Since its founding 35 years ago, apartment owner and manager Boyd Management has carved out a niche not only in affordable housing but also in the rural Southeast. The Columbia, S.C.-based company manages some 13,000 units spread across North Carolina, Georgia, Florida, Alabama and its home state.
An affiliate of Boyd Management owns about 75 percent of the units, which were largely developed utilizing a U.S. Department of Agriculture’s loan initiative to increase the supply of affordable housing in rural areas. Boyd Management’s third-party clients typically develop properties using low income housing tax credits and other programs. The overall portfolio, which also includes age-restricted and senior housing properties, has a vacancy rate of less than 2 percent. Barbara “Babbie” Jaco, vice president of Boyd Management, has been at the company since day one and discusses its long-running success.
What are some of the secrets to successfully managing a rural multifamily portfolio?
Jaco: Typically these properties are small—32 to 48 units—although we have some that are 72 to 100 units, and some properties are in the suburbs of bigger cities. Still, it can be a challenge to manage a single 12-unit property in Alamo, Ga., so we have to find the right people and make our expertise, volume and geographic footprint work for us. In Clinton, S.C., for example, we have six different apartment communities, and it would not be unusual for one manager to oversee three of the properties out of one office. Our regional managers are within a two-hour drive of their properties, and they don’t get on airplanes. Once you get on an airplane, you’re losing money.
Talk about the health of some of these rural communities. Are there risks associated with young people moving away?
Jaco: I don’t think that’s what young people are doing. The renters qualifying for these units are your firemen, teachers and service workers. They may be getting some child support or working more than one job. The communities that are being built also knock your socks off—they have fitness centers, computer rooms, community rooms, courtyards and picnic areas, libraries and lush landscaping. We’ve got a community outside of Savannah, Ga., where the rental rates for a two-bedroom unit are around $720 a month. If that was a market-rate community, it would probably rent for $1,200 a month. So I think that really good, quality development, with a nice manager who’s helpful and responsive, sells. We don’t have any trouble keeping properties full.
Why does Boyd Management specialize in affordable housing communities?
Jaco: (Company founder) Donald Boyd was one of the first developers that started developing apartment communities as part of the U.S. Department of Agriculture’s Farmers Home program. Then we started managing tax credit housing projects as we continued to develop and expand our Farmers Home portfolio. We got really good at what we were doing—we still pay a return to the owner (an affiliate of Boyd Management) on that very first Farmers Home project built in South Carolina.
Are you still developing or buying Rural Development or other types of affordable properties?
Jaco: We’ve done some small acquisitions here and there, but we’ve primarily been focused on preserving the inventory we have. Some of our third-party clients are developing, and we’ll be leasing up and managing eight new properties this year for them.
Tell us about the renovations.
Jaco: We’ll do eight to 10 units a day between 8 a.m. and 5 p.m. because they’re occupied. We call it the “big push.” We’ll gut the kitchens and bathrooms, and the units will get new solid wood custom cabinets, countertops, sinks, range hoods, dishwashers, refrigerators, bathtubs and showers, toilets, water heaters, vanities and in some cases, light fixtures. We’ll update the air conditioning systems to use 410A refrigerant. Somewhere between four to eight weeks, the properties will be completely done and will include new roofs, parking lots, playgrounds, accessibility, mailboxes, fencing, signage, landscaping and dumpsters. We do it all.
What are some of the challenges related to managing affordable units?
Jaco: When I started in this business, all you needed was a check stub to figure out an applicant’s yearly income and whether they qualified for affordable housing. Now I would say we’re up to 50 or 60 documents. You have to have their life insurance policy because it could have a residual value, or a divorce decree could include a settlement, alimony, child support or other assets. You’ve got to have six months of consecutive bank statements, and all kinds of birth certificates, social security cards and other information for every member of the household. Our compliance department has 25 people in it, but it’s not just hard on us, it’s hard on the applicants, too.
Despite those challenges, Boyd Management is by all measures flourishing. What do you attribute that to?
Jaco: We have never had a reported 8823. In the affordable housing world, an 8823 is an IRS form indicating noncompliance and a violation can trigger the recapture of millions of dollars in tax credits from investors. Maybe you rented to someone who is ineligible because you forgot to count overtime, or maybe peeling paint on a handrail didn’t get corrected within a required timeframe. So the stress to have everything perfect all the time is extremely high. But we also have a very good relationship with the affordable housing agencies and we get a lot of calls to manage apartments because we have an unblemished record.