Blog

Property CAPEX: Friend or Foe?

No comments

Property CAPEX: Friend or Foe?

The goal of capital expenditure (CAPEX) is to improve a property to both attract and retain tenants. Why then would any Owner not agree to completing CAPEX projects? The answer, high costs.

One item considered a necessity is general maintenance and upkeep of the roofs. Because flat roofs are associated with lower costs, it is easy to find an apartment complex where all of the buildings’ roofs are flat. However, according to BRAX Roofing, the flat roof that was installed during construction will likely end up costing new Owners in the long run due to:

Before:

After:

  1. Ponding Water – Standing water leads to serious problems such as leaks and algae growth.
  2. Debris – Remnants of leaves, branches, and other items result in blocked drains.
  3. “Alligatoring” – Roofs that have begun to crack and bubble leading to further damage to the building’s structure if not treated properly.
  4. Buckling – Because a flat roof’s membrane is one continuous sheet, shifting of the structure over time can cause the roof to buckle.
  5. Wind – Flat roofs offer less protection to the entirety of the structure from severe winds.
  6. Leaks – All of the issues above can cause flat roofs to begin leaking.
  7. Shorter Lifespan – In general, a flat roof should last at least 15 years; however, this time frame can diminish based on inclement weather or quality of materials used.

The average apartment is reportedly 861 square feet with the average price to repair the roof of that apartment varying from $1.50 – $10.00/sq. ft. Using $5 on average, it would cost $4,305 to repair or replace a single roof. If the roof in this example belongs to a community of 100 units, it is likely not the only roof requiring repair or replacement. Suddenly, a simple job has turned into a major expense.

Before:

After:

The example above paints a clear picture of why Owners approach property improvements with hesitation. Whether the work proposed is cosmetic, or an emergency, the following tips can help Owners and the operating team manage CAPEX projects effectively:

  1. Align yourself with the correct person to do the work – Collect multiple bids on the same scope of work, interview contractors, and compare/contrast the proposals.
  2. Assemble the team – All parties involved should have a clear understanding of their role and responsibility in the project.
  3. Overcommunicate – Establishing an updated schedule holds team members accountable to ensure work is progressing and gets completed on time.
  4. Establish a clear budget – All team members and contractors should understand that the budget is not a goal, butrather a necessity.
  5. Allocate time – Take time to assess work as it is completed, and what work remains.
  6. Analyze the process – If all goes well, this may be the first improvement project of many! Once the current project is completed, take time to reflect on the process and how certain aspects could have been better implemented.

References:

“Build Apartment Cost.” www.Fixr.com, www.fixr.com/costs/build-apartment

“How Much Does a Flat Roof Cost?” www.CostOwl.com, www.costowl.com/home-improvement/roof-flat-cost.html.

Matthews, Ben. “Watch Out for 7 Common Flat Roofing Problems.” www.BraxRoofing.com, 28 Dec. 2017, www.braxroofing.com/blog/watch-out-for-7-common-flat-roofing-problems.

Sullivan, Megan. “Six Keys to Effective CapEx Project Management.” www.LodgingMagazine.com, 22 July 2015, lodgingmagazine.com/six-keys-to-effective-capex-project-management/

Colin CosbyProperty CAPEX: Friend or Foe?
read more

The Importance of Curb Appeal

No comments

From the moment an individual decides to become a renter, to the moment they officially sign their lease, there are several first impressions that occur which can potentially derail a great lead. Think about it:

  1. Advertising – How do potential renters learn about your community? Do you have a website? Is it current with up to date information? How about visuals and functionality? Does your customer service/sales team remain responsive to new inquiries?
  2. The Leasing Office – Is your office easy to find? Clean and professional? Are there handouts about property amenities for tenants? How are they greeted when they enter the office? Is the staff alert and well-mannered?
  3. The Showing – Do you have a designated show unit? If yes, what are you doing to ensure the highest level of cleanliness? Do you have air fresheners to create an inviting smell? Is the unit well-lit? Ultimately, would you be excited about the unit if you were a potential tenant?

If you answered no to any of the questions above, it is possible that you or your team are not making as great of a first impression as possible. However, possibly one of the most important first impressions (and often most overlooked) is a property’s curb appeal.

Before
This image has an empty alt attribute; its file name is image-1.png
After

Curb appeal is, “the attractiveness of a property for sale and its surroundings when viewed from the street.” Before a potential tenant sets foot on the property, a message is being resonated to them from the street level. This message could be welcoming if there is a

well-lit exterior, ample signage, and colorful plants; it can also derail your property’s leasing efforts if management ignores items such as overflowing dumpsters, peeling paint, and overgrown greenery.

Forbes.com identified three specific areas on properties where excellent curb appeal standards should not be overlooked (Greer, 2018):

  1. The Front Door – While the article refers to the front door of a residential home, the same should be expected of the front entrance to the Leasing Office or show unit:
    • Freshly painted
    • No remnants of any clutter
    • Colorful plants to draw attention
  2. Landscaping
    • Mowed yard with trimmed bushes
    • Planted flower beds
    • Clear of weeds
    • Décor inside of the unit should also be addressed
  3. Exterior Materials
    • Consistent, monochromatic paint colors
    • Clean brick or siding
    • Power wash buildings regularly/as needed
Before
After

References:

Greer, R. (2018, April 11). Curb Appeal Counts: Three Steps To Increasing Interest In A Property For Sale. In www.Forbes.com. Retrieved from https://www.forbes.com/sites/forbesrealestatecouncil/2018/04/11/curb-appeal-counts-three-steps-to-increasing-interest-in-a-property-for-sale/#5b921e863d8b

Colin CosbyThe Importance of Curb Appeal
read more

Online Reviews Matter

No comments

In today’s digital age, consumers are bombarded with flashy images and catchy taglines wherever they go. We live in a society where ads follow us online and appear as based on our search history.

With all products claiming to be “the best,” differentiating between two similar choices can turn into a daunting task. Once targeted ads are thrown into the mix, the volume of options can overwhelm anyone.

How are consumers expected to make the right choice?

According to Jia Wertz, a contributor for Forbes.com, “Customer reviews are powerful – so powerful, in fact, that the vast majority of people trust online reviews just as much as they trust the opinion of a close friend,” (Wertz, 2019). Honest and authentic online reviews from real people that have used, or are using the product or service, have become one of the primary resources referenced during the research phase of buying. Wertz goes on to site that 63% of consumers seek out online reviews before visiting a business. This phenomenon is no different in the apartment complex industry.

Globally, across AFI’s 14-state portfolio, our average Google rating is 4.5/5.0. All AFI on-site managers are continually coached to acquire as much feedback as possible from stakeholders of the property (tenants, neighbors, store owners, vendors).

Entrepreneur.com provides five great tips on how to improve your company’s online presence:

  1. Use an online reputation management software. While not feasible for all businesses, this solution could be helpful for companies looking to make the transition from small to medium business who are also in need of scaling their marketing efforts.
  • Educate customers on how to leave a review. If a consumer agrees to leave a positive review, help them do it. AFI managers are encouraged to direct stakeholders to the property website while they are still on site in order to capture their true feedback.
  • Ask every customer for feedback. “It builds amazing legacy and forces you to get better. Asking everyone to write a review will expose most flaws publicly, giving you free insight on how to improve the business,” (Nwazor, 2017).
  • Respond to reviews honestly and publicly. All reviews, whether good or bad, deserve thanks to the individual for sharing their opinion or a professional response regarding corrective action, if applicable. See below for examples of responses to both positive, and negative reviews:
  • Provide an incentive for customers to write reviews. While incentivization should remain a last resort, promoting contests with prizes awarded for posting reviews can be a great way to encourage audience engagement.

References:

Nwazor, T. (2017, February 6). 5 Surefire Ways to Improve Your Site’s Online Reviews. Retrieved from:https://www.entrepreneur.com/article/288388

Shewan, D. (2019, January 23). The Rise of Ad Blockers: Should Advertisers Be Panicking?(!!!). Retrieved from: https://www.wordstream.com/blog/ws/2015/10/02/ad-blockers

Wertz, J. (2019, May 28). The Business and Monetization of Product Review Sites. Retrieved from: https://www.forbes.com/sites/jiawertz/2019/05/28/the-business-and-monetization-of-product-review-sites/#3b80685b5d4b

Colin CosbyOnline Reviews Matter
read more

The Importance of Enhanced Security

No comments

According to John Gramlich of the Pew Research Center, “both violent and property crime rates have dropped significantly since their ‘peak’ in the early 1990s. An annual report compiled by the Federal Bureau of Investigation shows violent crime decreasing by 49% between 1993-2017 and a 50% decrease in property crime for the same period” (Gramlich, 2019).

While the statistics mentioned above indicate a trend in the right direction, close living quarters and frequent interactions with neighbors on a high-density apartment complex can result in escalating activity at any community.

Tenant safety has always been, and will continue to be, a top priority for AFI. Earlier this year, an asset in North Carolina was showcased that saw a 40% reduction in on-site crime since AFI began managing the property in 2017 (www.afi-llc.com, 2019).

With tenant safety being top priority, recently AFI’s on-site team at a campus asset in Lawrence, KS worked diligently with the Property Owners to replace all outdated entry doors on site with high-tech, secure, key-fob entry doors.

The new doors not only improve curb appeal at the property, but they accomplish AFI’s goal to maintain a safe and secure living space for all tenants. In addition to increasing safety on the property, this project was completed almost $30,000 under budget AND included the implementation of a property-wide security system.             

Prior to moving, AFI advises prospective renters to ask themselves the following questions regarding property safety:

  1. Is the community well-lit? Properties with poor exterior lighting tend to attract suspicious activity.
  2. How is the property’s curb appeal? Failure to tend to general maintenance items can be indicative of a lack of concern from the landlord.
  3. Are crime statistics available online? There are several free online tools potential tenants can use to learn more about the crime history of a property such as CrimeReports.com and CrimeMapping.com

Since the security door install, both CrimeReports.com and CrimeMapping.com indicated zero reported incidents at the Lawrence, KS asset.

Gramlich, J. (2019, January 3). 5 Facts About Crime in the U.S. Retrieved from: https://www.pewresearch.org/fact-tank/2019/01/03/5-facts-about-crime-in-the-u-s/

Cosby, C. (2019, May 28). Safety Is Not an Amenity. Retrieved from:
 https://www.afi-llc.com/safety-is-not-an-amenity/

Apartment Security and Safety Tips for Renters from Safewise. Retrieved from: https://www.safewise.com/resources/apartment-security/

Colin CosbyThe Importance of Enhanced Security
read more

Accounting Success – Water Bill Anomaly

No comments

MONTHLY UTILITY BILLING AUDITS IDENTIFY ANOMALIES

Recently, while completing the Monthly Utility Bill Analysis Module, an Asset in Indiana was found to have been invoiced over 106% more than the average bill.

Utility waste in the US is at an all-time high with ~60-80% of the energy consumption being attributed to waste and errors (source below)

This anomaly was noted and investigated by AFI staff and the following errors were discovered:

  1. Human data-entry error: The technicians at the utility company entered the meter data incorrectly (scrivener error).
  2. Meter Change: A new meter was installed at the property by the utility company further complicating data collection and reporting.

The total savings for this error? $14,657.52

Had the utility bill not been audited, it is unlikely the invoice would have been corrected by the utility company due to the complex nature of the error.

HOW CAN ERRORS IN UTILITY BILLING BE AVOIDED?

  1. All utility bills should be managed at a single location to allowing for data aggregation and institutional knowledge to develop.
  2. All utility bills should be handled by a single team to ensure that consistent monthly KPIs are utilized. For example, AFI has a single team analyzes trailing cashflow and consumption data each month on a per unit basis.
  3. Utility data is analyzed on a global basis to allow for highlighting anomalies. Anomalies can be not only data-entry errors, but also might include leaks, incorrectly set HVAC systems, power drains, etc. By completing a global analysis, a granular comparison is able to be created cross-systems to highlight outliers. Additionally, by aggregating data, a larger comparison group is created. AFI, for example, analyzes ~250 meters and 5000 units. The more data available, the better.

Consider implementing a utility analysis system today of your own to prevent errors and waste. Not only are invoice errors expensive, they are potentially wasteful to energy resources and money.

https://www.erc-co.org/spooky-statistics-about-energy-and-water-waste/

FACT: One drop per second from a leaky faucet could equate 2,700 gallons a year.

Colin CosbyAccounting Success – Water Bill Anomaly
read more

Employee Celebration – July

No comments

AFI Property Manager, Katina, recently celebrated her one-year work anniversary in style as she finished last month at FULL OCCUPANCY with several units PRE-LEASED!

Originally from Texas with an extensive background in both sales and leasing, Katina was eager to get back down South as quickly as possible. When an opportunity arose for Katina to takeover an asset just South of Dallas, we knew she was the obvious choice!

Katina has been a wonderful addition to our team and we look forward to many more years of success to come!

Colin CosbyEmployee Celebration – July
read more

AFI Reduces Property Taxes by 31%!

No comments

Recently, at an AFI asset in Texas, the Owners saw tax savings of over $18,000!

Here at AFI, we have seven Core Values that are at the forefront of our minds at all times. Two of these Core Values are Collaboration and Efficiency. Through effectively managing vendor relationships, AFI was able to help the property appeal a previously proposed assessment and further increase NOI for our stakeholders.

We pride ourselves on of course achieving fantastic results for our Owners, but also on having the opportunity to work with like-minded individuals that share in our values and commitment to excellence!

Colin CosbyAFI Reduces Property Taxes by 31%!
read more

Good Luck, Joe!

No comments

Last week, AFI wished a fond farewell to former Accounting Specialist, Joe.

Joe had been with AFI for over three years beginning with the company as an Accounting Intern during his time in Columbia at the University of Missouri. Since first joining AFI, Joe graduated from Mizzou with both his Bachelor’s, and Master of Accountancy degrees.

Joe will be relocating outside of Missouri to now begin a new chapter in his professional career. Joe has proven his value time and time again during his tenure with AFI and we are confident that he will replicate his success in any future endeavor.

Colin CosbyGood Luck, Joe!
read more

Columbia Asset CRUSHES Monthly Income Record!

No comments

AFI Property Manager, Tim Trower, recently oversaw the addition of 16 new units on a Columbia-based property. With these new units came several additional challenges and an increased workload for Tim, but also an opportunity to further increase profitability on the asset.

Through Tim’s leadership, this property CRUSHED it’s previous monthly income record by almost $10,000!

Tim is currently managing his third asset with AFI and has proven, no matter the obstacle, his ability to hold tenants accountable and maximize revenue. Tim is the embodiment of the AFI system at work which has resulted in an excellent return for the Property Owner.

Great work, Tim!

 

Colin CosbyColumbia Asset CRUSHES Monthly Income Record!
read more

Employee Celebration – June

No comments

Please join us in saying, “THANK YOU,” to AFI Property Manager, Ethan Denum! Ethan recently celebrated his one-year work anniversary with AFI and has proven to be an excellent onsite leader.

Ethan has made Kansas his home for the past year with his wife and two children. Over the course of Ethan’s tenure as Property Manager, he has maintained a high occupancy rate year-round and CRUSHED global income records.

We look forward to Ethan’s continued success in his current role and are excited to reward him with new opportunities in the future!

Colin CosbyEmployee Celebration – June
read more