Topic: Transitioning to Conventional

Any tips in transitioning from tax credit property management to conventional? I would like to prepare myself for doing conventional management since there is a greater job market for that and most likely, more pay! I do enjoy what I do and I do it well. But unfortunately, the company I work for will not really have the growth potential I had originally hoped for. I have almost 4 years in property management and over 6 years of retail management. What steps can I take to also market myself to the conventional world?

Hi Jamie,

I actually did the reverse, started in conventional and moved to affordable. The biggest difference is you are less regulated in conventional. No housing authority or IRS auditor breathing down your neck. Now instead of people trying to convince you they make less than they really do, they'll try to make you believe they make more :)
As to a higher salary, I wouldn't count on it. In my experience affordable housing pays more because of the additional training required. I did some interviewing a while back for conventional class "A" properties and must say I felt like a few of the interviewers had some preconceived notion that those of us managing affordable communities might be a little "rough around the edges". I think people who have no experience with the affordable side of the industry don't always realize you can have a class "A" affordable community. Oh and while we're on the subject of community classes I have to say the most dangerous properties I ever worked were "D" conventional sight, not affordable housing.

Thank you for your feedback Stephani. You are completely right about having class "A" affordable properties. My property certainly is. I guess part of my thinking would be that I would like to make myself marketable to all aspects of residential management. I did do one interview once with a conventional company and the interviewer stated, "I do not think you can sell an apartment." Her assumption from what I could perceive was that because I work with affordable housing, I could never sell a unit at market rate. Of course, I disagreed with her comment, and explained why. Anyway, my longer term goals would be to be a regional manager, and I think having experience in all spectrums of residential management would be helpful to get there. :)

Jamie, I think it is a great first step you are taking by declaring your goal is to be a Regional Manager. I would suggest starting with education and not concentrating on moving to conventional side just yet, especially if you are on an "A" property now. Get a degree in Business and possibly get a designation of NALP, etc. That may help to convince others of the seriousness with which you are approaching your property management career choice.

Mindy, I did fail to mention I am a full time business student right now. Two more years and I will have my bachelors. :). You are right, I do not need an immediate transition! I do just want to prepare for the future. Thank you!

Hi Jamie!

I haven't managed tax credit, other than voucher programs, but I think it's more common to start conventional and move to tax credit.

It's always good to have multiple skill sets, but be careful what you set yourself up for, because if you don't like conventional it may be very difficult to transition back to tax credit. I've found that without tax credit experience, I can't get a position managing a tax credit property. My interest in tax credit has also held me back in my career managing conventional properties, because management companies sometimes aren't convinced that I'd be well suited or committed long-term for an A class conventional community.

With my interest in non-profit and social service, of course, tax credit appeals to me. I also used to have a desire to work at the corporate level, but I've discovered that this would not be a good fit for my best skills. I know now that leaving my community is not the only way to advance in the field.

When you have many different levels of responsibilities, being "just a site manager" can still be great career. :)

Having done both affordable and market/conventional management; I will say this:

There is not a lot of difference between running the two types of properties; the real differences lie in the application and renewal process, and the audits that are in place to ensure compliance with whatever program(s) your property participates in. A clogged toilet is still a clogged toilet and it must be solved; rent is still rent and it must be collected; a vacant unit is still a vacant unit and it must be marketed (although an affordable property may need to be marketed differently).

You can run an affordable property like it is a conventional class 'A' property; it is all in the mindset.

I would say since affordable housing is such a niche specialty; stick with it, but be willing to apply that knowledge to conventional if you have an opportunity.

Rose; I have done both conventional and affordable; in fact most of my experience has been conventional. It was not until my last 2 properties that I had gotten any experience in affordable housing; compound that with the first property being a lease up for special needs (income, disability, and homelessness were all included in the criteria). The second property was compounded with the fact that there were serious problems created by my predecessors that affected daily operations; here the only additional qualification was an age minimum. Thanks to that first property, I was able to take advantage of some training and earn tax credit certification online. I was able to learn while doing and apply the concepts in the training to my daily work routine and the quality of my work product increased as a result.

I think you all have very valid points. It's nice to hear others opinions. Mindy, I looked up the NALP designation and agree with you that it will a absolutely give me the education I need in the conventional aspect of leasing. I hadnt thought about going that route... Thank you for opening my eyes.

What tax credit training have you been given?

There are a number of options available to you.... on both conventional and affordable.

I leased for 7 months and then did Tax Credit for 4 years. I manage a small conventional property now. The hardest part for me was not giving prospects the "third degree."

In Tax Credit, I always asked prospects certain questions about income and household make-up before showing an apartment. Kind of "pre-qualifying." That seemed "rude" to conventional prospects.

In my market, I believe there is more money in conventional management than Tax Credit.

In Tax Credit, residents knew there were inspections. Conventional residents don't seem to understand why their apartments are being "inspected." Had to change my thinking and procedures for that.

I have also found conventional residents to be more demanding. Leasing is harder, too, because of competition.

I will never go back to Tax Credit because of the regulations and paperwork. It was a nightmare for me. I loved the residents. They were more appreciative. Tax Credit was more personally rewarding for me.

Good luck!

The thing with the application/renewal process for tax credit is that it is about what can be proven... Kind of like being back in math class when the teacher instructs you to either prove or show your work.

If you have a solid work ethic and process to follow with each applicant from the time the application is turned in to the time the resident moves out; it is a non issue.

@Sandy

Thank you for your post, your a true realist. We have done the tax credit along with HUD, HOME, USDA-RD and yes some conventional for the last ten years. I have literally seen my wife work well after midnight on recerts and have her office piled sky high with files trying to get information. When we first started, it really was not so bad. You only had one tenant file, and one annual recert, unless something odd caused an interim. Now you have two files, the tenant file and the tax credit file and you can have situations where the "two do not agree". I won't go further on this as those involved with it know what I am talking about.

Instead, let me inject the thing that absolutely makes me the most disgusted:

The rental assistance is based on the "Adjusted Gross Monthly Income". Any other assets are counted as 2% or actual. What ever cooks up as the "AGMI" (Adjusted Gross Monthly Income) is what the tenant pays rent against. And, there is the utility allowance which further reduces the tenant contribution on the rent.

What you can wind up with is a tenant with $100,000 or more in a bank CD living in a subsidized apartment. This does not set well with me, never has, never will.

However that is the way things are. I guess I am someone who wants people to pay their costs of living out of their own assets. I do it, and I want everyone else to as well. Now that I have said that, let people go ahead and run me out of town on a rail. But that is the view from my window.

@Herb; the only time I have had anything remotely close to what you describe with a huge asset was when I had a resident who had based income on a monthly disability, plus whatever he could make recycling (he had a lot of income from this based on check stubs he showed me); yet he drove a nice Jaguar (payments were being made by his girlfriend). I am not sure he was being entirely honest with me (or the government) about his income.

@Johnny

It is actually fairly common. Example:

Mrs Widow loses her husband. She will draw against his social security. She sells the house and buys a CD for the proceeds. The SS payment amount qualifies her for the Tax Credit apartment, on her AGMI. Her SS is what the rent amount is based on, and somewhere about 2% or actual on the CD she bought. Now of days as you well know, interest bearing CDs are nearly worthless.

The other sticker with me is the live in "caregiver". Mrs Widow wants a two bedroom apartment, as she "needs" a live in caregiver. She shows up with a doctor's statement that she "simply cannot live alone". (The doctor would write a note for an elephant if she asked him to do it.)

Now Mrs Widow chooses her "unemployed since birth" brother to be the caregiver. The caregiver resides in the unit free of charge. He sleeps in his own bedroom, and hangs out on Mrs Widow's porch, smoking and taking "care" of her. My question is "Who is taking care of who"? Looks like Mrs Widow is housing the brother to me!!

You may have seen this more than I have as far as the widow living on the former spouse's social security income (I have seen that) and the proceeds of the sale of the house (I have not seen that; I have seen more people having to walk away from home ownership when the mortgages were underwater). My grandmother is in the opposite situation; she has done very well with her financial situation for as long as I can remember and now is more than 50% paid on a home she has lived in for nearly 10 years.

As far as the caregivers are concerned; I have never had this request when the need was not apparent to the layperson. It is far more common for someone to request a companion animal when the need is not apparent.

However, I think this is getting slightly off the topic of the original post.

In my 4 years of working tax credit, I have not seen any situations that you describe, Herb. Tax Credit rents, at least in California, are not directly based off of the household income. One must fall within the income guidelines, and must still have enough to pay rent and expenses. I quote the program as being "affordable housing," not low income. In many cases, if the income is too low- the applicant may not be eligible. I have not seen a household with over 30k in assets. Over 90% fall into the less than $5000 in assets category. The program is made to help people for wanting affordable rents, as long as they are within a moderate income category. Now... I have had my hand full of evictions for those caught lying about their income... That's why a compliance system exists.

What Herb is talking about is VERY common in my 62+ tax credit community. For instance I have a resident who gets $870 in SS per month as her only monthly income, however she has close to a million in assets. The annual income from those assets is less than $10,000. With the 2% AGMI plus her $10,440 in SS she easily qualified for a one person household with a $31,800 MAI (max allowable income). Realistically you could have over a million in assets and depending on the income generated from those assets would possibly qualify for affordable housing.
Granted before I came to a seniors community I rarely even had to verify assets as most people didn't have over $5,000, however now assets are the bane of my existence!

Stephanie;

I did not say it is not common to see assets like Herb mentioned; just that I have not seen it with the demographic my last 2 properties served. The most I may have seen is a few thousand in whole life insurance policies; or death benefit payments to widows based on those whole life policies. I have seen a few with income from assets under a retirement plan; but I have only had ONE application with more than $5000 in assets or income from assets.

My last property was 55+ senior ( I do not recall the income limits; but I did not have any household with more than $28000 in income ). My prior property was not age restricted; but had 3 criteria the applicants needed to meet: Low/no income (No household had more than $18000 in income), disability (physical, mental, or addiction), and HOMELESSNESS. I think that only 20% of all the applications I processed even had a car....

Now Jamie, aren't you glad you asked this question? Hahaha! Why would you want to leave this area of property management - it's full of passionate individuals who have great stories to tell!

"Tax Credit" has different meanings around the country. It is, of course, an arm of the IRS, and administered by the Federal Government, although audited by the State Finance agency. Tax credit is overseen by the State Financial Agency, of which lately the screws have been tightened by the Feds. This screw tightening is evident in the republishing of the audit forms and the "once nice people" now becoming fairly harsh in their audits. They even now have the nice young woman with the laptop down on her knees at the kitchen sink looking for water leaks with a flashlight and popping GFCI's to see if they will trip. They have threatened 8823's at every turn, where in the previous years if it was lightly raining or too hot, they didn't even go into units at all. This is all about them being warned over their jobs if they don't start singing the music correctly.

As to instructions on tax credit procedures, the written information from the Feds is about as useful as a screen door on a submarine. The good news is that with the screw tightening, people will fear their jobs and insure that everyone passes the audits. I personally know of one managing agent that has been fired over an 8823.

As a general rule; I try to use the term 'affordable' to refer to all the programs that feed into it, including project based section 8 (HUD). Most programs have different requirements and some properties participate in more than one program that they must comply with.

Here in the "South," we call it "Low Income Housing". I tried calling it "Tax Credit," but I got too many questions about it. Nobody understands that term.

"Affordable Housing" is offered by everyone through advertising, so that doesn't work, either.

None of the tax credit properties here advertise they are "Low Income Housing" or anything related to it. It's like a big secret everyone wants to keep.

We have a large Housing Authority with a lot of "based on income" housing communities in the area, too.

Someone needs to build more. They are all full and the newest property with 52 units leased-up in 3 months!

It takes several years to get approval from the state to build one. Rehabs are hard to get approved, too, unless the developer has a lot of experience in tax credit.

Most people think government subsidized housing is all the same thing. No, it is not.
HUD vs RD for instance. County housing administers HUD where the property owner through a management company administers RD. Some have a duke's mixture of RD, HUD, and HOME.
Some have market rate intertwined with the subsidized units. This because of mismanagement, the property may have lost some Tax Credit or RA.
Developers usually apply for money to build a property, and as Sandy says after years and years, the government finally "drops" a specific pot of it for the construction. They must apply for it through the State Finance Agency.
Tax Credit is a gold mine for the developers if they can hire enough low wage people to manage it "correctly", and not lose the plot.
HUD is another animal altogether.

Johnny,
I have been through all sorts of tax training. I have done some classes directly with the California Tax Credit Committe, Novogradic (a federal auditing agency), Spectrum, Elizabeth Moreland, my last company had a great compliance program and training. So, I have done quite a bit of it. :) I do feel pretty confident with my tax credit knowledge, just every now and there, I will get one of those really complicated files that just stump me.

Herb, I cannot help but slightly get offended by your last statement about tax credit management. I would really say that there are many good companies out there that pay quite well for management of a tax credit property. There are not many management companies out there that I have seen (conventional) in which I would be better off than I am now. The only difference, and what does catch my attention, would be luxury housing, in addition to some of those better known REITs with huge properties.

@Jamie

There is really nothing to be offended over in my statement. It is just the nature of the beast. There is little actual money in the budget for a manager salary. Let me illustrate the starting compensation for an RD tax credit management team:


Free Apartment: Market Rate would be $600.00
Free Utilities: Value at $375.00 Electric, Internet, Cable, etc.
Office Salary: $450.00 month
Grounds Care: $550.00 month

Other points: Your not driving to work--saving gasoline.
Your doing a few other jobs at minimum wage.
You could probably earn more a month by helping out at other properties.

This is the southeastern USA. If the compensation equates to $2,200 to $2,500 a
month for the couple, that is walking on sunshine for someone not otherwise able to
have a better job.

In the glitzy areas like NYC, CA, others, that wage won't fly well or at all.

So, no need to be offended, it is the way the thing generally works out.

Cheers
Herb

Thank you for the explanation ;) You are right- that does look bad. I guess I am very lucky in part to be in Califonia, in my area, my unit alone is at least worth $1500 a month. And my wages are hourly, I work the full 40 hours, and I make more than twice the minimum wage (I won't specify how much more :) ) And, my maintenace guy has his own wages, and does not get a unit. Since my property is only 80 units, it only has 1 manager's unit. I have seen a lot of advertisements that pay the salary you are showing, roughly, and a lot of companies looking for "management teams." But, definitely looking at things in that perspective, well, the pay does suck!!! Sometimes, looking at other's points of views, one realizes how fortunate they actually are.

Correction to my post:

As reads: "Low Wage People"

Correction: "People willing to work for these wages."

Above correction less offensive and more PC.

Also adding on size of property: Stated wages for a 36 unit complex.
Also if you work out well the PMC can move you up!!! Say a 72 unit complex.
Also these jobs usually work best if the job is your second income and you make out by getting the free unit to live in. For instance a school teacher maybe. Yes, recruiting is a booger-bear at these prices!


As Changed,
Herb

I like the Elizabeth Moreland training; have you asked about completing the "Site Compliance" certification? Then you can consider the Certified Occupancy Specialist.

I would find a mentor and explore what other certifications you can pursue, with or without your company's assistance. It all goes into your toolbox of knowledge, and whether you stay put or move on; it is essentially your responsibility to ask for. But if your company assists you, even if it is to allow you to access the training with their corporate discount at your expense; it would not be practical for them to ask you to 'mind-wipe' the knowledge if you moved on.... Rather, they should make every attempt to keep you wanting to stay.

Regardless, I still advise a quarterly review of your resume. It is easier to recreate 3 months of accomplishments when you are not rushed and don't need to; than to recreate a year or more when you do. Plus, you never know when you will have an opportunity and be asked for your resume. This is something my dad advised me long before I started working.

Tax Credit properties in most cases pay the onsite stall above market, because of all of the resident documentation requirements. Most owners of conventional properties like to hire staff from the affordable side because of the expanded knowledge.