Here's a guaranteed way to get your residents to visit the office when you have trouble getting them to respond to your letters and calls at lease renewal time. Have you ever noticed that when the UPS person leaves a sticker on the resident's door, they come running to the office? A post-it note from you will have the same effect. The message should read: "We have a package for you in the office." Present the resident with a renewal gift upon arrival. My favorite gift is a mailbox filled with candy, and a note reading "Don't change your address. Stay with us. Renew your lease today!" Order mailboxes through Oriental Trading. I love this one so much; I use it on the very first renewal contact!

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“An Alternative Marketing Source—Increase Occupancy and Rental Income Simultaneously.” By Diane Steele

There is a lucrative market of potential renters searching for a property just like yours to live at-- the corporate business market.

You may think businesses primarily rent corporate business apartments from communities that are large, have a corporate leasing team, or are a luxurious new property. This is not the case. In reality, if you can offer business clientele a clean apartment, superb service, a convenient location, affordability, a shorter lease term (usually 3 months minimum) and a commitment to making the relocation process go smoothly for all involved, you have what it takes!

In this economy, companies and businesses are searching for ways to reduce housing expenses for their temporary consultants, transferred and short term employees. In many cases, businesses have used hotels for their housing needs. Hotels charge businesses a negotiated per night rate of approximately $79-109, or $2,370 - $3,270 per month, depending upon the market.

If you take a moment to calculate what you could charge for a corporate apartment in your community and compare it to the cost of housing at hotels, the cost savings for corporations could add up to hundreds of dollars per month. It could also add up to hundreds of dollars in additional rent you could add to your property’s bottom line.

To establish a basic corporate apartment, you will need furniture, housewares, electric, telephone (with a long distance block), and cable. (There may be additional utilities or items specific to your community you will need to include.) Below is an example of expenses you will incur on a monthly basis for each apartment using this example.

Market Rent        $900
Furniture            $140
Housewares        $35
Electric            $25
Cable                $45
Misc                $50
Total                $1,195

Now here is where your company can make a substantial profit.  Compare the monthly rates companies are paying at hotels per month ($2,370 - $3,270) to the above estimated price you need to charge for a corporate unit ($1,195.)  The difference between the two is at minimum $1,000 per month. There is a lot of room for you to add a corporate premium to your rent after you cover your expenses. Adding the corporate rent premium would increase your rent and at the same time save companies hundreds of dollars in housing costs per month.

Surprisingly there are additional benefits to your community other than increased rent. Some of the benefits may include;
1.    Easy and inexpensive turnover costs- Many of your corporate clients secure permanent residency in other parts of the country and live in their apartments on a part time basis. Therefore, wear and tear on the apartment is far less than with a normal 12 month apartment lease. (I have experienced this type of turnover to consist of a light touch up paint, carpet shampoo, spot cleaning and changing of the locks.)
2.    Repeat Business and Referrals- After you have established a solid client base with local businesses, you will create a bond in which they will continue to call upon you with their corporate and business housing needs. You will also have established contacts between vendors, other communities and relocation establishments that will also refer corporate clients and businesses to you.
3.    Increased Occupancy- You will increase your occupancy by filling apartments with business clientele vs. holding a vacant unit. You will also have the opportunity to convert short term leases into long term leases. Although some companies will initially ask for a 3 month lease, many often choose to renew several times afterward. In some instances, the apartment lease converts into a 6 or 12 month lease where the employee decides to relocate or is permanently placed in the area.

This all sounds great, but how do you know if this is right for your property? Where do you start?  What do you charge?  Well, you need to do some of homework. Here are a few places to start:
1.    Call all corporate apartments in your neighborhood and surrounding area for prices, amenities and ideas. This will give you a feel for the market, what is available and what you need to offer to be competitive. This process will also give you a good idea of your property’s potential price point.
2.    Call a few local hotels and ask what they charge for a 30 day stay or longer. Make sure you contact the extended stay hotels that cater to this type of corporate housing need.
3.    Make calls to your necessary vendors (furniture rental companies, cable, etc.) to help you determine your overall costs. Remember to calculate installation and delivery charges into your costs.
4.    Think about the type of apartment you have the largest inventory of or the type that is the hardest to move. This may be the apartment you feature for this situation.
5.    Determine the number of apartments you are willing to rent on a possible short term basis at any given time of the year. You need to be careful here and remember to diversify your units. As you need to stagger the months your leases expire on your long term leases, you do the same with business corporate units. Resist the temptation if you come across it to move 25 corporate apartments in the same month and face the same 25 vacancies in three months. This is a formula for Short Term gain and Long Term stress.
6.    Determine your competitive corporate rate. Make sure you are comfortable with this price and that others are willing to pay it. Ask for feedback from those you know in the apartment referral business about your program. They will be honest with you and let you know if they could send potential renters their way.

Now that you have a good idea of what you should charge, where do you find people to rent your apartments? Here are some quick ideas:
1.    On a map, circle a 5 mile radius around your property. Take a few hours from your day when it may be slow and drive around to all areas included within this 5 mile radius and write down as many businesses as you can think of that may have housing needs. Look at both small and large businesses. Contact those businesses either by telemarketing or person cold calling. You can start with HR or any administrative assistant who may make housing arrangements for a company. Remember to ask for referrals if they don’t have any needs.
2.    Go through your resident apartment files and determine where most people currently work. Pay special note to any residents who may be consultants or in IT. There is huge potential here.
3.    Inform all of your vendors and referral services you are offering corporate apartments. Prepare a flyer with all of the necessary information for them to refer to in the near future.
4.    Send out a letter to your current residents informing them of the corporate business apartments now available at your community. Offer a one time referral fee to anyone who refers their company to your community that ultimately results in a rental for you.

You have the opportunity to save companies money and offering their employees a comfortable home away from home. Companies are waiting for you to offer your property to them and rescue their employees from the four walls that are slowly closing in on them in their hotel rooms. (I moved an employee into an apartment after living in a hotel room for 3 years!)

With a little research and a little more work, there is great potential for you and your company to increase rent and occupancy simultaneously. Good luck!

Diane Steele is a sales and marketing professional located in the Minneapolis/St. Paul Minnesota area. She has worked in property management and related fields since 1988, specializing in increasing sales and occupancy quickly, corporate housing and property evaluations.

This is a great tool given to me by my Asset Manager to better manage my lease expirations with my traffic trends.  This idea took some getting used to because I was trained that we only offer 6 and 12-month lease terms. Those were the options no matter what month you leased an apartment home. With the Lease Expiration Board and your Traffic Trend numbers you determine how many leases you'd like to expire in any given month according the number of traffic expected. As long as the lease term is at least six months the new resident can choose the month they would like their lease to expire according to the availability of expirations for that month.  It's a great tool to manage turnover and I have even shown the board to residents to help explain the reason why the lease may be able to expire in August but not September.

You can make a Lease Expiration Board out of a large magnet board and magnets that represent each apartment.  The reason I use the board instead of a "Report" is to have it out in the open where the staff can see it and to be able to physically move the apartment numbers around the board from month to month.

Contributed by Michelle Whiting, Property Manager

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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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(And Other Soft Market Tips)
By Doug Chasick, CPM®, CAPS, CAS, Adv. RAM, CLP, SLE

Here’s a PROVEN strategy to deal with Resident turnover in a soft market. I’ve used it many times and it has always worked better than sending out renewal letters when my market disappeared! This idea is based on my belief that there are two kinds of Residents who move: those who have to, and those who want to.

1. Residents who move due to necessity (job, marriage, divorce, financial condition change, roommate add/subtract, buy house, etc.), are going to move – no matter what you say or do – because they have no choice. Stop trying to “save the notice” and do whatever it takes to make their move as stress-free as possible. It’s your last chance to let them leave with a good impression of you and can result in referrals to you later on!

2. Most Residents who don't have to move due to necessity aren't really aware that their lease is expiring until we tell them it is - with our array of 120/90/60/45/30 days prior-to-lease expiration letters. The Residents who want to move because they can’t stand living somewhere know exactly when their lease expires. They’re marking the number of days left on their lease on the living room wall, the way prisoners do in jail!

So, in a soft market, where concessions and specials abound, most people who are reasonably happy with where they are currently living do not peruse the real estate section. They’re not reading the various specials, because they aren't thinking about moving. If we don’t send them a renewal letter or notify them that they are now month-to-month Residents (the other part of this strategy is that we do not send them a MTM letter and we do not charge them a MTM fee), in almost every jurisdiction, under the Landlord Tenant law, the lease will automatically convert to a MTM lease. The only real reason to send them a MTM letter is to be entitled to collect MTM charges and to notify them that we are/will seek relief under any holdover tenant provision. So, the majority of Residents will stay put, paying their rent each month and living their lives.

When the market "comes back", we now have the ability to raise rents to whatever the market will bear with a 30-day written notice to all of those MTM Residents. If we had followed "conventional" property management procedure, we would have signed new, one-year leases with all these Residents at depressed rental rates (possibly with renewal specials), and we would have to wait for their lease expiration before we could take advantage of the stronger market. Plus, we could have forced turnover by "telling" the Residents to shop around for the best deal.

While I don't have any "hard" statistics for this since I leave all of that stuff at whatever company I was working for at the time, I can tell you that it works. In the approximately 16 years I have been using this strategy, I have always had less turnover during the "no renewal letter" period than in the rest of the year; my occupancy was higher than my comps without specials; and when the market came back, we realized significant (15 - 25%) rental increases even if I had to force turnover, eat the turn costs and some vacancy - or, if the Residents just stayed put and signed the new one-year lease at the current market rate. Try it. What have you got to lose? It really works!

Some other thoughts about succeeding in a soft market:

1. It’s the service, stupid! The three most important aspects of real estate will always be location, location, location – and the three most important reasons to renew are service, service, and service. Let’s focus on maintenance service for now: Are you A) Taking care of your Residents the way they want to be taken care of, or are you B) Twisting and squishing and otherwise reshaping their requests so that it fits your policies and procedures? If you chose “A”, you’re on the right track; if you chose “B”, read on . . .

Do you have a Service Tech who works on Saturday? How about several evenings a week? Automobile dealers discovered this a long time ago. Some of the dealers near me have Service Departments that are open Saturday and Sunday, as well as being open until 9:00 PM or 10:00 PM each weekday evening. Why? Because that’s the only time many of their customers can come in to get their cars serviced! “Oh, but Doug, the apartments are right here – the Resident doesn’t need to go anywhere, and nobody has to be home and we don’t do appointments and I can’t afford overtime and blah, blah, blah…”

Call me wacky, but most Residents want to be around when someone is in their apartment, even if we think that’s silly or inconvenient. We may have the right to enter without their presence; but when our Residents aren’t happy, they have the right to move. Follow the Platinum Rule: do unto others as they want to be done unto. Schedule a Service Tech to work Tuesday through Saturday. Schedule a Service Tech to work from noon until 8:00 PM two or three days a week. Accommodate the wants and needs of your Residents and they will stay put!

2. Beauty (and service) is in the Eye of the Beholder (or, You Can’t Manage What You Don’t Measure). How do you know when you are doing a good job? Actually, have you defined what a “good job” is, as far as Resident Retention is concerned?

• Do you measure the percentage of expiring leases that renew?

• Do you factor in how early they renew – 90 or 60 days out vs. the day before the lease expires?

• Do you factor in the amount of the rent increase vs. the value-added (stays with the property) renewal bonus or renewal concession?

• Do you keep track of whether they called you before you sent out the first renewal letter (they love it so much they want to make sure they don’t miss their renewal), or how quickly (or even if) they reply to your renewal invitation(s)?

• Do you review their service request and general complaint history and the completion/resolution satisfaction rate?

• How often do you talk to your Residents when you aren’t trying to renew their lease or collect their rent – do you call them after a service request is completed?

• Do you make NAR (No Apparent Reason) calls? If you schedule 5 to 10 each day, just to say “Hi” and find out if they need anything, you can end up talking to each Resident 4 – 8 times a year!

• Are you using “Rate Our Maintenance” cards? Yes, using, them – not just attaching them to service requests, but following up on each one, enrolling your entire staff to encourage Residents to return the cards, and recognizing service delivered at the level you have established.

• Are you USING “Rate Our Service” cards for the office staff? Wanna be really bold? Call these “Are You Getting Your Money’s Worth?” cards, and read the responses. If you want people to renew their leases, their responses on these cards will become your road map!

People who have a choice of staying or moving will stay put when they are getting their money’s worth, when they feel special, when living at our property saves them time, money and aggravation, and when they enjoy interacting with you and your staff. We know why they move and why they stay; so why not establish specific performance thresholds? Meticulously measure your actions and refine your policies, procedures and techniques to produce the results you know you need to keep your Residents happy.

Now, let’s get to work!

Douglas D. Chasick, CPM®, CAPS, CAS, Adv. RAM, CLP, is , Chief Learning Officer, and Senior VP, Multifamily Professional Services, CallSource.