Implementing a Community Services Program Boosts the Bottom Line
- Jun 19, 2014
As an industry standard, we gravitate to what residents want. Strategically revitalizing a community should be intently focused on what tenants need in an effort to retain them and eliminate the challenges that force turnover and increased expenses.
Property managers are paid for performance to budget, meeting or exceeding net operating income (NOI) and covering debt service obligations. Many times we forget or become complacent in the reality that residents are the catalyst for improved financial performance of a community/asset. The value residents place in their community actually matters.
Revitalizing a community from within is a holistic approach to managing operational performance through internal resources‑the tenants. With the provision of a service-enriched housing model, tenants benefit socially and economically from programs and services that support education, job readiness, financial growth and financial stability. By eliminating barriers that plague many during this time of economic instability and decreased employment options and/or opportunities for those residing in multifamily communities, we support re-establishing the resident population and their economic fortitude.
Uniquely-designed, service-enriched housing programs and services, such as those offered by Rainbow Housing Assistance Corp. on a national level, support the social and economic well-being of a community’s tenant base. Empowering the largest component that drives income and expenses in a community is cost effective and ultimately offers tangible and intangible changes that support improved financial performance.
Value-based community living improves tenant retention. Resident retention reduces turnover costs (paint, cleaning, flooring, reletting fees and concessions). Free programs and services offer increased marketability for a community, thus reducing marketing expenses. Additional bottom-line benefits can be seen by reduced vandalism through youth enrichment programs and reduced security programs aligned with a stabilized tenant base.
The implementation of a professional, service-enriched housing program opens doors to broaden resources that support the needs of veterans, physically and mentally disabled, chronically homeless, single-parent households and seniors. Vacancy issues can be dramatically improved with supportive services onsite that meet the needs of the tenant base. Additionally, this type of outreach and community support garners the interest of local city, state and federal agencies as a collective effort to combat many challenges that arise from the displacement of these demographics. Housing the most vulnerable in a stable community living environment reduces city and government expenses across many avenues.
Case studies have identified, on average, an 8 percent decrease in vacancy loss over a period of 12 months after a tenant services program was implemented. Within 24 months, as tenant service programs develop and continue to make an impact on the lives of tenants, bad debt write-offs and turnover costs decrease by 34 percent and 21 percent, respectively.
Graph 1 represents annual figures based on averages from the Rainbow Tenant Service Portfolio.
Core programs and services focus on education, employment, underemployment, financial intelligence, life skills, youth and senior programs, resources to eliminate emergency situations and social development in a multifamily community.
Stratford Landing (Stratford) in Tallahassee, Fla., is one particular property where a need for resident services was identified. Due to the property location in a college town, the typical college-aged tenant base resulted in a high-turnover ratio. Management shifted its leasing efforts to a single-family and senior citizen profile in anticipation of longer-term residents. Resident services were identified as necessary to stabilize this population in a metro area where unemployment ran at 7.1 percent and the average household income was $44,715. (See Graphs 2 and 3.)
In late 2012, resident services at Stratford were brought in to implement job retention, job readiness and budgeting classes, allowing residents to remain in the community instead of seeking alternative living to accommodate lower or no income. This ultimately reduced turnover percentages and costs, liberating onsite maintenance to focus on work orders and preventative maintenance, increasing the resident satisfaction and curb appeal.
Occupancy at Stratford did begin to increase as management sought to change its resident base. Within a short amount of time, Stratford began to improve and stabilize as the benefits of resident services were incorporated into marketing efforts, and residents began to stay at the property. Resident services helped ease the property manager’s focus on collections, as links between residents and local financial assistance resources were established and budgeting classes to create long-term financial plans were put in place. Bad debt began to steadily decrease within six months of service implementation.
Service-enriched housing can be defined as the integration of programs and services within a community that advance the social and economic skill set of the tenant base. A stable tenant base will determine the solvency of a community and reposition the financial performance of an asset.
Flynann Janisse is the executive director of Rainbow Housing Assistance Corp.