"Don’t leave your water safety to chance; protect your pipes, and plan for the potentially harmful e...
Florin Iftode
Great article and great ideas Gino.
I really love the idea with the pizza contract. Definitely it i...

Training Trivia

If a prospective resident wants a lease with an ending date not available on the lease expiration matrix, it is smart to make an exception and allow their lease to end when they desire to secure the lease.

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Posted by on in Apartment Investment
In our previous article, we focused on unit mix and the importance of choosing an apartment complex with the most beneficial unit mix.  In this article, we are going to focus on property classifications.  Property classifications are important because the investor will know what type of return to expect with the property and the investor will be able to convey to brokers the type of properties he is targeting.    It is imperative that an investor become intimately familiar with cash flows and cap rates associated with each class of property.   A-properties are the most recently constructed units, those that contain top amenities, require low maintenance, and are inhabited by young white-collar workers. These assets tend to be more stable, have less risk, and charge higher rents, all of which are the reasons they trade at lower cap rates. This type of property will appreciate more, but cash flow will be harder to come by.  My view is that an A property is excellent for wealth management, and large institutions such as REITS focus on this asset class.  If your objective is to create wealth, look elsewhere.B-properties have typically been built within the last 20 years, and it usually has a mix of white-collar and blue-collar workers. The property will show its age by a bit of deferred maintenance or functional obsolescence. You may also see older heating and cooling systems, roofs that have a bit of wear and tear and parking lots that need repair. B-properties have a good mix of appreciation as well...

Posted by on in Property Management
  Perhaps the most crucial challenge facing a property manager is finding ways to cut cost and turn a greater profit.  The conscientious property manager is constantly looking for ways to accomplish this goal so, in preparing for this article, I reached out to a few clients and vendors who graciously shared their money saving ideas and experiences. One idea I found particularly interesting is to brainstorm with other property managers about common needs such as pest control, pool maintenance, trash pick up, landscaping, etc. on how to reduce cost.  This economic approach is suggested by CCA Global Partners who created INNOVIA, a community management cooperative that provides members with opportunities to improve profitability.   "The purpose of INNOVIA is to bring together property management firms from across the United States so the services can be achieved at a greater discount than by going it on your own."   (Justin Gargiolo-senior VP of Corporate Management for Great North Property Management, 2013)  This method is designed to be an effective approach to cutting cost while maintaining quality services for residents.  What are other cost cutting ideas?  Start at the office by reducing  staff or closing on days when business is normally slow leaving the residents with an emergency maintenance number contact number.  Another office cost cutting idea is to "go green". This approach not only saves money but is good for the environment! Florida Power and Light (FPL) recommends switching from conventional light bulbs to compact fluorescent light bulbs (CFL) which will save as...

Posted by on in Apartment Leasing
Brainstorming Lease Pricing Presentation StrategiesWe talk a lot about lease pricing strategies, especially through revenue management systems.  However, there is one aspect that could potentially be expanded upon, and that is the actual presentation of the pricing.  I love looking at online services when it comes to pricing because they are able to test different pricing models much more thoroughly than we can.  They have a much higher transaction rate, and they also have less variables because people are dealing static web pages versus much more dynamic human interactions.  So they are often able to hone in on strategies to maximize the actual sale.  In this example, I'm not debating how the price comes about, but rather how it is visually presented to the prospect. One of the common strategies you all have probably seen is the three pane option, where they have three different options presented to the customer.  With each step up, additional benefits are included to sweeten the pot.  Now to be fair, I have not seen studies on the effectiveness of this particular strategy, but I thought it was an interesting topic of conversation to see if it could be applied to multifamily.  I could see this presented on a website, dynamically generated for each particular unit, shared on an ipad in person with a leasing consultant , or printed out.  So I want to share this mock-up below and let this be an open conversation.  How do you actually present your pricing options to prospects? Do you think it is...

Posted by on in Apartment Leasing
5 Attributes of a Successful Leasing Agent The job of a leasing associate is quite unique. Their primary responsibility is to sell successfully, yet they must be able to do so in an environment where they also maintain a service-oriented mindset. On a day-to-day basis, they’ve got a very predictable routine, yet they must be able to quickly adjust, as every interaction with a potential prospect or resident is, by definition, unique. Leasing agents must be easy to get along with, have attention to detail, efficiently do administrative work and always be ready for a prospect to walk through the door or phone in. Oh yeah, did we mention that for most leasing associates, the income opportunity is often comparative to working in a retail store or restaurant. As with any sales position, the people you hire are a crucial linchpin in the effectiveness of your efforts and the satisfaction of your residents. Given the inherent turnover associated with leasing positions, the ability to predictably hire the right people is a tremendous advantage. I’ve written before about the dangers of trying to hire to build a sales culture in multifamily operations; today I’d like to share the key attributes you should be looking for when hiring. You’ll notice that none of these attributes relate explicitly to skills or experience. Time and again we see very successful leasing associates who come from a variety of backgrounds, experiences and skillsets. An effective sales process will enable all of these different individuals to be successful. 1. Enjoys People While this one may...

Posted by on in Property Management
Tell one person. Many times marketing efforts are limited to post and run. Sticking flyers in someone’s hand, posting a flyer on a bulletin board and running out the door, will only bring minimal results for outreach marketing. The real value is the personal contact. It’s not limited to the need of the first person you meet, what matters is the impression you make.  Because, the person that you’ve talked with, will talk to someone else; and the opportunity for a general referral begins. Talking to People You Know Imagine checking out at the grocery store.  There’s a conversation with the person at the cash register. “ How are you today?; (and appropriate pleasantries, with a simple added phrase,) “you know, I manage Awesome Apartments, located just down the street.  If you know of anyone that might need an apartment, we have great apartment homes!” This is where the value of outreach marketing is created. The conversation and contact also applies to  memberships with the Chamber of Commerce, Rotary Club and Junior League.  Paying a membership fee because there’s a link to a web site, or someone might include print materials is a missed opportunity for greater exposure. Meeting business owners and managers creates the value for a personal endorsement and referral. I met the manager from……you should check them out…. Is the beginning of a great referral. The old adage, of you tell one person and they tell a person is the beginning of an awesome referral chain. If a property has a weekly requirement to...

Posted by on in Apartment Investment
One of the most popular questions that I get from my students is “Where do I get money for the down payment?”  In this article, I am going to discuss one strategy we employ to find that elusive down payment: Owner Financing.             Owner financing is confusing to many newbie investors, as well as seasoned investors.  It is referred to by other names, such as seller financing, holding paper and private money mortgage.  Owner financing is simply a loan provided by the seller to the buyer.  Buyers use this to assist in the financing of their deal, and agree to make installment payments usually on a monthly basis over a specified time frame until the loan is repaid.             Let me give you an example.  In our first deal, we had no credibility and even less money, but we located a property that had potential.  The property was listed for $750,000, but had been listed on Loopnet for over two years.  We approached the seller and asked if she was willing to hold paper as part of the down payment.  We agreed on a $600,000 sales price, with 10% cash down from us, 10% seller financing and 80% bank financing.             There are several factors that are needed in a deal to be able to utilize this strategy.  First of all, you need a motivated seller.  We had one, a couple that was burned out and ready to retire.  Second, you need a broker who understands owner financing and can...

Posted by on in Apartment Marketing
Google is constantly making changes to the way they do things. From the Panda Update to Penguin and now organic searches, it seems like it is one thing after another with them. Do you really know what type of impact the new changes are going to have on your Google Adwords campaign? To help you understand what these changes are going to mean for 3rd party property managers and apartment owners, keep on reading! Search engine results are constantly changing. Things like the news, videos, images and more have all played a role in what ad is going to appear first in the results. It used to be that paid advertisements were on the right-hand side of the screen when users searched for information, but that isn’t the case now. Ads are now going to appear along the top part of the screen. However, only the top four ads are going to appear here. The last 3 paid ads will be pushed to the bottom of the page. If you are wondering why Google is doing this, the answer is quite simple: to improve the desktop user’s experience just like the mobile user’s experience. With more people browsing the Web on their phone, they are looking to make the experience more pleasant and appealing in the same way for desktop search results. This makes your desktop experience appear almost like your mobile search experience. The whole point is to provide the searcher with the best possible search experience out there. Unfortunately for apartment...

Posted by on in Apartment Investment
When it comes to investing in real estate, it's not as complicated as some make it out to be. Investopedia defines a rule of thumb as “a guideline that provides simplified advice regarding a particular subject,” and we're here to show you that by adhering to several rules of thumb, you can be on your way to a successful career in real estate. ​   It's important for beginner investors to learn certain investing criteria and formulas in order to properly analyze investment properties. Using rules of thumb will give investors an idea if the property is worth consideration. For example, our rule of thumb pertaining to cash-on-cash returns is that it must be producing a 10% return or more, which means that if the investment is only producing a 4% cash-on-cash return, it's a big red flag to us that the asset is under-performing.We'll still examine the deal, but proceed with extreme caution. On the other hand, if the cash-on-cash return is 12%, then the investment meets our criteria and warrants further serious investigation. Keep in mind that each circumstance is different, so use each rule of thumb only as a guide.​The term “rule of thumb” is said to have originated with carpenters who used the width of their thumb to measure things. The term has also been associated with farmers who used their thumbs as a measurement to plant seeds the proper depth. In either case, you can see that the rule of thumb is an approximation, or a quick...

Posted by on in Apartment Investment
And now for the big question in many realtors’ minds- where do you stand to make more money- low end or luxury real estate? Typically, low end real estate requires low capital, making it particularly attractive to startups and small time investors. Luxury real estate on the other hand, is only a reserve for big firms with sufficient capital to spend in prime residential and commercial zones. Lately however, even the big firms are looking into the possibility of investing in low end real estate to capitalize on the rather expansive lower middle class market. So, What Exactly Is Low End Real Estate? As we’ve specified, low end real estate mainly targets the lower-middle class market. That alone excludes bombed-out slums, which obviously do not make sense from an investor’s standpoint. This type of real estate therefore, essentially refers to standard starter homes, which are located in second class neighborhoods- not that great, but good and acceptable. Why Low End Real Estate Investment May Make Sense In the US, a bulk of these types of low end houses go for $3000 to $25000, thereby, favoring owner financing and hard cash buyers. As a matter of fact, a significant number of buyers easily secure owner financing, which translates to steady cash-flow for sellers. Low end real estate also wins when it comes to distress auction (foreclosure, tax) sales. According to astudy conducted by RealtyTrac, 12.7% of all home sales in the third quarter of 2014 came from distresses sales and short sales. With...

Posted by on in Property Management
No property manager wants to pay too much for water. However, if those costs aren’t kept in check through good practices, the results can be much worse than a costly bill.   Just ask the residents of a condo in DeKalb County, Georgia. In February, the condo’s property management company threatened to condemn the building and evict the residents if they didn’t pay — wait for it — a $130,000 water bill. The building’s owners paid $220 a month to the property management company, but the dues simply weren’t enough to cover the absurd water costs.   What kind of water situation leads to such a high bill? While it’s possible the association in DeKalb misused funds, sometimes the answer is simply that the charges really are that high.   Water usage skyrockets when tenants of a complex or association use too much water, don’t report leaks properly, or simply are unaware of a leak. As costs rise, the property manager often doesn’t have the funds to cover the unexpected bill.   That debt gets passed along to residents, which opens the door to a situation like the one in DeKalb County.   Keeping Costs Down   Every property owner wants to avoid unexpected bills and angry tenants, while those same residents would rather not pay higher fees that go straight to the water company. This is precisely why property managers looking to maintain costs must make managing water usage a top priority.   In 2015, water prices rose at a higher rate than...