Foreclosure

We need your help! Throughout the course of writing the Buildium Blog we’ve covered countless property management scenarios. We hope that our property management tips, advice, and best practices have been helpful to your company — at the very least we hope that they have provided you with an opportunity to reflect on the way that your company does business.

We constantly hear stories from property managers — those of you who are out there managing your properties day-in and day-out — pertaining to specific challenges, nightmares, or unique occurrences encountered on the job. Whether your story is funny, horrifying, or enlightening we’d like to give you the opportunity to share. Buildium will now be accepting submissions for our “Property Management Stories from the Front Lines” series of blog posts.

So what do you need to do? Send us an e-mail detailing your story and what you think makes it unique. The best stories will become a series of blog posts on the Buildium Blog, which can then be weighed in on by other industry professionals. In exchange for your story we will highlight your company, your expertise, and your company website at the end of each post. This will provide great visibility for your business, and great discussion points for all of our readers.

When it comes to selecting an investment property, there are a few issues that every landlord must take into account. No matter how wonderful a property is or how eager you are to invest, never make a property investment without carefully evaluating the following items on your property investment checklist.

1. Calculate your profitability.

Although determining the likely profitability of an investment property may seem like a given, you might be surprised how many investors find themselves in a losing situation simply because they fail to do the math. Before buying an investment property at any price point, be sure you carefully determine how much rental income you are likely to generate on an annual basis. Weigh this against not only your mortgage and property taxes, but also all of the other costs that are likely to occur over the course of a year, such as advertising vacancies and doing general repairs and maintenance.

What is more important to you as an apartment investor, owner, or contractor doing a remodel in a rental property?

Is everyone only looking at price now because of our economy? Or do some people still give credence and importance to quality of materials, loyalty to the vendor they are getting a bid from, timeliness of receiving the bid, the delivery, and installation?

 I would really like to know what is more of the  driving force in the market. We have seen a large upswing in people wanting a bid, but putting more emphasis on Price than anything else. What does that say about the relationships you have built with your vendors? About our society as a whole?

How many of you apartment managers, apartment personnel, investors, contractors are going to the Denver Apartment Association Trade Show at the Merchandise Mart on May 20, 2009?

 Not many? A Few? None?

With today's economy, it's more important than ever to get the best value for your money? Am I right?

I'm constantly researching new and different ways for our industry to lease, market, retain and manage our assets. I came across this Wall Street Journal article , The New Condo Reality by June Fletcher, this weekend and the information it contained is essential to any property that fights the condo market.

If you have a prospect or resident who is considering purchasing a condo because it is a 'good deal', they need to know some facts:

If the building is not fully occupied: With fewer people in the building, those who are left wind up footing the bill for all of the building's expenses, from window washing and pool cleaning to big-ticket costs like roof repair and boiler replacement.

Gabriele Preston started this conversation with her great blog about apartment competitors and Mark Juleen continued the discussion on ILS's as apartment comps. I'd like to expand their discussion to include another group, single family housing. When I first jumped into property management, I was amazed at how our industry has seemed to have given up the fight against this competitor, and to this day, it never ceases to shock me when I hear a leasing consultant actually congratulate a resident for leaving to buy a home! It seems that our own employees have bought into the belief that we cannot compete against the "American Dream". Do we have a self-esteem issue, or have we not clarified what the true benefits are of apartment living?

 

 

Multi-housing News put out a great article today showing that there is actually less risk from renters, even after the foreclosure crisis (http://www.multihousingnews.com/multihousing/content_display/industry-news/e3i1752bc99a224d58049587d86107de9a2). In other words, undoubtedly many of those who have experienced foreclosures have entered the rental market, and yet the risk of nonpayment for the market actually went down during that time span. I had written a month or two ago questioning whether these type of renters were inherently risky, as evidenced by their foreclosure, or if they had really just gotten caught in a bad circumstance. Trust me, I'm not an apologist, but I do look at things economically, and it seems to be showing that it makes sense to actively pursue this market.

Another interesting quote from the article was, "Renters-by-choice is the fastest growing group in multifamily." This is huge as these renters are more attracted to the lifestyle and specific benefits apartment living brings. Therefore, they will be less price conscious. Of course, that also means you have to provide a differentiated living experience to realize those price benefits.

If you consistently read Grace Hill, you may already be up to date on this particular discussion, but for a moment I would like to talk about the foreclosure problem in the U.S. and how it affects our industry, in particular. Now, I must note that I am not well versed in the specifics of foreclosure proceedings, so if you notice some problems with this logic, please let me know. There are two facets to this argument in relation to accepting these people back into our apartments. The first relates to the foreclosure itself - some see these borrowers as those that do not respect the obligations of the loan; therefore, we cannot trust them to respect the obligations of any lease, either. The other aspect is that even if we adjusted our screening process for the foreclosure itself, the borrowers may have already wrecked their credit beyond repair.

When dealing with the foreclosure itself, I think we should consider, as an industry, lessening the screening criteria to allow more of these displaced residents into our communities. This is a great way to take "market share" back from single family homes, by making our industry viewed as a compassionate alternative, which seamlessly fits into our other benefits of hassle free living. I don't buy the argument that these people are now destined to back out on every lease and loan they ever get. It just doesn't make any sense that there would suddenly be this many new people surface that don't respect the contracts they sign.

This does not mean, however, that we lessen other key screening factors, such as remaining credit issues. If a resident has unfortunately racked up thousands on credit cards trying to save their home, for example, we just can't help them without taking too much risk. So I am not suggesting we break down every wall and barrier and let a flood of residents come in to the fold, but there is a very strong argument for taking a risk-averse tactic on improving our own occupancy industry wide.