JPM Article: Project What You Expect - Will Do!

There's no sugar coating it, this is budget season.  Everyone I know in Property Management is knee deep thinking about 2017.  I read the Journal of Property Management, and a recent article about budgeting, Project What You Expect caught my attention.  The main take away for me, reflecting my own bias, is that a budget is a "living, breathing document."  Back in the day, it was common practice to spend September and October reading our crystal balls and sending tomes of paper purporting to declare to our clients rosy leasing projections and reasonable operating expenses, resulting in copious cash flow.  Then we would explain variances throughout the year.  A valuable lesson I learned goes something like "Keep It Real."

Now that I'm in a position to organize the budget process, I am applying that valuable lesson.  Our budget format is a constantly updated excel document that gets updated with every lease renewal, move in, move out, and rent increase.   There's a tab for Property Managers to list any cash outlay not considered an operating expense.  The operating expenses themselves don't change all that much from year to year, so by capturing the tenant income changes and one time expenditures, we can pretty much take a look at the budget any time and get an idea of the cash flow for the next few years. What we don't do is budget leasing.  That violates my Keep it Real rule.  If we budget leasing, it's just a guess, and guesses don't pay the bills.

To read the JPM article, click HERE

Do You Know CPR? We AEDo!

A huge part of our culture is being goal oriented.  We find an endless number of ways we can improve, whether that's good news or bad news I will reserve for another post.  Anyway, for 2016, Property Managers and Maintenance Engineers set a "Sharpening the Saw" goal (continuing education) of completing at least 8 hours of outside training.   We put our heads together and decided to host a CPR training course as a way of achieving the goal.  We now find ourselves red cross certified to provide first aid and CPR. Who knows when one of us will be called upon to use our training, but given our role in the buildings we manage, we all feel better having the skills we learned that day.

That day we also trained on the use of AED devices.  AED stands for Automatic Defibrillator Device. Used correctly it can supplement CPR by delivering a mild electrical current to re-start a person's heart if needed.  We learned that if an AED is around, it greatly improves the survivability of a cardiac arrest.  In August we had a representative from the Red Cross address one of our PM Huddles to discuss how to install and deploy them in our buildings.  

When we set that training goal we didn't realize it would lead to adding AED devices to our buildings, but we're happy to be taking our training as far as it can take us, because it's the right thing to do, and by adding these devices to our properties we are showing our tenants that we care about the well being of their employees. For our owners, we're taking care of their customers. I do love a win win!

Have a Great Labor Day 2016 with documentary: Trash Dance

I am smitten with a documentary I just saw on PBS called Trash Dance directed by Andrew Garrison. One reviewer wrote:  Austin Choreographer Allison Orr finds beauty and grace in garbage trucks. The documentary follows Allison for over a year as she works with sanitation workers in Austin to develop a dance recital with the tools of their trade, from one individual picking up trash to 16 trash trucks, cranes and workers lifting cans and working levers to music--performing for an audience of several thousand people in the rain in Austin.  No tax dollars were involved, only private grant money and time of these unsung heroes went into the project.  I don't know whether you may have contemplated how and where the trash on your curb goes and how it gets to where its going, I cannot claim to much expertise on the subject.  This documentary tells some amazing stories.  I recommend it.

If you've been following my blog for long, you know by now that I find inspiration for being a Property Manager from just about everything I come in contact with, and Trash Dance is no exception. Like the individuals who are portrayed in this documentary, those of us in Property Management sometimes feel we labor in obscurity, that we only deal with problems, that we don't get credit for keeping the lights on and the toilets flushing.  Seeing this documentary reminds me, and I hope everyone who maybe sees themselves in less than "sexy" occupations take heart that their work has as much meaning and value anyone else's.  For this Labor Day 2016, here's to all of us who keep the trash picked up.  Hope you have a wonderful Labor Day Weekend!

Are office buildings going to the "dogs?"

You've probably seen articles touting progressive pet friendly company policies that allow, even encourage employees to bring fido to the office.  When I read those articles, I can't help but wonder whether the company checked with their landlord to see if it was OK with the landlord to have the employees bring their dogs to work.  I may be reaching here, but I doubt fido is being welcomed with open arms by the owner of just about any building.

Why, you may say, wouldn't it be OK to have man's best friend around at work?  Our four legged friends help us relax, the studies say, our blood pressure is lower with them around, etc etc.

All I can say is:  there is a reason why apartments charge pet deposits and even higher rent for those residents who have pets.  Carpets get ruined, waste has to be picked up, dog bites happen, not to mention the insurance, allergies and other issues relevant to companies who would bring their dogs into common areas shared by other tenants.    

So far it hasn't really been an issue for us, aside from one "therapy" dog in one of our properties, most of our tenants leave fido at home.  I'm glad, and I'm also hoping our buildings don't have to go to the dogs to keep our tenants happy.  I have a feeling that may make me old fashioned.  Oh dear.

Food for Thought - is Expertise an Illusion (or even a DE-LUSION?)

In the most recent edition of IREM's Journal of Property Management, a thought provoking article "Expertise and the Illusion of Knowledge" took the position that a person's Expertise, and in our case specifically Property Management Expertise, can REDUCE the quality of your decision making and the accuracy of your work.  How, you may ask?  The article defend its thesis by citing a book published in the last few years by Dr. Atul Gawande called The Checklist Manifesto.  Dr. Gawande argued that the same concepts that prevent errors by pilots, the extensive pre-flight checklist, should be adopted by medical professionals, specifically surgeons, as a way to reduce medical errors that have the potential to ruin lives.  Surgeons pushed back hard.  Look at their long training, their cumulative skill, their EXPERTISE!!! they said.  Who could question that they know what they're doing???  Yet Dr. Gawande provided lots of research that supported his checklist argument, not the surgeons expertise argument...sorry about that.

So if it's good enough for pilots, and if eventually medical practitioners begin to implement checklists to improve the accuracy of their life saving work, why on earth wouldn't  real estate professionals, and again, specifically Property Managers, also buy into the idea of improving our work through checklists?  I can't think of a single reason why not.  I completely agree that we consider ourselves "experts" at our peril, that we should always question what we think we know.  Only by doing that can we truly grow our expertise.

I can also think of times when sometimes there is no right answer, and when we have to find a creative solution.  In that case, expertise may carry us through.  In addition, those of us who are in the property management trenches every day know that it's hard to find time to work "ON" the business (i.e. create the checklists), not just "IN" the business.  I can just hear our customer's saying:  "So what, do it anyway."  And I agree, and so we do, through our huddles, our ongoing training, and yes, the checklists we have so far.  Are we perfect?  Hardly.  Are we perfectly committed to improvement?  Absolutely.

The Checklist Manifesto:  How to Get Things Right is available here at Amazon

 

Tenant Retention Tips - (CBC Blog) Part II

Posting from the CBC Blog again - Part II of tenant retention tips - Enjoy!

August 15, 2016

Tenant Retention Tips: Part II

The Coldwell Banker Commercial® organization offers these tips in continuation to “Tenant Retention Tips: Part I” to assist in retaining tenants:

1. Communication is Key
Make sure you communicate with your tenants on a regular and consistent basis throughout their tenancy.  Let them know if there is a scheduled maintenance such as parking lot cleaning.  Tenants don’t mind being inconvenienced once in awhile as long as they are aware and can make the necessary arrangements.
2. Ask What Would Make the Building Better
Another great way to increase your relationship is to speak to your tenant and inquire as to what would make their environment better to work in.   Tenants might have ideas, but don’t openly present them.  Many times, it may be something really small that could make the world of difference.  If it is a bigger item, it may be possible to amortize the cost in the general operating expenses if all the tenants will benefit from the suggestions.
3. Send Your Tenants Anniversary and Holiday Cards 
This is a simple thing that can go a long way.  Write your tenants a hand-written note inside.  Another idea is to give your tenant a small gift, like a DVD player, when they first move in.  It is small, but they will realize you are not an ordinary landlord.
4. Improve Property Energy Efficiency
In today’s market, efficiency and sustainability are very current issues that more and more tenants are acutely aware of. If your property is inefficient, cold or drafty, a tenant won’t want to extend their tenancy.  That inefficiency can translate in higher operating costs. There are many federal programs and tax advantages to retrofits of properties that result in efficiencies and reduced operating costs. These will go a long way to helping retain tenants.
5. Improve Property Grounds  
Maintaining the front door to your property and the common areas where people walk thru on a constant basis is an often overlooked and important tool to help retain tenants.  Plant flowers in the front of your property.  Keep the parking lot clean, the grass mowed and the bushes trimmed.  Make the property inviting to come into work.
6. Offer a Re-Signing Bonus for a Lease Extension  
The simplest and easiest way to incentivize your tenants to stay is to offer them a discount for signing a new long-term lease.  Consider how much money and time it would cost you to find new tenants.  Look to incentivize your tenants for signing up early, possibly with free rent, a larger tenant improvement allowance, reduction of security deposits, an offer to refresh paint or carpet during their lease term, etc. (Note: be proactive with such a program and start two years in advance of the expiration of their lease, to encourage them not to look at other options).
7. Rent Reductions
If a tenant gives notice because they can’t afford to continue renting the property, consider revising and extending their term to help get the rent down or draw a new lease up for a longer period of time. Repositioning the lease is better than having them move, potentially losing rent revenue or the required new and likely larger capital dollars to make the space ready for a new tenant.
8. Why Are They Looking to Leave?
Always cross-examine the tenant on why they want to leave when they give notice.  It’s vital to find out their objections to try and overcome them. Sometimes it’s an issue you can’t do anything about, such as lack of space, but other times it’s something simple that’s easily resolved and encourages them to stay.
View Part I: Tenant Retention Tips
By the Coldwell Banker Commercial Organization

Retain your tenants - CBC Blog - Part I

I'm pleased to be able to share from the mother ship CBC blog some tips for landlords (and their property managers) for holding on to your tenants. In our property management huddles we spend time on this topic because we all agree it's a good idea keep your tenants happy in their office home.

It's way too expensive to replace them, right?  Right!!  Enjoy...and watch for Part II in my next post.

http://www.cbcworldwide.com/blog/tenant-retention-tips-part-i

Carol

08 Jun 2016

Tenant Retention Tips: Part I

Obtaining new tenants can be a costly affair for landlords. If tenants are dissatisfied, given today’s market, they can easily seek new space. It is always the preferred option to retain good tenants – those who pay their rent on time and cause little or no problems.

The Coldwell Banker Commercial® organization offers these tips to assist in retaining tenants:

1. Meet Your Tenant
Even though the property was bought as an investment, you are still in the people business and going out of your way to meet up with lessees can lead to longer, more meaningful dealings between yourself and your tenant.  Also, understand their business and business model.  They may have unique requirements.
2. Don’t Get Complacent
A long-term tenant is a valuable asset in a saturated rental market, so make sure you keep on top of all those little jobs that will make it easier for the tenant to feel like it is a good working environment.

• Maintain the property in the best possible condition; make sure equipment if up to date
• When the tenant reports maintenance problems, sort them out immediately
• Issues involving water, electricity, heating and air conditioning or safety should be resolved inside of 4 hours with a follow up to the tenants.

3. Have the Right Attitude
Show that you’re fair-minded and understanding.  Don’t act like the tenant is ‘bothering’ you when they call.  Be pleasant and show concern for their needs.  Don’t ignore their questions or distresses.
4. Replace a Minor Item at Least Once Every Year
Have a plan to maintain the property on an annual and rotating basis so you are constantly generating a fresh appearance. Keeping up with some of the competing buildings will make a tenant see you care about the property and they will be less inclined to look around for unnecessary reasons. Amortized over time, the minor expenses don’t cost that much.  Plus, they will be attractive to new tenants, and they increase the value of the space.
5. Tenant Improvements
Requests for improvements should always be considered.  Be open-minded and flexible with the tenant’s space.  The tenant can always restore the space to its prior condition if agreed.
6. Respect Their Space
When landlords meet tenants in their property, be respectful, friendly and informal.  Avoid disparaging comments causing them to be unsettled by voicing possible future plans that are adverse to the current tenancy.
7. Pro-active Problem Search
Perform regularly scheduled “preventative maintenance checks.”  Make sure the tenants are aware of when such things are scheduled.  Performing these checks demonstrates a proactive approach as opposed to a “wait and see” and allows you to find issues before they escalate to a stage where they hand in their notice. Always ask if everything is acceptable or if the tenant has any problems.
By John Boyer, Senior Director of Marketing, Coldwell Banker Commercial Affiliates