JF1794: How to Asset Manage A Newly Acquired Apartment Syndication Deal Part 4 of 8 | Syndication School with Theo Hicks
Theo will give a brief review of everything we have covered so far in this series of Syndication School. The new area he will discuss today is maintaining economic opportunity. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Joe Fairless: There needed to be a resource on apartment syndication that not only talked about each aspect of the syndication process, but how to actually do each of the things, and go into it in detail… And we thought “Hey, why not make it free, too?” That’s why we launched Syndication School.
Theo Hicks will go through a particular aspect of apartment syndication on today’s episode, and get into the details of how to do that particular thing. Enjoy this episode, and for more on apartment syndication and how to do things, go to apartmentsyndication.com, or to learn more about the Apartment Syndication School, go to syndicationschool.com, so you can listen to all the previous episodes.
Theo Hicks: Hi, Best Ever listeners. Welcome back to another episode of the Syndication School series, a free resource focused on the how-to’s of apartment syndication. As always, I am your host, Theo Hicks. Each week we air two podcast episodes – and now also video episodes – that are part of a larger podcast series or video series that’s focused on a specific aspect of the apartment syndication investment strategy.
For the majority of these series we offer a document, spreadsheet, PowerPoint presentation template, some sort of resource for you to download for free. All these free documents and all of these free Syndication School series can be found at SyndicationSchool.com.
This episode is a continuation of a series entitled “How to asset-manage a newly-acquired apartment syndication deal.” This is part four, so if you haven’t done so already, make sure you check out parts one through three of this series. In parts 1-3 we went over the top ten asset management duties; these are the ten things that you as the asset manager are responsible for doing once you’ve taken over an apartment deal, and up until you see that deal. So this is most likely going to be the longest time range of the deal, which is from the contract to the selling. That could be five years, ten years, or even longer than that.
As a refresher, I’m just gonna go over these quickly, but if you want more details on each of these duties, again, make sure you check out parts 1-3. In part one we went over duties one through five, which were 1) implement the business plan, 2) do weekly performance reviews with your property management company, 3) send out investor distributions, 4) manage the renovations at the property, and 5) maintain economic occupancy. And we also gave away a free document with that part, which is the weekly performance review tracker. This is a template that has all of the KPIs that you wanna track at your property. So you’ll send this to your property management company, they’ll fill it out, and then on that call you’ll review the results each week.
Then in part two we focused exclusively on duty number six, which is the investor communications. Then yesterday – or the episode before this one – which is part three, we went over duties seven through ten, which were 7) plan trips to the property, 8) frequently analyze the competition, 9) frequently analyze the market, and 10) expect the unexpected.
Now, before moving on to other aspects of what’ll be most likely the longest timeframe of your business plan, which is from closing to closing – for example next week we’re gonna talk about how to manage your property management company and how to approach firing a property management company – I wanted to go into more detail on how to actually maintain that economic occupancy rate. That’s duty number five.
Again, I’ve mentioned this in all of these parts so far, at the end of the day it is your responsibility, the property is your responsibility. Everything at the property, whether it’s going wrong or right, is solely reliant on you. Yes, your property management company is gonna be heavily involved in a lot of these duties, but at the end of the day it’s your responsibility to 1) select the right property management company, and 2) manage them properly. So we’re gonna talk about how to select them, we’re gonna talk about how to manage them next week, and then we’re also gonna talk about when it might be time to part ways and fire them… But let’s say for some reason you find yourself with either a bad property management company in general, and you maybe are trying to figure out whether or not to fire them — and we’ll talk about this, again, next week, but you don’t wanna just fire them instantaneously; you kind of want to wait a set amount of time just to see if they turn things around, and then fire them.
So during that period of time you don’t want your property to go down the crapper, so you might need to become more involved in the marketing process… Or on a more ideal side, these might be the things that your property management company might not have thought about, or maybe they’re implementing maybe half the things on this list, and you’re experiencing a down couple of months or down quarter… So you can go to your property management company and say “Hey, here are some things I think we can do in order to increase the occupancy at our property.”
At one end of the spectrum it could be you’ve got a really bad property management company, you’ve kind of in your mind put them on notice and said “Hey, I’m gonna give them six months and then I’m going to fire them if things don’t turn around… But during those six months I don’t want to just do nothing and let them continue to run the property to the ground.” That’s one end of the spectrum.
The other end of the spectrum is a really solid property management company, but maybe you’re just experiencing a few down months two years into the business plan, for something that’s outside of their control, and you wanna present them with some ideas on how to actually increase that occupancy at your property.
Whatever situation you’re in, here are 19 proven ways to market your rental listings in order to attract high-quality tenants… With high-quality being tenants who pay on time and stay at your property and take care of the property as if it was their own.
Again, some of these are pretty straightforward, some of them might take a little bit more effort; some of them are free, some of them cost money… Essentially, anything that we could think of that we’ve seen people implement in order to market the rental listings.
Number one is to set up a landing page online and direct people to it. This should be something as simple as having a specific page on the property’s website, because more than likely if you’re dealing with these larger properties you’re gonna have your overall company website, but then you’re also gonna have websites specifically for that property, that’ll have prospective tenants, current tenants, [unintelligible [00:08:38].29] So you wanna have a landing page so that prospective tenants can go there and type in the information, and you’ll get that lead. And obviously, you’ll wanna take that landing page and market it on social media, do all the best SEO practices, maybe buy an ad in some real estate investor’s newsletter… But overall, the idea is to set up a landing page online and then making sure that people can find that landing page, and when they find that landing page, they can submit information so you can qualify them to see if they’re qualified for moving into your building.
Number two is to essentially do a direct mailing campaign to a property that is similar to yours. Let’s say you’ve got your 100-unit building in Tampa; then you could find other buildings that are between 50 and 500 units and then send direct mailing campaigns to those residents, trying to tempt them to move into your property. Now, obviously this strategy is going to anger local owners if they find out that you’re trying to steal their residents… So if you do decide to do this, don’t expect to be popular.
Also, once people catch on to this strategy, they might also do it to your residents as well. This is not something that we do, this is not something that Joe does, but it is a tactic that is out there that could possibly help you get new residents.
Number three, contact the HR department at all of the surrounding employers in that area and let them know about your wonderful apartments… Someone in the HR department at the company responsible for relocating employees.
Let’s say — obviously, Cincinnati is an example. You’ve got Procter & Gamble, you’ve got GE, you’ve got Kroger, you’ve got these really large companies that obviously are also services by other large companies… So if someone from L.A. is moving to Cincinnati to work for Kroger, then sure if they’re working for a smaller company they might have to find their own place to live or to rent on their own… But if they’re working for one of these larger companies, they likely have some resource available to them at the company that helps them out with this process. So it might be someone who’s responsible for just finding them a place to live for [unintelligible [00:10:50].09] rotation, or whatever. So your goal will be to find this person at that company and let them know about your apartment and see if you can be added to their list of preferred landlords, or whatever that particular list is called.
It’s pretty easy to find contact information to these people. One, you could just call the general phone number of the company and ask to be directed to HR, or you could go to somewhere like LinkedIn and find out who’s actually in HR at that company.
Number four – this one’s pretty simple – is to create a tenant referral program. You can post letters at your residents’ doors or send them emails saying that “Hey, if you refer a tenant to us and they end up moving in, then once they sign the lease we’ll give you $300.” $300 is pretty standard, unless the lease is like $500; then you might wanna reduce that to like $100.
Number five is to set up an open house and invite members of the local community to attend. This works best if you’re unveiling something new. Let’s say you’ve just renovated the clubhouse, so you host some sort of open house at the clubhouse and invite people who live at your property to invite other friends and family to come to this open house, and serve beverages and food. Or you can have an open house for a model unit, and have all the signs out front saying “Hey, we’ve got this new model unit. Come check it out.”
Obviously, you’ll wanna market it online as well, but overall, just set up some sort of open house at your property, whether it’s a model unit, whether it’s an unveiling of a new clubhouse, maybe it’s an unveiling of a new rebrand, you just got a new monument sign… And then invite people that live in the local community to attend.
Number six is to offer a special discount on rent for military, police and first-responders. You can say something along the lines of “If you were in the military or if you are in the military, or if you were or are a police officer, or if you were or are a first-responder, you’ll get 50% off of your first month’s rent.”
Number seven is to design For Lease banners and put them up at the entryway to your property. You see this a lot when you drive by an apartment and you can’t even tell there’s an apartment; you don’t know what the apartment name is, you don’t know if there’s any units available for rent… You have no idea. Whereas other ones, you’ll see the red, white and blue strings with little flags attached to it, they’ll have big arrows pointing at their property, they’ll have big signs and big red letters that say “One and two-bedroom units available.” Maybe it’ll talk about some special that they’re doing… So which property do you think is gonna get more foot traffic? The one that’s invisible, or the one that has all these bells and whistles that are pointing people to that property.
Number eight is to create a corporate outreach program. If your apartments would make a good corporate housing for executives or workers that are new to the area, then you will want to reach out to the corporations and see if you can get on their preferred landlord list. This is a little bit different than HR, because this is more of like a one-off basis… But if there’s — not necessarily an actual Kroger or GE or P&G, but an actual company that focuses on reaching out to corporations and placing high executives or workers that are moving into the area into places to rent… You’ll want to build a relationship with that company, so that instead of having to talk to individual human resources officers, you can just talk to this one company and they’re kind of like your nexus for all the major companies in the area.
Number nine is to design and place fliers at local establishments where you know there’s a lot of foot traffic. So make one-page fliers that talk about your property, and how it’s available for rent, and drop those off at Laundromats, hair salons, nail salons, restaurants… Anywhere that has those little tables that a lot of people drop off business cards.
Number ten is to purchase ads and place them in local newspapers. Again, this is kind of demographic-specific; if you’re obviously trying to attract millennials, then newspapers might not be the best way to go, but instead you can place ads somewhere else, and we’ll get into that a little bit later.
Number eleven is to post a listing to Craigslist, Zillow, Realtor.com, Apartments.com, Rentals.com and all of those other online rental listing services. In addition to everything else, make sure that you’re posting your listings to all these free resources online. You just create one listing, the same description for all the listings, same pictures, and just copy-paste that to all these different online portals.
Twelve is to partner with a real estate agent, or if you have a license, then I guess you’re that agent… And the purpose is to post your deal on the MLS. So it is possible to have an agent sell or buy a property, but it’s also possible to have him help you rent a property. I think they maybe take half the first month’s rent… But there’s a section on the MLS actually for rentals, and that’s one way to advertise your units.
Thirteen is to create a Facebook advertisement. Again, I guess this is gonna be demographic-specific, but Facebook advertising allows you to hyper-target a user based on a very specific criteria. You can say age, location, job, income, interests… And you can figure out “Okay, so what are those criteria for my ideal tenant?”, create a Facebook ad with pictures of your property, maybe some sort of highlights or a recent development at the property, and then mention it’s for rent. Make that ad and hopefully it gets in front of as many of your preferred tenants as possible.
Fourteen is to create a Facebook page for your rental business. This is sort of a longer-term strategy, and this could be for your rental business or for the actual property, but ideally both. So create a Facebook page for your actual business, and then create a Facebook page for each of your individual properties. Then brainstorm ways to post content there on a weekly basis. If you’re hosting weekly resident appreciation parties, take a bunch of pictures and post those online. Once your new monument sign is installed – take a picture, and post it on Facebook. Once you’ve painted the property, once you’ve installed the dog park, once you’ve completed the model unit, once the playground [unintelligible [00:16:29].01] come in. Essentially, anything that happens, take pictures, post it on Facebook, and over time you’ll generate a following from tenants who already live at the property, and then their friends will see that they are a part of this group, they’ll join, and ideally, over time you’re able to just post rental listings there, and then your tenants and the friends of the tenants will either see that and rent it themselves, or share it on their own page to attract more tenants to the property.
Fifteen is to pay close attention to what is nearby and cater to that audience. Again, this is kind of vague, but your marketing strategies are gonna be different for colleges nearby, because then you might wanna put fliers on those little bulletin boards throughout the campus; if there’s a military base, there might be a specific person that you can talk to. Large corporations – same things. But the type of advertisement is gonna be different for someone who’s in college versus someone who’s at a military base, because someone who’s in college is gonna want something a little bit different out of their living experience than someone who’s in the military or someone who’s a VP at a company.
Sixteen is pretty simple and obvious, but still pretty important, which is to provide good old-fashioned customer service. For the people that already live there, be responsive and timely with any requests that they have or any questions that they have. You don’t necessarily have to be a marketing wizard and get hundreds of responses from your marketing pieces in order to get someone to live there. And even if you do, and they do move in there and you’re not picking up your phone when they call — and again, this is you, your team, someone on your team is not picking up the phone, someone’s not responding to the emails… Then they’re not gonna stay, and they’re not gonna recommend your property if they move in there; or if they have all these questions before moving in and you’re not answering them, they’re obviously not gonna move in in the first place.
So providing good, old-fashioned customer service is also a great way to increase your occupancy.
Number seventeen – this is an interesting one. Call all the residents who have already told you that they plan on moving out at the end of their lease and figure out why they’re leaving. So let’s say Billy Bob Joe reaches out and says “Hey, I’m moving out at the end of my lease (which is in 60 days, or whatever)”, and you reach back out and figure out exactly why they want to leave, what’s the issue with the unit, and see what you can do to convince them to stay.
Maybe it’s something like they want to move to a different unit because they want to either upgrade or downgrade. Maybe there’s something in the unit that they don’t like, or they want upgraded, like there’s white appliances and they want stainless steel appliances, or like an X on the wall, or something.” And then something else you can do too is explain to them the costs associated with moving. Obviously, give them something, but also say “Hey, if you move out, you do know that you’re gonna have to pay a new security deposit, you’re most likely gonna have to hire a moving company to move all of your stuff from here to there, there’s gonna be cleaning costs for cleaning this unit, you might have to buy new furniture if you’re upgrading or downgrading units, so it’s gonna be pretty expensive to move.”
This overall conversation – make sure this happens 60 to 90 days before the end of the lease, because this most likely isn’t gonna work if they’re moving out next week. So give them some time, and again, figure out why they’re leaving and see if there’s something you can do to attract them and keep them at the actual property.
Number eighteen is to send marketing packages and gift baskets to preferred employers surrounding your property. Preferred employers would be companies who employ your ideal tenant demographic. You’d be surprised at how effective these gift baskets can be. Essentially, you just wanna create a gift basket with wine in it, or cookies, or chips, or whatever. And then either give that to the person at this place – the HR person or the corporate outreach person – and thank them for helping you get residents at the property with the gift basket approach.
The marketing package approach would be to do something similar where you’ve got a box full of fliers, and you’re gonna attach those fliers to like a [unintelligible [00:20:13].25] or something. Something that people will pick up, take the [unintelligible [00:20:18].01] read about your property and potentially move in there. But the gift basket approach is great, because that person’s more likely to send a resident your way than someone who didn’t give them some gift basket or some goodie.
And then number nineteen is to reach out to old leads that you receive. Obviously, you’ve got leads coming in, qualified or unqualified, and then a percentage of those leads move in, a percentage of those leads kind of just die out and you never hear from them again, so every 90 days reach back out to those leads that die out to see if you can attract some of those people to move into your property.
Those are the 19 proven ways to maintain and increase economic occupancy at your apartment community. Again, that’s not an exhaustive list; there’s plenty of creative ways to market your rental listings. We’ll probably go into a few more of those throughout this series. This is gonna be a long series, there’s lots to go over, because again, this is gonna be the longest timeframe of the business plan – 5 to 10+ years.
That’s the end of this episode. As I mentioned, in parts five and six we’re going to talk about – in part five, how to manage the property management company, and in part six how to approach firing a property management company; determining if it’s time to part ways, and if so, how to actually do it.
Until next time, I recommend listening to parts one, two and three, for those ten different asset management duties. I recommend listening to the previous Syndication School series that we’ve done. I think this is series 20, so you’ve got 19 other Syndication School series to listen to… As well as around 19 free documents to download for each of those Syndication School series. All that is at SyndicationSchool.com.
Thank you for listening, and I will talk to you next week.