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Getting Ready to Sell Your Community

Analyzing Metrics - EPIC Asset Management Group

In a recent article for the National Apartment Association, author Les Shaver, interviewed some multifamily professionals from Chicago-based AMLI Residential to learn strategies that make selling a community easier by demonstrating uncapitalized property value and analyzing macro data.

“We want to demonstrate value for the buyers by upgrading 20 percent of the apartments, Sarah Wieckowicz, Vice President of Revenue Management at AMLI, said during the Maximize session “Leaving Occupancy Behind: Identifying the Truly Important Measures” last week in Austin. “We can show a potential buyer what kinds of returns they can get.” In other words, leaving some meat on the bone will make your property more attractive to potential buyers when it comes time to sell.

In the process, AMLI is also harnessing the power of advanced metrics. The company is utilizing their access to big data to know when to accelerate or decelerate a rehab process, understand if it’s best to sell or maintain ownership of property, and accurately inform potential and current buyers.

For the entire NAA article and more details on these selling strategies, click here.

 

Airbnb Entering the Apartment Industry

Subleasing is usually something landlords do not prohibit because it’s often a high-risk low-reward situation. But that is not the case for a Newgard Development Group, a major real estate development company out of Florida. Earlier this month, CNET’s Dara Kerr reported the announcement of Airbnb’s new partnership with Newgard Development Group that will be branded as “Niido.”

The partnership will allow Newgard tenants of a 324-unit property in Kissimmee, Florida to utilize short-term leases and sublease their apartment on Airbnb for a maximum of 180 days per year. In return, Airbnb has agreed to share some of the income generated through the listings with Newgard.

Airbnb - EPIC Asset Management Group

The partnership aims to “eliminates barriers by encouraging home sharing and creating solutions that work for everyone,” stated Newgard CEO Harvey Hernandez. Furthermore, Hernandez stated the new business plan should help tenants relieve some financial pressures as cost of living increases by providing extra cash flow through Airbnb listings.  “Niido’s unique multifamily home-sharing model provides a powerful solution to this ongoing problem by delivering extra income for tenants while creating enhanced experiences for their guests.”

Beyond their intial Niido project, Newgard and Airbnb plan on furthering the partnership by building new apartments with the sole purpose of subletting to short-term tenants and tourists.

Click here to read the full CNET article covering the Airbnb/Newgard partnership

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Managing Online Reputation

Not long ago, reputations were formed through direct experiences, word-of-mouth, and paid advertising. But since the emergence of the internet and social media, a person or business’ reputation can change as fast as someone can hit ‘send’. On one hand, society’s constant connectivity can be very beneficial, as it allows people to reach large audiences faster than ever before. But just as easily it can bring a company to new heights, the speed and scope of the internet can run even the best reputations into the ground with one wrong misstep. Here are a few tips to avoid ending up on the negative side of online reviews. 

“Google” yourself. A business can’t manage its reputation effectively without understanding the status of its online perception. That understanding begins with a simple search on any and all search engines, social media platforms, customer review sites, and user forums. A simple Google search won’t suffice with such an abundance of online outlets that can directly affect a business’ reputation, so thorough research is critical.

Monitor online reviews. We’ve all heard the cliche, “The customer is always right”, which is, to a certain extent, true. It’s especially true with services such as Yelp!, TripAdvisor, UrbanSpoon, and many others, where customers can describe their positive or negative experiences with businesses behind the safety of their devices without an uncomfortable, personal confrontation with owners, managers, or employees.   One bad review can have a snowball effect, and before long, acquiring customers can seem impossible. That said, there will always be an unsatisfied customer, justified or not. Monitoring review sites allow a business to understand which aspect(s) of their product or service needs improving. In addition, if they have the ability to do so, business should reply to as many reviews as possible. It demonstrates pro-activity, a touch of personal care for each customer, and a desire to satisfy customer needs.

Maintain an active social media presence. In most cases, a business can’t reach its full potential without a social media presence. Networks such as Facebook and Twitter offer excellent opportunities to interact with and advertise to customers at little to no cost.  In addition, social media is often an accurate indication of current and upcoming trends among customers, so businesses can stay updated with their customers’ needs and adjust business strategies accordingly.

Keep it professional. Unless a business has an established focus on a specific political or social cause, it’s usually prudent to separate such opinions and stances from the business environment. Also, business’ should carefully consider the context of any created content available to the public. One offensive tweet or distasteful Facebook post can disrupt customer approval ratings, or even permanently ruin a business’ reputation.  These are just a few initial steps any business can take to harness the power of the internet to maintain or improve their online reputation. A good reputation has to be earned. It requires constant focus tobuild, and even more discipline to maintain. Ultimately, a company’s strategies and tactics can only take their reputation so far. Demonstrating excellent service and maximizing satisfaction will inspire customers to express their positive experiences to others and generate invaluable word-of-mouth no amount of marketing dollars can buy.

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Tenant Turnover

Yesterday we talked about tenant retention and some characteristics that motivate them to renew their lease. Using the aforementioned strategies will certainly help minimize resident turnover, but even a property with desirable amenities and excellent service, there will always be a situation where a good tenant has to move out. As soon as a unit becomes vacant,  the following actions taken by management and ownership are crucial in terms of cost and revenue.  

Check out this article from Multifamilyexecutive.com that offers some beneficial tactics owners can use to offset the disadvantages of resident turnover and potentially turn a negative situation into a positive one.

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Tenant Retention

Property owners are always looking for a competitive edge when it comes to the never-ending battle of attracting and retaining good tenants. Naturally, having a clean property, attractive curb appeal, desirable amenities, and a convenient location are all major factors in bringing in new tenants and filling vacant units. But what does it take to get the best tenants to sign on the dotted line when lease renewal season rolls around? 

It’s a combination of a property’s physical amenities and the quality of service provided by a management team that motivates a resident to move out or renew their lease. We think it’s more about the intangibles, rather than the physical attributes the property offers that keep tenants coming back. If a property has a friendly, inviting community with a management team that prioritizes honest relationships and high-quality service tenants that value these characteristics in a property will be encouraged to remain a resident for, ideally, many years to come.

In an article from Multifamilyexecutive.com, author Melanie G. French, the Executive Vice President of Operations of Cortland Partners, offers a well said explanation on what it takes to retain tenants, build trust and cooperation among the community, and the importance of a property’s staff to demonstrate genuine care for the needs and wants of their tenants.

Click here to read French’s article in its entirety.

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Increased Value Through Increased Income

In our previous blog post, we discussed a few general strategies property owners can use to increase the value of their multifamily property. We briefly mentioned how increasing income is one of the primary ways of raising property value, and with so many ways of doing so, we thought it would be a disservice to readers to not further elaborate on the subject.

First and foremost, a property will never reach its full potential with a high vacancy rate. Nothing hurts a property’s income more than a high number of empty units, so finding and retaining quality tenants is a top priority. Factors such as advertising, marketability, and curb appeal go hand-in-hand with acquiring and maintaining tenants, but that’s a another discussion in itself. 

Once an adequate vacancy rate has been achieved, only then can a property manager begin to truly maximizing property income. So what are the best “bang for your buck” strategies owners can implement? Hands down, the number one income booster for an owner is raising the base rent for each floor plan of the property. Even small increases like a 2-3% bump in rent can result in thousands of extra revenue dollars a year.

Additionally, building scheduled rent increases into leases can ensure a property is staying on par with its comparable market and remaining competitive. Raising rent increases income on an exponential level, so owners should always be looking to get the most revenue out of their units and amenities. Although, if a property owner is going to increase rents, they’ll have to spend money to make money. Raising rents have to be executed in conjunction with property improvements, otherwise, tenants won’t renew leases and move on to a property where they getthe best value for their money. 

One of the best justifications of raised rent rates is updating units. Even though unit renovation requires an abundance of time and money, a property will not survive if it’s out-dated. So renovation kills two birds with one stone by keeping a property up-to-date and competitive while increasing the revenue and value of a property through rent increases.

Renovations don’t have to break the bank. There are numerous inexpensive materials that achieve the same aesthetic affect as more expensive products. Alternative materials like vinyl flooring or lightweight granite can save money while achieving the same look and feel as hardwood floors or quartz countertops. Ultimately, the key is renovating for your target audience. Spending extra capital on upgrades B or C class tenants don’t desire can be a waste of money and lead to higher vacancy rates. 

Sometimes a property has updated units, popular amenities, and low vacancy, but still has room for increased revenue. In this case, there are a number of inexpensive, and sometimes free, strategies owners can use to create extra revenue streams. One source of free revenue is charging an application fee. Every potential tenant must go through a background check, and can create a potential problem for your asset, so application fees offset that risk. Implementing a pet fee has the same affect.

Parking is another source of untapped revenue properties can capitalize on. Even though not every demographic is willing to pay for covered parking, owners can implement an opt-in reserved parking program many tenants will find convenient. Reserved parking can generate hundreds of dollars in monthly revenue, efficiently organize the parking lot, and give tenants piece of mind regarding the safety and security of their vehicle. 

Most multifamily properties require tenants to pay an upfront security deposit. The deposit protects owners and their assets and while acting as incentive for tenants to take care of the unit. having said that, security deposits can be a point of distrust in the tenant/owner relationship. Owners wonder if their units will be taken care of and tenants wonder if they’ll ever get their deposit back. One solution to this problem is a mandatory, non-refundable move in fee. Owners get to retain the move in fee and tenants see a lower barrier to entry. Furthermore, once a tenant moves out, owners can use the move in fee to turn the unit for future tenants.

All of the examples provided above are strategies owners can use to justify raising rents, which will lead to an increase of income, and hopefully achieve the ultimate goal of maximized property value.

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Keys to Real Estate Investing

It’s no question real estate can be one of the best investment options when trying to generate passive income. But it’s not as simple as picking a building or plot of land and raking in the cash. A bad real estate investment can go south in an instant, and before you know it, you’re bleeding money.

Just like any other type of investment, the key is knowing current and future market trends, and making the best possible informed, knowledgeable decision. Simply put, being in the right place at the right time is the name of the game.

You can learn to make smart decisions with three of the most important keys to a good real estate investment in this article from Forbes Magazine.