Monthly Archives: August 2013

Trusting Your Intuitive Instincts

By John C. Maxwell

There is a certain element of risk in intuitive leadership, but that is the very nature of leadership. André Gide said, “One doesn’t discover new lands without consenting to lose sight of the shore for a very long time.” A neglect of cultivating intuition results from doing what is safe and secure. I can’t think of very many things of value that are won by staying safe and secure.

While leaning on your intuition is a leadership advantage, it can also be a weakness.  You’ll gain the trust of others when your intuitions lead to good decisions. And you’ll forfeit trust when you fail because you continually ignore the wise advice of those around you. Robert Heller said, “Never ignore a great feeling, but never believe that it’s enough.” Great leaders learn to trust the intuition of their confidantes as well.

Here are some steps I’ve developed for tapping into my intuitive instincts:

1. Write down the issue at hand.
2. Identify as many options as possible.
3. Pull away from the process and pray.
4. Start playing out consequences of your options, eliminating them one by one.
5. Bounce a couple of your top options off of wise people both inside and outside your organization.
6. Do a heart check. This involves looking at:
– My motive: “Why am I doing this?”
– My responsibility:  ‘Should I be doing this?”
– My emotional status: “Can I feel right about doing this?”
7. Make a decision.
8. Hold to that decision.

Keeping a Journal

By Jim Rohn

If you’re serious about becoming a wealthy, powerful, sophisticated, healthy, influential, cultured and unique individual, keep a journal. Don’t trust your memory. When you listen to something valuable, write it down. When you come across something important, write it down.

I am a buyer of blank books. Kids find it interesting that I would buy a blank book. They say, “Twenty-six dollars for a blank book! Why would you pay that?” The reason I pay twenty-six dollars is to challenge myself to find something worth twenty-six dollars to put in there. All my journals are private, but if you ever got a hold of one of them, you wouldn’t have to look very far to discover it is worth more than twenty-six dollars. I must admit, if you got a glimpse of my journals, you’d have to say that I am a serious student. I’m not just committed to my craft, I’m committed to life, committed to learning new concepts and skills. I want to see what I can do with seed, soil, sunshine and rain to turn them into the building blocks of a productive life.

Keeping a journal is so important. I call it one of the three treasures to leave behind for the next generation.  In fact, future generations will find these three treasures far more valuable than your furniture.

The first treasure is your pictures. Take a lot of pictures. Don’t be lazy in capturing the event. How long does it take to capture the event? A fraction of a second. How long does it take to miss the event? A fraction of a second. So don’t miss the pictures. When you’re gone, they’ll keep the memories alive.

The second treasure is your library. This is the library that taught you, that instructed you, that helped you defend your ideals. It helped you develop a philosophy. It helped you become wealthy, powerful, healthy, sophisticated, and unique. It may have helped you conquer some disease. It may have helped you conquer poverty. It may have caused you to walk away from the ghetto. Your library, the books that instructed you, fed your mind and fed your soul, is one of the greatest gifts you can leave behind.

The third treasure is your journals: the ideas that you picked up, the information that you meticulously gathered. But of the three, journal writing is one of the greatest indications that you’re a serious student. Taking pictures, that is pretty easy. Buying a book at a book store, that’s pretty easy. It is a little more challenging to be a student of your own life, your own future, your own destiny. Take the time to keep notes and to keep a journal. You’ll be so glad you did. What a treasure to leave behind when you go. What a treasure to enjoy today!

5 Long-Time Resident Retention Tips

by  – Property Management Insider

The old Texas saying “Dance with who brung ya” was a favorite of former Texas Longhorns head coach and legend Darrell Royal. It seemed fitting that Anne Sadovsky and I talked about that expression at June’s Apartment Association of Greater Dallas (AAGD) officer installation dinner where she was recognized with an appointment as a lifetime AAGD member and drew two standing ovations.

The idiom is very much in line with what Sadovsky has preached in her work as an industry trainer and consultant: Go with the players who best help you win. To Sadovsky’s point, retaining existing residents – especially those who have danced the dance with your property for many years – is critical in keeping apartments full.

Build Value by Building Relationships with Long-Time Residents

“Historically, we get so focused in our efforts to get new customers that we forget at renewal time about those who have lived with us and paid their rent for a year or more,” she said. “We spend our money and time on marketing to new residents, even standing on the corner banging our drum, to drive new business. Too often we forget the most important thing – keeping people we’ve got.

“We have improved greatly through the years. However, we still have room for improvement.”

A full roster of prospects can make it tempting for any head coach or property manager to look the other way when a long-time resident doesn’t renew. Having a call/wait list is insurance. But the cost for turnover is very expensive, an industry fact. For some properties it can be $3,000 or more (vacancy loss, marketing expense, labor costs, concessions and other costs) to get an apartment ready after a vacancy. The rule of thumb is that it costs five times or more to replace the resident than to keep them. With an industry-accepted 50-55 percent turnover rate, we’re talking serious money.

Yet, Sadovsky reminds, that the industry doesn’t always think about the impact that a long-time resident has on the property, both in the value of the community but also the property. “If they stay with you for 10 years, they’ve bought the darned apartment,” she said. “Think about that: if you use $1,000 as a rent average per month, times 12 months times 10 years, that’s 120,000.”

Improve Resident Retention with Genuine Expressions of Gratitude

Sadovsky suggests that property managers can retain long-time residents with a genuine expression of gratitude; something much more meaningful than a digital trinket or gift card that the resident could potentially use somewhere else. And in the process, the apartment can add bottom-line value to its property.


Image of a thank you card

“It’s a great idea to offer some incentives for renewals while being smart enough to retain those incentives at the property. At the same, the resident is being honored for having been there and paid the rent, and encourages them to renew. The incentives can be more of a perceived value than anything, and could be part of an ongoing rewards program that rewards residents the longer they live at the property.”

Here are five simple incentives for just a few hundred bucks that Sadovsky believes will encourage residents to continue living at the property and improve resident retention rates:

1. Make Reserved Parking a Perk for Loyal Residents

Parking is an issue in huge urban areas, and offering a resident his/her reserved space can be very attractive. Residents may actually be willing to pay additional for the parking, which could be rolled into the lease agreement.

2. Bring Back that New Apartment Feeling

Turn that apartment back into that “brand new” unit simply by painting and cleaning up. Ann contends that some people move out because the apartment is dirty. The resident may never have cleaned their oven or there is mildew in the shower. Contract a bonded maid service for half a day to give the place a good scrubbing.

3. Create a Sense of Ownership

One perk to home ownership is that any out-of-pocket improvements made can add to the long-term value of the property. While renters may want to improve their apartment, they are not getting potential return on the investment because the property is not theirs. However, if the apartment property makes an upgrade as a reward for long residency and renewal, the renter gets the benefit without dipping into their wallet. Obviously, the property benefits in value. The improvement can be as simple as putting in a nice light fixture in the dining room or adding a ceiling fan in a bedroom.

4. Become a Part of the Routine

Drive by any national coffee chain in the morning and you’ll see a great opportunity. Tell your residents to avoid that drive-thru on the way to work by stopping the office for a cup of premium coffee to go. The amenity will not only save your customers money and commute time but let’s them know they are valued.

5. Establish a Sense of Community

It is sad that we’ve lost the sense of community in our country. Recent events in Cleveland support that. And when residents frequently see moving vans on the property and residents leaving, that further weakens the neighborly bond. Apartments can plan simple events or social gatherings, usually at a nominal expense, so that residents gather and get to know each other. People are less likely to move if they have strong bonds with neighbors, and property managers should help knit the apartment community together.

A show of appreciation to a long-time resident at renewal time, or any time for the matter, doesn’t have to be over the top.

“Our residents need to feel good about where they live, and it’s up to the property to make sure that happens,” Sadovsky said. “While this is a business, it’s also a lifestyle for our residents. It is their home so encourage them to stay.”

That, my friends, is dancing with who brung ya.

Top Ten Apartment Market Rent Growth Leaders for Second Quarter 2013

by  – Property Management Insider

Earlier this month, MPF Research released highlights for the apartment market’s performance in the second quarter of 2013 and reported strong demand and accelerating rent growth.

When MPF releases these quarterly numbers I always look at the leader board to see which metro secures the top spot for rent growth. During the past few quarters, the top spot has been held by one of the Bay Area metros.

Did a Bay Area market once again claim the title as top annual rent growth leader? Did a metro from the Pacific Northwest challenge for the top spot? Let’s have a look.


Top Ten Apartment Market Rent Growth Leaders for Q2 2013

Click here to enlarge graphic.

 

Top 10 Rent Growth Leaders Analysis

Among large individual metros, San Francisco ranks as the country’s rent growth leader by a fairly large margin. Pricing there rose 7.8 percent during the past year, taking average monthly rent to $2,498. Annual rent growth came in at 6 percent to 6.9 percent in Oakland, Denver-Boulder and Seattle-Tacoma, and prices climbed 5 percent in San Jose.

Markets registering annual apartment rent growth of 4 percent or a little more were Portland, Houston, Austin and West Palm Beach. Fort Worth completed the top 10 list of the nation’s biggest metros with the fastest rent growth: rates there jumped 3.6 percent.

Metros that just missed the cut-off point for the best-performers list included Chicago, Raleigh-Durham, Columbus and Miami.

New York Apartment Market Curiously Absent

Notably missing from the top-performing group as of second quarter was New York. In fact, the metro registered slight rent cuts during the year-ending second quarter, with pricing down 0.6 percent. Still, New York’s average monthly rents are by far the highest in the country at $3,269, and its occupancy rate of 97.7 percent is the tightest anywhere. According to MPF Research, the metro is probably just getting a brief, minor correction in rent levels, after owners and operators got perhaps a little too aggressive when pushing prices throughout 2011 and the first half of 2012.

What’s your take? Are you surprised by the apartment markets appearing on this rent growth list? What about those that didn’t make the list? How was the rent growth on your apartment portfolio?

Bidding Wars are Back

By Aaron Y. Strauss, A.Y. Strauss – MultiHousingNews.com

Leverage has swung back in favor of sellers, especially within the multifamily sector. All too often these days, anxious buyers find themselves bidding on a great property and expect a draft contract from the seller shortly. But their broker mentions to them that the deal is strictly “as is,” that there is absolutely no due diligence and that there are other buyers actively competing for the same property.

While brokers may sometimes contribute to the feverish pitch around a deal by working buyers into a frenzy, the days of buyers squeezing sellers for healthy due diligence periods and having the luxury of time to fastidiously negotiate all their demands are gone.

Lawyers, too, may contribute to the drama. Sadly, it’s not uncommon to hear an owner or a buyer gripe about how their attorney is “over-lawyering” their deal—throwing as many obstacles in the way of the deal as possible in an effort to generate billable hours and drag out negotiations. And while that kind of counsel may traditionally be viewed as counterproductive, today, in the face of bidding wars, where timing is of the essence, this style of lawyering is often a major determinative factor in whether deals are won or lost and can have a negative impact on the overall strategy of a real estate owner or investor.

Given this particularly frenzied environment, here are some suggestions to help multifamily investors not only survive but thrive in the multifamily bidding wars:

View what the broker tells you with some healthy skepticism. 

For obvious reasons, brokers are incentivized for the parties to move ahead at lightning speed. This is often a good thing for everyone so that a deal does not get stalled. But brokers come in many shapes and sizes. Just as with attorneys, some are more ethical than others. Sometimes a buyer may be told it is a bidding war by a broker to provide that extra spark of anxiety, but you should ask your attorney to speak with the seller’s attorney to get a better feel for what is really happening. For example, the seller’s lawyer may reveal that “two other parties recently backed out,” which the seller’s broker may have positioned as “two other interested parties.”

Regardless of the competition for a property, all competing buyers including YOU need basic information to underwrite the deal. 

For example, a seller was refusing to provide leases for a property, leaving the buyer to question whether he should forego the requirement since there were other bidders. EVERY SINGLE OTHER BUYER would want a copy of the leases to verify the property’s income. Don’t forgo common sense just because your emotions are heightened in a bidding war.

3 When the deal is moving at much speed, your attorney’s job is to flag the serious issues and then get out of the way. 

I recently was involved in an off-market transaction that a client bought from an estate and then flipped within 90 days for a roughly $10 million profit. When the economic drivers of the deal are so compelling, many nuances of the contract that are ordinarily negotiated are sometimes plainly irrelevant given the deal value. You must still flag every issue for your client, but use common sense and don’t heavily negotiate a highly theoretical condemnation provision to the detriment of killing a deal.

4 In a competitive bid setting, if at all possible, try to set up a “sit down contract signing.” 

Although we live in a technological wonderland where efficiency is almost always facilitated by email and conference calls, this is a major exception. You simply cannot replace the dynamics of sitting down in a room with both the seller and buyer and their attorneys to quickly hammer out (and win) a deal.

Fight for your right to assign the contract. 

In a frothy market, if there are truly competitive bids on a property, a buyer may have actually made money by simply signing the contract if they’ve retained the right to assign it or “flip it.” While most sellers and their counsel will heavily resist the right to assign (and the request for the right to assign has to be marketed carefully so as not to appear as a “flipper”), in a rapidly moving and rising market, it is too valuable an option to leave on the table if at all possible.

Aaron Y. Strauss is the founder of, and a partner at, A.Y. Strauss, a commercial real estate law firm with offices in Roseland, N.J. and New York City.

The Top 3 Apartment Lead Sources Used by Renters

by  – Property Management Insider

Ask any marketing director what causes some of their biggest headaches, and you are sure to hear about the need for the correct lead source to be entered into the property management systemwhen a prospect visits a community. Unless you know where your leads are coming from, you won’t know where to allocate your marketing dollars.

So what if you don’t know? What if you aren’t currently tracking sources or you aren’t confident in your current source tracking process? Where do you focus your marketing dollars?

The Top 3 Sources Renters Use to Find Apartments

According to the 2012 SatisFacts Index, which compiles information directly from resident satisfaction surveys, here are the top three sources renters use to find apartments. Counting down, a la David Letterman, let’s start with number three:

3. Internet Listing Services (ILS)

Between 11 and 14 percent of prospects have used at least one of the top Internet listing services to find their new apartment. While there are arguments for and against these pay-per services, they continue to be effective in the marketplace.

2. Word of Mouth (without Social Media)

There’s a lot of focus on social media and how referral incentives potentially skew the true measure of how willing someone is to recommend a community. The fact remains, however, that basic word of mouth—the old-fashioned way without social media—is cited by 17% of renters as a source when they were apartment-shopping.

1. Apartment Signs/Driving By/Curbside Appeal

People typically know the general vicinity in which they want to live. Whether it’s to be close to work, close to restaurants and shopping, close to the freeway, close to childcare, or in a certain school district, people have preferences. And when looking for a new home, they tend to walk or drive through the neighborhoods or areas they prefer. In fact, more than one in five renters claimed signage and driving by as a source in their search.

While ratings and reviews are the talk of the industry (and rightly so, as they are becoming the “norm” in the rental decision), it’s important to ensure we don’t neglect some of the old standbys. Some options are quickly becoming obsolete (newspapers, for example, were only cited by 0.8%), but some of the basics still hold true. Ensure your signage is in great condition, is easy to read, and has your community phone number and/or web page listed. A prospect may drive or walk by this morning, look you up on the Internet when she gets home, and call for a tour by the afternoon. Make it easy for her.

What’s the number one lead source that potential renters use to find your apartment communities? Share them in the comments below.

Top Five Performing Secondary Apartment Markets

by  – Property Management Insider

Cap rate compression and price appreciation has led to more apartment investors seeking opportunities in smaller markets across the country. MPF Research examines which smaller markets have performed well of late, and which ones offer promise going forward.

Major markets, according to MPF Research, are the top 50 apartment markets according to the total number of apartment units. Secondary markets, as defined by MPF, are those markets outside the top 100 and typically have between 25,000 to 85,000 apartment units.

Looking at the apartment performance of secondary markets over the past year, there are five metros that clearly stood above the rest. These five markets all rank in the top five of annual revenue growth and annual rent change among secondary markets.

Rank Metro Annual
Revenue Growth
Occupancy Annual
Rent Change
1 Fort Myers/Naples, FL 9.5% 96.4% 7.0%
2 Santa Rosa/Petaluma, CA 7.5% 98.2% 6.8%
3 Corpus Christi, TX 6.9% 96.9% 6.3%
4 Sarasota/Bradenton. FL 6.6% 96.3% 5.8%
5 Honolulu, HI 6.1% 97.4% 6.2%

 

Top Secondary Markets Looking Forward

While this list of top performing secondary markets deals with past performance, here are some markets that MPF Research likes going forward:

  • Corpus Christi, TX
  • Santa Rosa/Petaluma, CA
  • Greenville, SC
  • Charleston, SC
  • Oklahoma City, OK
  • Madison, WI
  • Albany, NY

Zillow Reports Higher Home Values; Economic Activity Still Historically Low

By Dees Stribling, Contributing Editor – CommercialPropertyExecutive.com

Zillow reported on Tuesday that its Home Value Index was up 6 percent year over year in July, to a value of $161,600. That’s the first time, at least according to the home value data specialist, that home values have appreciated at an annual pace of 6 percent or higher since August 2006, and another bit of evidence that the U.S. residential market has indeed founds its legs.

July also marked the 14th straight monthly home value appreciation, according Zillow. Home values were up 0.4 percent in July compared with June.

“After three straight months of annual home value appreciation above 5 percent, the U.S. housing market recovery has proven it is on very sound footing,” Zillow chief economist Stan Humphries said in a statement. “We have entered a new phase in the recovery when we can begin to turn away from ugly recent history and turn toward what the housing market of the future will look like and how it will act.”

Economic Activity Still Historically Low 

The Chicago Federal Reserve said that its National Activity Index (CFNAI) edged up to –0.15 in July from –0.23 in June, which means that economic activity is still below its historic trend, but not quite as far below in July as the month before.

The index’s less jumpy three-month moving average, known as CFNAI-MA3, increased to –0.15 in July from –0.24 in June, marking its fifth consecutive reading below zero. Still, it was an improvement for the index, which has been hovering around zero since the recession ended. The all-time low for the CFNAI-MA3 was a little lower than –4 in early 2009. The only time it had even come close to that kind of trough before was during early 1975.

According to the Fed, the index is a weighted average of 85 indicators of national economic activity from four categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. Zero indicates that the national economy is expanding at its historical trend rate of growth, which negative values mean below-average growth, and positive values point to above-average growth.

Wall Street ended the day mixed on Tuesday, with the Dow Jones Industrial Average down 7.75 points, or 0.05 percent. The S&P 500 and the Nasdaq, however, were up to 0.38 percent and 0.68 percent, respectively.

Mortgage Delinquencies, Durable Goods Orders Drop in July; U.S. to Reach Debt Ceiling in October

By Dees Stribling, Contributing Editor – CommercialPropertyExecutive.com

Lender Processing Services, in its First Look report for July, said on Monday that the percentage of delinquent U.S mortgage loans decreased from 6.68 percent in June to 6.41 percent in July, and from 7.03 percent in July 2012. Some of the monthly decline, but not all of it, is seasonal in nature. According to LPS, a delinquent mortgage is one 30 or more days past due, but not actually in foreclosure.

The delinquency rate continues to approach, but hasn’t reached a “normal” range—that is, roughly where it was pre-recessionary years. The normal delinquencies rate by that definition is one that hovers between 4.5 percent to 5 percent.

The percentage of mortgages in foreclosure also dropped month over month and year over year. In July, the foreclosure rate was 2.82 percent, down from 2.93 percent the month before. A year earlier, 4.08 percent of mortgages were in foreclosure, according to LPS.

Durable Goods Orders Tumble 

The U.S. Department of Commerce reported on Monday that orders for durable goods (those expected to last three or more years) dropped 7.3 percent in July, which is the steepest decline in nearly a year for the economic indicator. The decline followed three straight months of increases, including an uptick of 3.9 percent in June.

The unexpectedly weak report (economists had predicted a drop, but not that steep) might be more ammunition for those in the Federal Reserve who don’t want to slow the central bank’s bond buying just yet. The Fed might make its decision about tapering as soon as Sept. 17-18, during the next meeting of the Federal Open Market Committee.

On the other hand, the report wasn’t all bad. Take out transportation equipment—airplanes in particular, a notoriously volatile category—and orders were down only 0.6 percent. Also, other kinds of durable goods orders showed relative strength. Car and car part orders, for instance, edged up 0.5 percent in July, and compared with the same month last year, were up 14 percent.

Federal Government to Reach Debt Ceiling in October

Treasury Secretary Jack Lew said in a letter to Speaker of the House John Boehner on Monday that the federal government will reach its borrowing limit sometime in mid-October. “Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority,” Lew wrote. “Failure to meet that responsibility would cause irreparable harm to the American economy.”

Wall Street was up most of the day on Monday, but took a dive at the end. The Dow Jones Industrial Average was down 64.05 points, or 0.43 percent, while the S&P 500 lost 0.4 percent percent and the Nasdaq lost a microscopic 0.01 percent.

Existing Home Sales Continue to Rise; Fed Minutes Spook Investors

By Dees Stribling, Contributing Editor – CommercialPropertyExecutive.com

The National Association of Realtors reported on Wednesday that U.S. existing home sales increased 6.5 percent to an annualized rate of 5.39 million units in July from 5.06 million units in June. There was also a year-over-year improvement, with sales up 17.2 percent over the 4.6 million-unit pace in July 2012. The organization pegged the national median existing-home price for all housing types at $213,500 in July, a 13.7 percent increase from July 2012.

NAR also said that total housing inventory at the end of July rose 5.6 percent to 2.28 million existing homes available for sale. That represents a 5.1-month supply at the current sales pace, unchanged from June. Listed inventory is 5 percent below a year ago, when there was a 6.3-month supply.

“Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines,” NAR chief economist Lawrence Yun said in a statement. “The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers.”

Fed Minutes Spook Investors

The Federal Open Market Committee released the minutes of its July 30-31 meeting on Wednesday, and economists, investors, and commentators were looking for hints about QE3, the Fed’s ongoing bond-buying initiative. The Fed said: “While a range of views were expressed regarding the cumulative improvement in the labor market since last fall, almost all Committee members agreed that a change in the purchase program was not yet appropriate.”

“Not yet” as of the end of July. The FOMC minutes weren’t any more specific than that about stepping down purchases in September, which is widely thought to be the central bank’s target month.

The Fed did say that it’s still watching the economy, waiting to see how it unfolds over the rest of the summer. “The unemployment rate had declined considerably since [last fall], and recent gains in payroll employment had been solid,” the minutes said. “However, other measures of labor utilization–including the labor force participation rate and the numbers of discouraged workers and those working part time for economic reasons–suggested more modest improvement, and other indicators of labor demand, such as rates of hiring and quits, remained low.” The central bank is paying attention to more than just the headline numbers, in other words.

Investors decided during the afternoon that they didn’t much care for whatever the Fed had said, though they might not have been sure exactly what that was. In any case, all the indices were down. The Dow Jones Industrial Average lost 105.44 points, or 0.7 percent. The S&P 500 was down 0.58 percent and the Nasdaq was off 0.35 percent.