Apartment Operations
Multifamily Five Years From Now….
My annual prediction post…of sorts. Just a few quick hitters…
Remembering last year before we look forward to the coming five….
Assume that:
Predictive analytics point people to the perfect Experiential Apartment Community (EAC) for them. One stop shop – if you will. Marketing as we know it – even today – will be rendered uninteresting and borderline useless.
Apartment prices are predicated on twenty times the metrics they are today – think big social data.
Interactive Digital Signage trumps the kiosk and does most of the heavy lifting as it relates to leasing and service after the sale.
People choosing to do business with you do so by telling Siri (or, any equal) what they need and she taps into your community IDS and together these two Digital Experiential Monitors take care of it all.
Personal Experience Agents pick up where the DEMs leave off. If there is anything left to do.
The term social media finally gives way to something deeper and more meaningful.
Business newcomers continue to fragment people’s attention by inventing 300 new variations of review sites, ILS’s and niche communities.
ILS’s, middlemen and other business newcomers stay in better contact with your residents than you do.
ILSs service after the sale.
ILSs create loyalty programs.
Middlemen reinvent themselves such that he comes back with a crushing vengeance.
The Nest finally prices for the masses.
The Internet of things is near saturation.
Smart appliances, mechanics and hardware schedule their own maintenance calls.
Those same appliances, mechanics and hardware, once repaired, follow-up via the preferred method of communication.
They also, order up the part used to repair the problem.
They also, order in bulk for your portfolio assuring you bottom dollar pricing.
Your current apartment related job is either gone or looks 100% different from today.
What then?
Apartment Budgeting: Internet Income
Continuing along with the Apartment Budgeting series today. The topic this week is Internet Income. This provides another opportunity to share in the revenues created by your allowance for exclusive marketing access.
Internet Income Defined
Internet Income can be defined in a very simple way – it is revenue share from your local Internet Service Provider (ISP). Not unlike revenue share from cable companies – you have to give up some exclusivity. That is to suggest that you have to provide exclusive marketing opportunities to the provider in exchange for the share of revenue. Item of note: Don’t confuse exclusive marketing with exclusive access. In essence, the only thing you want to give up is the ability for one company to market their services exclusively. It will not mean that your resident is limited in their choice. And, choice is a good thing. Good for residents and good for owners.
For apartment owners, internet revenue share comes in a couple of different forms:
1. An upfront per door fee.
2. A percentage of monthly revenues generated from total collections on billable subscriptions. More simply said, collecting a percentage of every dollar that your resident base pays to the internet provider.
3. A combination of both. You may get a lower per door fee and a higher percentage of share. Or, a lower percentage share and a higher per door fee.
4. Bulk – you buy internet for every door in the community for a base rate and then resell it for a profit. For example: you buy it for $15 per door and sell it for $25 and keep the $10 margin for yourself.
When it comes to negotiating a deal – I would recommend consulting with a guy like Mike Whaling. He has the expertise to negotiate the best possible revenue sharing opportunities that first and foremost provide your resident base with the best possible choices in service.
*One item of note – I’ve not lived in a market where internet revenues were shared with property owners. Therefore, I don’t have a lot to share in the way of norms.
**Another item of note – As the internet becomes more ubiquitous sharing opportunities might move to smart phone carries in lieu of cable/internet providers.
Internet Income Budget Strategy
This is a math problem any way you look at it. And, it is all predicated on penetration otherwise known as subscriptions. One thing to consider is the economy as a whole. The reason being that people get behind on the their internet bills just like they get behind on their rent. Except in this case, internet is likely something that is easily sacrificed where a home is not.
My best advice is to call your ISP representative and ask him/her to run a twelve month trailing report for you property and like kind properties. Use that to look forward and consider any stop service percentages that might be included.
Your always looking for ancillary income multifamily maniac,
M
Apartment CapX Budget Over Again
The Apartment CapX Budget is Over Again? How many times have you heard that statement in some form of fashion? And, I am sure – if you are anything like me – you just can’t understand it. Nor, in all fairness, do you take the time to understand it because you have a million other things that need your attention. But, I do have an idea as to why…
Humans Make Mistakes
Simply put – humans make mistakes. And, or they are innately incapable (not a dig – just plain reality) of thinking about every little nuance of a project. Or, they are too confident in their ability to forecast. But, most of all there are just too many steps in the process. And, the more steps there are the more opportunity there is/are for mistakes.
Apartment Project Management
A project is set up as a series of steps and each step has a probability of failure. With that in mind, I thought I would list a few examples of where exactly things can go wrong:
bad process, choice of vendor, equipment/mechanic, technology, your expectations are mis-communicated or not well understood, wrong leadership, wrong manager, inexperienced leader, poor choice of incentives, deciding to try something new, ordering the wrong product, product ordering mishaps, shipping delays, delivering the wrong product, weather, ignoring the canary in the coal mine, killing the canary in the coal mine (no canaries were harmed when writing this post), no tracking, loose tracking, leaning on our ability to track it in our heads.
And, the list goes on and on and on.
Solution: Fewer steps.
I think it is easy to assume that the weak link defines the extent of the success or the failure of the project. And, with all of these areas of opportunity for error – it’s no wonder that many times we come in over. But, still not acceptable in my head.
It’s a problem I am thinking through from an operational perspective. It’s one I think is solved with less steps and fewer people. And, I’m sure it will result in some posts along the way.
Hope your weekend is a crazy good one.
Your consistently thinking about apartment project management multifamily maniac,
M
Apartment Budgeting: Collections
In our last installment we wrote about the Legal/Collections line item. This week we are going to venture through the collections line item which is tightly knit to the Legal/Collections line.
Collections Defined
Collections is the line where we book or code monies you collect via third-party agencies. These are monies from accounts whereby you have given up collection efforts and turned them over. If that agency is fortunate enough to collect on that account then (after they take their fee) they send you a check. This is the line where you book that check.
Budget Strategy
This is another line item where history (while not the best dictate) is the place to look first. Look at a twelve to 24 month history and do some averaging to come up with the number. Or, if you would like to get a little more sophisticated, call the agency and ask them what their success rate (what percentage of accounts are they able to collect from and what on average to they collect) is? Ask them the total amount they are trying to collect on at that moment in time. Add to that, what, on average, you send over in a given month. And, put together a math problem forecasts that amount over the coming twelve months.
Now, here is what I have to say about that last piece. Have you ever heard the saying, “splitting hairs” or the “law of diminishing returns”? It makes no sense to me (and, that is just me) that anyone would take the time to get down to the brass tacks on this line. It’s such a small amount of money and doing the research to get precise is a border-line waste of time.
So work off of averages – if you can.
Your not likely to split hairs over small amounts of money multifamily maniac,
M
Water Trucks are the New Snow Removal Expense
We, at Mills Properties, have been celebrating a very positive variance in all of our financial reporting as of late. No winter equals big numbers flowing to the bottom line in the way of savings.
Heat Wave
That is until the country slipped into the worst heat wave in real recent history. Unless you are living under a rock (which is possibly a smart thing given the temps), you know that it’s crazy hot outside. And, like humans, plants can not survive the extreme heat. Especially when you factor in the indexes or how impervious surfaces and or humidity effect air temperatures.
Water Trucks
Call in the water trucks. We are electing to call in water trucks to keep the plants alive. We all know that clean, healthy and well-maintained landscape makes a huge difference in the leasing and retention arenas. So bite the bullet and give up the snow removal surpluses. Keep the plants alive so your occupancy will survive and thrive.
Your burning up in this heat multifamily maniac,
M
