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Making Budget Season Stress Free

Making Budget Season Stress FreeBudget Season.  The words alone instill panic in the hearts and minds of many.  Is there anyone out there who actually enjoys this process?  To help you not only survive the budget season, but perhaps even prosper, we'd like to offer a few tips that will hopefully make this year a little more stress free.1. Be organized.  Set a time aside each day to work on the budget, and don't allow yourself to get side-tracked.  If you're a list user, make one.  Crossing items off will make you feel like you're accomplishing something.  Take a look at last year's budget and identify those areas that will be automatically renewed this year.  Sure, some of the numbers may have changed, but it's a great place to start. 2. Delegate.  Ask your co-workers and support staff for help!  Task them with researching their areas of responsibility.  After all, who knows better what their needs will be for the coming year? 3. Eliminate distractions.  The rest of your work doesn't stop just because you're in budget mode, but for a little while, you might have to put some things on hold.  Forward your phone; only check your email at certain times during the day.  Politely decline requests for assistance or ask for meetings to be rescheduled.  Sometimes when we try to multi-task, we're just asking for trouble. 4. Break it up.  Feel like you're getting frustrated?  You may need a change of scenery!  Go for a walk, get a cup of coffee, borrow some ......
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Redefining the Renovation Process

As renovations have slowed due to the current state of the economy and the reduction or elimination of the renovation departments in REITs and property management companies have ensued, the time is prime to start strategizing on how the industry should approach renovations when they do come back...... and they will......, probably even stronger than before. Although the past year or so has been very painful within the industry, the slowdown offers a unique opportunity to reflect on the past, evaluate and modify the renovation process. The owner or management company that does not take the time to do this will find themselves being left behind using yesterday's more expensive  methods and technologies, resulting in  being less competitive and experiencing lower revenue than is possible because of not performing the renovations in a strategic manner. Over the past 5 years or so, companies like HD Supply, Wilmar, GE and a multitude of contractors have been desperately attempting to determine and meet the needs of their multifamily clients during the renovation process. The main challenge these vendors have had is trying to get their arms around an industry that demands immediate execution and a high quality product.   When a company performs new construction they will spend months or even years in the planning process prior to the start of a project.  Their planning usually includes demographic studies, engineering, architecture and design.  Now let's compare that to the renovation process, wherein companies will often begin a renovation project costing millions of dollars within......
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Active vs. Passive Property Owners

Key ExchangeAt the heart of it all, property management involves dealing with people. If you own your own property, you’re working with tenants, potential tenants, contractors, and real estate agents on a regular basis. And if you’re managing someone else’s property, you’re dealing not only with this cast of characters, but with the property owner as well. Like properties, property owners come in all shapes and sizes, with a wide spectrum of expectations for the property managers they hire. To complicate matters, these expectations are sometimes unspoken—which means it’s up to you to figure out what makes your boss tick and how you can best meet his needs. With this in mind, one of your first property management tasks is determining whether you’re working with an active or passive property owner. For the purpose of this blog, active property owners are those who are very interested in the day-to-day operations and happenings of their investment property. Passive property owners take a more hands-off approach and will likely be in far less regular communication with you, whether by choice or due to circumstantial factors (i.e., living in a different area or state).  Following are some tips for property managing with both active and passive property managers in mind. Record Keeping Organization is a critical aspect of property managing, whether you’re dealing with an active or passive property owner. Make sure to keep careful, easily accessible records available for things like rental income, bill payments, rental applications, repairs, complaints, and other administrative data. Active:......
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Multifamily Energy Budgets

I have seen all sorts of methods and approaches to doing multifamily energy budgets. They are difficult to do, but they are very important. In this article, I am will describe what I believe is the best approach to doing multifamily energy budgets, as well as some general energy management concepts. I hope there is something you can take from this article to make the budget process a bit easier and more accurate.First, everyone knows that energy budgets (like most things we budget) are a best guess. We want our budget to very close to the actual expense, but, more importantly, we want our budget to be based on something quantifiable. Quantifiable because you know the question is coming "Why are we over budget in..." In simplest terms a quantifiable energy budget is based simply on Usage X Effective Rate = Expense or Budget. For example, we would budget $120 for electricity in April 2010 based on using 1,000 kWh at a $.12 effective kWh rate. Pretty simple. Now when that over/under budget question is asked, we can easily answer or explain the variance by showing the difference in either the Usage or the Effective Rate. So using quantifiable budgets gives us a means to simplify the variance or monthly reporting every month in the future. This does mean an end to Year over Year budgets which should be used as a comparison tool and not a budget method. If it's quantifiable, you can explain it, and they can understand it.Looking......
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Avoiding the Ole' Swoop'n'Squat

A few months ago, I was up against a learning experience.  I had a personnel problem that I had to address and I didn't know what to say, so I reached out to my support network of property management professionals, and the most incredible thing happened.Nothing.It was one of those rare moments where no one was on Twitter or in front of their Inbox and no one could help me.  In a world where I had connections to the other 6.5 billion people on this planet, I was on my own with this issue.  First, I slightly freaked out, but then I realized that with the ticking clock, I had to know what to do and so I was forced to finally listen to myself.  I did the right thing, said the right thing in the end.  Nothing quite builds professional confidence like that experience. After the issue had been dealt with, my mentors and co-workers all felt bad that they couldn't help me at the time, but I told them not to worry about out it  and things had worked out great.  What I should have done was thank everyone of them for their hectic schedules and forcing me to use my own brain.  I'd forgotten to trust myself and my own judgment.One of the most common mistakes that I see managers making is that they swoop down like a guardian angel on their struggler and squat their ideas on the heads of the uncertain employee, rather than letting organic......
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Customer Retention is Built on Your Staff

The average rate of turnover in apartment rentals reported by the NAA is 60%.  Who can make a profit with such a rate of turnover?  Not only is customer retention built on quality leasing, it's also built on your staff.  Buildings and grounds don't maintain themselves, people do that work; apartments don't lease themselves, people do that work too. Often, management resorts to using a "rule of thumb" for determining an appropriate level of staffing.  A "rule of thumb" is kind of like knowing that the average depth of a lake is 2 feet - a person can still drown in the part that is 20 feet deep.  No two properties are alike; there are so many variables - location, unit composition, design, age, amenities, demographics, etc., along with special characteristics that affect its operation (we can get as much as eighteen feet of seasonal snowfall). An assessment of staffing requires a comprehensive analysis of staff work load and your expectations, arriving at an optimal configuration of contracted work and in-house labor. MAINTENANCE.  We have 346 apartments and a full-time maintenance staff of five.  One person is dedicated to performing daily customer service requests.  Three people prepare vacant apartments for new customers.  The supervisor coordinates contractors, troubleshoots, and takes care of those maintenance issues no one else can.  Painting, vacant cleaning, carpet cleaning and most lawn services are contracted out.  Snow plowing and snow shoveling is performed in-house. In most cases we expect to provide same-day service to our customers.  Further, we do not differentiate our service from business......
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Increasing Property Values

No matter how big or small your budget is, there are always ways to increase the value of your investment property. Whether you’re looking to make updates for efficiency, improve aesthetics, or just make general miscellaneous upgrades, following are some ideas for boosting your property’s worth. Roofing If you suspect you may be selling your property any time in the near future, consider your roof’s condition. Yes, this is a high-ticket item (approximately $10,000 to $15,000 to replace your current roof), but it’s also one of the first thing inspectors, real estate agents, and potential buyers will look at. Even if your roof isn’t in need of repair at this precise moment, chances are your property value will go down if buyers think that they may have to re-roof within the next few years. If your roof is on the older side but not quite ready for replacement, consider getting a roof certification. For the comparatively inexpensive price of about $250, a roofer will guarantee that your roof will not leak for two years—and if it does leak within that period, he will make the necessary repairs free of charge. Energy Efficiency When the time comes to replace unit appliances, you should strongly consider installing energy-efficient upgrades (such as EnergyStar). This is a great selling point for tenants and buyers alike and it will also pay off on a month-to-month basis that really adds up in the long run. If you are covering your property’s electric bills, energy rates can be......
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The Worthless Lone Summer Party

Imagine for a moment my diet is filled with donuts, Monte Cristo's, and Venti Mint Mocha Chip Frappuccinos, and one day I think, "I'm going to be healthy and eat some carrots today!" Let's be honest here - what is the point? Those carrots aren't going to do anything except upset the delicate hyper sugar balance I have already mastered. Although it may make me feel good for the day for being "healthy," in the end it really means just about nothing. Those carrots are the equivalent of a stand-alone summer party.  The infamous apartment community summer party may make us feel good thinking that we are making some sort of effort in our resident retention program, but really, you have essentially flushed $3,000 down the drain for no reason. If your resident retention program is limited to a summer party, it is almost guaranteed that it did not successfully achieve any meaningful goals. How could it? First of all, the rule of thumb for attendance at a summer party is approximately 25%, but only a portion of those residents will have a renewal anytime soon enough for the party to make an impact. So if only 25% of your residents actually have an upcoming renewal, then you have only reached 6% of your "target audience"!  (Many times apartment summer parties don't looks much better than this...) And even more so, what is the true benefit that is going to impact a resident's view of their community or their decision to stay? The......
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FHA Multifamily Loans - 223(f) Acquisition or Refinance

With many lenders on hold the topic of the day has been FHA.The FHA multifamily loan programs have been in place for over thirty years.  They continue to be used regularly and have closed as much as $8 billion a year in new business.  With commercial lenders on hold there has been renewed interest in these valuable programs.  The following summarizes the 223(f) program.The 223(f) program provides high-leverage long-term permanent debt to refinance, purchase, or moderately renovate existing apartment communities on a fixed-rate, non-recourse, assumable basis.  The loan size is relatively unlimited and the properties can be located in any state, Puerto Rico, Guam, and the US Virgin Islands.The property must contain five or more  units and be at least three years old based on the final certificate of occupancy.  (HUD recently granted waiver authority to the field offices through September 2009  to refinance younger properties that have stabilized.)  Commercial space cannot exceed 20% of the total net rentable floor area or 20% of effective gross income, including a 10% vacancy allowance.  Repair cost are limited to 1) $6,500 per unit as adjusted to FHA's high-cost factor for the area; 2) a maximum 15% of "as-improved" market value; and 3) cannot involve replacing more than one major builidng companent.Borrower Advantages:  35-year amortization period; eligibility for both market rate, subsidized, and LIHTC properties; NO rent control restrictions, rental subsidies, or limitations on owner return; non-recourse; AAA credit enhancement with Ginnie Mae securitization.Guidelines:Term:  Up to 35 years fully amortizing with level payments.Loan Size:  Unlimited, nationwide.Loan Amount: ......
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Resident Retention: Boys (or Girls) of Summer

  Summer is here, and we’re all waiting to see what levels of turnover will occur. Our typical summer experience, especially where our maintenance teams are concerned, is an increase in turnovers and the increased focus on getting newly vacated apartments ready for potential new move-ins. The result?  Existing residents may have to wait a little longer to have a service request issue resolved. It might take a little longer to hear back on the status of an ordered part or a scheduled vendor. But wait! Doesn’t it seem strange that we would prioritize empty apartments above our rent-paying customers? It’s almost as frustrating as standing in the check-out line, money in hand, to buy the perfect prom dress, but the clerk is busy dressing the mannequin in the store window and can’t be bothered. Something’s wrong with this picture! We see the cycle. We know the cycle. There are times of the year that typically bring an increase in turnover, and times of the year that typically experience less turnover.  Knowing this, what if we did something radical – something that turns what has been the norm in our industry for years and years on its ear? What if we reduced or retired our monthly resident events (that may draw a handful of attendees) and shifted those dollars to that time of year when we know turnover is traditionally heaviest? What if we shifted those dollars to hire temporary, part-time maintenance help to ensure our existing residents were never aff......
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