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Want to Invest in New Properties? Here’s What You Should Know Before Signing the Check.

For multifamily property investors, the question of how much to grow an existing portfolio can be a difficult one to answer. On one hand, creating new streams of revenue is always an enticing proposition. But on the other hand, those new opportunities also come with more risk. Some of this risk can be mitigated thanks to greater economies of scale when it comes to purchasing insurance and preventive services (think water leak detectors and smart HVAC systems). Scaling up a portfolio also means building a team that collectively has a wider range of skills and more bandwidth to take care of properties and fix problems quickly. However, there’s no getting around the fact that having more properties means more ways things can go wrong — and more factors that need to be considered. But with the real estate market currently booming, many investors might be tempted to overlook the risks. They’re worried that if they act too slowly, they could be missing out on a once-in-a-lifetime opportunity. This is precisely the time, however, that investors and owners need to be extra diligent, taking every risk into careful consideration before grabbing up a new property. Otherwise, they might find that their long-term investments are harmed by short-term thinking. So what risks should multifamily property owners and investors be on the lookout for when trying to expand on their investments? Here are the biggest issues that have the potential to slip by unnoticed and create expensive headaches down the road (and how to avoid them)......
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Bang for the Buck: Smart Home Technology with the Best ROI

Bang for the Buck: Smart Home Technology with the Best ROI
  The purpose of smart home technology is to create efficiencies, and ideally, those efficiencies should generate a substantial return on investment (ROI). However, that ROI comes in many forms, sometimes making it difficult to measure or quantify.While some smart home tech has a linear and tangible impact on bottom lines and operating budgets, other products produce their ROI through preventive capabilities or marketable features. So, which smart home devices deliver the biggest bang for the buck? We’ll review four smart home products with the greatest potential ROI in the multifamily space, regardless of how it is defined.Leak and Humidity SensorsOf all the various systems coursing through an apartment community, plumbing has the greatest potential for property damage. The source of a water leak can be tricky to locate and water is capable of carving out paths of destruction one would not expect. An undetected leak in an upper level apartment can result in tens of thousands of dollars in damage in mere minutes, leading to weeks of mitigation work and lost revenue. Leak sensors – placed under or near washing machines, dishwashers, toilets, sinks, water heaters and sump pumps -- are the first line of defense. When a leak is detected, automatic alerts are sent out to designated personnel enabling an immediate response. With water leaks or broken water lines, every second matters. A prompt response can mean the difference between deploying a mop, or flooring and drywall removal. Smart thermostats equipped with humidity monitors can also identify and report abn......
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4 Ways to Maximize ROI with Your Property Management Software

4 Ways to Maximize ROI with Your Property Management Software
  Landlord’s and real estate investors operate in a world of tight margins. The difference between a successful rental property investment and one you wish you could take back is often only a few percentage points. For this reason, more than ever, landlords and property managers seek various ways to increase efficiency, both as it relates to the time they spend with their properties and to their finances. Property management software is an increasingly essential tool in any good rental property manager’s tool-belt. Below are four ways property management software can increase the ROI of your rental property investment. 1.       Collect More Money One of the primary reasons landlords first consider property management software is for the ability to collect rent online. These landlords understand that online collections are quite a bit more convenient for both them and their tenants, minimizing trips to the bank and allowing tenants to pay in ways they want. These are great reasons to start using online payments, but landlords often overlook the impact it can have on their bottom line. Property management software typically includes a notification system that will automatically remind your tenants of upcoming payments. The best systems will handle send notifications before rent is due, the day its due, and when it’s late. Oftentimes, you can send additional messages quickly and easily as needed. What’s more, good rental management software will permit tenants to sign up for autopay, ensuring they never miss a payment again. And the very best platforms also offer tenants......
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Technology Revenue Drivers

Technology Revenue Drivers
The multifamily industry has truly turned a corner. Rather than being skeptical that technology will produce any ROI at all, many apartment owners and operators have begun evaluating technology based on how much ROI it’ll produce. It’s no longer a zero-sum game in their minds. But it is vastly more complex to evaluate every technology based on how much revenue it’s going to generate rather than whether it will generate any at all. And technologists certainly aren’t making it easy.Ever the optimists in search of being the next Google, technologists tend to over promise when it comes to revenue projections. Yet, we’ve now had enough experience with technology in the industry to know what drives the most revenue and the most value for our assets. Here’s a rundown of some of the new and old technologies that have clearly proven ROI and what I believe will drive revenue going forward for apartment owner/operators. Revenue ManagementRevenue management is the clear winner in revenue driving technology. It not only helps owners and operators increase rents intelligently in hot markets, but it also protects against rent losses in slow markets. Of course, the technology doesn’t work on its own. It needs human input, but it’s ability to capture and process large quantities of information to provide a suggested price that maximizes revenue is something no owner or operator should live without. Implementing revenue management technology is simply a no brainer. Customer Relationship Management SystemsSales is a numbers game. The more quality leads you can attract, the mo......
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Maximizing asset value and revenue on smart home

Maximizing asset value and revenue on smart home
It doesn’t pencil out. Or does it?The mantra that used to be associated with smart home technology in multifamily was that it was nice, but wouldn’t have a return on investment. However, with growing demand and more residents coming to expect their apartment homes to be fitted with smart home technology, that mantra has begun to shift toward a more fitting question: How do we maximize asset value and revenue on smart home technology?The answer seems simple: Smart Home as a Service (aka the new SHaaS). Residents pay a monthly fee for the smart home service, apartment owner/operators make some ancillary revenue and the smart home companies offer 24/7 customer service on the devices. As much as we’d all like it to be that simple, it isn’t. We all know being in the residential service industry that residents are picky and multifamily housing is complicated. That’s why there’s a significant difference in both asset value creation and monthly fee depending on the smart home technology you install. Asset value increase from the installation of smart home technology can range from $745,000 to $1.1 million, while the monthly fee residents are willing to pay ranges from $10 to $50, depending on the quality of the smart home system.The kind of resident who wants smart home tech, doesn’t just want any system, especially if they’re paying for it as a service. They want the best smart home system money can buy. They want every device to be interconnected and work seamlessly, a hub to manage all o......
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Top 5 Package Management Problems No One is Talking About

Top 5 Package Management Problems No One is Talking About
We know there’s a package problem – there is absolutely no denying that. We talk about porch pirates. We talk about no longer accepting packages. We talk about the various solutions to today’s package situation. But as the industry searches for ways to fix the problem, there are some vital areas that aren’t being discussed, including the impact to apartment owners and management companies and how ROI cannot simply be measured in cost-per-unit. Poor package management negatively impacts the leasing team because they end up handling packages instead of focusing on their value-add job of signing new leases to drive revenue.By not addressing the top five issues below, finding the best solution to the package conundrum will remain elusive:1.    The package problem will become bigger than we realize: Well, yes, we are talking about the future growth of the package problem, but the industry is looking to solve for the number of packages it receives today rather than what it will receive in the future. In 2017, e-commerce sales accounted for 9 percent of all retail sales in the United States. This figure is expected to reach 12.4 percent in 2020. That’s increased from 5.8 percent in 2013, meaning online sales has almost doubled in less than five years. 2.    Packages are evolving: The iconic Amazon rectangle box is a thing of the past. Packages are no longer squares or rectangles that can fit into a pre-determined space. Oversized, awkwardly shaped and even heavy packages are being delivered hourly to properties nationwid......
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Working Your Business Strategy

Working Your Business Strategy
In my blog post "What Is Your Business Strategy?" I mentioned that there are three basic elements of business: price, service and quality. In my experience businesses that succeed compete well in two of the three categories. You may be wondering, "Shouldn't successful businesses compete on all three?" While I think that would be great, it's often not economically sustainable to try and have the lowest pricing and high quality and amazing service.  How this worksOne of the communities I worked at was ultra high-end luxury apartments with stunning ocean views in a very affluent area. When I started at the community we offered great service (we had a lot of staff on-site to cater to our residents) but we were undergoing a massive renovation at the time which meant that the majority of our amenities (a huge reason to rent there) were not able to be used for a while and we were doing renovation work in our apartments as well. All of this work affected the quality of what we offered to our residents and made our community less attractive to potential renters and to our current residents. We marketed this community as ultra-luxury but that was not the reality of the experience during this season. However we did NOT compensate for the temporary drop in quality with a decrease in our overall pricing strategy. There was a disconnect between what we offered and what we delivered. We were only competing in one of the three main areas and we suffered......
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Stocks, Bond and Funds Vs. Real Estate- Look Beyond The Numbers

It’s an old debate. Which is better, investing in the stock market or putting your money in real estate?   Years ago when I was a financial advisor at a Wall Street firm, I knew everything, or so I thought. Late nights spent feverishly studying the stock market, staring at charts, reading stacks of annual reports and clinging to the words of Warren Buffet. Mutual funds, stocks, interest rates, bonds, variable annuities, options, even futures, I knew it all…in theory. One cold February day an older, a much wiser silver haired client sat in my office with hands folded across his chest. I gave my mutual fund pitch, rattling off a dozen reasons to buy. His eyes glazed over. I mentioned our top analyst’s stock picks. He yawned. Quietly and patiently he waited. Recognizing his boredom, I wrapped it up. Later a colleague informed me that my wise old client was a well-known real estate investor. He’d accumulated significant holdings spanning decades. He was far wealthier than I presumed, and much smarter than I’ve given credit. Puzzled, I wondered how stodgy old blue-collar apartment buildings had yielded such wealth. Over the years similar clients sat across my desk with the same story. Sometimes it was a sprawling multifamily complex, other times a portfolio of rental houses or a corner retail building, maybe a warehouse near the airport. But the story was similar, real estate accumulated slowly with good tenants, over time paid off and appreciated in value. It was repeated again and again......
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Budget for Amenities!

Budget for Amenities!
A Budget Including Amenities Can Help You See and Save Green! It's that time of the year again: the preparation of next year's budget for your community. Your budget is likely to cover a lot of different areas; from marketing and sales to staffing and screening. While these are necessary for the property to keep functioning, make sure to make room for amenities. Amenities can increase occupancy and drive increased revenues. It can also be used in your marketing efforts to generate leads. When budgeting for amenities, there are a few things you need to consider. If you follow these three steps, you'll be good as gold! Survey The best amenity is a wanted amenity. A good way to gauge interest in a potential amenity before purchasing is to survey your community.  What do they want? What amenity adds convenience for them? What's going to make them want to renew their lease? You may think your community desperately needs a guinea pig playroom, but you better check first. An amenity collecting dust is a waste of money and isn't generating ANY revenue. ROI Stemming off of the first point, when you figure out what amenity or amenities your community wants, it's important to consider the ROI. You don't want to commit to an amenity with a short lifecycle. You're looking for an investment with long-term results. This can be challenging, especially when trends can come and go. Doing your due diligence through research will be vital to making sure your addition isn't a dud. Find industry resources......
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Low End vs Luxury Real Estate: Which is a Better Investment?

Low End vs Luxury Real Estate: Which is a Better 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 a med......
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