We want, expect, maybe even demand good…but excellence in multifamily property management deserves special attention, doesn’t it?  It is the policy of Rose City Commercial Real Estate to celebrate excellence.  I have worked with a number of fantastic property management firms in my career.   Today I want to salute one of them.

I like to see an organization do something just because its the right thing to do for their clients…not just trying to improve their operational metrics.  Princeton Property

No one associated with this blog is a stakeholder, nor have they received payment from anyone cited for excellence.  Previous posts have celebrated Holly Bray/Love Funding, David Moore/Equity Advantage, John Adams/Logo Products, Montage Restaurant, Chinook Construction, and more.  If you think what someone is delivering is excellent not just good…let us know and perhaps we’ll celebrate them here.  Contact Rick Bean at: 503.577.1034 or rick@rosecitycre.com.

Management’s aggressive approach to lowering property taxes for it’s client’s properties is an example.  They’ve done a superior job of supporting tax reduction advocacy.  And they have taken the extra effort to be certain that each asset they run is reviewed for possible reductions.  The irony is that most of  Princeton Property Management’s clients won’t even know about the extra effort that Princeton has expended…but that’s why I’m citing Princeton for multifamily management excellence.

Remember that the norm is for management companies to get paid on gross revenue.  While successful property tax reductions pay off handsomely for the owner, the property management firm is not compensated or even acknowledged.  Office Manager Amy Acala is heading up the effort, but she also  has enlisted and received the support of the entire organization in pursuit of lowering property taxes.  That’s how things ought to be done!

From what I’ve observed, the overused word “excellent” is appropriate when discussing Princeton Property Management!

--- END POST ---

Property management professionals know that two profit killers remain:

1. Unmanaged property tax liability. This is an item that needs an annual review by a professional. As an example, exception value in Oregon can only be appealed the first year it appears. No, they don’t identify it…so failure to appeal can cause a permanent increase in taxes.  There are a few exceptional professional property management companies that consider property tax minimization as part of their mandate to run the property.  Many do not!

2. Resident retention…and turnover costs when we fail to do so. Many multifamily property management folks don’t focus on this so much, after all the next renter is just around the corner. While the vacancy component of total turnover cost is lower than it used to be, the costs of turnover can be huge, particularly if retention rates drop. Below is another great article from Keat Foong of Multi-Housing News Online. Interesting reading that challenges commonly held beliefs about renter behavior.

Concerned about maximizing your apartment portfolio’s profitability?  Contact Rick M. Bean of Rose City Commercial Real Estate for an evaluation.  We’ll discuss low hanging fruit as well as more involved projects.  Phone: 503.577.1034, or e-mail me at: rick@rosecitycre.com.

According to Miller, being able to successfully keep your residents has to do with paying attention to basic “blocking and tackling” tactics on the operational side of apartment property management. “What we have found is that when prospects are first enticed to a community, they are interested in how the community looks and all the bells and whistles. Once in there, their focus shifts, to the service level and the value they are getting. The question for them becomes how easy it is to be a resident in the community, to get calls returned and things fixed,” says Miller.

For a recent national survey conducted in June and July, “Getting Inside the Head of Today’s Online Renter—Behaviors, Preferences and Implications,” SatisFacts surveyed about 85,000 residents in communities of all classes managed by 20 companies. Topping the list of what is most important to residents when shopping for their next apartment is the perception of quality customer service, the ability to pay rent or submit service requests online, and the ability to provide resident feedback. At the bottom of the list is having a community Facebook page, or the ability to rent Zipcars.

Biggest reasons for turnover

The Towbes Group boasts a relatively high resident retention rate, and its turnover rate does not exceed 45 percent, even with the recent implementation of a rent increase program. That number is 10 to almost 20 points below the average industry resident move-out rate of 58 percent to 63 percent. Jim Carrillo, vice president, residential properties, for The Towbes Group, says “communication with the residents is always transparent and two-way. Nothing of importance is kept from the residents, positive or negative.” The company also surveys other communities in the markets it serves to observe the level of service provided at its competitors’ properties. Then the company establishes a standard above that.

As a way to preempt potential move-outs, in October of 2008 The Towbes Group informed all its market-rate residents that rents would be frozen through 2009. Rents were again frozen in 2010. And the company did not participate in lease renewals, but rather, allowed all leases to convert to month-to-month after the initial 12-month lease. This led to a low annual turnover rate averaging 39 percent—in the midst of the economic recession following the financial crash. Since then, the company has implemented a renewal program that is seeing some of the first increases in nearly three years, says Carrillo.

Lowering the rent or refraining from raising it, although necessary in downturns, may be a costly way to keeping residents in communities, however. Instead, Jen Piccotti, SatisFacts senior vice president of education and consulting services, recommends that property management professionals pay attention to providing great service at all stages of the lifecycle of the apartment renter. SatisFacts’ research shows that residents tend to feel neglected towards the end stage of the lease cycle. “You have to show the love 365 days a year,” not just at the beginning of the lease term, says Piccotti.

“Every property has its chronic complainers. You get to know your high maintenance residents, and the human tendency is to start hiding and looking busy when you see them coming, but you have to make sure every resident feels welcome. They are, after all, paying your salary,” says Piccotti. “Keep that smile, welcome everyone, and bend over backwards every time someone walks in the door. We need to assume that as soon as they leave the office, they go to their mailbox and find a lease renewal/rent increase letter awaiting them.”

Creating an appealing environment

The visual appeal of an apartment community can also play a role in retaining residents, according to designer Rebecca Jones, ASID, principal of RD Jones & Associates Inc. “Overall, the client base is hesitant to invest in design the way it should, but clients that do are reaping the rewards,” she adds. For example, The Bozzuto Group hired Jones to design the interior spaces of The Fitzgerald in Baltimore, which garnered a 2011 MHN Excellence Award and is, according to Bozzuto, the fastest-leasing apartment community (25 units per month) in the history of Baltimore.

The Fitzgerald was designed with a boutique hotel aesthetic, reminiscent of a hot spot you’d find in New York City, such as The Gramercy, says Jones. “If you design something really cool, that sets you apart from the competition,” she adds. The fashionable design makes the residents “feel good about the space, about themselves and about their living environment.”

Self esteem is important to the sociable Generation Y, and they like to bring their friends to their trendy buildings—they see the common areas and the entertainment spaces as extensions of themselves, she says. “They want to be able to say, ‘this is my personal space that I can enjoy and use with my friends,’” Jones notes.

Don’t underestimate the role that functionality in the design plays in holding onto residents, says Jones. Flow, access and convenience are important. You do not want the garages to be in a location that is too much of a trek. And make sure there are enough elevators interspersed through the property. “We see a lot of buildings in which you have to hike a football field to get to your space,” she notes. People may express dissatisfaction with such daily inconveniences by moving.

--- END POST ---

W Scott Phinney and I, co-founders of Prime Property Tax Negotiation will be the featured speakers at the next Oregon/SW Washington CCIMLuncheon November 2nd, 2011 at the MAC from noon to 1:15 PM.

Following the passage of Measure 5, Oregon State transferred its property tax appeals from the Dept. of Revenue to The Courts.  A whole new system had to be created including rules, laws, procedures and the appeal process itself.  The Chief Hearings Officer for the State of Oregon, Scott Phinney, was one of the co-creators of the Magistrate Court and much of the current property tax appeal system.  Since then Mr. Phinney has spent 2 decades in private practice expanding his sphere of excellence to include property tax appeals in Oregon, Washington and California.  He has worked on successful property tax appeals on single assets and multi-billion dollar portfolios for a “Who’s Who of Big Business”:

• US Bank
• FDIC
• Hilton Hotels
• Marriott
• Rite Aid
• Met Life

Mr. Phinney’s talk will cover the broad strokes of the Oregon Property Tax Appeals system; I will use CCIM type techniques to quantify the potential short and long term values of appeals.  We’ll also show how real estate and accounting pros can promote appeals as a client development tactic.  We will also dispel misconceptions and bust myths about Oregon Property Tax appeals:

• “It’s not possible to win a property tax appeal in Oregon” (Wrong.)
• “You have to get the Market Value down to the Assessed Value to earn a compression refund.”  (Wrong.)
• “You just can’t win apartment appeals.” (Wrong.)
• “There is no system to appeal personal property assessments. (Wrong.)
• “I have to pay lots of money upfront to appeal my property taxes. (Wrong.)

Time permitting Scott will also talk about the most frequently overlooked property tax break that is missed by over 80% of the qualifying projects.  In one case Scott found overpayments of $506,000 on a single project.

Please contact Rick M. Bean at 503.577.1034 or rick@primeptn.com for pricing and details.

--- END POST ---