Maximizing value of our assets

As property managers, we have an obligation to maximize income and minimize expenses.  All of us have had to contend with a budget, sometimes realistic and achievable and sometimes not.  While I have talked about budgeting in the past, what I want to focus on now are the aspects of maximizing the NOI of your community or communities no matter what the status of your budget is.

There is no doubt, the first and best way to improve NOI is reducing turnover.  Fewer residents move out, less vacancy loss and lower turnover expenses.  So how do we do this?  Excellent customer service, exceptional communication, maintaining the asset and their apartment, and providing services that enhance their lifestyle (of course based on your target market).  What most managers and team members do not know is the cost of turnover and the time relationship of turnover.  Average turnover varies and is reported anywhere from 40 - 60% as the median.  We know turnover varies based on markets, property types, seasons (NMHC reports 46% of renters report they moved in the June - September time period), financial cycles, etc.   Recent trends and reports show rents have been on the increase since 2010, construction of new communities on the upswing in 2012 for the first time in four years, and turnover has been declining in most of the major markets.  Some of this related to uncertainty within the financial sector, challenges still related to the foreclosure markets, and I also believe property managers continuing to more effectively relate to resident service and services. 

Raising rents is the next way to increase NOI.  There is a tradeoff between raising rents to where residents continue to find value, and the point where resistance makes them want to look somewhere else.  That balance in order to be used effectively must be understood by property managers.  Regional Managers and corporate management I believe can do a better job of training in this area, versus dictating changes to the sites.  Help them understand the process and the analysis, as they will better "buy in" to raising rents if they understand the "why and how factors."  Average turnover costs have dropped in the last year, basically because vacancy has declined and the loss to vacancy has been reduced in most markets.   Lenders use 95% as the rate structure for loans, while property managers typically use 95% as the balance point for raising rents.  With improving occupancy nationally, this is likely to change...at least for a period of time.  One thing is for certain, nothing is permanent in our business but change.

Last but not least, minimizing expenses.  Enhancing and doing a better job of inventory control, insuring things are fixed the first time, insuring we are using the most effective marketing mediums, finding energy conservation measures, making wise purchasing decisions, and hiring the right people to get the best team are all ways we can minimize expenses.  Ever business and property can find ways to cut costs.  Just wish our government would believe that as well.

Finding 

From both an investment and an operations standpoint, 95% occupancy is considered the optimum level for multifamily properties. Lenders use the 95% occupancy rate to structure loans, while managers consider 95% to be the balancing point between keeping a property full and focusing on raising rents. - See more at: http://www.ccim.com/cire-magazine/articles/maximize-apartment-value-through-strategic-management#sthash.KthAnU4p.dpuf

From both an investment and an operations standpoint, 95% occupancy is considered the optimum level for multifamily properties. Lenders use the 95% occupancy rate to structure loans, while managers consider 95% to be the balancing point between keeping a property full and focusing on raising rents. - See more at: http://www.ccim.com/cire-magazine/articles/maximize-apartment-value-through-strategic-management#sthash.KthAnU4p.dpuf

From both an investment and an operations standpoint, 95% occupancy is considered the optimum level for multifamily properties. Lenders use the 95% occupancy rate to structure loans, while managers consider 95% to be the balancing point between keeping a property full and focusing on raising rents. - See more at: http://www.ccim.com/cire-magazine/articles/maximize-apartment-value-through-strategic-management#sthash.KthAnU4p.dpuf

If life gives you grapes...make wine!

I'm sure some of you have heard it differently involving lemons.  Don't know about you but wine just sounds more fun, unless it's a hot summer day then lemonade fits the bill.  Where I am going with this is to emphasize we have the ability to make what works and what applies, if we choose to use the resources available to us and use what works best for the situation and time.

We all make choices in life, some of them easier than others.  What movie do I want to go see tonight?  That one was easy as I yesterday took some "Larry Time" and went to go see "Now you see me."  Being a magician and based on the recommendation of some friends at Disney, I made the choice to spend more than the movie ticket on popcorn and a drink to see the movie.   Some choices are more difficult and with longer lasting consequences, but have high rewards.  Some choices are out of necessity while others voluntary, keeping in mind they are still choices.

As my friends and family know, I have made the choice to return to the executive/leadership world after spending several years training, consulting, educating, and when not doing that working at Disney doing something I have a passion for.  My friends, co-workers, and supervisors at Disney have been fantastic, and the memories and relationships I have established will last a lifetime.  So I could transition back into leadership I stopped taking contracts for speaking engagements.  Opportunities here in Florida have been slim, and I have even turned down a couple of positions because it was not a good fit.  One of the opportunities involved a company that had a very bad reputation, including not paying their suppliers and there were even reports of pay checks bouncing at the regional level.  I chose to keep looking, and do not regret for one instant the decision I made (even though it was for a lot of money...keeping in mind if the check cleared). 

One opportunity I recently applied for is not in Florida but back in North Carolina, where we were before coming to the home of the mouse.  What is hard is moving away from my daughter and grand-daughter (and of course my son-in-law), which I know will break Taylor's heart.  But, sometimes we have to do what we must do.  Interview completed and have been told will know within the next week as they have other candidates to talk with.   As I said, sometimes choices are hard and sometimes easy.  Not sure where this will go, however, if given the opportunity I have always said, "If opportunity knocks...you at least answer the door."  Those that know me understand the passion I have for the business that has provided for me for over twenty years.  Outside of the training and education part, property management is who I am and what I do.  We'll keep you posted and let you know what happens from here.  Either way, the choice is mine.