Property Management Resources

October 28, 2014

Partnering with Suppliers and Contractors

By Pam McKenna,
Members Using MembersDirector of Real Estate, Greystar

As I walked through the booths at the Spectrum Trade Show, I was struck by the vast amount of knowledge and experience that these industry partners bring to our business. It underscored how crucial this partnership component is to our success. The challenge can be in choosing the right supplier, understanding how to manage the process and defining the scope of work. This can often be overwhelming but with a few simple steps and procedures in place you can set a standard for your community that will help you alleviate a lot of the stress.

Step one – set up your approved vendor list ahead of time. Don’t wait until something goes wrong to engage your suppliers. Create a list of the categories of supplies and services you will eventually need to order, including emergency services. Once you have created this list you can start the process of locating the right supplier or contractor.

Step two – do your research. Multifamily NW offers a great solution called MUM (members using members) Being a member with Multifamily NW gives you access to a list of industry supplier members that are in good standing with the association and the members. Being a member you also have access to other members in the industry that can provide references or feedback on suppliers. Through word of mouth you can discover the best companies for customer service and quality work.

Step three – protect your property from liability. Set minimum insurance requirements to protect the property owner from potential liability resulting from labor, deliveries, and other exposures related to having contractors on site. Consider using a compliance organization that will track your vendor list ensuring every participating vendor is up to date on their insurance coverage and their credentials meet your standards.

Step four – define your scope of work. A recommended way to do this for larger projects is to engage an construction project manager that can determine the extent of the work required and help to write the scope of work. If it is smaller projects, for instance exterior building window cleaning, sit down with your maintenance team to properly define the project to include how many stories the building is, how many exterior windows, do you expect them to clean the exterior of the balconies while completing the job, etc. Make sure to include details that may be important to note for instance if you are running a “green” building you may have requirements for products that can be used at your community.

Step five – take it out to bid, with a standard written scope of work, providing all suppliers the written scope. This allows for a more precise and fair bidding process relying on an “apples to apples” comparison of price based on an identical scope. Be clear on your change order process in the event that the job requires additional work.

Step six – create a bid comparison sheet. Compare the bids side by side with your property owner, your supervisor or your team.   This is an efficient way to get approvals processed and documented, especially for larger projects.

Step seven – execute a contract. This is an important document so be sure to review the contract before signing it. Have your project manager or legal department review the contract if necessary. Are you the right person to sign it based on your Property Management Agreement? What are the specific terms of the contract? Does it have an auto renewal written into the contract? Often we get in a rush to push work through and can overlook unfavorable terms. Take the time to ensure what you are putting into place is the best for your property owner.

Step eight – clarify the payment process. What are the terms of payment for your property? Communicate this to your contractor or supplier so they understand the process. If you are processing a draw request for capital improvements this can often delay the timing of payment. Being transparent up front is always a benefit to both parties.

Step nine – inspect what you expect. Follow up and inspect the work before signing off on the work. If you are not satisfied with the work, allow the contractor to come back and make it right. One of my biggest pet peeves is managers that want to fire a vendor for not meeting their expectations before they make them aware they aren’t happy with the work performed. Give your industry suppliers the same respect we would want to receive.

Step ten – build partnerships. Long term partnership will work in your favor. When you have built solid relationship with an industry supplier they will better understand your expectations for future work. You will spend less time explaining what you expect the next time around. Long term partnerships build dependability, trust and confidence.

These steps will help in building industry partnerships resulting in better solutions and costs savings. This valuable partnership is well worth your time and energy, allowing you to tap into the vast knowledge and experiences of our great industry suppliers and contractors.

April 25, 2014

BOOM! – Spring 2014 Apartment Report

By: Craig McConachie, C&R Real Estate Services, Co.

Spring 2014 MultifamilyNW Apartment Report-Vol.20_Page_01-web

Amidst a significant building boom, low vacancies and increasing rents, there are some early signs that supply and demand will soon equalize, and the market will be more in balance by the end of next year. Overall vacancies have inched up in most areas, and the inclusion of new units in our survey has caused average rent rates to increase over 5% in the past six months.  Operating expenses for all unit types have increased a modest 2.2% on an annual basis, as landlords continue to realize solid returns on their investments.  Market demand is high for the multifamily sector, and supply is extremely low.  The number of closed transactions in the Metro area decreased from 87 in the fourth quarter of 2013, to 56 in the first quarter of 2014, reflecting a 36% decline in sales.

 

Portland/Vancouver

Vacancy

The Portland /Vancouver vacancy factor increased, and currently stands at 3.46%.  This is only slightly higher than the 3.11% rate reported in our Fall report.  The St. John’s area is showing surprising strength reporting a 2.3% vacancy factor. This is the lowest in all of the surveyed areas.  Tigard, NW Portland, Lake Oswego and Aloha all have vacancy factors over 4%.   All unit types are less than 4% vacant with the exception of a 4.06% rate for 3 bdrm/2bath units. Two-bedroom, one bath units have the best occupancy all unit types, with average vacancy of 2.7%.

Rent Rates

Overall rents in the Metro area have continued to increase at an annual rate of over 11%.  In the past six months Northwest Portland, and Tigard have experienced an 11% increase, with the St. John’s area showing a 25% increase.

Average rent per sq. ft. for all areas has increased to $1.16.  The downtown core continues to have the highest rents at $1.93 p.s.f.   Outer NE Portland and Troutdale/Fairview have the lowest rates, averaging $.88 p.s.f.  Oregon City was one of the few areas that had a slight decrease in rent.

Market Conditions

Only 7% of all properties are offering rental incentives. The average number of days that a unit will stay vacant for the entire area is 35, with Inner SE Portland and St. Johns experiencing the fastest turnover rate of only 10 days. Fifty two percent of all professionally managed properties in the Portland/Vancouver area are passing through water and sewer costs to their residents.

Other Areas

The Bend/Redmond area continues its strong performance, with a vacancy rate just over 1%, as Deschutes County, is once again, the fastest growing county in the Western U.S.  Eugene/Springfield is stable, with a 4% vacancy, and average rents of $1.02 p.s.f.  The Salem market has experienced a significant increase in vacancy from 4.03% to 6.45%, and landlords are offering incentives at 23% of the properties.  Salem landlords have been increasing tenant paid water and sewer bill-backs, with over 45% of tenants being billed.  The Bend and Eugene areas are reporting 33% tenant paid water and sewer.

Operating Expenses

This issue includes our annual survey of apartment operating expenses. The numbers are derived from 2013 year end operating statements at 108 stabilized properties, representing 13,011 units throughout the Portland Metro area.  We have expanded and modified our property types this year for Multnomah County, and now have three age groups for both garden style and urban style projects.  This will better reflect the recent building activity and allow for more relevant comparisons.

Median per unit expenses have increased for all property types by a modest 2.2 % over the past year, from $4,251 per unit, to $4,346  per unit.  Newer garden style apartments in Clackamas County have the highest per unit expenses at $5,009, while older urban style units in Multnomah County have the lowest per unit expenses of $4,037.  Property taxes average $870 per unit ($1.07 psf), insurance cost averages $165 per unit ($.22 psf) and water and sewer expense averages $550 per unit ($.76 psf).

Our Contributors

Patrick and Mark Barry have once again contributed an excellent article on the apartment construction market. The current building boom and the market’s supply and demand are skillfully analyzed in their detailed article.

Barry reports;

  • “There is a current shortage of 4,000 units”
  • “6,500 units currently under construction across 56 projects”
  • “75 projects with 6,850 new units completed in the last 18 months”
  • “14,000 proposed units across 125 projects”
  • “Longer lease up periods”

Over 50% of the units under construction are either close-in east Portland, or suburban west side.  Over 50% of the proposed units are close-in west Portland or suburban west.  There is a concern that the income levels needed by tenants to afford these higher priced units, may not be supported by the Portland economy.  As absorption slows and concessions increase, Barry expects vacancies to increase to 5.25% by the end of 2015.

We are in the midst of a “broad-based and healthy recovery”, explains Amy Vandervliet from the Oregon Employment Department. Unemployment has dropped to 6.4%, which is the lowest it’s been since the summer of 2008.  This has been helped by job strength in manufacturing, business services and the housing market. Amy believes that the jobs recovery is complete and notes that “in good times and in bad, people want to live here”.

This survey represents a total of 63,161 units from 890 properties.  All of the articles have been reprinted without editing the content, in order to present unbiased opinions.  We’d like to thank all of the management companies and property owners who have submitted information. Their participation is critical in insuring the accuracy of our data and the continued success of this report.

January 7, 2014

Now Is the Time to Really Go For It

Filed under: Business Development — Tags: , , , — Mary Daggett @ 9:00 am

If you are not rapidly growing your business now, you likely are not really in business.

If you are in the apartment or related business and you agree or are challenged by this observation then you are alive and pushing for opportunity, if not it’s doubtful. The same amount of effort and imagination spent staying alive during the economic down turn will now produce three times the result, not only because we are in the up side of our business cycle but because basic economic and demographic changes are causing long term market changes that favor the apartment business. The wind is at our backs.

Look around and see who is doing things. They are not always the same people as before. Question all your old assumptions about what can be done and what to avoid. Get energized by moving out of your rut. Yes, you are in one, we all are to some degree. Seek others who are doing the same in your business and other businesses. Action and enthusiasm are infectious just the same as doubt, fear and same old – same old.

Almost every time I engage with Multifamily Northwest events, classes, committees etc., I come away with a new clue, idea, contact etc. When I am open-minded I see new things I can do or use and often remember things I had forgotten. If you are a member and not getting the same, you’re probably walking wounded not really in business and worse yet, it’s your own fault.

First you have to show up. It’s been said by a lot of successful people, 85% of success is just showing up, which includes having an open mind.

The table talk at all sorts of events and projects is ripe with shared experience, observation, added perspective, angles and possibilities. Rub shoulders with new people. You already know what your current crowd knows or thinks they know.

Portland and Oregon’s other major cities are growing. Just read the October Apartment Report put out by Multifamily Northwest. Its straight talk with specifics and mostly all positive. More people need places to live and larger numbers have more money to pay for them. More properties and management need more products and services. There is a new energy out there and you can be a part of it. Get refreshed, take some initiative, get active or join. You may find your head isn’t on as straight as you thought. You can’t get it if you don’t plug in.

In this environment risk is less risky and more largely rewarded. Remember you are either growing or dying. There is no such thing as just holding your own.

From Jerry Mason – Westland Investments

Multifamily NW 16083 SW Upper Boones Ferry Road Suite 105 Tigard, Oregon 97224 Phone: 503-213-1281 / Toll Free: 800-632-3007 / Helpline: 503-972-3363 / Fax: 503-213-1288 Hours of Operation: M-F 8:30am-5:00pm