Follow the money

Never will you hear an owner or supervisor say, "It's about the people...not the money."  That being said, it is about having the right people to insure NOI increases and the property is profitable.  Our job is to increase property values with one of the primary ways being the increase of Net Operating Income. 

We look at how we can improve NOI with the obvious being rent increases.  We do this through several key factors, however, we do not always keep them in mind as our site personnel go about their daily tasks.

*  The first and most important way is through resident retention.  In no other area can we have such a positive impact on income and expenses both.  This is done through exceeding resident expectations, providing "WOW" customer service, effective communications, and insuring all of the team contributes and understands the critical nature of how it impacts the bottom line.  We preach resident retention, however, I suggest we don't practice it on an every day basis.  This is where having the right people, the right training, the right follow-up, and the right attitude will make the difference between success or failure.

* Second, keeping your eye on the market and your finger on the rent button.  Managers for some reason are hesitant to raise rents.  They perceive this and believe it will drive prospects and residents away.  They also believed we would have empty properties when we started charging for water, sewer, and trash, only to find out it didn't happen.  This is where a good regional or district manager through conditioning can eliminate that fear, and then passing on that conditioning to the leasing staff.  Get a manager who resists changes to rents, and you will more than likely get those working with that manager to feel the same way.  By keeping your eye on the market, knowing your product and the product of your competition, you can maximize rents in any market.  Teach your team to be pro-active and the leader in the market, and you will probably find other properties wanting to be like you and following suit.

*  I have said this a million times, resident retention is not an event....it is a process.  Like the first bullet above where I talked about one of the keys being resident retention, if you provide exceptional service and a great product don't be afraid to ask for its value.  Why is it we wait until 90 days before lease expiration to then send a resident a letter or make a contact (maybe for the first time), only to have it asking for more money.  I have blogged about this before and stress the importance of making resident retention a process, which will lead to a higher success rate of retention and higher revenue.

*  Don't be afraid to adjust fees to increase revenue.  Application fees, administration fees, late fees, and of course pet fees are all part of our revenue.  This is especially true for pet owners, as they will pay for their pets.  Now I have never been advocate of pet rent, and find it crazy to expect a pet to have a job to contribute to pet rent.  Pet owners however, will pay a pet fee and few managers would ever contemplate making the pet administration fee for that lease term only or raising the fee to overcome an annual fee.  I can hear managers cursing me now, however, stepping out of the box is often a way of stepping into success.  I heard of a community raising their pet fee by $100, however, they included a free annual checkup with a local vet in the area.  The vet was anxious for new business, and would come to the property four times a year (one Saturday each quarter) to give registered pet owners an exam for their pets.  He got a ton of business and the pet income increased by $11,000 in the first year.  I also suggest we need to do a better job of verifying pet owners are registering their pets so we can collect fees, and you may have heard me talk about my pet amnesty program and how it improved pet income at one property almost $4,000 in one month it was done.


*  Collections are another way to improve income.  Time is money, and insuring your team knows how to effectively and efficiently collect rent and fees can have a huge impact on income.  The basic aspect of this is being consistent, firm, and timely when addressing collection of rent and fees.

* Finally to the expense side of the equation.  Managers are so focused on the numbers, they often miss the meaning of the numbers.  It's kind of like the old saying, can't see the forest for the trees.  We have them doing monthly reports, but do they really know what they are looking at and are they effectively monitoring expenses during the month to be pro-active versus re-active?  My suggestion is they are not, and keeping their eye to expenses (especially turnover and service) and training their team to do the same can have a huge impact on meeting budget or being over budget.

This is why property management is not a job...it is an adventure.  We can always find way to improve and we can always encourage our people to improve and excel.  I remember a manager that had for the first time exceeded budgeted NOI in several months and seems to have an attitude of "stepping back" rather than looking forward.  I asked her if since she proved she could do it, was there any reason why it could not be done every month.  She looked at me and said, "I suppose I could."  I asked her to review her statement and told her I had faith in her team and her and would not accept "suppose or I could" as a response.  After all, what was done was already history and I wanted her to keep her eye on the future...that my friends is the only thing that matters.  Almost every month after that for the rest of the budget period, she met or exceeded goal.

Hitting a moving target!

Leadership as you know is a topic near and dear to my heart.  I believe there are certain qualities in great leaders, and I also am a firm believer there are distinct differences between management and leadership.  That being said, both management and leadership has a responsibility to insure those that follow or work with them have the tools and knowledge to exceed and excel.  We can complain that someone is not performing or meeting goals, however, what are we doing to insure support is provided that leads to greatness.  That support comes in training.

Training and education is never done, but it is an evolutionary process.  It also means following up on what is taught to insure clear understanding, and keeping an open mind to finding new resources and ways of teaching and seeing the benefits.  The moment we believe we are done with training or supporting from an educational standpoint, we have failed both ourselves and those working with us.  Fair Housing is one example of an area we "assume" our team members know.  We give them an online course to complete or on occasion send them to a workshop if the funds are in the budget.  I have in the past written about the trend witnessed related to this topic.  When interviewing managers or anyone that is already in the business I always ask, "What are the protected classes in Fair Housing?"  I have yet to have more than two candidates in ten able to easily give me the correct response.  Our industry has many resources for education and training from site led reviews, regional workshops, Internet based courses, corporate conferences, and apartment association events.  So why is it our people do so poorly in this and other areas we "assume" they are trained in?

The answer is in several areas all critical to benefiting our teams, creating a motivational environment, and raising the skill levels of our associates.  First is follow-up.  How often do we confirm understanding of what is taught?  What I have found when talking with industry trainers is we seem to be lacking in training trainers and leaders/managers to verify educational success.  We instead assume they get it!  The key to great education is not that they can pass a test on an Internet required course, but they "retain" what they have learned and can use it effectively.  Second, we fail miserably at conditioning the training over time.  Humans for the most part need conditioning.    Our people pass that Fair Housing poster many times a day, why don't they know what is on it?  Because we fail to provide reminders and conditioning over time about the importance.  Third, we fail to explain the importance of the training and what they should expect.  This is to not only insure they have a clear understanding, and they won't be surprised as to why we will be following up with occasional testing. 

These points are also true when it comes to closing, troubleshooting for maintenance, risk management, and so many other areas.  Make education a process and condition your teams to expect it and you will probably find they desire it.  Help them identify with how this will help them move up the ladder of success, and you will no doubt find yourself being more successful.  Great leaders also have willing and great followers.  Since we cannot do the job alone, it is the great followers you develop that will raise your ability to lead further as well.

A New Year

Maybe things are starting to turn around.  As my friends and people I have worked with know, I started seeking a position back in property management.  Training and education has been fun, informative, and good, however, I sure miss the challenge and opportunities being in leadership. 

I went a couple of months with virtually no interviews, and now it's like the flood gates have opened up.  Two phone interviews today, one early next week, and a follow-up interview from one of the phone interviews today already scheduled for next week as well.  What has been interesting about the interviews has been the questions received and how some are only presenting basic questions while others really dig deeper to find out about the candidate (yes, that's me).  One interview today told me a lot about the organization, and did a fantastic job at getting into core areas.  Having written articles on hiring and spoken at NAA and many management company and NAA affiliates related to the topic, much can be said about the interviewer and organization.  As an example, one of my postings on hiring talked about making sure we give not only the good things about why someone should work for them but also give expectations and challenges.  I respect an organization and their interview team who isn't afraid to present what some may feel as "intimidating" questions and comments. 

Yes, they were tough questions and made me think and dig for answers.  That is what an interview should do to make sure we are hiring the right person.  Remember it's not hiring someone to fill a position, it's hiring the right person to fill the position.  I won't mention names or companies, however, I will say one interviewer impressed me enough to write this piece tonight and reflect once again on the importance of getting away from the standard questions. 

Hopefully one of these opportunities will pan out, and once again I'll be visiting properties and doing what I love most and have a passion for.  Make it a great weekend and I'll chat with you next week.