Doing some fall cleaning and thought I would pass on an old but good note on email.
Ideal times to get your email read are between 5a and 7a.
My annual prediction post…of sorts. Just a few quick hitters…
Predictive analytics point people to the perfect Experiential Apartment Community (EAC) for them. One stop shop – if you will. Marketing as we know it – even today – will be rendered uninteresting and borderline useless.
Apartment prices are predicated on twenty times the metrics they are today – think big social data.
Interactive Digital Signage trumps the kiosk and does most of the heavy lifting as it relates to leasing and service after the sale.
People choosing to do business with you do so by telling Siri (or, any equal) what they need and she taps into your community IDS and together these two Digital Experiential Monitors take care of it all.
Personal Experience Agents pick up where the DEMs leave off. If there is anything left to do.
The term social media finally gives way to something deeper and more meaningful.
Business newcomers continue to fragment people’s attention by inventing 300 new variations of review sites, ILS’s and niche communities.
ILS’s, middlemen and other business newcomers stay in better contact with your residents than you do.
ILSs service after the sale.
ILSs create loyalty programs.
Middlemen reinvent themselves such that he comes back with a crushing vengeance.
The Nest finally prices for the masses.
The Internet of things is near saturation.
Smart appliances, mechanics and hardware schedule their own maintenance calls.
Those same appliances, mechanics and hardware, once repaired, follow-up via the preferred method of communication.
They also, order up the part used to repair the problem.
They also, order in bulk for your portfolio assuring you bottom dollar pricing.
Your current apartment related job is either gone or looks 100% different from today.
Internet Income is the topic of our apartment budgeting series this week. Are you sharing in the revenue?
Continuing along with the Apartment Budgeting series today. The topic this week is Internet Income. This provides another opportunity to share in the revenues created by your allowance for exclusive marketing access.
Internet Income can be defined in a very simple way – it is revenue share from your local Internet Service Provider (ISP). Not unlike revenue share from cable companies – you have to give up some exclusivity. That is to suggest that you have to provide exclusive marketing opportunities to the provider in exchange for the share of revenue. Item of note: Don’t confuse exclusive marketing with exclusive access. In essence, the only thing you want to give up is the ability for one company to market their services exclusively. It will not mean that your resident is limited in their choice. And, choice is a good thing. Good for residents and good for owners.
For apartment owners, internet revenue share comes in a couple of different forms:
1. An upfront per door fee.
2. A percentage of monthly revenues generated from total collections on billable subscriptions. More simply said, collecting a percentage of every dollar that your resident base pays to the internet provider.
3. A combination of both. You may get a lower per door fee and a higher percentage of share. Or, a lower percentage share and a higher per door fee.
4. Bulk – you buy internet for every door in the community for a base rate and then resell it for a profit. For example: you buy it for $15 per door and sell it for $25 and keep the $10 margin for yourself.
When it comes to negotiating a deal – I would recommend consulting with a guy like Mike Whaling. He has the expertise to negotiate the best possible revenue sharing opportunities that first and foremost provide your resident base with the best possible choices in service.
*One item of note – I’ve not lived in a market where internet revenues were shared with property owners. Therefore, I don’t have a lot to share in the way of norms.
**Another item of note – As the internet becomes more ubiquitous sharing opportunities might move to smart phone carries in lieu of cable/internet providers.
This is a math problem any way you look at it. And, it is all predicated on penetration otherwise known as subscriptions. One thing to consider is the economy as a whole. The reason being that people get behind on the their internet bills just like they get behind on their rent. Except in this case, internet is likely something that is easily sacrificed where a home is not.
My best advice is to call your ISP representative and ask him/her to run a twelve month trailing report for you property and like kind properties. Use that to look forward and consider any stop service percentages that might be included.
Your always looking for ancillary income multifamily maniac,
Is Your Apartment CapX Budget is Over Again.
The Apartment CapX Budget is Over Again? How many times have you heard that statement in some form of fashion? And, I am sure – if you are anything like me – you just can’t understand it. Nor, in all fairness, do you take the time to understand it because you have a million other things that need your attention. But, I do have an idea as to why…
Simply put – humans make mistakes. And, or they are innately incapable (not a dig – just plain reality) of thinking about every little nuance of a project. Or, they are too confident in their ability to forecast. But, most of all there are just too many steps in the process. And, the more steps there are the more opportunity there is/are for mistakes.
A project is set up as a series of steps and each step has a probability of failure. With that in mind, I thought I would list a few examples of where exactly things can go wrong:
bad process, choice of vendor, equipment/mechanic, technology, your expectations are mis-communicated or not well understood, wrong leadership, wrong manager, inexperienced leader, poor choice of incentives, deciding to try something new, ordering the wrong product, product ordering mishaps, shipping delays, delivering the wrong product, weather, ignoring the canary in the coal mine, killing the canary in the coal mine (no canaries were harmed when writing this post), no tracking, loose tracking, leaning on our ability to track it in our heads.
And, the list goes on and on and on.
I think it is easy to assume that the weak link defines the extent of the success or the failure of the project. And, with all of these areas of opportunity for error – it’s no wonder that many times we come in over. But, still not acceptable in my head.
It’s a problem I am thinking through from an operational perspective. It’s one I think is solved with less steps and fewer people. And, I’m sure it will result in some posts along the way.
Hope your weekend is a crazy good one.
Your consistently thinking about apartment project management multifamily maniac,
Have you ever heard the saying, “splitting hairs” or the “law of diminishing returns”?
In our last installment we wrote about the Legal/Collections line item. This week we are going to venture through the collections line item which is tightly knit to the Legal/Collections line.
Collections is the line where we book or code monies you collect via third-party agencies. These are monies from accounts whereby you have given up collection efforts and turned them over. If that agency is fortunate enough to collect on that account then (after they take their fee) they send you a check. This is the line where you book that check.
This is another line item where history (while not the best dictate) is the place to look first. Look at a twelve to 24 month history and do some averaging to come up with the number. Or, if you would like to get a little more sophisticated, call the agency and ask them what their success rate (what percentage of accounts are they able to collect from and what on average to they collect) is? Ask them the total amount they are trying to collect on at that moment in time. Add to that, what, on average, you send over in a given month. And, put together a math problem forecasts that amount over the coming twelve months.
Now, here is what I have to say about that last piece. Have you ever heard the saying, “splitting hairs” or the “law of diminishing returns”? It makes no sense to me (and, that is just me) that anyone would take the time to get down to the brass tacks on this line. It’s such a small amount of money and doing the research to get precise is a border-line waste of time.
So work off of averages – if you can.
Your not likely to split hairs over small amounts of money multifamily maniac,
We, at Mills Properties, have been celebrating a very positive variance in all of our financial reporting as of late. No winter equals big numbers flowing to the bottom line in the way of savings.
That is until the country slipped into the worst heat wave in real recent history. Unless you are living under a rock (which is possibly a smart thing given the temps), you know that it’s crazy hot outside. And, like humans, plants can not survive the extreme heat. Especially when you factor in the indexes or how impervious surfaces and or humidity effect air temperatures.
Call in the water trucks. We are electing to call in water trucks to keep the plants alive. We all know that clean, healthy and well-maintained landscape makes a huge difference in the leasing and retention arenas. So bite the bullet and give up the snow removal surpluses. Keep the plants alive so your occupancy will survive and thrive.
Your burning up in this heat multifamily maniac,
What is an insufficient notice fee? Simply put, it’s an acceleration of rent due for giving a notice that does not meet the necessary lease protocol.
I am back for the weekly (save last week – vacation) budget installment. I took some time off last week and completely (save a pic post here and there) unplugged. All I can say is – DO THIS. Give yourself three to five days off every quarter and get away from everything. It’s good therapy. So – this week we are talking about the Insufficient Notice Fee.
Insufficient Notice Fee Defined
What is an insufficient notice fee? Simply put, it’s an acceleration of rent due for giving a notice that does not meet the necessary lease protocol. For example, Mills Properties requires a 60 day notice prior to move-out. If a full 60 day notice is not given, Mills charges for any days short of that notice period. Give a 30 day notice and they charge for 30 days beyond that. Give a 45 day notice and they charge for 15 days beyond that.
The Insufficient Notice Fee is a line item that you can budget based on twelve to twenty-four months of trailing information. The frequency is random so there is a real chance that you could budget for four based on your trailing information and end up with two or six. You will likely never be precise with this number. In the same respect you will likely never be too far off.
It’s short and sweet this week. And, it’s hot in #STL.
Your trying to keep cool in the 100+ temps multifamily manic,
Two words – Trojan Horse
Brilliant Word of Mouth
No doubt the word of mouth marketing campaign that Entrata (Property Solutions) is using to bring about awareness is brilliant. It is off the charts – cool.
Check this video out – it’s one of four that are uber-cool.
All the brilliance aside, I can’t help but to call a trojan horse on this one. Full disclosure, we are a client of Property Solutions. And, for the record there are very few occasions where I would call a spade a spade publicly. This one just has my gut screaming. It seems that our partner entered into a relationship with Yardi in part (or, it evolved into that) to get a good look at the back office. Not unlike Steve Jobs did when he bought his way into looking at what Xerox was up to years ago before graphical user interfaces entered the mainstream. While Steve spun that to be an okay thing –
I am just not buying it from Property Solutions. One does not have to look to far to get what I mean – take the definition of Entrata for instance:
To capture a Property Management Software System by going alongside (inside) and then invading Yardi… Sorry, improve is likely what they were going for.
Every Property Management System is Lacking
In all fairness – I think every property management software platform is terrible. They all cater to accountants (not to discount accountants – I have some great friends from that world). But, accountants don’t run properties. Sales people, psychologists and craftsman do. There is no Apple about Yardi, MRI, RealPage or any other system out there. They are all complicated, stodgy, aesthetically limp, expensive, slow and they hold your data hostage to a mind numbing degree.
Last week I received a package in the mail. Contents: A baseball Jersey from Property Solutions with Entrata stamped across the chest and the number 1 stamped on the back. And, a letter dripping with edifices and endorsements aimed at juicing me up to write about this new property management software offering.
#gameoff – I was jazzed until the curtain was pulled back and it became apparent that Entrata was in fact a product of Property Solutions. Likely not the post they had in mind and I am borderline apologetic for that. Excepting that the relationship has not been without pain.
Would I endorse this product? Not even on it’s best day. For two reasons. It’s intellectually disingenuous. And, it speaks volumes to the reason our service experience has been less than just bad. It would suffice to say that all hands have been on deck to include some brilliant marketing efforts to get this product to market and the ask for forgiveness machine has been in full affect. That experience is to include an email I sent six days ago asking for some clarification that has gone unanswered.
I can’t help but to use the over-used and abused #fail hashtag for this one. There is a huge difference between being shrewd and just swindling.
Your hoping I am completely misplaced in my remarks so much so that I eat crow for this post but thinking I am not alone in my thoughts multifamily maniac,
What are lease termination fees? The fee is applied if a current resident decides to break their existing lease contract prior to the lease end date.
Lease Termination Fees Defined
What are lease termination fees? The fee is applied if a current resident decides to break their existing lease contract prior to the lease end date. I have seen the fee vary in amounts – some as low as one months rent and others as high and two and one half times the amount of the monthly rent.
The apartment lease termination fee is a line item that you can simply use history to forecast forward. If you collected three of these fees last year, it is fair to say that you might do the same in the coming year. Or, if you have more history to pull from then do so. If you have three to five years of history, go back and consider the number of fees you collected over that time and simply average it out.
Once you have determined the number you have collected, space them out over the course of the year. Feel free to pick your months at random as there is no absolute way to predict when someone might need to break their lease.
Charge and Beware
This is likely the second most contested apartment related fee standing close behind late fees. A quick search yielded more than a few Q&A sites that advised everything from – pay it to challenge it.
The fee is perfect legal and it is agreed to at the time of the lease signing so feel compelled to stand your ground.
Your lovin’ other income multifamily manic,
This week we are rounding out our budget concession discussion with the topic of employee concessions. People are the difference that make a difference in property management. I would argue that it is not location location location but rather people people people that make or break the present and future value of an asset. You can have the best location on planet earth with the worst people and you are guaranteed sub-par valuation. Relocate that asset to a B+ location and team it with A+ characters and you will have yourself a winner. It really is all about the people. And, employee rent concessions are one way of saying thank you.
Value in Responsive Service
Beyond the concept of reward, concessions can be looked at as incentive for an employee to live on-site. There are clear advantages to owners when an employee lives on-site. It lends well to responsive customer service, especially if that employee works on the service side. As an example, if you have an A/C go out after hours, he/she can provide rapid and responsive service. If you provide lock-out services; the idea of rapid response is a real plus. In the event of a major crisis, employees living on-site can act as first responders in the way of organize and deploying crisis management protocols.
Things to Think About
I have seen this amount vary over the years and is certainly subject to ownership or property management protocols. It typically ranges from 15% to 100% and is credited monthly over the course of a lease term. It also typically carries a caveat in the way of an employee addendum that spells out strict concession payback and move-out protocols if the work relationship turns sour.
The biggest thing to consider is IRS implications. Always consult a good tax attorney when thinking about giving away money as I am certain our great Uncle will want his part.
Your – advocate of employee rent concessions – multifamily manic,