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Building Apartment Revenue: Yield Management

Apr 15th, 2011
by jameswb.
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It is no mystery that the past few years have been tough on the multi family industry.  We are seeing pockets of recovery while other regions are still suffering.  Despite overall vacancy issues, you often will see certain floor plans or views maintain high demand.  This is where market rate properties can boost revenue by practicing yield management. 

I first started practicing yield management when I worked with a client that primarily owned hotels.  They taught me a lesson that I would never forget.  When occupancy is high, the prices go up.  When occupancy is low, prices drop.  Basic right? The key; however, was to look for opportunities to grow revenue even when overall occupancy is down.

I was curious as to what Wikipedia had for a definition and really like what they had to say:

There are three essential conditions for yield management to be applicable:

  • That there is a fixed amount of resources available for sale.
  • That the resources sold are perishable (there is a time limit to selling the resources, after which they cease to be of value).
  • That different customers are willing to pay a different price for using the same amount of resources.

Airlines jumped on yield management after deregulation.  In essence, they cannot manufacture more seats just as we cannot add more rental units.  Hotels quickly jumped on this trend as well.  We all sell space for a specified time frame.  We have a time limit—and if we don’t maximize that time we lose money.

There are software programs available that will help you to do this; however, if you want to experiment without the investment, gather your front-line team, take a look at your property and ask, “Which styles always rent the fastest?”  Every property has apartments that rent quickly.  This is an opportunity to create revenue where there was none before.  Push the rents on those styles. 

Create a base price.  This may be as simple as taking your current pricing and adjusting from there.  However, if upon review you find that some unit styles are always full and you have occupancy issues on others, you may have a pricing problem.  If you aren’t already doing so, do a market analysis to compare your pricing with your comps.  Are their rents higher or lower than yours?  (You can look at rents per square foot; however, most customers do not take the time to analyze this.  They are more concerned with “What do I get for my money and how much will it cost me each month?”)  Are their amenities better or not as nice?  Is the location comparable?  Put yourself in your customers’ shoes.  Be as unbiased as possible.  If you were your customer, how much would you pay?  As a result of this exercise you will discover where you can push rents and perhaps where some should be pulled back a bit.

Increase rents for value items.  Increase the base price for amenities such as fireplace, vaults, extra windows, upgraded finishes (appliances, carpet, remodels, etc.), which floor it is on (top floor is generally premium—unless you do not have an elevator, walk-outs are a premium due to convenience for dog owners and active residents) and views (pool or nature views).  (One of the benefits of going through this exercise with your team and manually adjusting rents is that everyone understands the reasoning behind the pricing and can therefore explain it to their customers.  This has been a frustration with yield management software.)

Invariably, when we have gone through this process we have ended up creating the equivalent of several units worth of revenue.  So, on a 100-unit site, we have ended up with revenue generation equivalent to 103 to 107 units (based on former average rents).  At the high end you can end up with almost an extra month’s worth of revenue per year!

You will also find that you have enough income to more than offset reduced rents on the apartment styles that typically do not move quickly.  This gives you the benefit of a lower ‘loss leader’ for advertising purposes as well.  There is also snobbery on the upper end of the market so this increases your total range and broadens your appeal to a larger slice of the market.

At the end of this process you may find that you love the extra income that yield management brings you.  (Undoubtedly your ownership will!)  At that point you will want to look at the benefits of utilizing a yield management software versus doing it yourself.  There are pros and cons to both.  Regardless of which you choose, you will grow your asset and hopefully increase bonuses and your career growth!  Seize the opportunity!

Jim Baumgartner is Senior Vice President of RentSoda, a consulting company offering apartment marketing, business & operations consulting as well as industry-specific training.

www.rentsoda.com |8 blog.rentsoda.com| jim {at} rentsoda(.)com | 

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Building Revenue: 10 Tips to Decreasing Apartment Vacancy Time

Apr 7th, 2011
by jameswb.
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The market is firming up in many markets across the United States. After three dismal years this is a great thing!  Many owners are looking for ways to gain back some of the revenue they have lost over the past three years.  When inventory is leasing quickly, there are only a few ways to do this: 

  1. Increase rents and drop specials
  2. Decrease expenses
  3. Reduce down time between vacate and the new move-in

Increase rents & drop specials

When a market improves, most site managers want to bask in the glory and comfort of a solid 100% occupancy.  It is possible; however, despite the emotional gratification, it is not profitable.  Whenever your site is over 95%, it is time to kick the rents up a notch.  You can even analyze this by unit type.  This is your opportunity to get your largest revenue boost. (More on this at a later date.)

Decrease expenses

Most of us have spent countless hours renegotiating contracts, looking at utility savings and eliminating the nice-to-have vs. the need-to-have items on our sites.  In a recent blog, Amy Kosnikowski wrote, “Let’s face it – Frugality is now cool.”  While we should always be reviewing this, most of us have beat this up pretty well.

Reduce down time between vacate & the new move-in

The time a rental unit sits vacant between the previous resident moving out and the new one moving in is becoming an area of increased focus.  When the market is good, the vast majority of building owners in the Minneapolis/St. Paul market try to turn apartments within 24 hours.   We have a limited inventory and cannot order more product from the factory if we run out!  Using the example of bathing suits at Target–If they start selling well, Target orders more.  We cannot do that.  We get paid for time, if we don’t get paid, we’ll never capture that revenue.  Our inventory is fixed so we have to maximize it–meaning less downtime = more revenue.

 Tips to increase revenue by decreasing down time:

  1. Hold a group meeting to discuss ways to better manage the turnover process.  This encourages those who are ‘experts’ to share with their peers and build buy-in.
  2. Walk your move-outs early in the month to determine needs. Which homes need new carpet, what repairs have to be done, etc.  Any repairs that can be done while the current resident is in the home should be done prior to move-out.  This will also clue you into any homes that need major renovation and therefore will have to be down for an extended period (meaning one or two weeks—not months!)
  3. Make sure expectations for your vacating residents are clear.  Ideally they received some kind of unit condition form.  Let them know replacement and labor costs so they know what to expect when they vacate.  It is a good idea to send another copy of this along with a notice confirmation letter.  Hopefully, they will do the bulk of cleaning for you!
  4. Order parts and supplies by mid-month so time isn’t wasted running to the hardware store during turns.
  5. Establish a good rapport with vendors.  Schedule them early (e.g. carpet extractors, carpet replacement, painters, outside cleaners if you use them).  If you set your expectations they will adapt to the pressure of turning between noon on the last day of the month and noon on the first.  A key item to consider, if you contract much of the work out, you can get it done faster but at a higher cost.  Take a look at this to see if it makes financial sense for your property.
  6. Talk with the residents who are moving out.  Are any going to be moving out early?  If so, schedule their move-out inspections earlier as well as the subsequent turn work requests.
  7. If you have more move-outs than demand, create a priority list—divide and conquer.  Make sure your most popular styles are turned first so they are available to show and rent.  After those are ready, make sure you have one of each style available.
  8. In many markets, it is not unusual to have staggered move-ins and move-outs.  Consider if this is a system that would work for your company.  Many prefer it because it staggers the work; however, others find it bothersome to track notices, etc.
  9. This process of tightening up your turn time may take a few months to implement.  Set achievable goals and tighten the timeline a bit more every month.
  10. Celebrate a job well done with your on-site team!  It takes a lot of work so bring pizza in for lunch, snacks, etc. 

As managers of real estate, it is our job to grow the investment we manage.  If your company has not started to focus on this yet, you will be a rock star when your boss starts to notice your revenue increasing.  Follow these easy steps and you will see positive results!

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Success Stories: Two Apartment Managers Who Started Small & Making A BIG Splash!

Jan 26th, 2011
by daisynguyen.
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This is the first blog in a series of blogs that takes a closer look at success in the multi-family apartment industry – Who’s successful? Who’s Being promoted? How did they do it? and most importantly to YOU as the reader – can their stories help YOU become successful in your apartment industry career?

This blog examines:

Two SUCCESS Stories of Apartment Managers Who Started Small

and Currently Making a BIG Splash!

I interviewed Kate Heitzman of Greco Properties – General Manager at BLUE in Uptown Minneapolis, a 242 unit luxury market rate property and Toni Powell of Bigos Management – Community Manager at Calhoun Greenway also in Uptown Minneapolis, a 350 unit market rate property. Both management companies operate in Minnesota.

Q: How did you get your start in the apartment industry?


Above: Toni Powell of Bigos Management

Toni: By accident! I moved to the twin cities from St. Cloud. The apartment building I moved into didn’t have my apartment ready – they needed a manager, and there I was. It was a 40 unit 1st tier

Minneapolis suburb, class A property. Eventually, they asked me to take over a different 38 unit luxury townhouse project. I did. When my manager left, I asked to take over both properties. I was bored and I needed MORE. They didn’t think I would be able to handle both properties, but they gave it to me, and I made it work.

Above: Kate Heitzman of Greco Properties

Kate: I had always worked in retail management, and didn’t want it anymore. Once I had a kid, the hours didn’t work for me. I did my research and felt that as a single mom, property management would fit into my lifestyle. I applied for a full-time caretaker position at Laurel Village. As you may know, Laurel Village is one of the largest properties in the twin cities metro area with 720 units across 7 buildings spanning 3 city blocks in downtown Minneapolis. On a site this large – there’s a lot of miscellaneous stuff that needed to get done. THAT was me. It gave me a good introduction into property management – I’ve seen a lot and done ALOT. I’ve been surprised by people many times, and they STILL surprise me to this day! That’s property management for you – never a dull or predictable moment.

Q: How Long did you stay in your first property management job before you decided to move on? What made you decide to move on?

Toni: (I stayed with my first company)…for 3 years and then started to look for opportunities. I get bored REALLY easily, so I need to have challenges!

Kate: I was there (at Laurel Village) for 3.5 years. In the last year, I realized that I would definitely stay in property management, but I REALLY wanted to have my own property to manage. While I was at Laurel Village, I was promoted from Caretaker to Operations Assistant.

Daisy’s observations: It looks like for both Toni & Kate, stayed a decent amount of time with their first employers and learned as much as they could learn. As it does to many people I have talked to in the apartment industry, it HOOKS you, it gets in your blood, and then you’re left looking for MORE. They both wanted MORE > which is the catalyst that prompted them to look for the next step in their career. Interesting!

Q: Where did you go next? What did you decide to look for? How did you find your next job?

Toni: Another peer I networked with worked for Bigos and LOVED the company. So I found a job posting they had listed and interviewed with a Regional Manager at Bigos. I didn’t hear back from him! But I KNEW I wanted to work there (at Bigos), so I decided to call him once a week for 2 months. I had heard that the “word on the street” was that I was not a good fit for the property I had applied for, but I knew in my heart, I wanted to work for Bigos. My persistence DID pay off. Another Regional Manager at Bigos called me and offered me a job at Mallard Creek – 120 units in Golden Valley. It was a market rate, older property (20 years old) in a GREAT area.

Daisy: Here’s a woman who doesn’t take “no” for an answer!

Toni: I stayed at Mallard Creek for 3 years, and during that time, I handled a total rehabilitation of the property (interior and exterior) – it kept me challenged and I was constantly learning new things.

Kate: I started to look for opportunities where I could manage my own site, and saw an ad for a Section 8 property in Edina. It was 80 units spread across 4 different buildings – similar in set-up to Laurel Village, but that was where the similarities ended. It was MUCH different in size and demographics. I stayed there for 1.5 years – I worked hard, I did everything from ripping out carpet with my Maintenance guy, plunging toilets, to doing Section 8 paperwork. You name it, I did it. I’ve not only become pretty handy with tools, when I work with Maintenance, they respect me, as I’ve done many of the things they’ve done right alongside them. I learned everything I could about managing my own site, and my next opportunity was a larger site in Chanhassan – 162 units. I stayed there for a year before realizing I didn’t like being so far out. From there, I was contacted by someone I knew in the industry to manage a 290 unit property in St Louis Park. My sites kept getting bigger and bigger, my responsibilities grew, and I learned A LOT during this time!

Q: Why/How did you decide to go about finding your next opportunity?

Toni: I love working for Bigos. I have great managers/supervisors. I communicate with my supervisors that I want something new, and that I can get bored really easy. They always find ways to challenge me. I love new challenges. After Mallard Creek, when I started getting bored again, I started to apply to other openings in our company, but I didn’t get the positions I applied to. In hindsight, it was a GREAT decision both for myself and for Bigos – because I got to do all the things I did, learned a lot, then when I WAS ready, Bigos was there to challenge me. My next challenge was a 245 unit market rate property in Plymouth called Willow Creek – I stayed at Willow Creek for 1.5 years before applying for other challenges within the company. From Willow Creek, I was promoted to Shadow Hills, a 322 unit market rate property – we won property excellence last year at the MADACS – this property is one that I consider my biggest challenge and triumph so far! I’ve been with Shadow Hills now for exactly 12 months, and just when I thought I might get bored, along comes another challenge. (At the time of the interview) – Next month, I will be transferring to a Calhoun Greenway. This is in Uptown – I’ve always been in the first tier suburbs. This will be a whole new area and demographic for me. This is a new acquisition and total rehab of 350 units. It’ll be totally different than anything I’ve done, its different clientele, different location, with lots of moving parts. I’m going to LOVE it.

Kate: Working in the suburbs, I realized I missed the hustle bustle of a densely populated urban area. I knew I wanted to either return to downtown or uptown in Minneapolis. I began networking with people I knew, putting my feelers out for opportunities that met my need. I now had experience, so I didn’t want to go just anywhere. I wanted to find the right match for me & my family. I knew what I wanted, and I was willing to be patient and look for the right opportunity. That’s when I heard about Greco Properties and their new project in Uptown Minneapolis, called Blue. 242 units of luxury market rate apartments in Uptown. This was a new project with a new lease-up – something I had never done, but couldn’t wait to do.

Q: What are the biggest challenges going from a smaller property to bigger properties?

Toni: It wasn’t much different. The more units you had, the more people you have to get everything done. For me it wasn’t a change. You just learn to manage and increase your employee base, and work on larger numbers when thinking about resident retention. The challenges in property management are the same from a small property to a large property – those challenges are resident relations, turnover, staff moral (especially with management company transitions), and the most challenging of all, but also the most rewarding – is to take a property over from another management company and bring it up to the Bigos standard of excellence. We have a standard of excellence – both with apartment residents and employees. Sometimes making those changes can be tough – but in the end, it’s good for everyone.

Kate: The biggest challenge is all the things you don’t know. But just know that its trial & error, and if you’re smart, you can figure it out quickly. The biggest challenge for me is to know what I want out of a job/career. It’s taken me a couple of years of experience to find my niche – find what I liked, what I don’t like, what I am good at, what I am not so good at and find a company who wants me for all the things I do well. There’s a lot of variety out there, and lots of availability. There’s a job, career, company for everyone. You have to find the right property and right management company for you.

Q: What do you think has played the biggest role in your success – what would you advise others to look for/do to become successful?

Toni: The thing with Bigos is that they’re a big, smartly run company. There’s always another opportunity to do something new. They’ve been a HUGE part of my success. They support their people, they provide education, they have opportunities – it’s a culture of cultivation. Bigos has promoted and moved people within the organization – which has been a HUGE part of my learning, growth and success.

I also advise others to communicate with their supervisors about their long term and short term career goals as well as what you’re good at, and what you want. I’ve always communicated to my supervisors what I want next, let them know I BELIEVE I can get it done. I’ve let them know that I can get bored easily and I need to have new challenges. I have been lucky to have supervisors and managers that listen and utilize me to the best of my abilities.

Kate: Ask A LOT of questions, get to know your peers in the industry, go to the MADACS & other MHA functions, attend networking functions that are offered in the industry to get to know everyone and what’s out there. It’s a big industry, but at the same time, it’s SMALL – you know? You can get to know people, network with them, help them out, treat your vendors well, etc.

I also recommend that everyone get to know themselves and what they want. For me, I have always looked for smaller, more hands-on management companies where they know you personally and where you’re not just another employee. It’s more family oriented. Where you feel like your suggestions and voice is heard – where they DO listen and implement your suggestions. I found out what I wanted through my journey and when I looked for opportunities, I paid attention to what made sense to me – what I wanted out of a management company. When I’ve found the right management company – I am able and allowed to be successful.

Daisy’s observations: Both women were high energy, go-getters. Both started relatively small, and grew their success from there. One went the path of a large management company, and the other went the path of picking smaller management companies with the right opportunities that met her needs. The thing that struck me about BOTH of them is that they both KNEW themselves well – knew what they wanted, knew what they were good at, and knew what they were looking for. I talk to A LOT of people – there are MORE people that are confused about who they are and what they want to do than there are people who KNOW themselves. These women KNEW themselves. This is part of their success.

Something not noted in the blog, but I want to mention, is that both Kate & Toni talked extensively about their team and resident strategies. It is clear that both liked working with people, and both women valued working in teams, as well as valued their teams.

It is our hope that through our SUCCESS STORIES series, you, the reader, will find new inspirations, new ideas, new ways of becoming successful. Our next SUCCESS STORIES blog will be focusing on individuals who have been successful making a transition from being a vendor in the apartment industry to working at a property management company.

Are you at a small apartment community manager or leasing agent with goals to work your way up? Have you worked your way up and have additional tips to add on what it’s done, and how to be successful at moving towards larger goals? Leave us a comment and share with the readers!

Don’t GET IT? RENT SODA! GET IT!

-Daisy Nguyen in Minneapolis, Minnesota MN

CEO/President

RENTSODA-small

Offering Apartment Marketing, Apartment Business & Operations Consulting & Apartment Leasing Training

Web: RentSoda.com Email: Daisy {at} RentSoda(.)com

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The heART of the Deal | Lessons in Management: The Art of Delegating

Jan 18th, 2011
by jameswb.
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 Any time you manage other people or projects your life goes from simple to crazy!  The only way to survive is to learn to delegate.  While many joke that they have mastered the art of delegation (and now spend the majority of their time, feet on desk, surfing eBay or YouTube) most supervisors struggle with this key management technique.  Unless managers delegate some of their work, they are acting as individual contributors instead of as a leader. 

To delegate means to assign a task to another person.  This gives them the responsibility and formal authority for accomplishing that task.  One key item to remember is that while authority and responsibility are passed on to a subordinate, the buck still stops at the manager’s desk.  Therefore, monitor progress to ensure that the task is done with quality and on-time.

An added benefit of delegation is that it provides experiential learning.  This allows the entire team to develop and grow.  There will be mistakes but the educational opportunities are well worth it.  Several years ago an employee bashfully entered my office.  I could tell he felt horrible.  With prompting he relayed that he had screwed up on a project and it would cost a property a chunk of change.  I asked, “Will you ever do that again?”  He emphatically replied, “No!”  Consider this tuition for the school of life.  Today he is very successful in the multifamily industry (and he never repeated that mistake!)

There are three basic components to delegation—just think much ADO about nothing:

A – Authority:  The manager needs to pass the authority on to the person to whom the task has been assigned. 

D – Duty:  Assigned the project or task to the person on your team most well-suited to the work.  Make sure you are clear as to what the desired results are.

O – Obligation:  Create a sense of responsibility on the part of the employee—ensure that they will do the work.

The process of delegating by a manager can be done in three steps:

  1.  Make the decision to delegate and ask four questions: 
    1. What are the objectives—what do we need to accomplish?
    2. When does it need to get done?  Is it urgent?
    3. Does the employee have the right resources to get the job done?
    4. Who has the talent best-suited to the task?  (To do this you need to know your team.)
    5. Clearly communicate to the employee:  what is the task, what resources are available to the employee to complete the task and what are the benchmarks to measure progress.
    6. Evaluate how the process went (after the task has been completed):
      1. Were the original objectives met?
      2. Did the employee grow?
      3. Was it done efficiently?
      4. Was the delegation effective?

So why don’t more managers delegate?  When I was a newbie manager, there were quite a few reasons why I stumbled:

  1. No training—I did not know how.
  2. A belief that I could do it better than anyone else.
  3. I came up through the ranks and knew only one way!
  4. No system to measure and assess.
  5. It took too much time (when I am struggling to keep up, it is hard to conceive of the idea that delegating can actually—eventually—save me time!)
  6. Fear of having the subordinate outshine me.
  7. The corporate culture was filled with insecurity and instability.
  8. I didn’t trust my employees—or know them.
  9. The employee rejected taking on additional duties.

So I learned a few things!  I learned that when I delegated to my employees they grew and became stronger contributors to the organization.  The amazing thing was that this enabled me to grow too!  I found that as I hired a team that balanced out my weaknesses, we became a powerhouse!  I got credit for their strengths.  Then I learned to pass the credit for a job well done on to the employee—but if it was a flop, I took the hit.  I avoided the temptation to torpedo the employee who screwed up.  If I did, none of my team would want to take on anything different or new.

I also learned that as an employee, a great way to win the respect of my boss was to take the initiative to take on additional tasks.

So delegate!  You will find that you have more time to manage for the future (because you are taking less time to react).  You will discover jewels in the rough on your team—and with your delegation and accompanying counseling they will turn into highly polished and valuable jewels.  Lastly, it will help you grow to the next level.  And that’s the heart of the deal!

Cheers!  Jim Baumgartner | Rent Soda

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The heART of the Deal | Lessons in Management: The Dynamics of Relationship

Jan 11th, 2011
by jameswb.
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Life has a way of dropping needed messages in our laps that, when pieced together, bring new insight. The news of another shooting spree came after I had finished teaching a management class where we had discussed Transactional Analysis (basically the study of interactions—or ‘transactions’—between people) and its impact on our relationships with internal and external customers. 

Transactional Analysis is a method of understanding human behavior and interactions—a concept discovered and popularized by Dr. Eric Berne in his book The Games People Play.  His work was carried forward by one of his students, Dr. Thomas Harris (the author of I’m Okay – You’re Okay).  Dr. Harris outlines four positions of ‘Okayness’.  The shooter in Tucson was a classic example of “I’m not okay – you’re not okay”.

Before delving into ‘Okayness’ and its impact on our internal and external customers, we need a firmer understanding of the background of Transactional Analysis.

Ego States:  The Foundations of Transactional Analysis

Dr. Berne theorized that there are three ego states: child, parent and adult.  These are based on the belief that our life experiences impact the way we look at the world.  We learn the first two ego states from our parents and authority figures.  In fact, he believed that we literally record every event in our brains—to be relived, remembered or replayed later.  We drift in and out of ego states within seconds; however, we have a tendency to spend more time in one.

Child Ego State – When we are children, we record the internal events that are associated with external events we witness.  Basically these are the emotions or feelings that are tied to those events.  This ego state typically exhibits childlike behavior such as tantrums, selfishness, a desire for immediate gratification and raw emotions.  It is referred to as the ego state of “I Want”.  In an appropriate setting (out on the town, a party, at a football game, etc.) it is a wonderfully fun and releasing place to be.

The Parent Ego State – Also learned in childhood, we modeled this ego state on our parents’ (or others in a parent-like role) values and prejudices.  It is thought that there is a massive collection of external events that were perceived during the first five years of life.  These might include: “never take candy from a stranger”, “look both ways before you cross the street” or “always chew with your mouth closed”.  During the first five years of life, the child receiving these messages and events has no way of filtering the information.  Have you ever watched children play and heard your words (and tone) come out of their mouths?  I will never forget my shock the first time I opened my mouth to reprimand my son and my father’s words came flooding out.  I had sworn I would never say that—and yet I spoke it as if on ‘auto pilot’! This is the ego state of “I Should”.   

The Adult Ego State – the final state, this is what we perceived to be different from felt (Child) or observed (Parent).  At around one year of age, we are able to exhibit gross motor activity:  grabbing a toy, playing peek-a-boo, etc. We converted the information gathered from these situations into information. According to Berne, the Adult ego state is “principally concerned with transforming stimuli into pieces of information, and processing and filing that information on the basis of previous experience.”  It acts as a referee between the emotional pinings of the ‘Child’ and the biased ‘Parent’ to sift out the facts and draw a satisfactory conclusion or compromise.  It is the ego state of “I Will”.

(While Berne was influenced by Freud, do not confuse his three ego states with Freud’s Id, Ego and Superego.  It was Berne’s belief that instead of finding ourselves in a stage, human personality is multi-faceted.  Each of us contains personality factions that collide with each other.  These interactions and collisions between our factions result in our thoughts, feelings and behaviors.)

 A researcher who greatly influenced Berne’s study of Transactional Analysis was Dr. Wilder Penfield. Using electric currents Penfield discovered some amazing things about our brains.  Some of Penfield’s findings that most influenced Berne were:

  • Our brains record events like a camcorder.  You may not be able to access the information at a conscious level; however, it is always in your brain.
  • The event, as well as the feelings that were experienced during the event, is stored in your brain.  As such, they are entwined and neither can be recalled without the other.
  • When recalling a past event, they will be so vivid that the same emotions will be felt.

Is it any wonder that we have ‘hot buttons’ that cause us to feel extreme emotions? 

The goal of understanding that we all wander in and out of one of three ego states is to enable us to better gauge our customer’s point of reference.  If your customer is yelling at you for towing their car for snow removal (Child ego state) you probably will not have great success if you respond by saying, “Well, you know you shouldn’t have parked it there!” (Parent ego state.)  This transaction is known as a crossed ego state.  Your goal is to get them into a complementary or parallel ego state so a constructive discussion (transaction) can take place.

Fast-forward to Dr. Thomas Harris.  A student of Berne’s, he took the study of Transactional Analysis to a new level.  In his book I’m Okay – You’re Okay he relays that as babies, we learned that we are completely dependent upon ‘big people’ and therefore not okay.   As we grow, we can become more accepting (and therefore move towards a sense of okayness) as a result of positive input and reactions from others or we get stuck in a very negative self-concept.  (Negative inputs would include comments like: ‘why can’t you be more like your father?’, ‘don’t be such a baby’ or ‘you’ll never amount to anything’.) Therefore, we start out ‘bad’ and need to be talked out of it.

There are four positions or attitudes of Okayness:

  1. I’m Okay – You’re Okay:  This is expressed by self-confidence, relates well, accepts people at face value and respects opinions.
  2. I’m Okay – You’re NOT Okay:  People holding this perspective are self-righteous and domineering.
  3. I’m NOT Okay – You’re Okay:  These people see the world from their insufficiency and insecurity.
  4. I’m NOT Okay – You’re NOT Okay:  These people exhibit depression and despondence; nothing in life is good.

Jared Loughner, the shooter last weekend, is probably operating out of a position of “I’m NOT Okay – You’re NOT Okay”.  While it is unlikely that we have people waiting to shoot us with real bullets, there are a lot of folks out there with emotional bullets aimed at us.  It is helpful to understand that this condition exists and is not personal.  There are a few steps we can take to counter it:

  1. Take the time to listen; don’t try to shove negative behavior or comments under the carpet.
  2. Make eye contact and smile.  Establish a positive and personal connection.
  3. Understand that you are powerless to bring this person to a place of Okayness.  (Don’t try to rescue.)
  4. Ask about her/his feelings.
  5. Don’t make excuses for behavior lapses—hold her/him responsible.
  6. Be honest about what you need from her/him.
  7. Be empathetic.

We spend the majority of our time communicating and interacting with others; you have the power to make it positive!  Understanding how others can push your ‘buttons’, how you can slide into a less-than-healthy-ego state for the situation or how your sense of self impacts communication will make you a better leader, a better salesperson, a better employee and a better friend.  And that’s the heart of the deal!

Cheers!  Jim Baumgartner | Rent Soda

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Successful Rent Collection Timeline: Show Me the Money!

Nov 24th, 2010
by jameswb.
1 comment

It’s the holidays!  Peace on earth; good will towards…delinquents?! 

During the holiday season rent collections can be particularly difficult—especially considering our economic climate.  But in order to ensure effect collections over the holidays, the time to start is now.

Today:  Do you have chronically late people?  Take a moment to sit down and make a list of every resident who is typically late.  If you have been at your property for a while, this list will come very easily.  If you are new you will need to take a look at your receivables from prior months. 

Start the Process Early:  Take some time the week (before the first) to make positive personal contacts with everyone on your chronically late list.  It is a good idea to set up clear expectations right from the start (e.g. When will you be paying?  How many times will I have to hound you?  How much of my mental energy are you going to take?!)  Call and say, “Hey, I just wanted to call and thank you for paying your rent.  Next month’s rent is coming up—are we going to be okay?” Take time to briefly listen to the ‘story’.  Some may have fallen on hard times.  For cases like this, it is an excellent tool to assemble a list of local charities and houses of worship that provide emergency assistance.  Pass this list on.  Be compassionate and respectful but firm.  Remind your customer that rent is due on the first and that you will be looking for it at that time.

After 5 p.m. on the First:  Take a look at who has not yet paid.  Tackle the members of your chronically late list first.  You have already had a phone conversation with them so at this point, a quick e-mail or note under the door with a gentle reminder is good. 

“End-of-grace-period Eve”:  Twas the night before the late fees kick in—it’s time for another courtesy call.  At this point, call everyone on your delinquency list to let them know that any rent received after 5 p.m. on the next day (consult your site’s procedure to verify when this kicks in) will need to include your late fee.  Let each resident know what the total amount due will be if they are late.  At this point you will discover that some of your residents have just plain forgotten in the hustle and bustle of the season. They may be embarrassed so treat them kindly (as you do with all of your residents!)

The Morning After:  The day after your grace period ends, send your late letters out. At this point, you have given a gentle reminder to everyone on your list (personal calls and e-mails) so it is appropriate to write a professionally polite letter that includes the amount owed as well as consequences of continued non-payment.

48 Hours:  Within two days, send another, sterner letter out to anyone who still has not paid.

24 Hours Prior to Starting Legal Action:  Send a final letter out to anyone who has not paid rent.  Let them know that this is last call. Often the threat of legal action is enough to get someone to finally fork it over.  If there is anyone you have not been able to speak to personally, try again to have a conversation with them to determine what the situation is.

Start the Legal Process:  Be consistent.  Do what you said you would do.  At this point, if you bail on your policy and procedures you have violated Fair Housing and you have sent a message to the residents involved—as well as any other residents in their circle of influence that late rent is okay.

Starting over (or on a new property)

Perhaps you have taken over a property where rent collections have gotten sloppy or perhaps you have enabled residents to start slipping outside the bounds of your company collections policy.  Some tips:

  1. Send a memo out to every resident letting them know that rent collection has gotten a little lax and reminding them of your policy.  Specify that you will be returning to your standard procedures in thirty days.  Place a copy in each resident file.  In many jurisdictions, if a resident can prove that rent has not really been due on the first a judge will often side with them.  In effect, you have rewritten your Lease based on your actions.  You need to draw the line in the sand again. 
  2. Let new residents know your rent collection expectations (policy) from the very beginning.  This is an excellent item to underline and have them initial on the Lease during your Lease-signing meeting. 
  3. When a resident is late, have a standard recap of your rent collections policy including time-line and give it to them. 
  4. Still having problems?  Early in my career a resident told me that I was his last priority because our site’s late fee was lower than his truck late fee.  (It’s always good to know where you stand!)  After researching what others were charging in the market and what state law allowed, we increased late fees.  Make sure the penalty is fair but big enough to be felt.
  5. Start weeding out chronic late-payers at renewal time.  There comes a time when you have to decide whether or not you want to keep a customer.  Sometimes it is okay to just say goodbye.

We would all like to be able to say, “Hey!  No pay no stay!”  But we are in a customer-service business. Rent collection is often one of our least favorite tasks because we feel like we are always chasing the painful few.  I hope you take some time to use these tips to create a proactive plan to motivate your customers to pay you on time.  And then, enjoy the holidays!

Cheers!  Jim Baumgartner | Rent Soda

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Motivating Your Employees in a Stressful Economy: Seven Tips to Building Team

Oct 20th, 2010
by jameswb.
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It is ironic that a lot of positive things have come out of the downturn in the economy.  We have focused more on cutting costs, built stronger relationships through social media, increased customer service initiatives and strengthened our skills.  However, one of the negative outcomes has been a tendency to take staff for granted.  There has been a trend towards seeing employees as a commodity that can be cut—in quantity as well as compensation.

Cutting employee costs is an understandable reaction to an economic downturn.  However, will this serve us best in the long run?  This trend creates two areas of concern:

  1. Disgruntled employees feel abused and unappreciated.  They pass this attitude on to our customers.  In a competitive climate, is this the front-line environment we want to create?
  2. Demographic trends indicate that we will be facing a shortage of talented experts in the future.  As the employment market starts to loosen up, our top talent may be easily wooed away to other jobs promising greater appreciation and rewards—both monetary and emotional.

How do we keep our team motivated and happy to be working with us?  We do not have extra cash budgeted—but it’s not always about the pay.  In fact, most of the time that is not the most motivating factor in retaining excellent employees and motivating them to excellence.

A few tips to help you motivate your team:

  1. “Please” and “thank you”.  Take time to remember the manners your mama taught you!  Being thoughtful, courteous and polite goes a long way.
  2. Set aside time to listen to your team members:
    1. Concerns – what is working; what is not?  Your front-line team has insights you could only dream about.  This is a great opportunity to gather expert advice.
    2. Ideas – Whenever you are feeling stuck, sit down with your team.  You will be amazed at the ideas they will give you.
    3. Give clear direction and expectations—as an employee, one of the most frustrating experiences is not receiving clear work direction.  Have you outlined the company’s goals and each team member’s contribution to that effort?  I once had a supervisor who gave conflicting work expectations.  Continually changing directions made my efforts feel futile and hampered progress.  I felt like a puppy unsure of whether to come or go.  I ended up going.
    4. Firm but fair—favoritism will kill a positive environment.  Employees find great comfort in knowing exactly how you will react and that your response will be consistent.
    5. Share the good jobs – don’t just delegate the ‘icky’ stuff.
    6. Bring your team in on decisions.
      1. Brainstorming and ideation—holding a brainstorming meeting allows for a free flow of ideas.  You will be amazed at some of the revolutionary concepts that emerge.  This also makes each team member feel like they are part of the creation process.
      2. Meetings—openly discuss concerns and issues in meetings. Invite feedback and team member contribution.  Take the time to listen and consider input.
      3. Creates ownership—When you have involved team members in the process from ideation to decision, they feel as though they have a stake in the successful outcome of that decision.
      4. Publicly praise—did one of your team members do something very, very right?  Praise in front of peers and the big boss.  This praise will go a long way. When we were inexperienced supervisors we thought we had to find and own all the kudos we could!  However, in reality a superstar team reflects a superstar boss. 

Celebrate your staff!  Taking the time to tune in to them will pay dividends:  increased sales, improved retention and a positive working environment.  And you might even find that going to work is more fun!

Cheers!  Jim Baumgartner | Rent Soda

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Top Ten Tips for Leasing to Seniors

Oct 12th, 2010
by jameswb.
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According to the U. S. Census, there are 35 million seniors in the U. S. today—12.4% of the population.  Over the next decade that percentage is projected to grow to 16.5% (53.7 million people).  How do we attract this population to our community?

  1. Attitude is key.  Remember who you are marketing to—not just your senior prospect but also their kids and influencers.  Don’t approach your customer as ‘old’.  Studies show that we routinely think ‘old’ means ten years older than we currently are!  Talking down to your senior prospects will kill your sales.  Try to avoid words like senior, old or elderly.  Today’s seniors do not see age as something that is determined by the number of candles on a cake. 
  2. Seniors do use the internet (in fact senior use is growing by leaps and bounds); however, they still heavily utilize print.
  3. Depending on your budget you will likely have multiple marketing campaigns (a primary one for your senior customers and ancillary campaigns for influencers).  Design your senior-focused print advertising to be easily read and understood.  As we age the way we perceive color changes and larger print is appreciated (no smaller than 11-point).  Avoid serifs, italics and fancy fonts.  Color ads draw attention (to the exclusion of black–and-white). Avoid reverse copy and maintain good white space.  Keep your message on-point and clearly highlight the benefits.
  4. It’s all about relationship – take the time your demographic needs (and they will need a lot of it). Seniors appreciate the personal touch.  Relax your pace to match your prospect.  As we age relationship becomes more and more important.  Who you are is as important to them as what you are saying. 
  5. Your senior prospects have seen and done a lot in their lifetimes.  They are skeptical (life can do that to you!)  Have testimonials that you can share.  Better yet, have resident hosts at social events, use a resident’s apartment as a model or stop and chat with residents along your tour route.  Create opportunities for your prospects to socialize with your current customers.  Credible testimonials work. 
  6. Be real.  Be direct. Your customer has a lot of experience; they will be able to see through flash.
  7. Always ask for the sale; however, do not use a hard close or scare tactics.  Remember, this is a major move for them.  In some cases they have 30 or 40 years worth of possessions to sort through and dispose of before they can even make the move.  The name of the game is to not ADD to the fear but enforce the newfound independence they will have moving in to your community.  Your job is to solve their problem and present your offer.
  8. Highlight why the move to your community will help them remain active and independent.  A great fear is having to rely on others for basic everyday life functions.  What do you offer that will enhance their lives?  Define what your customers need; do you have it?  The senior housing market is changing quickly.  Baby Boomers are demanding a level of quality and service that far exceeds their predecessors.  In the past, buildings became ‘senior’ buildings because the population aged in place and never left.  Today, your customers are expecting much more.  (Expectations might include van service to doctors, shopping centers and events; library/business centers; hot meals; fitness centers; hair salons and even happy hours!)
  9. Senior prospects fear being taken advantage of.  The use of guarantees can be very helpful in imparting confidence.  This might be the time to employ fully refundable holds.  Don’t cop an attitude if your customer takes advantage of it, they may be testing you.  If you handle the situation with grace, your likelihood of eventually closing the sale is very strong. 
  10. Don’t forget the old-fashioned hand-written thank you note.  The time and effort it takes to send a personalized note will be valued and appreciated.

Why work so hard to attract this demographic?  Your senior customers will be amongst your most loyal residents and will remain as long as their health permits.  In addition, you will find that they do much to enhance their new community.  The investment in time it takes to build these relationships will continue to build dividends.

Cheers!  Jim Baumgartner | Rent Soda

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#1 Most Important TIP for Apartment Resident Retention

Oct 8th, 2010
by daisynguyen.
3 comments

With so many choices available, the price competitiveness of the market, and concessions still a tool that lots of apartment communities still use to entice renters, the best way to control vacancy loss is to close that back door – retain your existing residents. What’s the most important thing you can do to increase resident retention and lower your resident turnover?

Here’s my #1 most important tip I can give you regarding your resident retention plan: RESPECT your residents and genuinely APPRECIATE their business. OK, so maybe that’s 2 tips – just consider it my two-for-one tip deal!

The reality is, no matter what the rent is, whether its $500.00/month, or $5000.00 a month, its likely the BIGGEST check your resident writes every month. Find ways to let your residents know you respect and appreciate them as residents of your apartment community! If you can find ways to show them you respect and apprecaite your them as residents, the higher your likelihood of turning them into life-long residents!

This may sound like an easy no-brainer, but the reality is, it is so easy to forget – it is something you have to work actively to remember and practice.

When I work on affordable communities, I am always amazed at the amount of complaining I hear in the site staff – they can’t identify with the residents – they find it hard to believe that anyone would live at ABC DUMP apartments, they complain about how small the units are, and its common for me to hear, “I could NEVER live in a place like this!” They frown upon the community of hard working adults – the same community that pays their paycheck! This kind of attitude rubs off, and can be felt by your residents.

My 17 year old son, Alex, recently bought his first car. He had been working and saving up for the past 3 years and had saved up $6000.00. To a cars salesman, $6000.00 is probably one of the smaller deals that he can land in a week. But, to my son Alex, he wasn’t thinking, “Gosh, I’m going to buy the cheapest, crappiest card I can find on the lot,” he was thinking, “I am going to find the best looking, biggest value I can find!”

No one intends to be cheap or settle for anything less than the best – its whatever they can comfortably afford.

Another way to look at this: If you were to go into a retail store month after month and write them a check for the same amount as you typically spend on your monthly rent – how would that store treat you?

Whether you are in the Nordstrom’s shoe department income bracket, or the PAYLESS Shoes store income bracket, I am willing to bet the sales person who helps you out every month will learn to love and appreciate your business.  How would they do this? I’m also willing to bet they would know your name, know your preferences, make it convenient and easy for you to shop at their store, accommodate your needs, and thank you each and every time you make a purchase.

In our industry, we are so used to getting a monthly rent check from our residents, its so easy and convenient to forget to do simple things like remember everyone’s name, be helpful, find ways to make it convenient for your residents to live in your apartment community, make it easy for them to LIVE at your apartment community, or even say THANK YOU every month! – At times, I see the exact opposite behavior in our community offices – our residents walk in, and we ask them to wait, we look up – irritated that they interrupted the time we had set aside to do paperwork, they tell us about a leaky faucet – and we ask them to call a designated number for service requests, we charge for such easy conveniences as faxes and holding packages, we receive the rent check in a drop box, and never say THANK YOU – we do everything to practically show them the door out.

Is this how you want to be treated when you are writing the biggest check you can possibly afford to write every month? Would you continue to live there?

How do you show your residents how much you respect and appreciate their business?

Don’t GET IT? RENT SODA! GET IT!

-Daisy Nguyen in Minneapolis, Minnesota MN

CEO/President

RENTSODA-small

Offering Apartment Marketing, Apartment Business & Operations Consulting & Apartment Industry Training

Web: RentSoda.com Email: Daisy {at} RentSoda(.)com

Become a fan of RENTSODA on facebook.  Connect with RENTSODA on LinkedIn!

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5 Things To Do NOW to Deter Crime From Your Apartment Community

Sep 1st, 2010
by daisynguyen.
3 comments

Crime is an issue in any apartment community. Because apartments communities are denser populations, your apartment complex can be appealing to criminals – in a short amount of time, over a short distance of space, they have access to a higher number of “opportunities.” What are some affordable tips that you can implement NOW that can help deter crime from your apartment communities?

5 Things YOU Can Do NOW to Deter Crime From Your Apartment Communities:

  1. Take care of graffiti as soon as possible. Leaving a graffiti tag on your building only sends the message that your management either doesn’t care or is lax in the maintenance of the building. If you are lax with the maintenance of the building, would be thieves may believe you will be lax with the security of the building, the legal process, etc.
  2. Install good lightening around the perimeter of your community/apartment building. When I spoke with the Minneapolis police department, they don’t recommend motion lightening in favor of lightening that is turned on a dusk and off at dawn. Their reason: crooks will run into a dark alley, along a dark street and look for opportunities. Even if the lights come on once they on that street or alley, you’ve invited them in. Rather, light the streets and alleys, and those same crooks will avoid your street/alley way altogether.
  3. Leave windows to public areas unobstructed & lighted. Again, the best deterrent in crime is the appearance that the entire neighborhood could be watching. Especially where your community space may face a busy street, make sure the view into the space (i.e. community room) is not obstructed by potted plants, trees, etc. Thieves don’t want to be seen when they are thieving. Where possible, install motion lightening in your interior public spaces – if someone were to break into your community room or office after hours, the space will light up, and with the windows unobstructed, any activity going on in your community room has the possibility of being seen by all.
  4. Plant thorny vines or plants along walls or fences to deny access & prevent graffiti. If you have an area that is frequently tagged with graffiti, have an area that attracts unwanted activity, or have a wall that you want to keep people off – plant thorny vines or bushes. Nobody likes to be pricked by rose bushes or thorny vines – even toughened criminals or your harmless neighborhood juveniles.
  5. In parking areas, like garages & parking lots, post signs to remind residents and guests to lock their cars and take their valuables with them.

Don’t be a willing victim. Without the right “opportunities” for criminals, they WILL move onto greener pastures – that don’t include your apartment buildings.

These are my favorite cost effective, affordable, easy to implement crime deterrents - what are yours?

Don’t GET IT? RENT SODA! GET IT!

-Daisy Nguyen in Minneapolis, Minnesota MN

CEO/President

RENTSODA-small

Offering Apartment Marketing, Apartment Business & Operations Consulting & Apartment Industry Training

Web: RentSoda.com Email: Daisy {at} RentSoda(.)com

Become a fan of RENTSODA on facebook.  Connect with RENTSODA on LinkedIn!

Follow RENTSODA on Twitter!

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