This article is being republished for Alicia and Derek.

Special Note to Alicia and Derek: When you have no availability in your one-bedroom apartments, it's time to increase the rents. One of the biggest issues I see with apartment communities across the country is that they treat community occupancy as a whole when they should be focused on apartment-type occupancy and availability. Rents on a one-bedroom can be higher than on a two-bedroom!  I have achieved this with success!

I wrote an article a while ago that addressed the issues of offering concessions.  Actually, it was more of a rant, but you can believe that I meant every single word of it.  The truth is that at the time, I was face to face with a tough decision to toss my convictions aside and offer concessions at McNeil House (the first apartment community I built, 193 units in Austin Texas), or continue receiving only three or four new leases per week, while around twenty new apartments per week were completing construction and ready to lease!

Anyone who knows me, including our long-time subscribers, can attest that “concessions” is practically an expletive in my vocabulary.  Choosing whether or not to offer them in my very own community was probably the toughest decision I’ve had to make as a developer – well, the second toughest.  The toughest was whether or not to build in the first place!

The fact that I had to approach the issue from all angles, or even approach the issue at all instead of dismissing it without a second thought, opened my eyes a quite bit to the many factors involved.  Now, don’t get me wrong – I’m still up on my same old soapbox.  Concessions are NOT the answer to your occupancy problems.  The whole reason why companies and communities offer concessions or incentives is to gain a competitive advantage, right?  So, let me ask you this… if everyone in the market is offering concessions, then where’s the advantage? It only puts us all right back where we started, on a level playing field.  We all end up giving away the farm rather than educating our prospects and residents, and playing the never-ending game of one-upsmanship that some of us have been trapped in since time immemorial. Concessions are one of those things that works well in theory, but actually creates a world of, well, concessions (I was going to use a four-letter word there, but the one I used is worse).

Hey, I understand that there’s something to be said for a level playing field, but remember when Mom used to ask, “If all of your friends jumped off of a cliff, would you do it too?” Mom was giving you some amazingly valuable marketing advice there, and you didn’t even know it.  My experience with McNeil House has given me a much clearer understanding of the facts that have to be carefully considered where the concessions issue is concerned.  If you find yourself in a similar situation, I hope you’ll take the time to consider these factors with an eye for the “big picture”.  I had to think, and rethink the issue before making my final decision, and I’ll let you in on all the factors that I considered and the steps that I took to sensibly approach the issue of offering concessions.  Next, we’ll discuss my final decision, and the results we received.  We’ll answer the important questions: Would I do it all over again?  What would I change? What did Lori (the community manager) have to say?

If your community occupancy falls below a profitable level, or you find yourself with more supply than demand, perhaps this common-sense approach will help you as much as it helped me!

Review The Overall Picture

• Meet with the entire staff, and ask for feedback from everyone on what they feel is happening.  (Actually, you should do this regularly anyway, whether you perceive a problem or not.  Some of the best and most practical insight comes from your “front line”.)
• Have your entire staff shopped along with your top three competitors. Use a third party independent company so that you’ll be able to compare the whole apartment shopping experience from your prospects’ perspective, and make adjustments if needed.
• Meet with the staff again.  Review the shopping reports together, make the necessary adjustments, and arrange for one-on-one training where it’s needed.
• Review each floor plan independently, and consider its pricing carefully.  Make any necessary adjustments to the rent based upon the floor plan’s strengths, weaknesses, and competition within the marketplace (compare your floor plans to your competitors’ similar floor plans and pricing).   In other words you need to do a side-by-side, floor plan-by-floor plan comparison of your community versus your competitors’ floor plans.  Jennifer Nevitt Casey of Bravo Strategic Marketing has created a comprehensive and widely used method for doing exactly this.  Jennifer shared her system for comparatively rating floor plans. Jennifer and I also worked together to create the ultimate evaluation tool!  NOTE: Alicia and Derek Read The Finer Points of Floor plans I am tracking this down so I can post it for you both.
• Walk all of your floor plans with a critical eye for weaknesses.  Create a training list with tips and techniques for overcoming objections and selling the strengths of each floor plan as compared to the competition.
• In existing communities, I would also take the “less desirable” locations and floor plans and determine if there is anything within budget that we could do to improve the interiors.  I’ve used this technique repeatedly with great success.
• Create / evaluate the model.  We completely upgraded our model with added crown molding, optional paint color, special plumbing fixtures, special lighting fixtures and ceiling fans, closet organizers etc.  In other words, we dressed the model up with all of the added options that were available for our residents to choose from.  This showed our prospects what they could do with the apartment home if they chose to.  We priced each option by adding only a 15% mark-up to our cost.  Five percent of the mark-up is given to the leasing professional who sells the upgrade, and the additional 10% is administrative income.  We call this our “Custom Home Apartment™.  Several companies, including ZOM Residential and Post Properties have used similar custom upgrade programs with success.
• Photograph the entry of your community and your competitors’, and compare them.  Make yours more inviting.  Look at your advertising.  How does it stack up against your competitors?  Do you sound different?  What do you offer that they don’t? KEY: Are you advertising the floor plan with the highest availability?  Are you showing both photos of your community, model and lifestyle photos, or are you showing the same thing as the competition?
• Have you tried offering an incentive (i.e. a washer/dryer, ceiling fan, upgraded fixtures, crown molding and so on).  The best incentives are stay with the community long after the resident is gone, and create added value in the long run.

Determine if you have a leasing problem or a marketing /advertising problem.

Don’t let the formulas scare you.  Once you’ve filled in the blanks, you’ll find the process to be fairly straightforward:

Objective: To reach your leasing objectives, they must be qualified in terms of numbers, time to lease up, and people.  Complete the information below to determine your objective.  Remember to be realistic.

Leasing Objectives

Number of occupied apartments desired (ex: .97 x NO. Units)               __________________

Number of apartments currently occupied                                        -_______________

Pre-leased (vacants and on-notice)                                                              -_________________

Subtotal additional apartments needed                                             =_______________

Estimate Skips                                                                                        +_______________

Current Notices                                                                                      +_______________

Estimated Canceled preleased apartments                                      -_______________

Lease expirations                                                                                  +_______________

Lease renewals expected (include residents going month to month)           -_________________

Subtotal number of new leases needed                                           =_______________

Estimated canceled and rejected leases                                           +_______________

Net Total Number New Leases Needed                                            =_______________

Traffic Needed to Reach Objectives

Leases needed ¸ closing ratio = traffic needed to reach new lease goal.

____________________ ¸ ___________________ = ____________________

* Average closing ratio including unqualified and cancels

Note:  By increasing the closing ratio, you will be able to decrease the amount of traffic necessary to meet the objectives.  This greatly saves your marketing / advertising dollars.

Rentals Per Leasing Professional Number of new leases needed per month                                                                                                             ________________

Number of leasing professionals                                                        ¸________________

Number of new leases needed per month,

per leasing professional                                                                   =_______________

Leases needed per week (¸ 4.3)                                                         =_______________

Telephone To Traffic Ratio

Total appointments kept ¸ total phone calls = Telephone to Traffic Ratio

____________________ ¸ ___________________ = ____________________

* Goal = more than 60% of all appointments kept

* Goal = 25 -50% of closing ratio

Cost Per Traffic & Cost Per Lease

A. Monthly or weekly cost of a specific media or traffic source ¸ traffic generated by _____

this source = cost per traffic

$______________ ¸ ____________ = $ ____________ Cost Per Traffic

Monthly or weekly cost of specific media or traffic source ¸ total new leases

generated by this source = cost per lease

$______________ ¸ ____________ = $ ____________ Cost Per Lease

B.  TOTAL of all Traffic Sources expenditures ¸ total traffic = average cost per traffic

$_____________ ¸ ____________ = $ ____________ Average Cost Per Traffic

TOTAL Traffic Sources expenditures ¸ total new leases = average cost per lease

$_____________ ¸ ____________ = $ ____________ Average Cost Per Lease

Do you need to increase traffic?

• Pull your last two weeks worth of guest cards, and call each and every one.  Tell the prospect that you’re conducting a third-party audit of the apartment shopping experience, and need to ask them three quick questions.  Promise that you won’t take more than a couple of minutes of their time.  The questions we ask are:1.  Have you made a decision on where you are going to move, and if so, why did you select that community?  (If they say that they’ve chosen your community, community, thank them, set an appointment for the signing of their lease if needed, and move on to the next person.) 2.  Did you visit _________ apartments (your primary competitor), and if so what did you think about the community?  Is there a specific reason why you’ve decided not to lease there?
• Invite local businesses to attend resident functions.  This increases your word-of-mouth referral network by leaps and bounds.
• Beef up your resident referral program.  If you have a referral program in place, sometimes all it takes is a well-designed flyer to remind residents of it.  If your program has grown stale, give it a fresh twist.  If you don’t have a referral program in place, get busy!  (If you’re considering offering cash rewards, make sure they’re legal in your area, but please consider that there are plenty of great alternatives to cash or rental rate rewards!)
• Make marketing calls.  I highly recommend that you not only call on the Human Resource Departments of local employers, but that you also take time to introduce yourself to the receptionist. She knows everyone in the office and everyone communicates with her on a daily basis. And these are usually the people that everyone turns to for information when they’re new to the company.  Establish a long-term program that keeps you in touch with these valuable people.  Once a month, deliver donuts, cookies, candy, flowers or some other small gift to the receptionist that she/he may share with the rest of the employees.  Include a friendly note with a few business cards enclosed for them to pass along.

Increase Closing Ratios!

• Provide continuous motivation for Leasing Professionals to stay focused on the goal (i.e. charts, graphs and incentives placed where all can see).Extend office hours and raise bonus amounts for leases closed during a specific timeframe.
• Establish a rotating bonus plan based upon leasing certain apartment types.  For example, “All A-1’s leased this week are bonused at $100!”  I typically select the apartments that have either been vacant the longest or have the highest availability. Establish team goals with bonus incentives.  Any opportunity to foster teamwork is too valuable to pass up!
• Bring in your company’s very best leasing professionals to obtain their perspective. Have everyone shopped, and review the shopping reports carefully to apply training where needed.
• Provide weekly articles of interest that focus on overcoming concession objections and closing.  I faxed our community a new article every Monday morning.  Keep the tone encouraging and motivational.
• Ask yourself this: If you increased the closing ratio by ___%, how much more traffic would you need to reach the desired goal?  Is this possible?  Can you generate that much traffic? Can you handle that much traffic?  Here’s my “Feasibility” worksheet:

Traffic Increase Feasibility

Ÿ    Is the number of leases needed per month significantly higher than current performance?

Ÿ    How much more would traffic have to be increased if closing ratios remained the same to equal the needed goals?

Ÿ    Needed leases goal.  Current closing ratio _____ = _____ new amount of traffic needed less current amount of traffic _____ = _____ amount of extra traffic needed.  Is this possible?__

Ÿ    How much more would closing ratios have to increase if traffic remained the same to equal the _____ needed leases goal?____________________________________________

Ÿ    Needed leases goal _______ ¸ current traffic _______ = new closing ratio needed _____.  Is this possible?___________________________________________________________

Ÿ    What is the monthly goal per leasing professional?__________________________

Ÿ    How does this compare with current performance levels?_____________________

___ __________________________________________________________________

__ __________________________________________________________________

__ __________________________________________________________________

Ask yourself the big question.

Finally, when all is said and done, ask yourself whether it’s really necessary to give away such a valuable commodity as the opportunity to live in your community, not to mention cutting profit from your bottom line!  In light of all of the other things that you can do to increase traffic, better motivate your staff, and gain a profitable long-term advantage, should you really give in?

My answer was a resounding (brace yourself), “Yes!”   As sick as it made me, I made the decision to give concessions. I actually get chills as I sit here and write this.  Can you guess what happened next?  As a result of my decision to first consider all of the above, and then give in to concessions, leases increased -- by leaps and bounds!  The on-site staff is more aware of the competition, more motivated, and more skilled at closing than ever before!

The decision to give away rent took me five to seven months to make.  What if I had to do it all over again?  I’d follow all the same steps that I took, but I’d do it faster.  I should have made the decision to offer concessions about two months earlier than I did, based on my lease-up schedule.

What else have I learned?

1. We could never have truly known whether or not we could have leased-up without concessions if we didn’t try to avoid them in the first place;
2. The staff became a powerhouse of product knowledge!  They were more educated than ever before about our product and our competition;
3. Our competitors thought that we were crazy (actually, they thought that I was crazy, and pitied my staff), so we were easily dismissed as viable competition.  Now, because we tried it the hard way first, they realize that we’re a force to be reckoned with.  They knew that we don’t offer concessions as standard practice, and that when we do, they’d better jump!
4. If you have to give something away, ask for something in return.  Along with the free rent, we asked the resident to sign a paying lease term of either six months or one year.  In other words, their free rent period, although covered under the lease, was not included when the lease term was calculated.  For example: with one month free rent, the lease term was 13 months.  This enabled us to get full years collection of rent without increasing our operating expenses the next year.  If you don’t do this, (as you may be aware), your turnover expenses are divided into 11 months instead of 12, so the concession actually costs you more than a months’ rent. Note: Alica and Derek this is why I asked you to read Lease Renewal Strategies that Help You Manage and pay close attention to staggering leases by apartment types.
5. Cover your bases.  As even further protection, we asked the resident to sign a concession agreement, stating that if their lease is broken for any reason, the entire amount of the concession is due and payable.  Where the lease terms and conditions are met, there is no liability.
6. Sometimes it makes sense to spread the concession over the first six months of the lease.  We did not use this method, but I have heard of many companies that have used it with success.  I think it’s a great idea, where the market is receptive to it.  Because we decided to offer concessions in order to be competitive, we had to also consider that part of our competitive edge involved how and when the concession was delivered.  In our case, the market was most receptive to a one-time offer; and you’ll find this to be true in many areas where residents view the concession as a welcome means of offsetting moving expenses – but I think the six month idea is a great one if you can pull it off.
7. You really can increase rents even though you are offering concessions.  In fact, it’s probably easier to increase rent in some places, where the market is focused on the short-term benefit instead of the long-term effect. This rings especially true when you are offering the better product.  An apartment community in Dallas leased 100 plus apartments (70%) in two months by giving away 1.5 months’ rent.  Unfortunately, they didn’t increase the rents while doing it, not to mention that they weren’t under the gun because they didn’t even have the apartments out of construction yet.  Don’t miss the opportunity to raise rents when offering concessions, whenever you can do so sensibly.
8. If you are offering concessions and decreasing your rents at the same time you had better have done all of the above and make absolute certain you are handling each and every unit type and floor plan on a unit by unit basis and monitor it with every single new rental.

After all was said and done…

I know your burning questions are (1) how did the community manager feel about the entire experience, and (2) what kind of concession did we finally settle on.

Lori’s last words were “I have learned a lot!” When asked if she would do it all over again, her response was “People can’t believe that we leased all those first apartments without concessions, but I would give the concessions the next time around instead of waiting until we had vacancy loss”.

As for our decision, we first decided to offer the market standard one-month free on a one-year lease, and 2 weeks on a 6-month lease.  We quickly adjusted that to $500 on a 6-month lease and $1000.00 on a one-year lease (which is less than a half a months’ rent and a months’ rent, respectively).  We only offered concessions only on floor plans with the highest availability.  In addition, and this is key, we continue to adjust our rents upward as we leased apartments (see #7 above). We actually charge more for a one bedroom floor plan then we did for a two bedroom floor plan.

If you’re caught in the concession trap, or even considering giving in to it, please take the time to consider the HOW, WHAT, WHEN, and WHY of it all before you follow your competition over the rail of that proverbial bridge!  Depending upon your own unique situation, there is either an economically smart way for you to avoid concessions, or to offer them wisely.  I found my answer, and so can you!

Wouldn’t it be nice if we didn’t have to worry about lease expirations? If every resident simply moved in and stayed….and stayed…and stayed? Ah, but this is the real world—and in the real world, leases expire and residents move out. Even the best resident retention plan won’t  eliminate turnover.

Because lease expirations are a fact of life, they must be managed like any other aspect a property. You need techniques for ending leases at the most appropriate times and in manageable numbers. You also need strategies for getting a little more mileage out of a resident—for those times when the market is terrible and your occupancy is not all that it should be. This article will look at some lease-expiration strategies that help you protect your occupancy and your income.

It’s Staggering!

One of the most effective techniques for controlling expiration's and ensuring that your occupancy doesn’t take any sudden plunges is to stagger lease-end dates. Some companies follow very strict policies about how many leases can end in a given month, ensuring that only a certain percentage of the total number of apartments turn over at the same time. Others try to make sure that most of their leases end in the spring and summer months, when traffic is at its highest. Companies with high numbers of student residents often write their leases with the school year in mind, offering lease-end dates that coincide with the ends of semesters or terms. By controlling the number of leases expiring in a given period, you make life easier on yourself and your entire staff. Your service teams won’t be faced with a daunting number of make-readies all at once, and your leasing professionals won’t suddenly find themselves with impossible numbers of vacancies to fill.

Another approach involves staggering leases by apartment types. This ensures that you don’t end up with an oversupply of one apartment type and no availability in other types. If you are very in tune to your market, and you notice that there is a higher demand for certain floor plans at certain times of the year, you can stagger leases to ensure that vacancies in specific apartments coincide with demand for those apartment types. If you don’t have a sense of which apartments are most in demand at certain times, review your traffic reports and lease information for the past couple of years and see if you can discern a trend. You might be surprised.

Any staggered expiration approach will almost certainly involve offering non-standard lease terms. For example, if a resident signs a lease in February, and you have already scheduled your maximum number of move-outs for February of the following year, you will have to offer either an 11-month or a 13-month lease. If you’ve already filled up your move-in slots for January and February and March, the lease expiration will have to be pushed into either December or April. Some companies put a “flexibility” sales spin on the funky lease terms, allowing residents to pick their own move-out month based on expiration availability.

Going Month to Month

Offering residents a month-to-month option may also help you manage move-outs. There are some disadvantages to the approach—the most obvious, of course, being its uncertainty. The more residents you have on month-to-month leases, the more precarious is your occupancy. You have no way of accurately forecasting your turnover beyond 30 days unless you REQUEST a 60 to 90 day notice to vacate.

But stress level aside, month-to-month agreements can work wonders for a community’s occupancy. If you simply can’t afford to lose residents, they can be just right carrot to entice those who are hesitant to sign a year or six-month lease. A month-to-month can also be useful for eking out just a few more months of occupancy when you need them most. For example, if you can convince a resident whose lease is ending in February to stick around for just another two or three months, you will be that much closer to warm weather—and to the traffic you need to fill vacancies.

If you opt to let residents renew their leases on a month-to-month basis, you are entering into what is properly called a “rental agreement” rather than a lease. Essentially, this agreement expires at the end of each month, and is automatically renewed when the resident pays his or her rent for the next month. In addition to specifying the standard terms that all leaseholders agree to (resident and management obligations, rules, etc.), the agreement should specify:

·    How much notice the resident must give if he or she decides to vacate, and
·    How much notice the property or manager must give the resident in order to either change the terms of the agreement or end the agreement

The length of both these notice periods is often 30 days, but may vary from state to state.

If possible, when offering a month-to-month lease you should ask for more rent. In many markets, residents are willing to pay a premium for the flexibility of such an agreement. However, if it is the weakness of your market that is forcing you into a MTM in the first place, you may find it impossible to increase the rate. If this is the case—and if you really need the resident for a bit longer—don’t get stuck on the idea of charging a premium. Keep your eyes on the prize: you’re NOI.

The Ostrich Approach
In markets that are extremely difficult, some communities may opt to simply ignore lease expiration's altogether. That is, they do nothing to bring the lease end to the resident’s attention, in the hope that the resident will simply go on living there—and go on paying rent—as if nothing has happened. Doing this creates a “tenancy at will,” which means the tenancy has no specified duration and can be terminated at any time by either party. Laws may vary from state to state, so you should check, but in most cases, the original terms of the lease are still binding (with the exception of the lease term dates). Either the resident or the community may residency the tenancy with a certain amount of written notice, which varies from state to state. The community may also change the terms of the lease—such as the rent or security deposit—with a specified length of notice.
In practice, then, this approach differs little from a month-to-month rental agreement. The main difference is the lack of paperwork. Another practical difference is usually the ability to charge a premium. While some communities charge a higher rate for the month-to-month option, those that opt to create tenancies at will are almost certainly not asking for more rent. Quite the opposite, in fact— they generally need their residents so badly that they’ll do whatever they can to avoid rocking the boat.

Squeezing in Some Marketing

Which ever strategy or strategies you use for renewals, one challenge you undoubtedly face is managing them in such a way that you have enough time to market newly vacant apartments. This requires balancing two sides of your managerial personality. On one hand, you want to give a current resident every possible chance to renew his or her lease—right down to the wire. On the other hand, you need to know what apartments are vacating so you can start advertising them. The longer you wait to market, the longer the apartment may have to sit vacant. So how do you satisfy both of these demands?

Part of the solution may lie in how much in advance you contact your potential renewals. The question of when to first approach residents with notice of their impending lease expirations depends largely on the state-mandated length of notice they are required to give of their intent to vacate. The general rule if to make contact at least one month before this formal notice is required. Following that guideline, then, communities with a 30 day-notice might make contact 60 days in advance, while those with a 60-day notice might make contact 90 days prior to lease end. Giving yourself the extra month accomplishes two things: (1) it allows you to surface objections that can be overcome, overcome them, and get the renewal, and (2) it allows you to identify those “solid” no’s, so you can start looking for replacement residents.

Solid no’s are generally those residents who are making major life changes—buying a home, moving out of town, getting married, etc. While it’s not impossible that they’ll change their minds, it is mighty unlikely. You are probably safe to assume that they’ll be vacating. Other solid no’s are those residents who, for whatever reason, are clearly unhappy in your community. You know who they are—every property has at least one.

Once you’ve identified those residents you know will be moving out, you can start your marketing efforts for those apartments. If you have a close-knit community, you may want to start close to home—with the neighbors of the soon-to-be-vacant apartment. Simply call those residents in the vicinity of the apartment, and say, “Mrs. Smith, can you think of anyone you’d especially like to have as a neighbor? The apartment right across the hall from you is opening up next month, and I wanted to let you know before we start advertising it, in case you had someone special in mind.” Who knows—you might just get a referral! And even if you don’t, you’ll win points with Mrs. Smith and the other residents you contact.

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We all know that in our industry, as in most industries, well-trained associates are critical to our companies’ success. Unfortunately, we are rarely allocated enough funding to design and conduct the kind of comprehensive, all-out training we wish for. And now, given the struggles our industry is facing, many of us are finding our already limited training budgets slashed. That’s why it’s more important than ever to keep a close watch on our expenses and to find creative new ways to make our training dollars go further. Here are 20 ways to help you do just that!

Make the Most of Technology

The Internet and email bring a whole new set of options to the process of communication—and when they are used effectively and consistently, they can save enormous sums of money.

1. Use email to send quick “reinforcement” messages. Nothing could be easier or more economical. Create mailing lists of employees who should all receive the same message, and email them once a week with a reminder of a key point you want them to remember. There are many software programs that can be used to automate the process. Make training materials available online. Don’t automatically opt for the default method of printing out and distributing all employee manuals and training materials. Some might be equally, or even more, useful in an electronic form. Look for ways to cut printing and/or copying costs by going paperless whenever possible. By making your training materials online you’ll also give instant access to employees who want a refresher or added information.
2. Combine teleconferencing and online learning. If your company has an intranet and if your trainees all have computers with Internet access, you can create inexpensive, yet effective mini-training or refresher sessions—complete with visuals. Post a PowerPoint presentation on your intranet, and choose a convenient time during which your trainees can all be stationed at their computers and near a phone. Initiate a conference call to the trainees, and have them log on to the appropriate section of the intranet. You can then present your information, and they can follow along slide by slide.
3. Create a training chat room and/ or Bulletin Board. Create a dedicated online space where you and your trainees can interact at any time. You can have your programmer establish a chat room on your company’s intranet or, if you aren’t lucky enough to have one, simply create one on one of the many chat websites available (such as Yahoo). Once you have established a chat room, think of creative ways to use it. For example, you could hold periodic topic-specific chats, inviting associates to join you in a discussion of challenges and best practices on a range of issues—a great way both to reinforce training messages and to instill a sense of team among associates from multiple properties. You could also host “guest speaker” chats, in which you spotlight a particularly successful associate and have him or her share tips and answer questions. A bulletin board gives you employee a place to ask questions that other will benefit from and share ideas or programs that have worked for their community.
4. Consider delivering at least part of your training via e-course. It may be hard for you to imagine that an online course could generate the same enthusiasm and hands-on learning as a good face-to-face training session, complete with role-playing and other active learning methods. But remember—not all training topics require the same level of “immersion” as do leasing and resident service techniques. Some topics—such as Fair Housing, sexual harassment, workplace safety, and so forth—may lend themselves readily to an online course. Developing an online course might be time-intensive and even somewhat costly up front (depending upon how sophisticated you want it to be). But in the long run, it can save serious money by reducing the amount of time trainees have to spend away from the office for training activities, as well as trimming related travel expenses.

Look for Inexpensive and Creative Approaches

5. Pulling employees away from their communities for several days of training is becoming more and more problematic. With communities already thinly staffed, sending employees off to training is difficult for onsite managers—not to mention expensive. It’s becoming increasingly clear that we need to find ways to “shrink” training into more manageable chunks and to provide it in creative new ways. Try some of the following.
6. Train one employee to train others. Whenever possible, choose one motivated employee to attend training and then make her responsible for presenting what she learned to her colleagues. Not only is this a cost-saver, but it’s also a great way to develop and reward high-performing employees who are eager to take on additional responsibilities.
7. Create job aids. Reinforce your training messages even when you aren’t around by giving employees easy-to-access “cheat sheets” that list key points you want employees to remember. For example, you might create stickers that list important questions to ask a telephone prospect, and attach one to each leasing professional’s telephone.
8. Create training modules “to go.” Credit for this clever idea goes to Kara Rice, co-founder of Grace Hill. In her presentation at Annual Multifamily Housing Brainstorming Sessions Training Trends luncheon, Kara suggested that you find good print resources that address various training topics, write up a pre-test and posts-test for each resource, and package the tests and the book in a zip-lock bag. You’ll have a lending library of mini-modules that you can loan out to associates who want or need to learn more about specific topics.
9. Have a sleepover. Invite leasing and management staff to spend the night in some of your vacant/model apartments. Have staff members use the appliances, make dinner in the kitchen, hang their clothes in the closets, and generally get a feel for what it’s like to live there. Meet in the morning to discuss what they learned from the experience and to brainstorm ways to improve the apartments for the residents. Jennifer Robinson, of KSI Management, tried this and found that it was an incredibly useful training experience—all for $20-30 worth of food the staff used to use to prepare their dinners.
10. Use job shadowing. Cynthiann King, (Chief Learning Officer of C. King Education Services ) suggests having office staff spend some time with “superstars” either in the multifamily industry or in other industries. Call your local apartment association and ask for the names of winners of local leasing awards programs—then contact them and ask if you can accompany them on their next tour. Outside our industry, try shadowing large-scale hotel banquet managers, real estate agents, or travel agents for upscale travel agencies.
11. Borrow from the pros. Take a look at what other companies are doing—both in and outside our industry—and modify it to fit your needs. There’s no need to spend time and money recreating the wheel!
12. Make the most of your time. According to the American Society for Training and Development, when trainees only hear information presented—and do not discuss or interact with it in any way—only 10 percent will retain it 6-8 weeks later. When they practice the information when it is delivered, however, the number goes up to 80 percent. So don’t fall into the lecture trap; fill your sessions with interactivity and application. Training time is precious and hard to come by—use it wisely!

Trim Travel and Meeting Expenses

There are a number of cost considerations that you should be conscious of when planning classroom training. From travel to lodging to food to presentations—the little decisions you make can add up to big dollars spent or saved!

11. Work with your airline. If you frequently have staff members fly in from out of town, see if your air carrier can offer you any sort of discounted rate. If rates are non-negotiable, ask about getting extra frequent flyer points.
12. Get all you can from your hotel. When choosing accommodations for training attendees, look for extras that will save money and make your life (and the lives of your trainees) easier—shuttle transportation to and from the airport, early check-ins, late check-outs, in-room internet access, free continental breakfast, etc.
13. Book in advance. If you will be having trainees coming into town for a number of training sessions over several months, and if you know in advance when those dates will be and how many will attend, book lodging for all the sessions at the same time, with the same hotel or chain. This will give you leverage to negotiate a better deal.
14. Keep travel distances as short as possible. Locate your training sessions strategically, and pick a location that will allow the maximum number of trainees to drive to and from the session without spending the night.
15. Use your own space wisely. Instead of renting meeting space, assess available space at your nearby properties to see if it could used. For example, perhaps you could hold whole-group meetings in the clubhouse, and breakout sessions in vacant apartments.
16. Reuse supplies. Look for ways to pinch pennies by recycling what you can from one training session to the next. Some items that may be eligible for recycling include: plastic name badges, all types of signage, table or room decorations, visual aids and props, etc.
17. Be smart about snacks and drinks. Consider serving snacks that are individually packaged and will keep, so that what is not eaten at this session can be used at the next. Also, eliminate waste by going for smaller versions of treats and drinks—mini-soft drink cans, bite-sized candy bars, small bags of peanuts or granola, bite-sized doughnuts, etc.
18. Ask for help from your vendors. Talk to your vendors to see if they would be willing to “sponsor” part of your training. For example, they could provide a breakfast or lunch, donate trainee gift bags or favors, or sponsor a cocktail hour “meet and greet” for trainees.
19. Learn from experience. Always keep track of how many attend and what is consumed/used at each training session. It will help you know how much food and beverage to order for similar sessions.
20. Share the cost. If there’s a speaker you’d especially like to hire, but can’t afford, consider teaming up with other companies in your area. If the topic is fairly general, you could approach almost any sort of service-oriented business (hotels, restaurants, retail, etc.). For topics specific to the multifamily housing industry, however, you would probably need to join forces with your competitors; even so, it may be worthwhile. (Thanks to Cynthiann King for this great idea, which she shared in her breakout session at Brainstorming 4 years ago!)

It’s that time of year again … when we sit down at our computers, with last year’s budget in front of us, and try to predict what and how we’ll need to spend in the coming year. For most of us, it’s an exercise in creativity—trying to portion out our limited dollars so that they have the most impact and the greatest chance of being approved.

If you’re about to start the process—or if you’re stuck in the middle of it—take time to review the following basic principles and approaches. Then take a deep breath, and tackle that budget like the pro you are!

The Main Thing to Remember

It’s been said over and over again, but it bears repeating: All training goals and activities should link directly to business objectives. While learning for learning’s sake is rewarding for both trainers and trainees, most business leaders want something more for the money they invest in training. They want to see how it will make a measurable difference in the way employees perform. Furthermore, they want to see how that difference in performance will lead to an improved bottom line.

To be sure your training budget supports your company’s business goals, then, you must design your training plan with those goals in mind. This sounds obvious—and it should be. But you’d be surprised at how easy it is to sit down and draw up a year’s worth of great training plans without ever once thinking about overall business strategy. To be sure you don’t make that mistake, start by reviewing your company’s planning documents—such as mission, value statements, core competencies, long-term strategy, and short-term goals. Then ask yourself what training is needed to help employees meet the aims outlined in those documents. In addition to looking at training from this “top-down,” you might also consider “bottom-up” data, such as needs assessment findings and feedback from frontline employees. This information can identify gaps in skills and knowledge that need to be filled.

Projecting Expenses from the Training Plan

Taking both top-down and bottom-up factors into account, design a training plan for the coming year. Ideally, your plan will outline each type of training event or program, its intended audience (site managers, leasing frontline, maintenance, etc.), and how it links to a business objective. It will also specify the duration of the event (four hours, two business days, etc.), how many times it will occur during the course of the year, where it will take place, how many employees will attend.

Once you’ve completed your plan, you can then work from it to estimate costs associated with each program. These costs might include course materials, equipment rental, facility rental, food, guest speaker fees, facilitators’ salaries, and travel expenses for both participants and instructors. Depending upon the training planned, your company’s procedures, and your particular budget guidelines, they might also include such things as participants’ pay while they are attending training, secretarial support, costs associated with designing and developing programs, and post-training follow-up.

Sample guidelines for costing out a training program are provided below. Note that program design costs (the first category) probably will not pertain to existing programs that you plan to continue offering.

Facilitators (Training Program Design)
1. Salaries (full time): Number of days multiplied by daily rate multiplied by number of facilitators
2. Honoraria (part time): Number of days multiplied by daily rate multiplied by number of facilitators
3. Per diem: Number of days multiplied by daily rate multiplied by number of facilitators
4. Travel: Number of trips multiplied by round trip fare multiplied by number of facilitators

Facilitators (Training Program Implementation, Evaluation, and Report Writing)
1. Salaries (full time): Number of days multiplied by daily rate multiplied by number of facilitators
2. Honoraria (part time): Number of days multiplied by daily rate multiplied by number of facilitators
3. Per diem: Number of days multiplied by daily rate multiplied by number of facilitators
4. Travel: Number of trips multiplied by round trip fare multiplied by number of facilitators

Materials, Equipment, and Facilities
1. Training materials (ordering): Number of sets multiplied by unit price
2. Training materials (shipping and customs duties)
3. Training materials (duplication):
a. Paper
b. Photocopies or stencils
c. Labor
4. Training supplies: Item cost multiplied by number
5. Equipment rental: Item rental multiplied by number of days
6. Facilities: Daily rent multiplied by number of days Participants

Participants
1. Travel (to and from training): Round trip fare multiplied by number of participants
2. Travel (training related): Round trip fare multiplied by number of participants
3. Per diem: Daily rate (local) multiplied by number of participants
4. Per diem: Daily rates (non-local) multiplied by number of participants

Secretarial and Clerical
1. Secretaries
2. Secretarial supplies
3. Clerical support
4. Communication (letter, telephone calls, telexes, telegrams)
5. Refreshments
6. Special opening and closing ceremony events

Post-Training Activities
1. Reproduction of the Report
a. Typing
b. Reproduction
c. Distribution
2. Follow-up
a. Travel
b. Per diem
c. Salaries/Honoraria
d. Report preparation, duplication, distribution

3. Evaluation
a. Travel
b. Per diem
c. Salaries/Honoraria
d. Report preparation, duplication, distribution

As you allocate funds, be sure each request is defensible. Can you demonstrate that it will lead to results? Can you show how it supports a business objective? Be ready to defend your proposed spending in quantitative terms: ROI, measured by dividing the anticipated financial value of training by the cost of training. If you can’t show how training dollars will add value to the company, they will be perceived as nonessential—and we all know what happens to nonessential costs in our current business environment.

Low-Cost Training

And speaking of our current business environment ... If your company is like most, it’s operating under fairly stringent budgetary restraints. Therefore, as you develop your budget, always be looking for ways to reduce your expenses. Save money wherever you can, so that the funds that are available can be used for what’s most important. The following are some strategies for keeping overall costs down, while still protecting the effectiveness of your program.