Operations: Boosting the Bottom Line
- Feb 14, 2014
“A lot of the online functionality of the leasing process has been a huge focus for us,” says Steve Boyack, senior vice president at The Laramar Group LLC. “I think it’s really made a dramatic effect on our operational efficiencies on the ground for sure.”
The Laramar Group operates out of corporate offices in Chicago, San Francisco, Los Angeles and Denver, and owns or manages more than 30,000 units across 28 major U.S. markets.
Boyack particularly notes the multifamily industry’s increasing use of mobile and tablets as a way to extend website offerings of lead-to-lease technology. Prospective tenants can tour a property, view information from their computers or mobile devices, and complete the leasing process without ever having to step foot on the property.
“For a lot of the leasing that happens site-unseen. For international clients, it creates a lot of functionality by having all of that integrated so that people can go through an entire leasing process without a lot of email or, like in the old days, a lot of mail going back and forth,” he says.
The flow of online leasing has been improved in recent years, according to Boyack, who said that in the past, third-party vendors would offer services that would have to be executed individually. The integration of all of these technologies has produced a simplified, congruent web-based leasing process.
“It used to be applications could be done online, and that was great … but that still had to transition into a lease-generation process, [and] that happened at a leasing agent’s desk,” he says. “Now, the application process happens, credit check, background check all of those things. You can basically hit send, and your signed lease gets sent right to your email account.”
With the technology helping to improve leasing efficiency, Boyack says that leasing staff by default become more available to handle other community matters.
An efficient leasing staff is not the whole picture. Boyack points out that technology use by maintenance staff as well can bring a potential boost to NOI. The ability to remotely assign and close work orders without additional trips to the office maximizes maintenance staff time around the property. Additionally, the use of mobile technology—taking pictures of situations for example—allows for a more expedited execution of the work order.
“I think the general efficiency of [maintenance staff], how they move around the building, how their time is used, and also how the work that they perform is being monitored and tracked and recorded, has been improved dramatically,” he says.
Keep it simple
Marketing and other lead-generating activities can eat up large chunks of operating budgets if not carefully planned. Often times a simple approach is the most effective approach.
“I believe that anytime you can simplify your strategy and focus on the heart of what is working, you will positively impact your NOI,” says Lynette Hegeman, vice president of marketing at Berkshire Property Advisors. “We believe in our people, go to great lengths to train and mentor our associates and are always looking to refine and refresh our marketing programs and service vendors.”
Berkshire is headquartered in Boston, with its property management division located in Atlanta. The company owns or manages more than 90 communities, which totals more than 30,000 apartment units in approximately 30 markets nationwide.
According to Hegeman, Berkshire Property Advisors, a REIT specializing in value-add and other opportunities in the multifamily industry, has emphasized the importance of attracting more qualified leads through proven marketing sources, rather than taking a shotgun approach in its marketing-related operations.
“[We] generate greater and more qualified leads while reducing marketing costs,” Hegeman says of the strategy. “Using analytics we are able to focus on the most efficient marketing sources, rather than using a multi-marketing source strategy. We apply the 80/20 rule; therefore we focus on what is most effective and create strategies to maximize what we know is most productive. This cuts down on unnecessary marketing costs—enabling us to place those dollars in other areas of our business.”
The 80/20 approach, according to Hegeman, is the concept that 80 percent of the company’s leads come from 20 percent of the company’s top marketing sources. Additionally, Hegeman notes the importance of connecting with both prospects and residents in order to maximize brand recognition, a feat that is accomplished through the use of social media, online advertising, community outreach efforts and creating a personable atmosphere within the communities.
“We are embracing experiential marketing starting with the online shopping experience, to the moment they first step foot in one of our communities,” she says. “Our goal is to create an inviting experience that makes future renters feel educated and engaged, and builds a trusted advisor relationship.”
It’s the small things that count
While larger companies may have the available capital to invest in large-level shifts in operation strategy, smaller companies have the advantage of going through fewer company channels to approve strategies aimed at streamlining operations.
“I think we’re very fortunate here because we’re a mid-sized regional company. We don’t have to go very far for approval or permissions,” says Jim Carrillo, vice president of residential properties at The Towbes Group Inc., a mid-sized regional real estate, development and property management company based in Santa Barbara, Calif. “All of our budgets, all of our projects, or any items that we want to include in our operations that we think will help us by impacting our bottom line in a positive manner—all of those decisions are made here.”
The Towbes Group, which manages 13 communities in Central and Southern California, has recently enacted a portfolio-wide no smoking policy at its residential communities. With the exception of a few communities with designated areas, the smoking ban restricts smoking anywhere on the properties—including inside the units. The policy was implemented at the beginning of 2013 and was intended to not only help create a healthier living space for residents, but to also help reduce turn costs.
Carrillo noted at press time that he was interested in “putting the numbers together” to see what effect the ban has had on turn costs. “Turn costs vary by community, but it’s not uncommon to have turn costs of $450 on the low end right on up to $1,200,” he says. “While I realize that’s a big range, probably the most impact would be in our painting. Not allowing the residents to smoke significantly reduces our paint costs.”
In addition to the paint-related expenses, which include scraping the walls, then priming and adding a finish coat, Carrillo thinks the policy will help reduce other peripheral turn costs such as cleaning fees and carpet replacement.
The Towbes Group has also experimented with other cost-saving projects. The company recently expanded the size of one of its community’s trash enclosure to allow for a new and larger recycle bin. The expansion of the enclosure, which cost about $4,000, and the addition of the larger recycle bin at the community has allowed the company to save thousands of dollars a year in refuse collection fees.
“The savings in trash collections alone, at a 128-unit community is $7,000 a year.” Carrillo notes. “In less than a year we paid for the expansion of the trash enclosure to say nothing of the fact that we’re spending $7,000 less each year on refuse collection.”
Carrillo noted that educating residents about using the recycling bin correctly has been a key step in making the project successful.
To comment, e-mail Joshua Ayers