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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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Our Pricing is Confusing Our Prospects

I'd like to ask you to do something for yourself today. Pick up the phone and call some of the properties in your immediate market. Chances are, they might be offering concessions of some sort. "Shop" them, as if you were a real live prospect. And let them explain their concession to you. I did. And here are some examples of what I got:"We amortize your three months free over the life of the lease and that reduces your rent, so you're not really paying market rent. You're getting free rent. Does that make sense?""We give you your first month free and spread it across the first six months. After six months, you go to market rate. And if you break  your lease, you have to pay back the free month that you got.""We only charge net effective rents." (I played devil's advocate here and asked what ‘net effective rents' were. The answer-->)"Er...um...I'm not really sure what they are, exactly. But they are what we are charging now. It's better than regular rent though. I do know that..."Now, as if that isn't confusing enough, we get into menu based pricing (of which I am a fan, but not necessarily right now). Try to explain to a prospect that he will pay $45 more per month because he's on a higher floor with a 'better view', southern exposure that's close to the amenity area. Generally, he doesn't really ‘get it' because to most of our prospective residents, our apartments all pretty much look......
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Affordable Video Shops Provide a Clearer Picture

Today many apartment communities are competing for fewer prospects. Having top sales teams in place is essential to keeping apartment communities afloat. Yes pricing, marketing, product condition and appeal all play a hand in the success of a community, but none more than the quality, talent and drive of a Property Manager and his/her sales team.To make certain your sales team knows what the expectations are in handling prospects, training is essential. Knowing you really have the right people...mystery video shopping provides a better answer. Mystery shopping has long been used as a control and training tool in our industry. Video shops offer a reality that written and audio shops do not. With written shops, we largely depend on the objectively and integrity of the shopper to provide reliable answers. With audio shops, we hear what was said and can make better determinations, but with video shops (utilizing a hidden camera) we can really see what our representative's look like, their body language and the surrounding distractions that play into the shopping experience for the prospect.I recently hired a company that provided mystery video shop's on DVD for $150 and delivery via streaming video for an extra $15. The shop looked like a 20/20 undercover investigation. I could see the representative and the surrounding area from waist or chest height up. The picture and sound quality was decent enough to get a feel for the shopper's experience.Overall the video shops provided a clearer picture of what was happening during a prospect's......
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Resident Retention: Love You Long Time... I think

I've lived in a handful of apartments over the years, and though I might not be able to tell you what I ate for dinner two nights ago, I can tell you how long I lived in each of my apartments. There was my first apartment in a historic home. No A/C, poor heat, but I loved it. Just over a year. Next one? 1 year. Then 2 dreadful months. Then 18 lovely months. I could go on, but I won't. The 18-month place, I would have stayed for years, but I ended up moving out of state. The next long-term apartment was 2 years, and I would have stayed there longer too, but we bought a house. I remember how long (or short) I stayed and exactly why. Most residents do. However, very few property owners bother to track length of residency for their residents. They look at turnover, occupancy, traffic conversion, but not length of residency. And why not?  This one metric tells you so much. It can be one of those indicators of how well (or badly) things are going on site. Check it out: In 2008, out of more than 30,000 satisfaction survey respondents, we found that nearly 30% had been living in their apartment for 1-2 years. Over 16% had lived there for 3-5 years, and over 10% claimed more than 6 years in their current apartment. Are these residents celebrated? They should be. These are your bread and butter customers, the foundation upon which your......
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Prospects Want Perfection; Are You Giving It?

In traveling the country these past few months during this challenging environment, I've seen quite a trend that is affecting every industry, not just ours. Consumers are showing an ever growing lack of patience with anything less than perfect product and service. Think about it for a moment: A year ago or more, you might have found average service and average product acceptable. I'll bet you don't anymore. The example I consistently use is food and beverage at the drive thru. I ask my audiences of property management professionals (vendors included) if one year ago they would have accepted food and drink that was less than perfect. After all, to return to the restaurant would probably require that you park your car, enter the restaurant, wait in line, discuss the transaction with someone and hopefully either receive a refund or a replacement product. Wow, that's A LOT of work for what had been a convenience purchase to begin with, isn't it? Regardless of the amount of work involved, everyone agrees. What was acceptable a year ago is no longer acceptable, regardless of the inconvenience to the purchaser. Translation: Perfect product, perfect customer service, and perfect presentation are more important than ever before.This begs the question: Was less than perfect ever acceptable? Sadly, yes. In an industy where we have problems answering the phone (multifamily call center stats show that at least 37% of our calls are going unanswered); where we can't seem to follow up effectively (J Turner Research stats show that......
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Somebody talk me down from the ledge...

While there are apartment properties who do a spectacular job working with apartment shoppers, I am horrified by the lengths some leasing teams go to in placing obstacles for those who take the time to submit a request for more information about leasing apartment homes.

I implore and plead...PLEASE we need your advice in helping us help you train the folks in our industry. GREAT LEADS are coming through our system, but jeepers creepers...it seems at the core level of our industry, we complicate the most basic of functions.

While I am known lean a bit to the dramatic side, what we are hearing is so scary. These are just a couple of the calls we're reviewed pasted below, don't even get me started on the cleaning crew answering the phone telling the caller to call back...or the leasing agent who tells the caller, "You know what...we're closing right now, can you call back tomorrow after 10:00 am?"

Note to self.. .Breathe, breathe, breathe.
I need a hot yoga class.

 Now for your listening pleasure:

Apartment Shopper Phone Call

Tamela Coval works for RentWiki, providing social media solutions to apartment renting.

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Eight Simple Ways to Increase Your Online Ad Conversion

1. List prices in your online ads. Properties that list their pricing get 192% more traffic than properties that do not. You will also end up pretty much dead last in the search results.2. Put your floor plans in your online ads. Showing your floor plans can increase your traffic results by as much as 68%. And if you haven't bothered to get your floor plans digitized and colorized, there's no time like the present.3. Interior photos are one of the most requested items on internet listing service  (ILS) sites. Check to make sure you're not heavy on amenities and exteriors and neglecting your interior photos. And hey, spend some money on a good photographer too. It can make a huge difference in your photo quality.4. Make sure you are using every available feature on the ILS sites. Can you bold your ad? Do it. Do they allow unlimited photos? Then get as many on there as you can. Call your ILS reps and ask them what you can do that you aren't currently doing with your ad. They are happy to help you.5. Make sure you check ALL amenities that apply to you. Don't take it for granted that people know you have air conditiong or an outdoor pool. If people knew exactly what you had, they would probably skip the online search and just come straight to your leasing office.6. Make sure you're not using your brochure copy for your ads. These ads are all crawled by the search......
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I No Longer Give a #&%! About Your Closing Ratio

That's right, it deserved an explative.  Why in this industry do we get caught up on this number?  My question is how many leases did you get today (or this week)?  I don't care how many times you picked up the phone or how many people you showed an apartment to get that/those lease(s) as long as you get them.

Why, Mark, why?  Because you're all full of #&%! when you tell me how many calls or traffic you had anyway as you're afraid to have a low closing ratio.  We've been holding you to some magical closing ratio number, and it's time to stop.  I love interviewing new leasing candidates or managers and they tell me that they have a 50% closing ratio or higher.  I call BS!  How is that exactly measured anyway?  Is it based on people you actually showed an apartment to?  Is it based on everyone that inquired?  Does it include people that are interested in a one bedroom that you have no availability for? 

 And given all that criteria, what really matters?  I think two things matter.

1. Getting the leases to achieve the goals set for yourself and management.

2. Recording every single call, visit, or inquiry of any kind that comes in.

I believe these are the key measurements needed for leasing and marketing a community.  And that's why I no longer give a #&%! about your closing ratio.

 Enjoy your day!


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