Business plan

How to Retain Happy Tenants:

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How to Retain Happy Tenants:

Renewing a happy tenant has a lot of potential to be a win-win situation for both the tenant themselves, and the property where he or she is living:

Tenant:

  1. Does not have to incur additional expenses involved with moving
  2. Does not need to restart the “apartment hunt”
  3. No interruptions to routine or unintended consequences

Property:

  1. Does not need to incur additional expenses to turn/renovate the unit
  2. No need to spend time searching for a new tenant to fill upcoming vacancy
  3. Retention of a rent-paying, happy tenant on the property!

According to Rent.com, tenants who decide NOT to renew their lease can spend up to 60 days searching for a new community (Rent Editorial Team, 2018). This means that if you are a tenant considering moving out and have also waited to make that decision until receiving your 60-Day Notice to Vacate, you have likely waited too long.

A recent Avail.com survey reported that finding a new tenant or, losing a renewal, could cost as much as $2,500 per vacancy (Manolas, 2019). Avail provides the following helpful tips to encourage happy tenants to sign their renewals:

  • Speak with the tenant sooner, rather than later – Avail recommends beginning renewal conversations with tenants as early as 90 days in advance.
  • Maintain a relationship with all tenants, current and past – Arguably the number one tool a Manager can use to encourage a renewal is their level of service. Treating everyone with courtesy and respect can go a long way when these conversations begin to take place.
  • Make the renewal process as easy as possible – Overcomplicating the process can lead to unintended frustration. Avail recommends an online process where terms can be changed if needed, adjusting lease dates, and sending to the tenant for signature.

“How Long Does it Take to Find an Apartment?” www.Rent.com, 6 Dec. 2018, www.rent.com/blog/how-long-find-an-apartment/

Manolas, Kasia. “Lease Renewals: Are You Going to Lose Your Best Tenants This Year?” www.avail.com/education, 27 Aug. 2019, www.avail.co/education/articles/lease-renewals-are-you-going-to-lose-your-best-tenants-this-year

Colin CosbyHow to Retain Happy Tenants:
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Property CAPEX: Friend or Foe?

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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?
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The Importance of Curb Appeal

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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
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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
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Online Reviews Matter

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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
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The Importance of Enhanced Security

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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
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Why buy B and C class apartment assets in today’s market?

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1. Tenant Pool Stability

On the apartment quality scale of A—B—C—D, owning A-class assets is not all it’s cracked up to be. In an economy of fluctuating incomes and employment, with underemployment as a growing trend, holding owning B- and C-class assets is the most enviable position because these asset classes benefit most from ‘downward mobility’ pressure being exerted on the tenant base. Former A-class tenants are not going down to D-class units. Rather, they are settling for B-class apartments. Similarly, former B-class tenants are settling for C-class apartments. Given that D-class properties are uniformly crime-ridden and unsafe, the bulk of the pre-existing C-class tenants will strive to remain in a C-class property, spending more on housing than the average tenant by sacrificing elsewhere.

2. Non-Speculative Market Space

There is one very important question to answer when contemplating the development or purchase of an A-class apartment asset—Is there a large enough pool of viable tenants with the economic means and the appetite to live in the most expensive, albeit most richly appointed, apartment property in the area? While the most expensive product on the market carries distinction and prestige, these features do not necessarily lead to greater sales. In our unpredictable economic climate, we can emphatically affirm that these assets do not typically produce meaningful financial returns for investors.The most important question to ask regarding prospective B or C class asset is this: Does the property have the right problems? That is, does the property have:

  • Deferred maintenance, and/or
  • Poor management

Deferred maintenance and poor management are quickly remedied by the application of intelligent and aggressive property management fundamentals. Commanding property management focused on correcting physical deficiencies, improving tenant quality, and introducing tenant-centric services produces momentous returns on investment.

B- and C-class assets are established properties in their respective sub-markets, and new C-class apartment buildings will not be built at the same class level because construction costs are prohibitive. Additionally, C-class assets can be elevated to B-class properties with a recoverable cost basis. In most cases, the cost of entry is too high to elevate B-class assets up to A-class quality.

3. Cost of Entry = Volume

Compared to A-class assets, the per-unit cost of B- and C-class assets allows for many more units to be purchased for the same capital investment.

4. Less Competitive Acquisition Environment

Effective B- and C-class apartment management is complex, involved and downright messy. It requires hard work, singularity of focus, rehearsed professional processes, intelligent decision-making, sharpened experience, industry expertise, broad vendor connections and gritty determination. These facts can intimidate investors who are accomplished in investment acquisition, but who lack real-life management skills and experience.

AFI excels at the real-life, day-to-day management needed to support the discerning investor’s objectives.

tourvistaWhy buy B and C class apartment assets in today’s market?
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