Apartment Budgeting
Resident Referral Money
Mike Brewer · · 1 Comment
Before we continue with our budget discussion on the topic of resident referrals, I want to back up and remark on a comment that I saw this last week. The comment was posted on Facebook and whether it related to our post or not, I found it a bit amiss. It was along the lines that discounts for specific groups be it students, seniors, city service workers are dumb.
Now I would not debate the merit of the remark in the sense that there are more creative ways to give money away. I would/will take the position that if it works – do it. It’s kind of like print media. Despite our need/want/desire to get away from our reliance on print media and ILS’s – if they work – we should use them. That is until they run their respective courses.
Resident Referrals
I am fairly certain that resident referrals or giving money or gifts away in exchange for move-ins is employed by every multifamily operator out there in some form or fashion. On that note – are they dumb? If I apply the same logic as our Facebook commenter then I posit – yes. It’s a concession given to a specific group. And, there are more creative ways to give money, influence or incentive to that group. That said, I am both a fan and an advocate of using them be it in the form of a concession, gift card or otherwise. After all they are much cheaper that most print media and or ILSs.
Resident referrals are used to reward your best in place marketing machine. The people who live with you currently. Every single one of them are a marketing opportunity waiting to happen. And, giving them reward can/is a good thing. And, that reward can come in any number of means.
They are monies given in the way of a concession, gift card and or hard tangible item (think flat screen, iPod, iPad, etc..). Now, we could debate the amounts given or the merit of a gift in lieu of money. We can suggest that money is not remembered after it is given. In my mind, we could suggest the same for a gift.
It doesn’t matter where you book it (Read: which line item it hits in your budget) it all shakes out in the bottom line.
No matter how you give it away, I would suggest you make it an experience. If you give them a concession – couple it with an impromptu in-home celebration. If you give them an iPod – record an uber-cool celebration message and load it in. Have a party centered around resident referrals and introduce the idea of making a commitment to share 10% (matched by your company) of the fee. Invite the charity in to share in the experience. Get creative and make it worth remarking about.
Your – believing that if it works – use it – multifamily manic,
M [Read more…] about Resident Referral Money
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Student Concession
We are continuing our budget discussion this week with another short and sweet concession entry. Student concessions are used to attract those who are pursuing advanced educational opportunities at schools or institutions around your apartment community. This is a way that apartment operators can both attract and retain students in addition to giving them cause to talk about you. It’s all marketing all the time.
Concessions or Discounts
As an item of clarity – a concession is not a discount and a discount is not a concession. Both impact the bottom line but one lives on while the other has a one time impact. Student concessions are typically given up front at the beginning of the lease and or at the time of renewal. They are considered a one time event whereas a student discount is some that lives on over the life of the lease. Example of a concession might be: $200 off of your June rent if you move in by June 10.
A student discount on the other hand is a rent reduction from the market rent over the course of the lease. Example: you give a 5% or flat dollar amount discount off the market rent rate for the term of the lease that you sign if you move in by June 10. Both have an impact on the bottom line and both have a potential opportunity for you in the way of marketing.
Your – continuing the budget journey – multifamily manic,
M
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Apartment Budget Conversations: The Courtesy Officer Concession
Photo by Fred Moon on Unsplash
In our recent discussion on apartment budgeting, I delved into two pivotal concession line items: new and renewal concessions. These concessions play a crucial role in acquiring new leases and boosting retention rates. Over the coming weeks, I’ll explore various other discounts categorized as concessions. I invite you to join the conversation by leaving comments, tweeting, sharing, and more. Today, let’s discuss the “Courtesy Officer Concession.”
What is the Courtesy Officer Concession?
At its core, the courtesy officer concession aims to attract and retain both on-duty and off-duty uniformed police officers. In essence, officers are offered a rent discount in return for specific services. The scope of these services is clearly defined in advance. Here are some tasks that might fall under an officer’s purview:
- Conducting nightly patrols of the property.
- Identifying and tagging vehicles that are illegally parked, inoperable, or have expired license plates.
- Compiling daily reports, highlighting issues such as property lighting or incidents during a shift.
- Ensuring amenities like the Fitness Center, Laundry Rooms, and Pools are securely locked every night and monitoring the office for suspicious activities.
- Regularly inspecting the entry gate, noting any damages or times when it’s found non-functional.
- Keeping the management informed about crimes in or around the neighboring area.
- Upholding a consistent, approachable, and professional presence in the community, regardless of duty status.
While this isn’t an exhaustive list, it provides a comprehensive foundation if you’re considering this initiative for your property. The concession’s value can be calculated based on an hourly rate, a flat rate, or a per-project rate. However, any resulting discounts will be recognized as a courtesy officer concession.
Final Thoughts
Offering concessions in return for services from uniformed officers can be an invaluable addition to a community.
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Apartment Budgets: Concessions
Welcome back for another installment on the subject of apartment budgeting. This week we are going to discuss the line items called concessions – new and concessions – renewals. Before we get started I have to admit some surprise. I did not think this kind of subject matter would spur much in the way of conversation but it truly has. And, we have posted some record numbers in the way of page views and the on and offline conversation has been very upbeat in nature. I have to give all the credit to Carin – one of our accounting team members at Mills Properties.
Up to this point we have discussed the main driver of revenue – rent. And, we have taken the time to walk through the ever complicated world of loss to lease for both new and renewed leases. And, just last week we penned about the quasi robber baron – vacancy loss. Let’s continue in the vein of loss this week with a discussion on the art of concession use.
Apartment Concessions
Concessions are defined as credits (dollars) given to offset rent, application fees, move in fees and/or any other revenue line item. They are generally given at the time of move-in to offset physical moving costs such as those associated with cross-country movers or cross town movers. Concessions are also used at the time of renewal as a way of offsetting the cost of a rent increase or the addition of an ancillary expense [Read: utility billing, renter’s insurance, etc.] to a new lease term.
They can be given up front or amortized across the life of the lease. They are also given during ‘oops’ moments. That is to suggest that if we drop the ball on the service side of things, we can give concessions as a way of saying sorry for the inconvenience. In short, we can say they are used for marketing and with that comes any number of perspectives for and against the use of concessions.
That being said, we have left out a number of good points and as a result I am looking forward to the conversation.
Your, burning concessions off as fast as reasonably possible, multifamily maniac,
M
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Apartment Budgets: Vacancy Loss
Mike Brewer · · 1 Comment
Back for another round of apartment budget discussions. Today we are talking about vacancy loss. Before we do, lets recap in the way of a list of line items we have penned about up to now.
Rental Income
Total Potential Rent
Loss to Lease – Move – Ins
Loss to Lease – Renewals
Total Effective Rent
Vacancy Loss
Let me introduce you to the biggest robber of revenue on the income side of the ledger – vacancy loss. It gets disguised under a number of line items, all seeming innocent in nature. Things like Down Units, Models, Offices and Fitness Centers (if housed in an apartment) get captured in Vacancy Loss. The line item as a total (Total Vacancy Loss) captures 100% of all physically vacant apartments in the way of a negative revenue number no matter the nature. And, it is driven by any number of stimulants.
Apartment Vacancy Drivers
Vacancy is driven by the economy as much as it is by poor or sub par management. If the economy is stalled or sputtering along than vacancy tends to trend higher. If it is booming – think dot-com days – than vacancy is low. If job growth is anemic or trending net negative then vacancy trends higher. If jobs are growing on trees – the vacancy trends lower. If interest rates are low and lending standards are relaxed then vacancy suffers in the hands of home buyers. Interest rates rise and lending standard constrict then vacancy goes lower. Developers and builders take advantage of foreseen demographic trends, low-interest rates and relaxed construction lending standards to build tens of thousands new units and vacancy could suffer to the down side. They stall out for any reason and the inflow of new renters (demand) takes off and you yield to the upside.
Down Apartments
Down units are a Big No in my book. To easy to lose track of. Put an apartment on a down unit status and the next thing you know you are spending 10k to get it back on-line. It gets cannibalized by the service team and left to rot by the management team. Just don’t do it. If it’s considered down – call it a tough turn. And, by all means do not let your service team pick it for parts and pieces.
Bad Management
Likely the biggest contributor to vacancy loss is bad management. From curb to commode, you can add to or take away from the loss to vacancy. From pricing to inventory turn time and ticket turn rates, you can give to or give back vacancy loss. And, from sales to renewal discussions – you can reap or spoil the line item.
Drawing it in
In summary, vacancy loss can wreck a budget inside of one months time. It can also boost your bottom line by many fold if managed well. It’s driven by any number of factors from macro to micro and everything in between. It can be a friend or an enemy.
What are your thoughts – would love to see them in the feedback section below. And, thank you in advance.
Your – fending off vacancy loss – multifamily maniac,
M
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