Apartment Vendor

Are donations really required?

Seeking donations from vendors have become the standard for many of us on the property management side. Is it really the answer to our lack of budget for resident retention programs or corporate meetings?

One of the more unique aspects of this year’s Future Midwest Conference was Funded by Night.  The basic premise was to have startup companies compete in a business pitch competition for the chance to win an investment of $100,000 from Detroit Venture Partners.  25 companies competed for the prize in Shed 5 of Detroit’s Eastern Market.

The ideas ranged from a simplified inventory management system for small restaurants to a high school sports channel run by student journalists.  Winning the competition was a company called Gumshoe that gives a geo-location angle to a mystery game.  Think Clue with a live Foursquare element.

Every now and then, a tenant offers to make repairs to the unit he’s living in. Often, such offers are made in exchange for rent (in other words, the cost of the repairs is deducted from the monthly rental rate). In other instances, the tenant simply wants certain upgrades in his unit (a new paint job, removed carpet, etc.) and offers to do them himself. The argument for this is that the tenant can enjoy a place that “feels like home” and you reap the rewards of these upgrades once the tenant vacates the unit.

Clearly, there can be benefits to this sort of situation: You receive property upgrades at a reduced (or negated) cost, and your tenant gets to customize the unit to his own preferences. Unfortunately, though, there can also be some pitfalls. All too often in these scenarios, tenants are not qualified to complete these upgrades or updates up to par. The result is unfinished or sub par work that ultimately becomes your responsibility to rectify.

Not only this, but such deals can also result in sticky financial situations and—in extreme situations—legal problems. Let’s say that one of your long-time tenants wants to repaint his living room from the standard white all of your units are painted in to a more colorful rustic red. You agree that the color would suit the space well and tell your tenant can deduct the price of paint and labor from his next rent payment.

I started in Property Management thinking it would just be “employment to pay the bills until I found a real job.”  Twenty eight years later, I owned a property management company and then became a consultant, trainer and speaker.

If you look on the Web for a definition of property management, this is what you will find:  The range of functions concerned with looking after buildings, including collection of rents, payment of outgoings, maintenance including repair, provision of services, insurance and supervision of staff employed for services, together with negotiations with residents or prospective residents. The extent of and responsibility for management between landlord and resident depend on terms of the lease(s). The landlord may delegate some or all of these functions to managing agents.  However, it is so much more!

To generate more rental income, it’s sometimes necessary to put a little work into your property. If a potential renter is comparing your property to a similar, less expensive property, the renter will need to be able to easily identify those aspects (whether it’s aesthetics or features) that make your unit worth more than the competition’s. Depending on where you’re starting from and where you want to go, upgrades may consist of as little as some simple “rejuvenation” projects or, alternatively, some larger-scale renovations.

Generally speaking, your bathroom and kitchen are two key areas that play a large role in making or breaking the value of your rental unit as compared to competitors’. All other factors being equal (such as size and location), chances are most renters will select the unit with a nicer looking or more upgraded bathroom or kitchen. Many renters will even be willing to pay a bit more if there is a noticeable difference or greater utility in one or both of these two rooms. In other words, these are the first places you should make improvements if you want to command additional rental income for your property. What does this mean exactly? Let’s take a look.

Renovation
There’s not really any way around it—complete renovation of a bathroom or kitchen (appliances, lighting, tiling, fixtures, etc.) will cost you a few thousand dollars. However, it will also likely pay off in the form of a higher rent rate.

One of my friends and industry partners here in Phoenix asked me to speak about achieving excellence in sales relationships at one of the monthly vendor meetings.  It seemed that since we had fallen on tough times, many were feeling abandoned by their customers and it seemed no loyalty existed any longer.  I put together 12 reminders not lose sight of during the good times or the bad times.

1)      Good salespeople bring positive energy to a relationship.  We can choose to be energy givers or energy takers.

2)      Trust hinges on the willingness to deliver on promises.  Once trust is lost, relationships cannot survive.

Using travel-sized toiletries and cleaning items, one can create a unique tenant welcome gift that can create a lasting impression, especially during those hectic first few days of move in.  To choose what to put in the gift basket of goodies, one must think like a new tenant, whose stuff is still boxed up, but everyday things need to get done from the moment of arrival.  Some helpful tasks and accompanying products to include are:

• Laundry: Include a single use laundry detergent, bleach, and fabric softener to help get that first emergency laundry load underway
• Cleaning: Even with a professional cleaning, new tenants may want to clean certain things, or even clean their own stuff as they unpack it and set it up.  Thus, include a travel size cleaning solution, paper towels, and Lysol.
• Dishes: Cleaning that first round of dishes before being fully unpacked can require certain items, so include a sponge, washcloths, liquid dish soap, and a packet for the dishwasher (if there is one).
• Bathroom:  You could include the typical toiletries, but odds are, those have been prioritized in the packing and you don’t need to provide for emergency supplies (and, those tend to be more brand-specific to each person’s tastes).  Thus, a hand sanitizer can be helpful, and a travel sized roll of toilet paper for move-in day.
• Miscellaneous: Tape is always needed when moving, and not just when packing up.  Thus, a travel sized roll of duct tape (which is more versatile than packing tape) can be a handy item, as well as some WD-40 (great for screws that are on too tight, squeaky doors, and other minor fixes).

Even if only a few of the items actually get used, they will all be saved for future uses, and the unique impression will go a long way to continued top notch customer service.

What other interesting things have you put in your welcome baskets?

Paul Shrater is the Co-Founder of Minimus.biz, the leading online retailer of over 2000 major brand travel-sized and individual sized items.  Beyond its retail website, Minimus.biz also offers wholesale pricing, and custom kit creation – including its House Warming Kits, recommended by Realtor Magazine.

As 2010 draws to a close, it’s a good time to reflect on lessons from the past year and apply them to the future. As you prepare to move into 2011, be sure that you know not only what didn’t work in 2010, but also what did. After all, the goal is not to create a cycle of constantly tweaking systems and procedures but, rather, to find methods that work optimally for you and your tenants and stick with them.

For an overview of where 2010 leaves you, begin by honestly asking yourself the following two questions:

1. What was the highlight of my property management year?
2. What was the lowlight of my property management year?

When you’ve answered both of these questions, you should have a good idea of where you stand. Say, for example, that the highlight of your year was filling 40 percent of your available vacancies throughtenant referrals. This indicates that you are doing a great job of keeping your units in good shape and keeping tenants happy—in other words, in both of these realms, you’ve already found a formula that works. Though you may want to make little adjustments in these areas here and there, for the most part, you should continue doing exactly what you’ve done in 2010 on into 2011.

A few weeks ago, we talked about 10 Signs of Property Management Success. This week, we’re going to take a look at the flip side of that coin, reviewing some indicators that it may be time to make some changes (after all, the time for New Years’ resolutions is just around the corner!). Following are a few red flags to keep an eye out for in your property management business.

1. Lack of referrals – This applies to both tenants and property owners. In an ideal scenario, you should be creating a web of referrals that expands year after year. If you’re not, it may mean that: 1) existing tenants and clients aren’t confident enough in your work to refer you or 2) business-building incentive programs are not in place.

2. Haphazard organizational systems – If your office doesn’t have an organizational system in place for things like accounting, rent payment tracking, and maintenance requests, your efficiency and accuracy may be taking a hit. An investment in property management software will pay off big in the long-run.

So I know this is not my normal positive leasing blog but I wanted to give a shout out to the Carpet Cleaning Industry and maybe educate some one else today. So here is my Did You Know blog.

Recently my significant other ( boyfriend, not legal husband but we call each other husband and wife, children’s father, free thinker, best friend) has become a Carpet Tech for a local Turn Key Company that specializes in Carpet Cleaning- they do a wonderful job seriously even before my honey pie went to work for them. Now if you had ask me four years ago when he was let go from his awesome IT Job would I ever see him cleaning carpets I would have laugh at you because the idea was absurd. But desperate times call for different ways of thinking and well now he is very happy about being a Carpet Tech- he even gave me a lecture on why I can't use Resolve to get my stains out of the carpet anymore... it was quite cute actually. Anyways getting off the subject matter and that is Did You Know That Most Carpet Cleaning Companies pay their techs on straight commission?

I for one did not know this nor did I even care at the time how they got paid just that my carpets in the units got clean at a low price. But boy has my thought process change sense my honey pie went to work as a Carpet Tech. He gets oh lets just say 25% of the sales on the units he cleans. So if he were to do a job that was a set rate of $250 (save unit) he is only getting paid $62 and could be in the unit for more than two hours but lets just say a max of two hours. I know your thinking hello "Jolene he just made $31 an hour that is more than the Property Regional makes so what are you complaining about?" I'm actually not complaining I just thought I would educate the group on some interesting things that I have found out.

Now lets say you have a save unit the guy can do it but you don't want to pay the $250 so you ask for it to go to $150 you just cut his pay in half. He is going to do it because they want your business but know that you just cheated your favorite carpet tech out of his pay because you did not budget properly for saved carpets- can I get an Amen...totally just kidding. So we all know that we just don’t have an extra $1500 around to replace carpet whenever we need to, so we have to rely on these carpet guys to save the carpet. My point is you don't want to work for less than what you are worth, so why would we expect these guys to do the same. So when you complain about the high carpet cleaning bill remember this you may be paying out $1500 but he just saved you 6 apartments that you would have otherwise paid $9,000 to replace the carpet. Also remember if you are cheap on the amount they give you for the carpet clean it will get around and the good guys, you know the ones who know what they are doing and take pride in their work will pass you to the weak one, you know the one who dose not know what he is doing or cares about his job. Then you no longer have a pretty saved unit but an ugly saved unit and you may just end up spending more money on it.

Now let’s address the whole Renewal Carpet Clean Price. We love deals, yes we do! Again never thought about this till my honey pie went to work as a Carpet Tech. So now we are at renewal time and we are giving an incentive to have a resident renew their lease with a free carpet clean and boy do I mean FREE. The carpet cleaning companies have reduced their price for renewals because you give them so much business. Its a give and take relationship but what about the carpet tech that is your favorite and you only want him what dose he get for the renewals...drum roll please...at $25.00 a renewal clean and 25% commission it comes out to $6.00 WOW that is less than minimum wage. So if you have oh say 15 renewal carpets that day your guys is now spending the day there (if not then he a horrible cleaner) and just made a total of $90. I know that I hate working for less than I'm worth so why do we expect others to. I also know we are not going to rush right to our carpet cleaning company and say "gee can you raise your renewal carpet clean price so your carpet guy is at least getting $7.25 a renewal clean" in a perfect world that would be awesome if it did happen. But let’s face it we have a budget that we have to abide by at the Property so if we can get something less than what the normal price is we are going to take advantage of it. So I know what your thinking come on Jolene what is the solution. Don't worry I have some suggestions but it’s up to you if you use them or not.


Suggestion 1: Don't Bargain with the guys to much on your saves. You know what a Save carpet is by now and know that if you make short cuts you’re just going to call them back out to redo it and pay more. If you don't know what a Save carpet is walk the unit with the tech and maintenance supervisor to learn. Pay the carpet tech what they are worth and they will do a great job for you.

Suggestion 2: On the renewals educate the residents to tip the tech. Yes tip him like $5-$20 for coming out to clean your carpet. If they know they are going to get tip they will do a fantastic job better than a normal renewal job. Seriously try to make up for the awesome deal by educating your resident. I did this and it is working.

Suggestion 3: Stick with your carpet company. If you have one that you like use only them not three or four at a time. The reason for this is you will get better deals and service by just using one Carpet Cleaning Company. You may think they don't know you’re using more than one Carpet Company but they do. So if you want to continue your good prices and clean then stick to the one carpet cleaning company.

Suggestion 4: Talk to who ever makes your budgets but giving you more play room in the Saved carpet area. Look at previous years and see where your heaviest saved units were, they tend to stay in a trend. By budgeting for this you are not stressing out over a saved unit and the fact that your favorite carpet tech just made less than he is worth.

Suggestion 5: Emergency Water Extractions...they are considering it an Emergency ( hello you called it in for an Emergency)  so therefore they are going to cost more. When you call out for an Emergency you are taking that Carpet Tech from a current job that they now have to make excuses for and possibly lose money on. Expect to pay for that emergency no matter what. If you’re resident has renters insurance then submit the bill to the insurance company to get your money back. Also you can submit the bill the resident if it is due to their negligence and take the proper procedures. You can also budget for the emergency cleans at budget time; you know that when it’s the raining season there are bound to be leaks or floods so make room for them. Keep in mined when you go to the ER you know that you are going to pay that high bill because it was an emergency so why would you cheat your company out of pay when they dropped everything for you.

I'm not sure if this helped anyone or not, but for me it did. I truly did not realize what I was doing to the guys who come out to get my carpets pretty so I can move in someone when I tried to get them to lower the bill. It's important that we keep the techs happy because hello they in the end save us allot of money. Also with out pretty clean carpet people tend not to move in or just make our lives at the office hell.

Jolene Sopalski
Assistant Manager
Finlay Management, LLC