Those of you that know me or have been to one of my workshops have heard me talk about emergency preparedness. On occasion we as property managers are faced with the many types of challenges related to the topic. I have instructed companies and associations on how to prepare for them and presented to hundreds of managers all over the country. This past week the Northeast was dealt an unforgiving hand with Hurricane Sandy, and I personally had to deal with a fire a my community. These events emphasize the importance of being prepared and expecting the unexpected.
True story!
So I just get off of work and it's 6:19 PM on a Friday. My cell phone rings and on the caller ID it's the company that monitors our alarms...not a good sign! Now we have had issues on occasion with ground faults related to the alarms, but there had been no storms or anything to lead me to believe it could be that. The person says, we have a fire trouble signal in Building 3. I ask, is it a trouble alert or fire? Then I hear that four letter word we never want to hear, "fire." Ok Larry, take a breath and think...rule number one!
After arriving I did all the things I teach others to do, and wouldn't you know it I even beat the fire department. Check the apartment with the fire and assess the status, check. Fire out by the sprinkler system but now water is flooding the apartment. Wouldn't you know, it's a third floor apartment and water never travels uphill. Check surrounding apartments to get residents out, check. Call the water extraction company, check. Call the sprinkler company as the system will have to be inspected and tested before residents can re-enter the building, check. Call the on call service technician, check. Check the status of the apartments downstairs, check. Provide comfort to the residents who were involved, check. Begin efforts to protect the asset and insure cleanup is started, check.
Luckily there was more water damage then fire damage, if that is luck. Luckily we require our residents to maintain renters insurance. If you have ever witnessed sixteen families wondering around your office like zombies because they have just lost everything they own, have no where to go, and don't know where to begin the process of recovery you understand what I am talking about. Unfortunately I have had to experience this type of event far too many times.
The next time one of your residents asks, "Why do I need renters insurance?" ask them the following. Can you guarantee you or your neighbors will not have an incident that could put you in a financial position where you have to replace all the contents of your apartment? Accidents can happen and it does not have to be your fault where you are put into a position that everything you own could be lost. What if you put a pot on the stove and leave it for even a few minutes and it catches fire? Who will be responsible financially for the damage?
Insurance means peace of mind both mentally and financially. We resisted when we started charging our residents for water and said they would leave, and they didn't. We resisted when we started charging for trash and said they would leave, and they didn't. We resisted when we started requiring renters insurance and said they'll choose somewhere else, but they choose your community. Renters insurance should not be a choice or an option it should be a requirement at all communities. Look at what is happening with the Northeast and imagine the thousands of renters impacted by potential loss. Hopefully all of them have insurance, however, we know many of them do not.
Tuesday, October 30, 2012
Monday, October 1, 2012
Thinking outside the apartment box
Our industry has changed considerably over the years. From doing our accounting on ledger cards to lease optimizer programs, nothing is for sure but our industry is changing. Financial success means thinking outside the box and if you are afraid to look at operations beyond the norm and how we have done them, you will probably get left behind.
Owners and managers struggle to find ways of increasing revenue and new ways of generating income streams. The obvious way to improve income is increasing resident retention, which is the highest controllable expense we oversee. With the average cost of turnover including vacancy loss being well over $3,000 in most markets, keeping ten more residents on a 200 unit community (5%) means $30,000 of improvement to the bottom line. Other critical points include managing lease expiration's and of course providing excellent customer service (also tied to resident retention). A property I recently took over had 68 expiration's in one month. Can you say, "who in their right mind would allow this to happen?" Apparently someone that did not understand the concept of expiration management.
So where do we go beyond the obvious and what "outside the box" ideas should be looked at? First, a great leader and manager never is afraid to test the waters and take risks. We have all heard people say, "If it's not broke, don't fix it," or "We've always done it that way so why change." Whether it is raising application or administration fees, pet fees versus deposits, or charging for premium parking spaces, you never know if it will work if you don't try it. Companies are looking at taking prime parking spots in front of buildings and charging "convenience" fees for these spaces, generating thousands of dollars in additional income. One of the new trends is actually setting up mini-markets in apartment offices where residents can purchase toilet paper, paper towels, toothpaste, dish washing and clothes detergent, and other items they run out of and are willing to pay a little extra for the convenience of walking out their front door and purchasing on the site. With gas at $4.00 a gallon, this type of out of the box thinking is generating additional revenue. Putting motion detectors on lighting at tennis courts at a property I oversaw paid for itself in 10 months.
Expenses are rising related to taxes, utilities, payroll, and other areas. It is up to us to find ways to offset those expenses and improve the bottom line. Creativity is the key to success, and owners have expectations on their return on investment. For years apartments have been called, "the vanilla box." How about putting a little topping on that vanilla, and take a risk. We would never have reached the moon or developed a new property in a new market without taking risks. Think about it and you may come up with the next idea in raising revenue.
Owners and managers struggle to find ways of increasing revenue and new ways of generating income streams. The obvious way to improve income is increasing resident retention, which is the highest controllable expense we oversee. With the average cost of turnover including vacancy loss being well over $3,000 in most markets, keeping ten more residents on a 200 unit community (5%) means $30,000 of improvement to the bottom line. Other critical points include managing lease expiration's and of course providing excellent customer service (also tied to resident retention). A property I recently took over had 68 expiration's in one month. Can you say, "who in their right mind would allow this to happen?" Apparently someone that did not understand the concept of expiration management.
So where do we go beyond the obvious and what "outside the box" ideas should be looked at? First, a great leader and manager never is afraid to test the waters and take risks. We have all heard people say, "If it's not broke, don't fix it," or "We've always done it that way so why change." Whether it is raising application or administration fees, pet fees versus deposits, or charging for premium parking spaces, you never know if it will work if you don't try it. Companies are looking at taking prime parking spots in front of buildings and charging "convenience" fees for these spaces, generating thousands of dollars in additional income. One of the new trends is actually setting up mini-markets in apartment offices where residents can purchase toilet paper, paper towels, toothpaste, dish washing and clothes detergent, and other items they run out of and are willing to pay a little extra for the convenience of walking out their front door and purchasing on the site. With gas at $4.00 a gallon, this type of out of the box thinking is generating additional revenue. Putting motion detectors on lighting at tennis courts at a property I oversaw paid for itself in 10 months.
Expenses are rising related to taxes, utilities, payroll, and other areas. It is up to us to find ways to offset those expenses and improve the bottom line. Creativity is the key to success, and owners have expectations on their return on investment. For years apartments have been called, "the vanilla box." How about putting a little topping on that vanilla, and take a risk. We would never have reached the moon or developed a new property in a new market without taking risks. Think about it and you may come up with the next idea in raising revenue.
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