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Brent Williams' Apartment Blog

Thoughts, comments, and ideas about the overall multifamily industry, as well as a property-specific focus on resident retention and apartment marketing.

You Only Need 300 People To Love Your Apartment Community

Our industry has an incredibly bad case of “one-size-fits-all-itis”, where the fear of turning even one prospect away makes us cringe.  Part of our condition is a direct result of our past and current failures.  When an average apartment community loses 60% of its customer base every year, you tend to get more and more panicked about not turning anyone away.  This constant need to fill constantly vacating apartments pushes us to make decisions that are purely short-term driven, and serve to continue the cycle of ridiculously high turnover we have all come to expect as the norm.

What we tend to forget, however, is that we are a finite resource, so trying to be all things to all people makes even less sense!  If we get more prospects through the door, we literally can’t just create more apartments on that property to fill them.  We should have the exact opposite mentality when it comes to filling apartments.  When it comes to our availability, we often reek of desperation trying to get the apartments filled.  But think about your vacancies in a different way.  Instead of “I have 10 apartments to fill”, try thinking, “I only have 10 apartments to fill”.  When we think about the fact that we only have a limited amount of inventory to sell, we start rethinking our selling strategy!

Let’s think about this in dating terms.  If we are scared of being alone, we date anybody we can.  But since we are not selective, these relationships tend to be short and unhealthy.  But if we are confident in ourselves, we weed out the obvious nonsense advances and focus on the ones with the highest chance for a long-term relationship.  In property management, just like dating, we want long-term relationships, right?

But this is the point where most communities struggle – how can you be selective while not violating Fair Housing?  There are actually several ways to accomplish this, such as tightening up your acceptance policies, but for now let’s focus on creating the community itself.  As we have been trying to create a one-size-fits-all product, it is likely that our brand-concept is very watered down.  Back to the dating analogy, it would be similar to going out with someone where nothing was really wrong with them, but it was like dating a plain baked potato.  Boring, bland, and nothing you would be upset about if you got something different the next time.

Let’s take the other extreme, however.  Let’s say you only date someone who likes cats, raw oysters, hates the beach, loves the movie Rat Race, hates football, and thinks aliens already live among us.  If you somehow managed to find someone that fit all these criteria, it must be true love, but most likely you have created a niche that is much, much too small.  So we need to find a balance where our “appeal percentage” is high enough to have a decent target market, but still affords us to create a service in which people will LOVE, not just accept.  And in doing so, we have to realize that we will be turning off some people, and that is ok!  If nobody dislikes your community, it is the first sign that you haven’t done anything memorable with it!

This marketing program below seems a bit forced in my opinion, but it points out the general concept I believe in with apartment communities - take risks and dare to be different.  When you do that, you won't appeal to everyone, but you will have stronger ties to those that do.

[video:http://www.youtube.com/watch?v=dD1h94kuUmk 433x300]

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We have a small property and it is vital for us to get better, long-term residents. With our higher occupancy this year, we recently tightened our criteria even more. We now require first and last month's rent plus a full month's security deposit if the applicant has 1. No credit. 2. Foreclosure. 3. No rental history in the past 3 years. Unless I can see on their application they have stability, we will either deny or require this. I would rather have someone who rented for 3 years with 4-6 late payments than lived somewhere for 1 year and on the job less than a year.

  Sandy Martin
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I love hearing that, Sandy! That's a wonderful long-term strategy, and it will be interesting to watch how your turnover changes over the next few years.

  Brent Williams
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Brent, I wish every property owner could read your post.

Deming argued FOR management by systems analysis and AGAINST Management By Objectives/Numbers (MBO), yet the apartment industry is immersed in that failed approach. Consequently, pressured managers try to meet occupancy "objectives" with leasing decisions that at times verge on deperation, because of management's monomaniacal focus on MBO.

I would rather that an apartment stay empty than to rent it to someone who, in the long run, won't be able to afford it. We view leasing decisions as a three-legged chair - sufficient income, credit and good landlord reference. We look at five years of rental references, three different credit scores, and satisfactory income to handle both long-term debt and rent. Ultimately, we want to determine two things: will the person be able to pay the rent and will they be a good neighbor. We end up rejecting about 1/3rd of applicants. Of course, every approach requires a consistency of treatment of prospects, not only to comply with both the spirit and letter of the Fair Housing Act, but also because it is the right business practice.

About eight years ago, a rejected applicant was so interested in moving to our property that she asked about paying the entire year's rent up front. After considering the request, I agreed. Since then, we've offered this option in certain circumstances, such as when the credit score is inadequate. Incredibly, dozens upons dozens of rejected applicants have agreed to pay all or part of the rent up front. (We require pro-rated rent and a $300 security deposit otherwise.)

Why would someone choose to pay rent up front? Our key amenity is customer service - anything, anytime maintenance service 24/7/365, emergency or non-emergency. We perform about 3,000 service requests a year, each of which is an opportunity to prove our value - and 3,000 opportunities to screw up, which we sometimes do.

Our 42 year old property has about 350...

Brent, I wish every property owner could read your post.

Deming argued FOR management by systems analysis and AGAINST Management By Objectives/Numbers (MBO), yet the apartment industry is immersed in that failed approach. Consequently, pressured managers try to meet occupancy "objectives" with leasing decisions that at times verge on deperation, because of management's monomaniacal focus on MBO.

I would rather that an apartment stay empty than to rent it to someone who, in the long run, won't be able to afford it. We view leasing decisions as a three-legged chair - sufficient income, credit and good landlord reference. We look at five years of rental references, three different credit scores, and satisfactory income to handle both long-term debt and rent. Ultimately, we want to determine two things: will the person be able to pay the rent and will they be a good neighbor. We end up rejecting about 1/3rd of applicants. Of course, every approach requires a consistency of treatment of prospects, not only to comply with both the spirit and letter of the Fair Housing Act, but also because it is the right business practice.

About eight years ago, a rejected applicant was so interested in moving to our property that she asked about paying the entire year's rent up front. After considering the request, I agreed. Since then, we've offered this option in certain circumstances, such as when the credit score is inadequate. Incredibly, dozens upons dozens of rejected applicants have agreed to pay all or part of the rent up front. (We require pro-rated rent and a $300 security deposit otherwise.)

Why would someone choose to pay rent up front? Our key amenity is customer service - anything, anytime maintenance service 24/7/365, emergency or non-emergency. We perform about 3,000 service requests a year, each of which is an opportunity to prove our value - and 3,000 opportunities to screw up, which we sometimes do.

Our 42 year old property has about 350 apartments in central NY, an area that has experienced negative population growth. In 2011, we've raised rents, have been 100% occupied for a good part of the year, and may end up with a turnover rate of less than 20%, compared to the national average of 60%.

A lower rate of turnover comes with years of patient effort of building a solid customer base and is affected by each leasing decision.

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  Rick Hevier
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Thanks for the compliment, Rick, and I always enjoy hearing your success stories! One thing I can imagine is when a manager sees that you look at 5 years of rental history, they probably think they can't possibly have time for that. But in the big scheme of things, their operations are forcing them to approve over double the number of applications you need to approve, due to their high turnover. If they could lower their turnover, they could easily handle the time necessary to cover the time cost, but they are on the wrong side of the resident turnover cycle.

  Brent Williams

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