rent
Apartment Experiences
Rent is the biggest debit out of most bank accounts each month.
Is the experience that you’re creating in exchange for that rent worth it?
Is it compelling?
Do people feel compelled to tell their friends and family about the experiences that you creating in exchange for the rent payment?
Do you CARE?
Your desiring to make the experience worth the rent Multifamily Maniac,
M
People buy for the experience
I think it’s fair to say that people no longer buy things for the sole purpose of functional use. They don’t rent apartments just to occupy space.
They rather rent for the experience created in the leasing office or the perceived experience after they move in.
People want to experience something cool – something they can tell their friends and family about.
They need brag-a-log material.
Give it to Them
If you get nothing else out of this blog in 2014 – get this:
People who work in the multifamily space are in the experience making business.
Get busy creating compelling ones…
Your looking for compelling experiences Multifamily Maniac,
M
Apartment Late Fees
Apartment late fees are applied to a resident’s account if they pay rent beyond a pre-defined grace period. Generally grace periods do not extend beyond the first five days of any given month. And, apartment late fees are generally levied in an amount calculated as a percentage of the base rent and or as a flat fee.
Due on First Late on Second
Now technically rent is always due on the first of any given month. Despite what your grace period is rent is due on the first of the month and late on the second. That does not mean that you are applying your late fee but it does mean that rent collection procedures should be in motion on the second day of every month. You are building habits here and this is a good one to master.
A Word On Grace
I am a strong advocate for doing away with grace periods all together. I have never understood the appeal to use them. To me, it suggests that it is okay to pay late . Why would you do such a disservice to your respective business? Moreover, you have entered a binding contract and have agreed to provide some level of value in exchange for the monthly payment that will be made to you. So, in my head, you should ask for it on the first. And, define it as late on the second whereby you apply late fees.
Apartment Late Fees
I have seen several variations of late fee calculations. Presupposing rent is due on the first and late fees apply on the fourth – here are a few examples:
1. $50 on the fourth and $5 per day every day after until it is paid in full
2. $75 on the fourth. Another $75 on the tenth.
3. 10% on the fourth and $5 per day every day after until it is paid in full
That is just to name a few – there are very obviously hundreds of computations out there. The main point with penalties is behavior modification. Make the pain certain enough and people will very likely deviate away from it. Make it marginal and people will take advantage of it. Remember – for most of you there is a mortgage that has to be sufficed each month.
Your – advocating for no grace period – multifamily maniac,
M
Pic prop: flickr
Employee Rent Concessions
This week we are rounding out our budget concession discussion with the topic of employee concessions. People are the difference that make a difference in property management. I would argue that it is not location location location but rather people people people that make or break the present and future value of an asset. You can have the best location on planet earth with the worst people and you are guaranteed sub-par valuation. Relocate that asset to a B+ location and team it with A+ characters and you will have yourself a winner. It really is all about the people. And, employee rent concessions are one way of saying thank you.
Value in Responsive Service
Beyond the concept of reward, concessions can be looked at as incentive for an employee to live on-site. There are clear advantages to owners when an employee lives on-site. It lends well to responsive customer service, especially if that employee works on the service side. As an example, if you have an A/C go out after hours, he/she can provide rapid and responsive service. If you provide lock-out services; the idea of rapid response is a real plus. In the event of a major crisis, employees living on-site can act as first responders in the way of organize and deploying crisis management protocols.
Things to Think About
I have seen this amount vary over the years and is certainly subject to ownership or property management protocols. It typically ranges from 15% to 100% and is credited monthly over the course of a lease term. It also typically carries a caveat in the way of an employee addendum that spells out strict concession payback and move-out protocols if the work relationship turns sour.
The biggest thing to consider is IRS implications. Always consult a good tax attorney when thinking about giving away money as I am certain our great Uncle will want his part.
Your – advocate of employee rent concessions – multifamily manic,
M
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
