Apartment owners are taking an especially big hit on rents in the 1990s-era properties, which are seeing residents move up to heavily-discounted brand new developments in initial lease-up. Still, since the first step in overall recovery is to generate enough demand to push occupancy up to healthier levels, the rent cuts are doing what they're supposed to do. The apartment occupancy rate in Dallas/Fort Worth stood at 89.3 percent in March. That's up 0.5 points since December but still 1.2 points below early...

For my previous blog regarding negotiating apartment lease renewal rates, Johnny shared his strategy for the renewal letter, which included listing out the previous rental rate, the current market rate, and the new renewal rate, which was in between the first two.  His letter listed them out clearly to the reader (rather than mixed into a paragraph), and is a great example of anchoring the new rate relative to the higher market rate. So what is price anchoring?  You see price anchoring every day through sales - the price of a product or service is initially listed at, let's say, $30 and then discounted to $20.  That $30 serves as the "anchor" to show the customer exactly how much they are saving.  If they just showed $20 as the price immediately, it may or may not be perceived as a good price to the customer.  A good example is how the iPhone was price anchored to an extremely high price tag initially, so that when discounts were applied it had much more of an impact on sales. The problem with renewal rates, as Johnny pointed out, is that the "anchor" is what the resident is currently paying for their apartment.  If they are paying $900 for their apartment and you raise them $20 per month, it is a worse deal relative to their anchor price.  In other words, all they see is that they are having to pay more for the same apartment. But when you include the market rate in...

Newsletters are one of those aspects of property management that can swing either way. Depending upon your business and goals, newsletters can either go a long way toward improving and growing your business or, frankly, result in a relatively low payoff for a lot of effort on your part. So how do you know where you fall along the spectrum? Following are some ideas to keep in mind that will help determine whether a newsletter is a good business strategy for you and your property management business. Newsletters offer a great medium for getting information out there in a regular and proactive manner. Rather than requiring people to actively take the time to come to your website, a newsletter gets the information you want spread right into their inbox. Generally speaking, property managers want to get three primary forms of information out there: 1) vacancies, 2) company marketing information, and 3) information that affects tenants such as policies and procedures and property updates. With this in mind, although you ultimately want to spread all three varieties of information, the best medium for doing this is not uniform across the spectrum. Let’s look at each of these areas specifically. No: Advertising Vacancies Advertising vacancies is one of those scenarios that is most often best handled through mediums other than newsletters. For newsletters to work optimally, you need a targeted mailing list. By its very nature, it would be almost impossible to formulate (much less keep updated) a list of potential tenants. When...