People buy for the experience

I think it’s fair to say that people no longer buy things for the sole purpose of functional use. They don’t rent apartments just to occupy space.

They rather rent for the experience created in the leasing office or the perceived experience after they move in.

People want to experience something cool – something they can tell their friends and family about.

They need brag-a-log material.

Give it to Them

If you get nothing else out of this blog in 2014 – get this:

People who work in the multifamily space are in the experience making business.

Get busy creating compelling ones…

Your looking for compelling experiences Multifamily Maniac,

M

Apartment Budgeting: Lease/Short Term Premium

Back for another week of budget talk. Hope this past week has been over the top and amazing for all of you. If  not, you have a whole life of potential in front of you so don’t fret too much. Last week we talked about Month to Month Premiums and this week are moving on to Apartment Budgeting: Lease/Short Term Premium.

Lease/Short Term Premium Defined

Lease/Short Term Premium is a fee that is added to any lease that is less than the desired six, nine or twelve month lease that most of us non-revenue management practitioners desire. Call is a fee of convenience if you will. It allows a resident to have flexibility in the way of getting out of the lease contract without any lease break penalties. It is a simple month to month premium that you tack on at the initiation of the lease term.

I have seen this fee applied in the way of a flat fee ranging from $50 to $100/mo. And, I have seen it applied as a percentage of the lease rate ranging from 5% to 10%/mo.

Lease/Short Term Premium Budgeting StrategyPremium for short term apartment lease

I typically consult a twelve month trailing report to determine what my forward-looking twelve month budget number should be. This is again one of those fees that is very hard to budget for given the fact that is simply random in nature. Unless you are located in a somewhat urban area with a propensity to attract corporate type clientele, you will rarely book income to this line item.

Marketing Short Term Leases

Don’t forget that everything is marketing. And, this line item should prompt you to look for marketing opportunities. Use Short Term Leases as a bullet point on your website. But, don’t get too crazy as you don’t want to create unwanted exposure. But, it would not be a bad idea to let two to three percent of your unit count produce some extra revenue.

Your looking for opportunity in every line item multifamily maniac,

M

 

Apartment Lease Termination Fees

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.

Apartment Lease termination feesIt’s time for another installment of our series on apartment budgeting. Today we are tackling the top of apartment lease termination fees.

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.

Budget Strategy

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,

M