Search Results for: 2011
Apartment Budgets: Loss to Lease
Welcome back for another installment of the Apartment Budget series. Today we are going to talk about Loss to Lease. Interesting side note, I did a piece on this a number of years ago and to this day it remains the number one read article on this blog.
Before we get started, I wanted to post a note of clarity as it relates to my last entry – Apartment Budgets: Rental Income. Where I refer to Rental Income in that post – I am really talking about Gross Potential Rent as being the top line. You may also hear it referred to as GPR. In any event, I wanted to head off any confusion.
LTL
Now unless you have a brand new community in lease up, you will have in place leases that are very likely below the GPR. The primary reason being rent increases. Any time you increase rents you create a margin between the in place leases and the new increased GPR. This can occur in reverse and the impact to the LTL can go in reverse. That is to suggest that you can decrease the GPR and the margin or LTL becomes positive. Not a scenario you see to often as rents generally rise over time in lieu of decline over time.
Loss to Lease – New Move In
To put it simply; if you lease an apartment below the GPR, the discount is captured in a Loss to Lease – New Move In line item. To put some math to it; if your apartment’s GPR is $500 and you lease it for $450, the $50 reduction in rent is capture in the Loss to Lease – New Move In line item as a -$50 charge. And, it will exist for the life of the lease.
Loss to Lease – Renewals
When leases come up for renewal and they are under the GPR number – the margin is by default in the current Loss to Lease line item. When the lease renews, if it is still under the GPR that new number gets captured in the Loss to Lease – Renewal line item. Putting some math to it. Suppose your apartment’s GPR is $500 and the current in place lease is $450 – you renew it at $475. The $25 margin is captured in Loss to Lease – Renewals.
Total Effective Rent
Once you have accounted for your losses related to in place, new and renewed leases under the current Gross Rent Potential – you come up with a Total Effective Rent. That is where we will pick up next week.
We have purposefully left out the analysis piece this week because I think it will fuel some crazy cool discussion. Hope to see you in the comment section below.
Your – lovin’ budgets – multifamily maniac,
M
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Multifamily Monday: Practice
Perfect Practice Makes Perfect –
If you read our blog regularly then you have no doubt read the story about my high school basketball coach and his perfect practice statement.
Go Out There and Work Hard For Forty Minutes
The story I have not shared up to now is the pre-game pep-talk. Every coach that I ever played for, from pee-wee leagues to AAU leagues and right up to Texas Tech University had a way with words during the pre-game prep. And, they range from semi-inspirational/motivational to down right in-your-face set the world on fire or else.
Nearly twenty years removed from the high of playing NCAA basketball, I can still recall some pretty cool speeches, the following being one of my favs –
Paraphrased: Every one of you look me in the eye – go out there and keep your eyes focused on playing the game. Keep your eyes off of the scoreboard and play every last second like it is your last second. Look at me – if you go out there and give everything you have right down to the very last second you are on that court – the scoreboard will take care of itself.
He otherwise meant that if we would just focus on translating perfect practices into hard-core results on the court. If we just focused on taking care of business – we would win the game.
Go Out There and Work Hard Every Minute
I would suggest that it is no different in the business world. Your organization awarded you an opportunity to come to work everyday in lieu of standing in an unemployment line. They gave you a chance to exercise your mind and your body. They gave you a chance to move the meter. They gave you a chance to make a difference. They gave you a chance to produce results.
Everyday is your time to shine. Everyday is your time to keep your eyes focused on playing the game. [Read: perfectly practicing the fundamentals]. One who does so should never have to pay close attention to the plethora of reports that measure the success of an asset.
Work hard (and, smart) and the scoreboard will take care of itself.
Your – focused on the game – multifamily maniac,
M
Pic props: Raiderpower.com
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What Apartment Marketing Is
Everything is marketing and in that respect we don’t even scratch the surface in today’s post. We are only aiming to make a few points on the relationship side.
Apartment marketing is thinking about and communicating with people in a more intimate way. It’s block and tackle kind of stuff. If we take the time to know people’s names, their kids names, their likes, interests and motivations – they will love us for life. Even when we muff it up.
Apartment marketing is actively servicing the people who made a mindful choice to live in our communities – giving them every chance to rock your house. Read: give them the tools and provide for them the activities that make their lives a richer experience and they will tell your story for you.
Apartment marketing is asking for feedback. Listening to it. And, most important making their feedback a part of their future experience as often as you can.
Your – remembering that everything is marketing – multifamily maniac,
M
Pic props – App Smart
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Apartment Marketing Brass Tacks
“You need the kind of objectivity that makes you forget everything you’ve heard, clear the table, and do a factual study like a scientist would.” – Steve Wozniak
Short and sweet question(s) post today.
Do you ever feel like using social media to marketing apartments is like trying to smash a square peg into a round hole? Do you get the sense that we are trying so hard to make it work just because we just want it to? As opposed to following the advice of Steve W. and clearing the tables for some hard-core study of the real impact it is or is not making?
Have we been clouded by the hint of success we have seen from any one of the many mediums out there? A lease or two from Facebook, a lead from Twitter or a conversation stimulated by a killer resident function and we are quick to tout the success.
Have you found the effort to be worth the result? Do you think the real successes are down the road and over time?
In the end, content is not king – people are. People move business. And, people in relationship talk about businesses they like to do business with. Believe it or not – they usually do that offline.
Is it time to clear the table?
Your brass tacks multifamily maniac,
M
photo credit: blog mosaic
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Apartment Marketing: Paying Rent is a Social Act
Update: 4.30.12 – Social gifting, the new buzzword in e-commerce
I wrote about an idea along these lines sometime ago and Wrapp just might be the early way to get it done.
Original Article
Ran across Pepsi’s Social Vending Machine Story while I was in the process of purging some old files and it got me thinking about ways that we could make paying rent an even more social experience.
Is it reasonable to think that Facebook, Twitter, G+ or even resident portals could be robust enough to allow payments by third parties unassociated with lease contracts and the such?
Following the concept of Pepsi creating a the experience of sending free sodas to friends; could you see the same thing apply to rent payments? If my buddy knows that I have fallen on hard times and wants to help; could he go to our website, log in without disclosing his identity [at least to me] and pay my rent? Or, a portion?
It already happens in the analog world. Or not, if leases are written such that you can not take third party payments [not smart in my opinion]. In the former case, parent’s pay their student’s rent via various payment methods. A process, at least at Mills Properties, that is usually administered by our onsite teams. Can we make it DIY for third parties with technology? Do you employ such a service today? Tell us about it.
Your looking to make paying the rent a more social experience multifamily maniac,
M
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