Thinking Creatively About Detroit’s Recovery

Thinking creatively about new ways to do business is a big part of the recovery of Detroit’s economy, and that includes established industries like property management and real estate. MHN interviews Scott Allen, president of FOURMIDABLE, about the efficiences fostered by his company's business model.

ScottAllenPhotoBy Leah Etling, Contributing Editor

Thinking creatively about new ways to do business is a big part of the recovery of Detroit’s economy, and that includes established industries like property management and real estate.

For FOURMIDABLE and subsidiary venture Agility-PM, located in the Detroit suburb of Bingham Farms, the transition from owner-manager of properties owned by the company founders to fee manager has been a gradual one. Along the way, thinking creatively about the services required to run a portfolio smoothly, and the opportunity to improve on delivery of those services, has fostered new ideas.

“As a way to generate additional business, we decided to bundle our whole back office–accounting, HR, IT, compliance–as services to other property managers. We make it possible for property owners to eliminate a back office, not to pay office rent, and save on overhead,” says Scott Allen, president of FOURMIDABLE. He says the shift was a natural one.

“We’re just doing our job to get creative with the services we provide so that we’re not just providing them to the property owners like most traditional management companies do. We now are servicing what otherwise would be our competitors.”

Today, the company’s own portfolio is included within the 71 properties and just under 8,000 units that are managed by Agility-PM.

Allen spoke with MHN about the efficiencies fostered by this new business model.

MHN: Tell me about the process of developing Agility-PM, how that started and how it has expanded since then?

Allen: FOURMIDABLE began as a traditional full-service management company. It was associated with apartments owned by the owners of the company. Over the years, things changed, so now we’re basically a fee management company. We already have critical mass on our existing portfolio, so this allows us to bring to smaller operators technology solutions like resident portals for online rent pay, and some of those kinds of things that are usually difficult for smaller groups to get into.

MHN: Who are your clients?

Allen: Clients range from owners of single buildings with 500-600 units, to a client who has 12 properties with 1,500 units, and she manages them all but contracts with us for the back office services. Currently we have 71 properties and just under 8,000 units that are handled by Agility-PM.

Some properties are subsidized, some are tax credit situations, one is a luxury senior assisted living residence. There are regular market rate apartments as well. The communities are scattered around the Midwest and South, including Oklahoma, Tennessee, Mississippi, Kentucky, Arkansas, Alabama and Louisiana.

MHN: What is the fee structure?

Allen: It varies depending on the service module and size of the properties. At the highest level, a state housing authority with significant compliance requirements and reporting regulations, it comes out to between $200-$250 per unit per year. For our large market rate property clients it’s closer to $150 per unit per year.

MHN: For an owner, what are the benefits?

Allen: This set-up really allows someone to operate a portfolio and have virtually no overhead, short of their own time and transportation. They could work out of a property, or their home, and have all of the best back-up services.

We’re also able to bring in an employment-agency style arrangement, so smaller operators can take advantage of our scale for employee benefits, employment taxes and all of the HR requirements as well.

MHN: You also offer your clients a wireless network set-up that you supply and mange?

Allen: Essentially what we have done is created a managed Wi-Fi network that somewhat resembles what you would use in a hotel. We’ve packaged it as E-Crosstown and set it up for bulk delivery to apartment communities. It can be offered as a free amenity to residents. It’s such a sought after amenity, and if you can move into a community where you don’t have to go to an outside ISP, many people are happy to take advantage of wireless connectivity with enough bandwidth. We can scale the bandwidth, so Netflix and other streaming services aren’t an issue.

MHN: What’s in store for you in the next year?

Allen: We’re acquiring some of the low income housing properties we currently manage, which are coming out of their 15 year compliance period. We’ll be working on the redevelopment and resyndication of those properties very soon. We do look forward to growing our back office services, and we’re putting major emphasis on that and the expansion of our FOURMIDABLE brokerage sales services. We had $60 million in sales on the brokerage side in the last 12 months, with another $20 million anticipated in the next two quarters.

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