Sometimes the posts themselves are provocative, and sometimes they lead to a provocative post. [For those who don't click through, Mark Juleen of JC Hart announces that 1Q traffic was the same or higher year on year despite dropping all print ads; Lisa Trosien asks why we don't use more negative amenity pricing.]

Mark’s experience with non-print advertising echoes the experiences summarized earlier. I won’t rehash the post, merely to recommend that with costs under such scrutiny and a change in outreach methods underway, these types of experiences should be studied and tried.

Lisa’s post about negative amenity pricing prods us to think more thoroughly about product and pricing.

Our starting rent for a floor plan type should be a ‘basic apartment’. [The] base price should be set from our most standard types. Then, when we should look at our inventory and find the ones with detrimental items, such as horrible views, smaller spaces, undesirable locations, etc., we should subtract rent from those unit types.

An added benefit seems to me that it moves you away from a ‘bait and switch’ perception. If you base your pricing off the least attractive unit, you are almost compelling a prospect to spend more to get what they actually want and generating a certain amount of resentment for your trouble. Pricing in the middle (and entering at a higher base rate) allows the prospect to make the choice of purchasing as much apartment as they actually want. This also gives us a chance to listen more closely to the prospect and help match the prospect with the appropriate unit.

Although this is well-trod ground, pricing transparency links cost to benefits by creating a more quantitative ‘value proposition’. Per HBS’s Working Knowledge series:

Some companies view price bundling as a necessary tool to promote initial sales: If they eliminate price bundling, they could eliminate the sale. However, organizations could psychologically unbundle those offerings to promote consumption. One way of doing this would be to highlight the prices of individual items in the bundle after the payment has been made.

Using this unbundling as a guideline, you might want to create your own value propositions. Lower the price for distance from parking, older appliances, or lower ceilings. In this market, everything has a price (to owners and residents) and you might be surprised to learn what you don’t have to spend.

As an example from the archives, on one of my properties, the leasing agents complained about the difficulty of renting ‘basement apartments’ which were typically on the back of the building and darker than others because there were only windows on one facade. The basement apartments could more accurately be called ‘ground floor’ apartments, ideal for pet owners or shift workers who want a quieter unit. In addition to repositioning the units, we also reconfigured the landscaping, providing for more shade and using river rocks to create a constricted area for our four-legged residents. For those renters, no discount on these ‘undesirable units’ was required. Not only did we make more on those units by targeting a certain renter profile, we also improved the psychology of the leasing agents by highlighting the benefits of every floor plan. Please note that pet owners and shift workers are not a protected class for Fair Housing purposes.

[Additional info on pricing psychology from NYT and of course, Wikipedia.]

So I’m linking today to a February post at Greater Greater Washington, a blog that covers urban planning and development news in the DC Metro area. “ Sex and the City: why women and families matter ” is an urban planning-focused article that provides an example of the type of piece that should provoke additional discussion.

• How does your property encourage people to arrange their lives around your community and live where their life takes place?

• Can you name child care centers, religious congregations, grocery stores with the best pre-made meals, or other aides to a more convenient lifestyle?

• What can you do differently to make life more convenient?

• Can you identify and market your community in a way that reinforces this “convenience lifestyle”?

Look at what your residents need, look at what you know, and get to know more of what they need.

Invariably there was a failure and after 10, 15, or 30 minutes we’d call the property. The phone call always started with “Where are you?” followed by “Where am I?” All to often the reply was a laugh before hearing, “I don’t live here” or “Let me ask someone”.

I had one of those experiences again last week, so I’m re-linking to a January post on this subject.

To take it a step further, I want to highlight some other ways that owners and managers are letting someone else do it, particularly in the area of marketing communities. J. C. Hart of Indianapolis recently ran a contest for residents called “Live the Life”. Run as a way for residents to share what and why they liked living at a Hart property, the resulting videos were posted on YouTube. The contest resulted in 44 entries and generated over 30,000 views.

Urbane Apartments in Royal Oak, Michigan recently created the “Urbane Lobby” as a social network for their residents. Together with the “Urbane Blog” residents contribute blog posts, highlight local businesses, and build the type of community that most advocates of ‘social media’ can only dream of. Taking things even further, the owner of Urbane Apartments, Eric Brown, has found this model to be so successful that he eschews typical multi-family advertising such as printed guidebooks and uses Twitter and other social media avenues for part of his outreach. Leasing materials are provided on a flash drive, tours are self-directed, and units are improved, not rehabbed.

In my own portfolio, we’ve provided open space and materials for garden plots, worked with local religious centers for relationship counseling (which helped reduce delinquency from 8% to 1.5% in 4 months), arranged classes with the local Home Depot, and recruited local health agencies for on-site blood pressure monitoring, nutritional advice, and children’s dental care.

Even in straitened times, many towns and cities have a wealth of untapped resources. From saving money to creating a better environment for residents, it makes imminent sense to let someone else do it.

First and foremost, choose a place to live that is located conveniently for your lifestyle. This means looking at where you work, entertain, and play. So look at a map and start figuring out where your life takes place. If you live in or want to live in a less car-dependent area, be sure to check Walk Score, a great resource for helping to determine how much of your life can be lived without a car.

[Note to owners/managers: Your marketing and leasing efforts should emphasize these benefits. Get to know and love Yelp, Outside.in, and other sites that help define your community. If you don't know what is going on around your property, it's impossible to convey that to your residents. If you can't name three things going on in the next three days, how are you going to convince a prospective resident that you live in a convenient location, that you have an active resident base, or that you're any better than the commodity down the street?]

Once you’ve chosen an area to live in, it’s time to start narrowing down the product types. We’ll get to that in the next entry.

Many of the improvements that homeowners can make can be easily made by renters. While you obviously can’t do anything structural (e.g. no new windows or a green roof), you should also carefully read your lease for proscribed activities. This might preclude changes to shower heads, replacing washer-type faucets with cartridge faucets, indoor composting, excessive caulking, or replacing appliances, there are many other things you can do to improve your sustainability profile.

Easy things to do are living near transit, shortening shower times, washing clothes with cold water only, and replacing light bulbs (not fixtures!) with CFL bulbs.
If you live in a home, it might be possible to
1. install a programmable thermostat
2. replace aerators (reduce GPM from 2.0 to 0.5)
3. flush with less water (other upgrades here).

If you live in an apartment, the following are easily done:
1. Air dry laundry (does not require outdoor drying)
2. Keep curtains and shades open to heat your rooms.
3. Remove window-mount AC units during the winter.
4. Speak to your landlord about installing ceiling fans.
5. Running dishwashers when fully loaded.
6. Set your fridge to 38-40F (4C) and the freezer to 0-5 (-15C).
7. Don’t use plug-in air fresheners. Open windows, sprinkle (then vacuum) baking soda, burn a beeswax candle, use oils + water spritzer, or a potpourri sachet.

We’ll have more ideas in coming weeks and always welcome suggestions.

(HT: The Green Your… blog)

Here in Northern Virginia although many things can be developed ‘by right’ (according to the existing code), there is usually some type of give and take with the governing jurisdiction. Euphemistically called ‘proffers’, these shakedowns became egregious during the recent boom. The amount of roadway, public area, artwork, or just incomprehensible nonsense requested of developers really got out of hand. I recall one mayor in Loudoun County commenting that a town of it’s stature really deserved a statement-setting fountain. No prizes for what ‘public feature’ was placed prominently in every subsequent rendering.

Nonetheless, car sharing seems to be one of the proffers that is popular with both governments and developers. Because the shared car must usually be in a visible location, developers do not always have to provide an expensive underground space. They can stripe a surface spot for a few hundred dollars instead of the $20-35,000 an underground space would cost (depending on site work and blasting requirements). Car sharing also provides a developer with a way to negotiate a lower traffic count and reduced roadwork since shared cars by definition reduce the number of vehicles owned by residents. It also provides a nice blurb for the glossy brochure. Governments like car sharing because it provides a car to those who might not need one regularly or might not even be able to afford one, all at no cost to themselves.

HUD today released two studies about saving or coordinating transport near housing. It doesn’t really address carsharing, but it gets to an important point for low and moderate income renters: how do you get to work?

If you look at the typical income statement or pro forma, revenues represent your optimistic forecasts, admin and marketing represent your ‘we can do it for that’ hopefulness, and payroll, insurance, taxes, and utilities become your ‘fixed costs’ that no one touches.

In many respects, payroll is fixed. While I’m a believer in the 1 FT position per 100 units rule of thumb, that’s not always feasible. Both LIHTC and market rate have their own reasons for falling below that ratio. So when savings are realized, it is usually because of a personnel change or a change in ownership philosophy. There is not usually a way to show year over year reductions in payroll cost.

Insurance can vary a little bit by changing the total coverage, the deductible, placing it in a pool, taking it out of a pool, or shopping it around. Additional savings are feasible in exchange for capital improvements (trip hazards, lighting upgrades, fencing, e.g.) but those are not ongoing savings.

Taxes were covered in an earlier post, but are certainly the most ‘fixed’ of the fixed costs. Furthermore, in the current environment, with budgets beyond repair and everyone clamoring for holding the line against service cutbacks, expecting a major reduction in taxes is not a sure thing.

Which brings me to utilities and why this site spends so much time on efficiency and sustainability. Efficient utility use is the one area where we can reduce material costs, improve the resident experience, cut down on routine maintenance, and achieve important community goals.

There are plenty of easy tasks that can have a measurable effect on At a property in Texas we installed solar shades on the western exposures of the clubhouse. During the summer it resulted in a 5F reduction in temperatures, reducing the use of our air conditioners and the house electric meter. At a 400-unit property with dark interior courtyards, the service team spent one afternoon a week replacing light bulbs. By converting to CFL we not only reduced the workload, we reduced consumption by 80% (2x75w bulbs replaced by 2x15w CFL). Most successfully, we completed a 330-unit plumbing upgrade in 6 weeks for $90,000. Initial results suggest that we reduced water consumption by 50%, hot water energy consumption by 60%, and monthly water bills by $9500. This allowed us to push through refinements to the RUBS.

The 2009 budgets have revealed scheduled utility increases of 8-30%. Squaring away the small, easy tasks can mitigate or reduce these increases, reduce the amount of work required by the service teams, and reduce the wear and tear on the asset.

Reducing utility costs are the easiest way to reduce your ‘fixed’ costs and highly recommended for projects during the long winter months.

1. Schedule move ins
2. Ensure units are made ready
3. Schedule and supervise contractors
4. Weekly reports to supervisors and ownership
5. Supervise maintenance and leasing teams (typically 2-8 personnel) plus contractors (landscaping, security, utility)
6. Review and approve all invoices and leases
7. Manage resident satisfaction
8. Review and re-price units on a weekly basis
9. Recommend changes in leasing or marketing profile
10. Operate a multi-million dollar enterprise

In short, property managers supervise a small team, reprice and reposition their product on a regular basis, plan for capital expenditures, oversee sales to potential residents and outreach to neighboring businesses, provide entertainment and service to hundreds of residents, work with law enforcement, collect and dispense tens of thousands of dollars each week, and complete a thousand other jobs unknown to the owner.

Some management companies grant more or less responsibilities to managers than this list. Some want them to focus solely on leasing and resident satisfaction while others rely on the property manager as the mayor of a small town. Certainly that was the role I expected a manager at a 700-unit property in Georgia to fill. Managers respond to different challenges; some excel at lease-up properties but become so bored by stabilized properties that they let too much slide while others efficiently manage stabilized properties but overreact at the first sign of crime or occupancy slippage. Although most property managers have an AA or BA, they frequently start off as a leasing agent and work their way up, requiring an immense amount of training and on the job learning.

For all these tasks they are paid very little. Excluding benefits and bonuses, I think the highest paid manager in my portfolio makes about $59,000 for a 640-unit property and the lowest paid full-time manager is paid about $22,000 for a 170-unit property.

One of my midwest properties has turned into a tremendous time suck. It was poorly run for about 15 years by a local firm that gave it no time at all. We’ve uncovered astonishing failures of leasing, maintenance, and operations that would sound libelous if fully recounted. The arrogance and obliviousness of the prior management firm left us with 2 years of work to corret. This year it was my distinct ‘pleasure’ to introduce the manager to the joys of yoga. In that spirit, I recommend this article about the stresses of property mangement from The Cooperator: Stop, Drop and Breathe.

Title HT: Mr. James Garner