April is officially “Earth Month” and Friday of this week marks the 41st anniversary of Earth Day. I did some “Q&D” (Quick and Dirty) research and came up with the 5 easiest ideas your tenants can get on the Green bandwagon. The light bulb has long been the graphic symbol for a bright idea, so lets start right there with one of the biggest wastes of energy on the plant… the antiquated incandescent light bulb.
1. Kick out Thomas Edison
Thomas Edison may have invented the familiar bubble-shaped incandescent light, but it’s time he got the LED out. Incandescent bulbs are notorious wasters of energy. If you pay the electric utilities at your building, you have an even greater incentive to make the switch.
2. Grow a green thumb
Indoor plants clean the air. More plants mean cleaner air. Your model apartment should make good use of them because it drops the hint that green is beautiful and welcome.
3. Use the dishwasher
Dishwashers use less water and less soap. Plus, they are more sanitary. And when you’re finished in the kitchen, turn off the light. It is a massive waste of energy to light space that nobody is using.
4. Be a bag-free person
Instead of accepting plastic bags from retailers, bring your own tote. Many supermarkets sell tote bags and you may even be able to strike up a deal with a green-friendly retailer near your apartment complex and get free tote bags for your tenants. (There’s an added value: when you carry a tote you tend to buy only what you need because you carry less. So now you’re not only saving the planet, you’re saving money.)
5. Change by degree
Adjust the thermostat to be one degree cooler in winter and one degree warmer in summer. “Spring ahead; fall back” refers to changing the clocks, but now it can also refer to the thermostat. If you like it set at 72 in the summer, set it ahead to 73. If you like 76 in the winter, set it back to 75.The temperature difference is negligible, but multiply that slight energy reduction by tens of millions of thermostats around the globe one degree makes a big difference.
You Should Follow Me On Twitter, Here
 |
 |
The question that makes up the title to this article might seem a bit confusing. After all, isn’t the business of owning apartments (large or small) about having tenants and a positive cash flow? Of course it is, and that isn’t really the point. The point is that you should not have to be managing any tenants when your business is operating the correct way.
The way to get to this “tenant free” point in your own commercial real estate business is through the effective use of property managers. Managers can and should take care of the many tenant issues that have been the thorn in the side of property owners for decades. So, how do you get to this point in your own business?
It doesn’t necessarily always start out this way. Many real estate investors find it useful to start their businesses by managing at least a portion of their properties, so they develop a good feel for this side of the business. In this way, it’s not unlike a McDonald’s store owner being asked to work in the store for a while to get a good feel for the operation.
The challenge comes in letting go. Many real estate investors, through a committed work ethic, actual enjoyment in working with tenants, or just gluttony for punishment, often find it difficult to release the property management side of their business. As admirable as this may be, I also do not recommend it.
Property management is not only time consuming, but it also introduces an emotional element to real estate investing, given that you are working with real people and real life situations. I find that the best way to handle this real element of the business is to have a professional (and unbiased) third party do it for you, leaving you out of the picture when it comes to your tenants.
Call it sacrilege if you will, but I simply find this to be good business. The best form of business ownership is one where you aren’t enslaved by it, freeing up your time to relax, look for more deals, etc. Choosing a good property management company to handle each property you own can be an excellent way to accomplish this very thing.
Sure, property management is not without its own set of pitfalls, but they generally do not have to be costly to your business. In future articles, I will be discussing more the concept of selecting and managing your management team, so you can feel as comfortable as you should with letting go (at least somewhat) of this lucrative business of commercial real estate.
|
|
Today’s tight job market makes it difficult to find good apartment management personnel, especially for the entry-level positions. Currently about eighty percent of new hires come from similar positions at other apartment management companies. This means that not only is the applicant pool not large enough to meet current and future needs, but also that a number of these applicants do not have a stable job history.
This means that the apartment management industry must look in other areas in order to find good new personnel. For most apartment management positions at the entry-level customer service is an important requirement. Also, enthusiasm and loyalty to the company are very desirable in any employee. With this in mind, how and where are these people to be found?
One simple answer is by looking at the people encountered in daily life. Waiters and waitresses spend much of their time in customer service, and a good experience at a restaurant can be thought of as a mini-interview. This is especially true if you come after the rush hour for lunch or dinner, for then you see their character well into their workday. This is also the best time to have a five minute conversation with them, as they are not pressed into immediate service at other tables.
The best way to make an impression in such places is to leave a business card specifically designed for hiring in mind. It should have contact information to you personally, and also a brief description of the apartment management company. An attractive picture of one of the properties managed is also a good idea.
Another good calling card is a company newsletter, if your apartment management company produces one. Many apartment management companies now spend a good amount of time and money to produce a quality newsletter that looks much like a national magazine. Select an entertaining and informative issue, and keep a number of copies available to be given to prospective hires.
Attracting mid and senior level employees for apartment management personnel from other fields is not done often, and can yield very good results. One of the best areas to find new apartment management candidates is from the hotel industry. Advertising for higher level positions in their trade magazines can often bring rewarding results.
Another important and overlooked source is hiring from within. Apartment supervisors should be trained to make employee referrals when they have excellent employees. This is important for two reasons. First, it increases company loyalty, for many people will be more inclined to stay with a company if they hear about and see their coworkers climbing the career ladder. Second, these candidates have greater knowledge about the management industry and the company in particular.
In this regard, open positions within the management company should be made public and updated frequently. Having a website or other location where all positions are described is also a good idea. This allows employees to understand what career opportunities exist in the management company, even if they are not currently available. These and other ideas can help find great new apartment management personnel for any modern company.
|
|
Would you like to be notified every time I post a new blog entry? Click here & subscribe to my blog!
Check back over the next four days for a new teaching video from Dave at the Apartment House Riches Boot Camp!
Sign up below to discover how YOU can learn more about the strategies that Dave mentioned in the video!
|
|
There is a belief that an apartment investor can “get away with murder” by not having a professional property management person on site is negligent on the property management spectrum. The stark reality is that next to the rents, the property management aspect is top of the list for essentials in the apartment investing market. The average apartment complex has a few hundred units and at the very least, 40 hours of daily work tasks. These tasks need to be done on the occupants schedule not the schedule of the management. This creates a very interesting dilemma for any of the property investors that feel a 40 hour employee on site is either unnecessary or unwarranted. In both aspects this is incorrect. A simple table will demonstrate why this is a reality and a reason to employ a property manager on site, at least part –time.
Four Reasons to Come out of Pocket for a Great Property Manager on Site
• Professional Presence: Many Residents Prefer and Expect a Person On Site
• Customer Service Advocate: Professional Approach
• ‘Fire’ Person: Daily ‘fires’ That Blaze and Can Destroy an Investment/ Separate from the Real ‘Flames’ of a Fire
• Maintenance Issues: If There is no Dedicated Maintenance Person On Site the Professional Property Manager Will Know Who to Call or Do it Themselves
• Collection: Collector of the Rental Units Dues.
These issues listed above are very important and that list is just a microcosm of the reasons that can be formulated in the realm of property management for apartment investing success. Many other reasons are commonsense related and need no further defining and if they did then possibly there are other investment alternatives in the horizon. The apartment investor realizes all too well that the risk of failure in the business of renting units to strangers is relatively high. The nature of the business screams for the property to be adequately protected with a professional on site during the working hours of early morning to late afternoon. This is just how it is so when the check is being written, for the purchase of the apartment complex, make certain that an additional percentage is weaved into the final amount. This will make it that much easier to hire the property manager off of sites like IREM.org.
Are There Reasons to Not Employ an On Site Property Manager?
Yes. The size of the apartment complex may will decide what time of management you will need.. The tasks are so monumentally challenging to own and operate an apartment investment that the reasons for not employing a trained professional are almost not there. For some areas of the United States, where the rentals can be seen as almost homeownership by the clientele, these are the ones that can afford to not have an on-site property person. In the end the apartment investor that is serious about maintaining the integrity of both the rental units and their own will think very seriously about the hiring of an on-site property manager.
|
|
Some of the essential team members that you’ll want to have in place include:
· Bird dogs · A real estate agent or agents · A commercial mortgage broker · A banker (one or more) · A title company or closing attorney · A real estate attorney · Private lenders · An SEC attorney (if part of your business includes securing private funding) · An asset protection attorney · An accountant or CPA · Property management companies · Contractors
Contractors are the behind the scenes magicians that can really aid your overall cash flow in the long run as an apartment owner. Units that are in need of complete renovation or simply a few updates do nothing for you if they are unrentable. A good contractor (or collection of them) can minimize the time that units in need of some fixing stay vacant, thus optimizing your income from your properties.
Finding contractors who both do good work and do so in a timely manner can sometimes be challenging but remember that it is a tougher economy out there right now and people are looking for work. Make sure your contractors are necessarily bonded and insured and don’t be afraid to move on if someone does poor work or, worse yet, shows up late or not at all. It is your business and you have every right to expect quality and timely work.
I suggest having a variety of contractors at your disposal. You won’t need all of them all of the time (at least you hope not) but there is something to be said for specialization. Maybe you’re replacing carpet in your units as they turn over from one tenant to another. A professional carpet installer might be a perfect fit for getting a couple of units done at a time. You could make similar arguments for plumbing, electrical work, painting, etc.
Some contractors will claim they can do it all but you rarely need it all when managing apartment units. For assorted odd jobs, a good handyman is always a good bet and they can be great allies when tenants call with fix it items. It is both easy and practical to have budgetary limits set with your property management company so they can coordinate with contractors as needed for small jobs and avoid you getting bombarded with calls for ‘nickel and dime’ issues’.
Remember, this is a business and, as a business owner, it is both reasonable and advisable to delegate as much as you can so you can actually enjoy the fruits of your labor. Remember that just about all highly successful businesses share a common mindset. Success is a state of mind that is shared by few but for which principles are more freely shared than you might think. Make the acquaintance of wealthy people and pattern your own business after what they have done. This is one of the most basic secrets of becoming wealthy beyond your wildest imagination. Now that you have heard what I have to say about building a team, the next step is to find the deals that will help you build the fortune that is out there for the taking!
|
|
Would you like to be notified every time I post a new blog entry? Click here & subscribe to my blog!
Any real estate investment deal worth doing should be able to withstand a little due diligence, and commercial properties are an excellent example of this. I want to discuss examples of due diligence you’ll want to perform for your pending deals include:
· Property Inspection
· Market Analysis (values, rents, etc.)
· Title Inspection
· Lien Review
· Confirmation of Seller’s Mortgage Balance and Payment
· Confirmation of “Currency” of Seller’s Mortgage
· Mortgage Terms (e.g. fixed or adjustable, prepayment penalties, etc.)
Let’s spend some time on the final due diligence items from the list, which concern either title or financing, both of which are also critical prior to any commercial property purchase.
Title Inspection
The title to a property shows the chain of ownership and will feature any liens that are attached to it. Both of these factors are important to look into, before you ever close on any real estate investment. Because of family or business arrangements, chains of ownership are not always as clear as you’d like them to be, and your due diligence allows you to confirm that acquisition of the property can be a smooth transfer of ownership.
Lien Review
Another aspect of title inspection for a commercial property is the review of any liens on the property. Liens can come in many shapes and sizes but some of the primary types are listed below:
· Property tax liens
· Income tax liens
· Mechanic’s liens
· Judgment liens
Tax related liens are either due to local property taxes going unpaid or to state or federal taxes that are similarly delinquent. Tax related liens have high priority, when it comes to transferring ownership cleanly, and this is a potential issue you need to be clear about with any real estate investment you consider.
Mechanic’s or judgment liens are usually easier to address during the due diligence period, but are also worthy of your review, as they can still affect the closing process for a commercial property. When these liens appear, it is often a matter of contacting who laced the lien to see what they will accept to consider it fulfilled.
Confirmation of Mortgage Terms
A final form of due diligence you’ll need to consider is a review of any financing terms that the seller of a property has to adhere to. This review may include such items as confirmation of payment and payoff terms, confirmation of the currency of an existing mortgage ( to make sure the payoff is what everyone thinks it should be), and review of any relevant mortgage “fine print” that may affect the final closing numbers for the transaction.
Remember that due diligence is not just there as something to do, just for the sake of doing it. It is designed to protect you, especially given that commercial real estate represents an often-substantial investment of resources.
|
|
Would you like to be notified every time I post a new blog entry? Click here & subscribe to my blog!
Despite the current slump in the housing market, it can be an attractive time to acquire funding for a real estate property. I made my move into the real estate business at a time when it was “risky” and not a sure thing, but I have comprised systems that allow me to not only survive the slump, but profit from it. We all know the time to buy is not when you hear everyone saying it a great time to get in the market. We want to get in before that. I had a mere $800 to my name when I decided I to make real estate work for me. There are many ways to go about funding your next real estate deal, but today I would like to focus on grants, private investors, sellers, liquefying assets, and loans.
Grants:
The government dishes out millions of dollars each year in grants to those seeking funding for real estate ventures. This is mainly because one of the government’s main duties is to provide housing for U.S residents. Not only are the grants there to help the brokers, but also acts as an outsourced entity for the government. There are not only federal grants for which you can apply, but also state level grants as well.
Private Investors:
If you can be provided with an opportunity to sit down with someone who is willing to entertain putting forth a little investment capital for a possible venture, wear your best suit and tie. Have a professional proposal detailing your outlying costs and show the bottom line of your profit margin. Chances are your investor will be looking for a faster return on their money than a financial institution will.
The seller (can you believe this?):
Yes, you can possibly obtain the money needed for a property from the seller. It may benefit the seller more to finance your purchase than to maybe face foreclosure. In some instances the seller is willing to add additional money to the price of the property to account for the down payment and the closing costs. This additional money may need to be covered in a certain time period such as a deferred down payment. It will increase your interest to carry that extension on your balance; however it will buy you some time to earn more capital.
Liquefying any assets:
If you feel strongly about entering in to the market and have tried other avenues to obtain capital; you may think about liquefying any available assets. You can cash in any stocks, bonds or other savings. Also you may contemplate turning over your 401K in hopes that you can replenish your retirement fund with a much more lucrative investment in larger sums. Especially if you can invest then into a CD account which yields higher interest. However, seek professional guidance before making this move. We always need to think through our investments from how to get a deal to the proper exit strategy!
Loans:
If all else fails, it is still possible to obtain an investment loan from a bank or credit union. You may be required to possess a higher credit score and/or have substantial collateral to convince the bank to fund your venture. In this instance you may or may not receive the full amount necessary, and will also need to consider the interest rate that will be assessed above the loan. This will be essential when completing a bank proposal.
The right way to fund a deal is different for each circumstance. As a professional investor it is important to be able to use all the tools necessary to get the deal done. Understanding all your options enables you to be the investor that gets the deal done. Once you establish yourself as a closer the deals will start to run to your door.
|
|
LinkedIn
Myspace
Facebook
Live Events
Twitter