What can you do to make searching for an apartment twice as efficient?
Give the people who do business with you twice the number of reasons to stay. Do that by making sure that you over serve the people who serve your organization. It’s called trickle down…
Know that marketing is everything and everything is marketing – make it your mission to never settle for the idea of a middleman in your transaction. Throw out the idea that you should by ads or digital listings from people because they are nice. And, the bring you goodies around the holidays and throughout the year. Don’t get me wrong – I like most of those people too. I consider their value in the way of always keeping me on my toes. They help me understand the better, best and excellent ways to move people direct to Mills Properties instead of to their sites and then to my site.
Your always looking to make apartment search efficient for the people who need a place to live multifamily maniac,
It’s time to talk trash. Not that recent election type trash. Not the fiscal cliff type trash. And, not your run of the mill sports trash talk. Albeit, that has its place and is fun when kept in good spirit. No – we are talking about making some income from your apartment communities trash collection.
Trash Income Defined
Trash income comes from charging back or passing through the expense that you incur for having your communities trash hauled away. And, unlike water and sewer income – trash is not a regulated utility. That means you can charge back more than your monthly invoice. For reference, I have seen this number range anywhere from $3 to $8 per occupied unit per month. I would highly recommend that you use a third-party utility billing firm to administer this for you. Typically, this is billed monthly with your water and sewer charges. The more sophisticated services include rents and other applicable fees on the same monthly billing statement.
This one is fairly straight forward and most budget models will have a formula baked in. If not, you can take your average number of occupied units over the course of the year and divide the total trash spend by that number to come up with an annual per unit number. You can then divide that number by 12 and the answer is the minimum number you should charge per month to recoup your cost. For example:
Community: 212 units – 94% forecasted 2013 occupancy – $12,000 trailing 12 months trash bill (forecasting zero increase for 2013).
212*94% = 201.4 average occupied units
$12,000/201.4 = $59.58
$59.58/12 = $4.97 per occupied unit
This is the minimum amount you would want to bill back in order to recoup the full cost of your annual trash bill. Now remember – trash is not a regulated utility. With that fact in mind, I think it prudent to charge more. In this example, I think $6 or $7 per occupied unit is completely in line.
In closing, increases in utility cost historically outpace rent increases. That said, it is would be borderline careless to not share that cost with the people who benefit from the services.
Your always looking for a way to maximize revenue multifamily maniac,
Corporate Rent Premiums are convenience fees added to your Apartment’s Market Rent.
Over the last couple of weeks we have discussed premiums that apply to such things as Month to Month Leases and Short Term Leases. Today we take a similar angle in the Apartment Budgeting Series as we are penning on the subject of Corporate Rent Premium. In the spirit of consistency, we will start by putting some definition around the term and then we will dig into some budget strategy and possibly some thoughts on marketing.
Corporate Rent Premium Defined
Corporate Rent Premiums are convenience fees added to your Apartment’s Market Rent. It is a little bit different from the last two fees that we penned about. In this case, apartments are generally leased and paid for by third-party agencies. National Corporate Housing and Oakwood are a few examples of the aforementioned third parties. You, in a sense, up charge the agency for the convenience of getting out of the lease(s) with just a standard 30 or 60 day notice.
I have seen the fee applied by way of flat rates and/or percentages with upsides of $300 or 10% of the market rate.
Corporate Rent Premium Budget Strategy
Like all other rent premiums this can be a tricky thing to budget for and it definitely something you want to control. To budget, I would refer to a twelve month trailing all the while considering current economic conditions. If the economy as a whole is downtrodden that the likely hood of a boom of corporate leases landing in your lap is between nil and none. If the economy is gaining traction and or booming you will likely see this business experience an uptick. But, it is always open-ended.
Remember to control this. I can’t tell you how many times I have sat in an owner’s meeting trying to remind them of their generosity in giving up 20% of their unit count to a corporate housing provider only to have that provider pull the rug out from under them. How quickly it becomes the other’s guys hot potato to deal with and explain. 5% is a good number to manage. 10% is pushing the risk handle. Anything beyond that is pure gamble in my book.
Corporate Housing Marketing Strategy
No ballyhoo with this one. It’s a simple down to earth Dale Carnegie approach to getting your foot in the door. Do a little research and find out what the owners and account executives grapple with. What are the biggest problems that they deal with? What keeps them up at night? What rattles their brain(s)? Get into that in the way of solutions. Solutions that you can play into their real-time business transactions and make sure your company and community are associated in some way. Be swift with any help that you can give to them. And, don’t be shy about asking for the business.
Your always looking for some premium to rent multifamily maniac,
I am consistently baffled by cold calling efforts in a business climate that has turned radically social. Vendors can get to know anyone on the planet by simply dialing into twitter, facebook, linkedin or otherwise. And, if they take the time to set back and listen, dive in and participate, provide value, give and take feedback and over a bit of time – sometimes a very long bit of time (@30lines took the time) (@jonathansaar took the time) they earn business. key word being ‘earn.’ Mike and Jonathan respectfully spent the better part of two years nurturing a relationship with Mills Properties and it has paid off in a good way for them. And, equally important to this point – the time they invested has been equally rewarding for Mills.
Cold Calling Giving Way to Cold Email
The following approach via the ‘contact us’ button our company website bakes my insides every time –
I wanted to take a moment of your time to introduce myself and [don’t want to or am afraid to reach out via other more appropriate media – Graphics]. We are printers and graphic designers long specializing (since 19##) in the Multi-Family and Senior Housing industry.
We have lowered the prices on our FULL COLOR Marketing Business Cards!
500 = $50.00*
1,000 = $65.00*
2,500 = $110.00*
5,000 = $180.00*
Prices DO NOT include Taxes, Shipping, Redrawing or Creation of a Logo.
Marketing Business Cards
Great low budget marketing tool!
This product’s features include:
2 sided cards same price as one sided
your choice of 3 types of paper:
14pt uncoated cover – traditional, non-shiny paper
14pt matte coated cover – satin finish
14pt coated cover with UV – very shiny
I invite you to check out our newly revamped website at [www.imacoldcaller].
Multi-Family and Student Housing Specialists.
Long the focus of ***, our multi-family clients will love the extensive on-line shopping experience afforded by this new store. Printing, promotional products, signage, and more are offered here in an easy-to-order format, tailored for your industry.
Promotional Products. Easy On-Line Ordering.
All of our customers can pick and choose from over #00,000 advertising specialty/promotional products. Shopping has never been so easy.
Let me know if there is ANYTHING I can help you with.
Man I Don’t Like Cold Calling
Project Consultant at ***** Graphics
******, ** *****
The ONLY THING you can help me with is – helping me understand why this approach to business seems at all appropriate in today’s business climate?
Your – ranting on cold callers – multifamily manic,
What makes content engaging is relevancy. You need to connect the contact information with the content information. – Gail Goodman
Ever wonder how to make your content compelling enough for people to want to connect with and share it? It’s a topic I think about all the time. And, one that our digital media team at Mills Properties recognize as key to our success. The short answer – relevancy.
Over the past year we have been busy hacking away at our online strategy and we are very excited about the fruits of that labor. Melissa D and Jessica H along with a whole host of crazy awesome blog post authors have put together something really special in my opinion.
A big part of that strategy centers around apartment content relevancy. Content that up to now I purposefully thought should have nothing to do with Mills Properties or the apartments that we market and sell.. As of late my mind is shifting away from that sentiment but not in a way that you might posit.
Apartment Content Relevancy
Our content strategy will remain the same. It will have nothing to do with our company or our apartments but in essence it has everything to do with both. The content is real, runs the gambit of emotions and speaks to relevant and for the most part very local and very people-centric happenings.
I see all of the content being created, be it on the blog or otherwise, as an extension of our people, our respective apartment communities, our company and the neighborhoods we participate in. It’s our way of weaving apartments, apartment community amenities and the people that live there into the fabric of the neighborhood. It’s a way, if you will, to bridge the gap between your contacts and the content people what to participate with. And, if executed with precision, it will begin to really define the interests of our respective audiences as it relates to the current day neighborhood and the neighborhood they want to see come to fruitiion in the future. Interests that will further define the relevancy which will in turn further define the content. Such a beautiful cirle if you really think about it.
Your – always looking for relevancy in the content – multifamily maniac,
Welcome back for another installment of the Apartment Budget series. Today we are going to talk about Loss to Lease. Interesting side note, I did a piece on this a number of years ago and to this day it remains the number one read article on this blog.
Before we get started, I wanted to post a note of clarity as it relates to my last entry – Apartment Budgets: Rental Income. Where I refer to Rental Income in that post – I am really talking about Gross Potential Rent as being the top line. You may also hear it referred to as GPR. In any event, I wanted to head off any confusion.
Now unless you have a brand new community in lease up, you will have in place leases that are very likely below the GPR. The primary reason being rent increases. Any time you increase rents you create a margin between the in place leases and the new increased GPR. This can occur in reverse and the impact to the LTL can go in reverse. That is to suggest that you can decrease the GPR and the margin or LTL becomes positive. Not a scenario you see to often as rents generally rise over time in lieu of decline over time.
Loss to Lease – New Move In
To put it simply; if you lease an apartment below the GPR, the discount is captured in a Loss to Lease – New Move In line item. To put some math to it; if your apartment’s GPR is $500 and you lease it for $450, the $50 reduction in rent is capture in the Loss to Lease – New Move In line item as a -$50 charge. And, it will exist for the life of the lease.
Loss to Lease – Renewals
When leases come up for renewal and they are under the GPR number – the margin is by default in the current Loss to Lease line item. When the lease renews, if it is still under the GPR that new number gets captured in the Loss to Lease – Renewal line item. Putting some math to it. Suppose your apartment’s GPR is $500 and the current in place lease is $450 – you renew it at $475. The $25 margin is captured in Loss to Lease – Renewals.
Total Effective Rent
Once you have accounted for your losses related to in place, new and renewed leases under the current Gross Rent Potential – you come up with a Total Effective Rent. That is where we will pick up next week.
We have purposefully left out the analysis piece this week because I think it will fuel some crazy cool discussion. Hope to see you in the comment section below.
I like what Tom Peters has to say about it, “reward failure.”…
Moving past the halfway point with day 16 of the #trust30 challenge –
Greatness appeals to the future. If I can be firm enough to-day to do right, and scorn eyes, I must have done so much right before as to defend me now. Be it how it will, do right now. Always scorn appearances, and you always may. – Ralph Waldo Emerson
Trusting intuition and making decisions based on it is the most important activity of the creative artist and entrepreneur. If you are facing (and fearing) a difficult life decision, ask yourself these three questions:
1) “What are the costs of inaction?”….
2) “What kind of person do I want to be?”
3) “In the event of failure, could I generate an alternative positive outcome?”
We recently purchased a property from a lending institution who had in turn taken it back from a previous ownership interest. When completing the due diligence phase of our process we discovered roughly 40 units in various stages of disrepair. Units we classify as down. Down to mean not habitable absent some major rehab.
It spoke loudly to the point of the first question – inaction. Banks are not property managers. And, in lieu of spending $25 to $30k to replace the roofs, they left them alone. Result of that inaction? Several hundred thousands of value wiped away.
Greatness starts with forecasting the consequence of in-actions. In this case, it would suffice to say that some back of the napkin math would have yielded an ROI that would have driven a decision to replace the roofs.
What kind of company do we want to be
At Mills Properties, we ask that question a lot. As of late it has been in the area of branding, marketing, digital footprint and the such. We have been slow in moving toward what we want to achieve part and parcel because of near 50% growth in community and unit count over the past four years. And, in part not having a real plan.
Fast forward to today. We have taken the time to craft a 40+ page branding/marketing plan that includes everything from font types and size for all thing forward facing to big ticket strategies to dominate the St. Louis Apartments on and off-line space. It lays it all out and captures how everything from curb appeal to lease contract signing ladders up into an overarching message for the neighborhoods and communities we serve. And, in advance our striving to make a splash nationally at some point.
It all starts with asking the right questions.
I think the best way to overcome failure is understand that it going to happen from time to time. In fact, I like what Tom Peters has to say about it, “reward
failure.” If you are not failing, you are not trying, you are not learning and thus you are not growing. Equity Residential cements this in their 10 ways to be a winner – one being ‘take educated risks.’ The expectation is that you gather every piece of information you can to include the counsel of others before you pull the trigger. And, if you fail, you simply have a group postmortem where you examine the facts and the various action points to see what could have been done better.
Off for a float trip
It’s Saturday, it’s raining and we are headed out for camping and a float trip. Should be loads of fun. I say that with lots of hope in mind.
Your hoping you have an amazing weekend contributor,
Keep family front and center to all decisions you make and trust that honesty and forthrightness are your friends even when they feel like they are not.
#Trust30 – Day Five
Great questions coming out of the #Trust30 challenge. Today, the prompt is what would you say to the person you were five years ago? And, what would you say to the person you will be five years from now?
I’m entering year seventeen in the multifamily business and I think it goes without saying that I have met some amazing people and learned a ton about our business. Five years ago marks a point of significance in my life that really defined some things for me. I had become so consumed by my work that I lost touch with those that mattered most to me.
What would I say to that person? It’s time to grow up.
What would I say to the person I will be five years from now? You have a long way to go; take care of your health and welfare so you can take care of those you care about. Keep family front and center to all decisions you make and trust that honesty and forthrightness are your friends even when they feel like they are not.
What about you – what would you say to these respective persons?
Your thinking these questions are not getting any easier contributor,
We have all been there; sitting around the conference room table discussing the latest property management opportunity, issue or otherwise and you just know in your heart of hearts that no one including yourself is saying the tough stuff. Just this week I posted over at propertymanager.com about courageous conversations and moments of truth. In my head, it is the only way to grow an organization.
The sting of unspoken words gives cause for what Hugh calls, complete agreement. On the backside we have; 1. That is the stupidest idea I have ever heard. 2. That will never work. 3. I am doing my own thing. Or, worse yet – 4. I’m not changing a thing.
Take away: Don’t be “That Guy” or “That Gal” Instead be – “Not Afraid”
Silence or compliance cheats the group out of being a better organization and you out of being a better leader.