Teaching the Teacher

I have been conducting CAM and CAPS classes for NAA for almost two decades (Lord that sounds old when I say that), and have been fortunate enough to be on the NAA Education Committee and serve as a subject matter expert on re-writing several of the modules with those designation programs.  Today, was another day of teaching and learning which is the exciting part of what I do in addition to making new friends.  It never amazes me that while I am there to lead students into an educational experience, I always have "take-away's," which I benefit from.

While facilitating the Risk Management course and leading the discussion, several great points were raised and we had some great questions.  One of them dealt with private security at an apartment community and addressing crime problems they were attempting to overcome.  This community which was a condo conversion to rentals, had been experiencing criminal activity as well as resident issues.  Drastic steps were being taken to "re-position" the community, including hiring not just security (or patrols), but "armed" patrols.  The owner of the site had handled the contract side of it, and the manager while being active in the action, brought up her part in working with them.  Now if "armed security/patrols" scares anyone, there are many pitfalls and concerns that follow the path to the intended result.  Our industry has been careful not to use or "imply" we provide security or can guarantee a safe and secure environment.  The reason is we cannot guarantee security or safety, and no matter what we do things can happen beyond our control.  Crime can happen anywhere including home, work, or simply picking up a gallon of milk at the grocery store.  The question came up, "Does the badge worn by the patrol representatives which has security on it imply or provide a false sense of security?"

After contacting an attorney friend, the answer he gave was the usual attorney response "it could."  Did not say it did, however, cautioned how it could be interpreted in a lawsuit or litigation should one be brought.  The courts have gone both ways, however, mostly in favor of the resident or visitor at a property.  As we all know insurance carriers are often trying to avoid court action and will settle if there is anything related to the case they are not comfortable with.  He also asked what I brought up in the discussion, "Does your insurance carrier know this could be interpreted as implied based on their uniforms and armed status?"  In this case he again was not direct, however, stated if he was representing an injured or victim in this case he would use it if he could.

Our jobs as professional property managers and as fiduciaries for owners is to bring these concerns to the forefront.  The owner may wish to not investigate the challenge, however, you have done your job by bringing it up and documenting the communication.  In this litigious and changing society, we are constantly hitting a mobile target and having to look at new risks and challenges.  A good debate and discussion ensued related to this topic, and if nothing else opened everyone's eyes to what we face and what we need to be aware of in the decisions made by both us and by owners of our properties.  This became a learning point for everyone, including this old codger who then had to investigate and obtain information making me understand more about what we do.

Good lesson for everyone.

Expecting the Unexpected

First, I want to thank everyone for the great response I have received from the newly created workshop, "Expecting the Unexpected - Emergency Preparedness."  It appears to be a huge success and important topic that is often overlooked unless you are taking a CAM or CAPS class. (or unless a hurricane is coming your way)

Emergency preparedness is not difficult to maintain, however, takes some work to establish a program that can be critical related to life, property, and financial  implications.  Every apartment community in this country faces threats which can have an impact on the community, its reputation, and its financial stability.  Whether it be fire, flood, storm, ice or snow incident, earthquake, or other disaster, being prepared can lead to a recoverable condition and one you can make sound judgement decisions on both during and after the incident.

The workshop covers how to formulate a plan.  Who is responsible for developing and understanding the plan?  What disasters does your community face and how you can be pro-active and not just re-active?  Who can communicate with the media and what should they communicate?  How to respond in protecting the asset to minimize further damage or injury.  How can you establish a communication channel to your team members, owners, and superiors in the light of an event?  What should be included in your plan and emergency preparedness kit? 

The recent fire at an apartment community I used to manage brought back memories of incidents my teams and I have had to be prepared for and respond to.  Several fires, multiple floods, tornado's, hurricanes, snow and ice related storms, and the occasional police responded event which created a media headache are just a few.  If you have ever had an entire building burn to the ground with everything owned and cherished by the valued residents being destroyed or ruined, you would understand the importance of this topic.  We assume our managers and teams know how to deal with these issues, however, until it is experienced you will never understand.  Problem is we also fail to provide training and direction, and often just "expect" the team to  know what to do.  If you think about it, a vast majority of our managers may have never had to deal with a disaster.

To expect the unexpected, we have to train and coach our teams so they are prepared.  I know regional managers and vice presidents that have never dealt with a large or major disaster, simply fall apart when something happened because they were never coached or trained either.  Trust me, this is not something you want to just learn on the job.

If you are interested in how this one day workshop can provide tools your teams will have use, please contact me.  It takes much more than a few policy paragraphs or pages in Operating and Procedures Manual for your team members to be prepared and expect...the unexpected.

OMG...Budgets are coming!

July is about the time we start thinking of budgets for the next year.  That process with some companies starts as early as August/September, which is right around the corner.  Budgets are one of the most feared tasks within the duties and responsibilities as professional property managers.  

The only thing we have to fear is fear itself… and budgets!  Ok, so maybe FDR said it a little differently.  As property managers we wear many hats with one of them being experts in budgeting, or so we are supposed to be.  Sleepless nights and long hours with visions of numbers are spent, only to have our hard work changed or questioned.  Of all the courses we take and are offered they tell us how to be leaders, how to write and understand financial reports, how to manage risks, how to market our communities, and a host of other areas.  One gap in the management fence seems to be in providing the tools in not only how to write a budget, but how to sell one.  There is an art to selling a budget and even though changes may be made, the challenge is to provide a budget you can be proud of with accuracy and detail that makes it less likely it will come back looking totally different than the one you submitted.

Through understanding budget principles, adding backup and details to substantiate your numbers, understanding goals before the process is started, and having a budgeting map, you will find the budget process far less intimidating and something not to fear. The goal is to assist you in preparing for the upcoming budget season and removing some of those fears.  Some of the key aspects to budgeting are as follows:

•  Budgeting should not be thought of as an event, it is a process.  Teach your managers to set up a budget file for the next year, immediately after completing their budget for next period.  As an example, if you have just completed your 2011 budget and it is now approved, set up file for the 2012 budget. This way during the year they can put in notes and information (including some of the things on their wish list removed from the budget just completed).  This can include things they see throughout the year, photographs, news articles, changing maintenance issues, trend information, marketing data, etc.  By the time the budget process is started, you already have a significant amount of information to use and provide as backup.
• Understanding why we budget can sometimes enlighten us as to how we need to budget.   Tell them the why as well as the how.  Give them goals, just don't tell them to prepare their budget.  They cannot hit a target if we don't let them see it.  
• What is a CBA and how can it assist in the sales process?  Teach them  what a Cost Benefit Analysis is and how it can be used to "sell" their budget and items within their budget.  Remember upper management and owners are interested in one thing (mostly)....that is cash flow and NOI! 
• What details and information make your budget more justifiable and less the opportunity for change?  This includes photographs with notations and proposals, specifications that detail what is included in a proposed project, reliable market trend and data information, and what was given as goals and objectives and how they fit into the budget presented.
• How do photographs play a part in your presentation, and how to tie them to your budget?  They say a thousand words and tell a story.  If you are having roof issues, provide pictures that tell the story.  Use Photoshop to place arrows on photos identifying areas of concern or safety identification markers.  I have even had managers put together a Powerpoint presentation with their budget that was extremely effective in selling their budget.
• What is the best way to present a budget and what tricks can be the icing on your budget cake?  The words we use and how detailed the budget is will be the difference between something being considered and something they will take our or disregard.  An example of how effective wording can play a part is as follows:  

 "Mr/Mrs Owner.  I was given the objective and primary goals for preparing the budget of ABC Apartments in the coming year.  With these goals in mind and your desire as communicated to me to make sure the asset is maintained at the highest level, we have several exceptions not allowing us to meat the cash flow numbers.  While income can be attained and operating expenses carefully scrutinized to insure they are minimized, your objective and desire to maintain a high level of asset preservation cannot be met without consideration of the following exceptions. 

1. We have two roofs this year that have gone beyond the repair stage based on expert and comprehensive evaluation.  The loss of income from four residents this year (which has occurred, based on feedback received) would more than pay for the required replacement.  The attached photographs depict the severity of the issue, however, we would be more than happy to assist you on a personal visit to verify the information.
2. Attached are photographs of our parking and drive areas, which as you know we deferred repair in the budget last year.  Unfortunately, the deferred funds estimated at $58,000 if completed this year have increased for the coming year.  Weather and use conditions as well as expansion of some of the temporary patched areas per your request have created a higher level of work, and do have an impact on the aesthetics and appearance of the community from both a prospect and resident perspective.  The lowest estimate we have for inclusion in the coming year budget is $79,000.  
3. Three of our four direct and primary competitors completed forms of interior renovations in this last year.  Photo's to substantiate this are included, as well as photo's depicting relevance of ABC Apartments.  Reviewing objections from prospects who did not rent at ABC Apartments, the reason to lease at a competitor came down to upgraded conditions at the competitor were documented in over twenty prospects and has had a direct impact on reaching occupancy and income goals.

Selling a budget is different from providing a budget.  It all comes down to the details and documentation and supporting the assumptions with something tangible upper management or owners can relate to.  Teaching and coaching our managers the importance of this point combined with adhering to the principle it is a process, many times removes the intimidation factor from budgeting.  This is why I made it one of my primary education topics on hot to "sell" a budget, and not how to "prepare" a budget.