The Seven for 2011
The following text is taken from an article I wrote for both Apartment News Magazine February 2011 & the forthcoming Institute of Real Estate Management Los Angeles Digital Magazine-1st Quarter 2011. Continue reading below…
The Seven For 2011
By: Nicholas A. Dunlap, CPM
2011 is upon us and for property owners, it’s back to business as usual. As symptoms of the recession continue to taper off, owner/operators of multifamily housing will realize the opportunity to restore order or income to their bottom line. Part of restoring this order will require an active, hands on approach to both the asset and property sides of management. Doing so will not only prove profitable, but help to streamline operations as well. While we certainly need job growth to succeed, fears of a double-dip recession have subsided in most economic outlooks. Consider the following seven points as the “Seven for 2011”. Seven things for you to do in 2011 to ensure your continued success in the ownership and management of your income property.
Re-finance- With record low rates and great terms, now is an excellent opportunity to reposition the debt on your property. Lock in low rates for the longterm and improve your cash flow instantly.
Increase Rents- That’s right, it’s time to increase your market rents and consider raising those who moved in with move-in specials. Also, it is important to understand where you fit within your marketplace. If you are the only one still using concessions or specials to bring in prospective tenants, you may want to consider abandoning your strategy.
Create Ancillary Income- Pursue and establish partnerships with third-party service and utility providers to generate up front bonuses as well as residual income on an ongoing basis. Laundry companies have done this for years, but you will be amazed when you see what Cable, Telephone, Internet, Renter’s Insurance and other such service providers can offer. Depending on the size of your properties, you may want to consider Vending Machines as well.
Exhaust Your Freesources (Free Resources)- Monitor your advertising expenses and ask yourself “Are my paid ads truly attracting qualified prospects who ultimately lease?” In conducting a similar audit, we found that Craigslist had generated over 75% of our leases, with the other 25% coming from resident referral and walkup or drive by traffic. Our prospects were not coming from paid advertising.
Streamline Your Operations- Credit cards, online rent payment and application process, bookkeeping technologies; now is the time to modernize. Speed up processes, free up resources and become more efficient. What you spend on materials, you will recuperate in labor over time.
Invest & Expand- Whether acquiring a property on your own or participating with likeminded investors in a private-placement syndication, do not miss this opportunity to buy. There may not be great financial returns available in Southern California, but broadening your horizons and partnering with others to invest out of state yields tremendous potential. 10% immediate cash flow is available in select, primary Southwestern US markets.
Sell the Dog- Not Fido of course, but the figurative “dog” of your portfolio. You know, the underperforming, lackluster play that never quite performed how you wanted it to. With interest rates low and capitalization rates declining, adjust your expectations and call your Broker. Well-priced assets are generating multiple offers in most cases as there is pent-up demand to own multi-family property in Southern California.
Whether you choose to do one, none or all of the aforementioned items is entirely your decision. Certainly you will agree that it is important to implement the “smarter, not harder” philosophy when managing your property or portfolio. Having emerged from one of the most bleak fiscal periods our Country has known, consider today the best day in recent years to make an active attempt to make your life easier. Why not make yourself more money while you are at it?