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The Mentorship Model; The Apartment Developer's Dilemma

Over the past few months we have discussed some of the underlying problems within the wonderful profession of real estate development. We have also bantered about individual solutions to prepare ourselves (as the next generation) which have ranged from education to understanding the key success traits for our own self-improvement. Hopefully these have been fairly logical. But, if so, then why hasn’t it just naturally happened? Sadly, ‘obvious’ and ‘easy’ don’t always go hand-in-hand. I would suggest that self-improvement is one of the most difficult things to achieve- especially on our own. Often we are just not equipped to step back and look at ourselves objectively. And, even if we are, we don’t necessarily have the tools to affect the changes that we need. And when it comes to creating a good developer- it really takes a village. It would be nice if we could learn everything that we need to know from our superiors or the more experienced folks within our firms, but unfortunately, my generation and the one before me has left our profession in shambles. The built world is an uglier, less urbanistically successful place for many of our incursions into it. The reason for this is that (statistically speaking) you likely work for a spreadsheet monkey who was never taught or didn’t embrace the romance of what we do. He can’t teach you because he doesn’t know himself. If you want to be great, you will need to actively seek out the folks who can develop in......
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Guest — Brad W.
Interesting and relevant topic given the current state of development. I think it is important to note that it is possible to hav... Read More
Wednesday, 28 September 2011 00:19
Guest — David tB
"The reason for this is that (statistically speaking) you likely work for a spreadsheet monkey who was never taught or didn’t embr... Read More
Thursday, 29 September 2011 04:24
Guest — Krista W.
I asked a former boss to be my mentor (thanks, Maria Lawson). She was very different from me, and I could see from watching her le... Read More
Wednesday, 05 October 2011 01:01
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Establishing Transfer Policies for Multi-unit Properties

By Ben Holubecki, STML Realty Group, Glen Ellyn, IL Transfer policies are often a detail overlooked by landlords and property owners who own/manage multi-unit properties. A tenant requesting a move from one unit to another presents challenges and can add unnecessary and unexpected costs for property owners. Ignoring these requests or not addressing them properly can open landlords up to potential resentment from tenants and even legal liabilities if not properly documented. There are a lot of reasons why a tenant might request a transfer to another unit within the same property and there are positive and negative impacts resulting from this type of request. The most common reasons for these requests in my experience are: - Problems or issues with current neighbors - Maintenance issues within their current unit which they feel were not or will not be addressed - Lack of upgrades due to extended tenancy (newly remodeled units are obviously more desirable) - Preference regarding location within the property (different floor, closer to parking, amenities) - Moving from 1 unit type to another such as moving from a 1 bedroom apartment to a 2 bedroom Regardless of the tenant’s reason for the transfer request, there are both positive and negatives that you should consider. The positive: - Your tenant obviously likes the property enough to want to stay - You have a history with this tenant so you know what to expect regarding care for the property and rental payments. No surprises. That is always a positive. ......
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Andrew Fink
Very well thought out blog. However, being a strong advocate of customer service, I tend to look at things from the tenants' poin... Read More
Wednesday, 17 August 2011 00:16
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Know Your Property Management Market Potential

By Jo-Anne Oliveri, ireviloution intelligence, Brisbane, Australia I see too many property management businesses either fail completely or forever fail to achieve their targets for many and varying reasons. It’s important, just like in any business, to understand and know your market. In order to create your business plan and targets you must know the market size, potential, averages, statistics and demographics. In this particular blog I’ll focus on the critical role market potential and averages play in the success of your business. Mistakes continue to be made in the property management industry because business owners focus on numbers and not income. There are many critical factors that can make or break the success and profitability of an agency. By understanding critical factors you should then understand that by focusing on the number of properties under management, rather than the income, you are creating a ‘Frankenstein’ for yourself and your team, not to mention disastrous consumer relationships. To put it simply by focusing on properties under management you are focusing on quantity only. By measuring targets on income you are focusing on quality. It’s a classic “quality versus quantity” dilemma,  and quality always beats quantity. A quality agent attracts quality teams, which tend to attract quality property owners and their quality properties, who in turn attract quality tenants. Next thing you know you have yourself a quality business and a quality brand. QUALITY PLUS! Always remember – when you are tempted to focus on numbers of properties under management, when ......
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Guest — Mitchell Burgess
I've recently moved from managing single family homes to multifamily, and in all honesty I don't know my market very well. I'm in ... Read More
Saturday, 06 August 2011 10:26
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Setting Your Rental Rates

Rental ratesBy Geoff Roberts, Buildium, Boston, MA When determining rental rates, you want to strike just the right balance between maximizing your profit and remaining competitive in your local rental market. Following are some tips for finding that magic number. Look at rates of competitors As a property manager, you want to create business strategies that work for you and serve your best interests. However, you still need to be aware of competitors and the marketplace around you. When formulating rent rates, make sure you know what you’re up against. And the quickest way to do this is analyzing competitive prices. RentometerRentometer is a great web-based program that will allow you to see how you rank in your neighborhood. Just enter your address, rental rate, and number of bedrooms to gain access to a computerized graphic showing where your rates fall in comparison to other rental rates in your immediate area. Other Rental Listing SitesWhile Rentometer is great for a quick overview, remember that it doesn’t take specifics such as square footage, upgrades, and amenities into account. To make sure you’re comparing apples to apples, also look at competitive rental listings on sites likeCraigslist, Zillow, Rentals.com, Apartments.com, and local classifieds (both online and off). Look for places of a similar size, with the same amenities and upgrades and make sure that your rates are in the same ballpark. If your rental rates are higher than those of competitors, make sure this is justified (for example, your units have more square footage or were recently renovated). When a......
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Brent Williams
Managers may also want to check out an industry-specific source for comps, such as ALN.
Sunday, 29 May 2011 10:28
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Set Ground Rules Early with Owners and Tenants

The Rule BookBy Ben Holubecki, STML Realty Group, Glen Ellyn, IL I’ve always had a lot of respect for professionals who truly learn from their mistakes.  Many of the top companies and executives in the world admit that they have made plenty of them over the years.  What sets the successful companies apart from the unsuccessful ones is the ability to immediately make adjustments and avoid making the same mistake twice.  It can be costly to make an error on the job but it can be devastating to repeatedly make the same mistake over and over again.  That’s why I sat down last week to reflect upon a recent string of lost property management accounts. Those of us who manage properties owned by others all have our steady, long-term clients.  These are the ones that we can count on.  We depend on them to provide the residual revenue that drives our business and allows us to operate on a monthly basis.  These owners generally defer to our decisions, believe in our process, and most importantly trust us to manage an important part of their investment portfolio.  In our experience we have found a common theme that runs along with most of these clients.  Ground rules and expectations were properly set at the beginning of those business relationships.  Although there are always ups and downs involved in managing any relationship when you are playing with someone else’s money, those hurdles can often be overcome if guidelines were properly established at the beginning of the relationship.  If ......
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Is Renting to Family and Friends Wise?

Pay RentBy Salvatore J. Friscia, San Diego Premier Property Management, San Diego, CA As a property management company the majority of our accounts are derived from real estate investors but many of our accountscome from owners that have only 1 rental unit which is usually a prior primary residence. They may have self managed the property at one time but usually something occurs that invokes them to seek professional property management. There are many reasons why but for some the final straw comes after dealing with the aftermath of renting to a family member or a friend. Rental real estate should be treated like any other business venture but if you’re not accustom to being a landlord it seldom is. Many new landlords make the mistake of filling their vacancy with friends or family members to avoid having to actually deal with finding a qualified tenant. At first the situation may seem like a perfect fit and a great way to reduce costs associated with vacancy and marketing. In most cases the owner/landlord will typically relax qualification measures and make concessions based on the relationship, including not requiring an application or security deposit. Right from the start this creates a relaxed environment and allows the family member or friend to perceive the situation as somewhat casual and flexible as opposed to contractual. Because they know the tenant the owner often develops a false sense of security and doesn’t anticipate any problems, “I know this person and I’m helping them out so why ......
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Minimizing the Cost of Vacancy

By Ben Holubecki, STML Realty Group, Glen Ellyn, IL As a professional property management company we have found that one of the most difficult concepts for rental property owners to grasp is the true cost of vacancy.  Investors who have been in the rental game for a while understand that in almost all cases the greatest expense they will experience over the life of their investment property will be the cost of vacancy due to lost rent and preparing the property between tenants.  100% of our managed properties have or will go through a vacancy and prep period.  Based upon our experience in managing this process literally thousands of times we provide the following advice to our property owners to help minimize the costs associated with turning around the property and to expedite the placement of a new tenant to begin collecting rental income again. Get started now.  The worst thing that can be done is to wait for any particular task to be completed before starting on the next.  The game plan should be in place the day the tenant vacates the property.  Vendors should be ready to come in and provide quotes, marketing efforts should be getting put into place, and a firm deadline for completion of the necessary clean-up/repairs should be determined. Get your utilities in order – Make sure your utility accounts are in order as soon as your tenant leaves.  Nothing is as frustrating as having the carpet cleaners or painters show up to an empty......
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Guest — DJean
I always make sure that my rental contract includes the tenant allowing me to show the property the two weekends before they move ... Read More
Tuesday, 10 May 2011 03:21
Sandy Martin
To cut down on the time spent making repairs, I always inspect the apartment 2 weeks before the vacate date. I order any supplies... Read More
Thursday, 12 May 2011 08:31
Buildium LLC
Both of you seem to have very proactive approaches - definitely the key to cutting down turn-around time.
Thursday, 12 May 2011 22:21
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Should I Allow Tenants to Make Unit Upgrades?

Every now and then, a tenant offers to make repairs to the unit he’s living in. Often, such offers are made in exchange for rent (in other words, the cost of the repairs is deducted from the monthly rental rate). In other instances, the tenant simply wants certain upgrades in his unit (a new paint job, removed carpet, etc.) and offers to do them himself. The argument for this is that the tenant can enjoy a place that “feels like home” and you reap the rewards of these upgrades once the tenant vacates the unit. Clearly, there can be benefits to this sort of situation: You receive property upgrades at a reduced (or negated) cost, and your tenant gets to customize the unit to his own preferences. Unfortunately, though, there can also be some pitfalls. All too often in these scenarios, tenants are not qualified to complete these upgrades or updates up to par. The result is unfinished or sub par work that ultimately becomes your responsibility to rectify. Not only this, but such deals can also result in sticky financial situations and—in extreme situations—legal problems. Let’s say that one of your long-time tenants wants to repaint his living room from the standard white all of your units are painted in to a more colorful rustic red. You agree that the color would suit the space well and tell your tenant can deduct the price of paint and labor from his next rent payment. When the first of the next month......
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Guest — Becky / @ecomod
Maybe the question should be reframed as, "Will allowing my tenants to make unit upgrades give my community a marketing edge over ... Read More
Monday, 02 May 2011 00:43
Buildium LLC
I see that as a separate question. There's a difference between allowing tenants who approach you to make unit upgrades and active... Read More
Tuesday, 03 May 2011 00:51
Guest — DJean
I've had this happen so many times to landlords who had me take over their management. The horror stories are endless unfortunate... Read More
Tuesday, 10 May 2011 03:16
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A Quick Guide to Keeping Property Management Records

Keeping records on hand is important for a number of financial and legal reasons. Just because you’ve paid off an account or a tenant has vacated a unit, it doesn’t mean that you’ll never have cause to deal with these vendors or individuals again. Whether it’s for taxes, future loan applications, or legal issues down the line, you always want to be sure you have access to the information you need at any future point. Following are a few things to keep in mind about keeping records. What kind of records do I need to hang on to? As a business owner you will want to hang on to records that pertain to: Personnel Tenants Financial transactions (both payments received and payments made) Property-related information (both your properties and your clients) Insurance Legal documentation Audit documentation How long should I keep records for? The answer is: It depends. While the default answer for this question tends to be “seven years,” that is only the case in certain instances. Different types of records should be kept for different periods of time. Standard time periods include one year, three years, seven years, and, in some cases, permanently. As it relates specifically to property management, you will want to keep the following information for these specific periods of time: One Year Employee applications Purchase orders Meeting minutes Three Years Banking records Expired insurance policies Correspondence (with clients, tenants, real estate agencies, vendors, etc.) Internal audits Seven Years Accident reports/claims Accounts payable ledgers Accounts receivable......
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Renee Manes
This was very helpful. Thank you
Saturday, 23 June 2012 13:17
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New Loan Documents – Fannie Mae Multifamily Loans

If you have not already heard Fannie Mae is in the process of changing their loan documents.  This is the first major rewrite of Fannie docs in about 10 years and this is a substantial change from previous documents, both in form and content.   Since Fannie is one of the largest multifamily lenders and anyone financing a property is, or should be, getting a Fannie quote, you need to understand these changes.  Ok, before you fall asleep or click off this article because this is legal stuff and that’s your attorney’s responsibility and you really don’t care, take a moment.   While this stuff is a little dry, it’s important.    Anyone refinancing a small or larger property should be looking at a Fannie loan as a possibility and you need to understand the terms you are getting before you start the loan process.   If you wait until your attorney gets involved it’s too late, you have already spent your due diligence funds and may even have already signed a commitment tying you to the deal.  So take a minute and continue reading. Fannie Mae is the largest GSE lender and the only one really covering the full range of multifamily loans from small properties owned by local owner/operators to large ones owned by institutional investors.   These new loan documents affect all of these borrowers and, at least for now, these are one size fits all documents.   Fannie Mae documents are available on the Fannie web site at https://www.efanniemae.com/mf/loandocs/index.jsp   Finding the documents is a......
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