Are you reviewing the property tax assessments on your apartment building investments every year? In Seattle apartment research providers Dupre+Scott found that “this year almost 20% of the sales were assessed for more than they sold for. They were over-assessed by an average of 22%”.
In their video narrated by the xtranormal sounding ‘Kate Gardens’ she says: “With apartment prices climbing so much in the past year, we didn’t think many properties would be assessed for more than they sell for”. But their research shows that’s not entirely the case.
“… between 2000 and 2008 the average apartment was assessed for only 70 to 80% of what it sold for. Then things changed. In 2009 and 2010, the average property sold for less than its assessed value. And even though assessed values make more sense today, compared to prices, they are still higher than they used to be”.
Axiometrics was out with their National Monthly Apartment Trends report which includes a couple of cool charts, one is a map of their top 88 markets coded by rent growth (below). The one that caught my eye though was showing Occupancy, Effective Rents and Revenues:
Yes the Fed is fighting DEflation but it sure doesn’t feel like deflation when we go to the store or pull up to the gas pump. While I am glad that Ben is battling the correct demon, it would be very helpful to know what ‘living inflation’ is doing to or for our apartment residents. Especially since on their National Apartment web conference earlier this week Reis said that in many of their largest 79 markets class B & C owners ability to raise rents has or soon will run into the 35% of income barrier. Watching what the costs of rent, food and beverages, energy and medical expenses are doing to our residents’ pocketbooks could guide us in raising rents. Today Pragmatic Capitalism had a very interesting piece on just that.
Saw a very interesting piece by Daniel Cunningham, President of Leonard Property Management on how revenue management for apartment building investments might already have seen its best days of growing revenues. Dan compares it to what’s happening to other industries such as airline travel and hotels where consumers can quickly see all the pricing for all the competitors in the market or product they’re searching. With Craigslist and some patience renters can do that now Dan says. See the short to the point article here.
No real new news but good reinforcement on Gen Y prospects and renters:
They search using their phones, tablets and laptops so your marketing sites have to be readable by all three.
They use social media to check the vibe of your property.
They want a good location.
More than tanning beds, pools or other amenities they demand reliable wireless connection, cat5 wiring in the walls and cell reception in the unit. If you’ve ever lived somewhere that had bad cell reception you can relate.
If you are acquiring property these last two items should be high on your list. Making sure that your existing property has a consistent web presence is becoming more and more important to attract this growing demographic. Finally, making the wireless connection throughout your property is worth the effort.
See the whole MFE article for the results from two different research studies published this year.
From MFE Magazine: “For years, online review sites have been the bane of apartment pros, a place where the haters could post nasty missives about a community, whether true or not. But while there are still plenty of negative nellies online, like it or not, review sites have become the go-to source for renters who want to check out a community before deciding to live there. Join us for this in-depth Webinar on how to get the most out of online reviews, while keeping the haters at bay”.
Mike in Milwaukee, WI, that is a great question. Answer: $3,000- 5,000/unit/year. How’s that for an accurate but relatively useless answer? The real question is what is the annual expense per unit of the property you are looking at? If you are a large institutional investor like a REIT looking at national or regional averages like those published in the NAA Annual Survey (See the included charts for results from the 2011 survey) can give you an indication but you can bet the institutional players know their own costs to the penny.
In most larger metros there are also companies who collect and publish apartment surveys showing the areas average rents, occupancy, expenses, etc. One thing to make sure of is that the survey is based on properties similar to yours. There are a number of national companies doing multifamily research but they tend to focus on institutional sized properties 100 units and up so their numbers wouldn’t be comparable for a smaller property. For instance the average property in the NAA survey has about 250 units.
As reported by MHN Online. The Towbes Group, a Santa Barbara multifamily company has imposed a no-smoking policy in the 13 multifamily properties it manages in the Santa Barbara area. Common areas and individual units will be smoke free in 6 months.
We had received an increasing number of concerns from our residents regarding second-hand smoke
The percentage of Californians who smoke is down to around 15 percent
Recent California legislation allows landlords and property owners to offer “smoke free” living environments at their apartment communities.
We are committed to giving our residents the best living experience possible in their homes.
The cost to turn an apartment that has been smoke free is significantly less than that of an apartment that has been smoked in.
The most important reason is the ability to give our residents a ‘healthy’ option in multifamily housing.
And the results: “Out of those numbers [2,000 units in 13 communities], I received two complaints from residents who were not in agreement with our new policy. In addition, we did have one resident let us know they would be moving out of one of our communities. If anything, that very small number validated our decision to go smoke free. We really believe that we will attract a greater number of prospective residents by offering a ‘smoke free’ living experience.”
Not bad eh? Create a more healthy living environment for your residents while reducing turnover costs. Have you done this with your apartment buildings? If you have please share your experiences with us.
With so many online ad sources to choose from, how can you be sure which is best for your apartment building investment? Below Jason Velazquez, VP of Strategic Initiatives at Colliers of offers 5 tips for choosing a great ILS:
Does their traffic measure up? Most Internet Listing Services (ILS) will happily provide you with their web statistics. Take the time to thoroughly review any report offered to you before you sign on the dotted line.
Check whether they’re popular in your city. Simply because an ILS is nationwide, doesn’t necessarily mean they have high web traffic in your city. A simple way to gauge an ILS’s regional market penetration is to google the keywords – apartments in city name, and then scroll through the search results until you see their site. Don’t just search using the city you are located in; type other city names that your prospects move from.
If the ILS isn’t on the front page of Google, you may want to find an alternative ad source. Studies have consistently shown the majority of renters look for their apartment using search engines.
“People are going to have these conversations with or without you,” Wade Hewitt, vice president, apartmentratings.com said. “Engagement can really be a difference maker.”
In addition to steering the conversation about your property, reviews can also be used to see what other communities are doing right. “Use reviews to find out about your competitors and about what people like,” Erica Galos-Alioto, vice president, local, Yelp, said.
Negative reviews can also be useful to property managers. “Every review has some truth,” Patrick Grandinetti, head of real estate, Google, said. “If not, someone wouldn’t have posted it. Getting a bad review is a fact of life… so if you get a bad review, it helps ground you in reality,” he said.