Exciting Times at Siena Court

Our staff at Siena Court Apartments has been extremely busy for the last couple of months taking care of an enormous amount of move ins. Despite not having an operating pool right now (see What Happens When a Pool Isn’t Properly Maintained) we’ve had record high move ins. Since the beginning of June Siena Court has welcomed over 30 new residents, raising the occupancy from 55% to over 80%! This is a great accomplishment for our manager, leasing agent, and maintenance staff. As you can imagine, they’ve been running around like crazy people working to get all these new residents in and comfortable. Needless to say we’re proud of them!

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Siena Court Gets A New Sign!

We made the decision to change the name of Ashbury Court to Siena Court almost 2 months ago and we finally have the new sign up!  I must say that it looks great!  We still need to paint the structure actually holding the sign which will make it look even better but it’s a good start.  There will be lights pointing up to it at night as well eventually.  We also just received our new banner, yard signs, and flags.  The flags and banner will be up pretty soon but for now the property sign and yard signs will have to do.  Let us know what you think about it by commenting below.

Before

After

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Increasing Value to Tenants Increases Property Value

I’m a big believer in the idea that when you take care of others first you will be taken care of yourself.  Our free enterprise system is set up to reward those who bring value to the market, in our case – tenants.  Our residents willingly pay their rent in exchange for a place to lay their head at night.  Many property management companies stop there but PIMCO goes beyond the tenant needs to the tenant wants.

Adding value (or perceived value) to any product is the key to increasing income (value) to the business.  The core product we provide is shelter but much like a car, we add value by adding features.  The higher perceived value of the customer the higher they are willing to pay.  The more tenants are willing to pay the more income the property producing, thereby increasing the value of the property.

PIMCO specializes in increasing property values through increasing income, repositioning, and renovating properties for our clients.  Today I’m going to briefly talk about increasing your capitalization rate through increasing income.  The cap rate is calculated by dividing the income by the cost of the property.  For instance, let’s say you just purchased a small apartment complex that is earning $80,000/year for $1,000,000.  This would give you an 8% cap rate, which isn’t bad but you’d like to get a little more bang for your buck.

Your little 20 unit complex is about to get a small face lift.  You decide to spend $3,000 installing an on-site laundry room and vending machines which will add $10,000/year of income.  You also spend $2,500 on adding covered parking which allows you to charge an extra $50/month per unit.   Not everyone will be willing to pay the extra money for covered parking so you only build 10 covered parking spots.  This gives you an extra $500/month or $6,000/year.

Another great way to add value is to create a “dog park.”  This is a glorified way of saying dog bathroom.  Having a small fenced in area that tenants can take their dogs to so they can do their business and maybe play with the other tenants’ dogs can really make prospective residents feel better about having their best friend in your complex.  This is drastically make the property cleaner and more appealing.  Nothing says stay away like a big pile of poo by the sidewalk.  You can even increase your rents by say, $20/month when it comes time to renew for this one item.

By using these three simple strategies you’ve successfully increased your revenue to $100,000/year which brings your cap rate to 10%.  Now, if you want to sell this property and the buyer is happy with an 8% cap rate you can sell it him for $1,250,000.  This is oversimplifying but you just spent $6,000 and got $250,000 in return.  I’d say that’s a pretty good return, wouldn’t you?

There are a number of other small projects that can be implemented that can dramatically increase the perceived value of your tenants, which increases your revenue, thereby increasing your property value.  The whole point here is find out what the tenants want, how much they are willing to pay for it, and get them what they want.  By taking care of your tenants they will take care of you – many times over.

Is Traditional Marketing Dead?

I wouldn’t call the time of death just yet but I do wonder how much longer traditional marketing will be able to survive.  The vital signs are not promising for the old lady as her heart rate is sinking ever lower to a critical state.  The heart rate of course being the amount of consumers utilizing traditional marketing tools to find their next apartment.  It’s no secret that more and more people every month are throwing out their Yellowbooks, cancelling their newspaper, and completely disregarding radio and television ads.  This is an alarming fact for the managers that are stuck in the old way of doing business and are not preparing themselves for the inevitable.

The great redistribution of leads has already been started but I’m afraid that it is only the beginning.  Since the inception of the internet (thank you Mr. Gore) consumers has steadily increased their reliance on the web for the research and finding of goods and services.  While the real estate industry has typically been a slow mover in the field of technology it is definitely coming around.  This change is not being driven by the industry but, as with all positive changes, by the market.  Consumers want to find out as much information as possible about a product from the comfort of their own home without talking to someone as possible.  Apartment shoppers are not different than TV or car shoppers; they are going to do their homework.  Homework as in at home – get it?