Tips for Transitioning Apartment Communities into Operational Brilliance
A new property acquisition often signals an opportunity to strengthen a multifamily company. Done right, transitioning the property to a management company’s portfolio can be business as usual. But there is a lot of behind-the-scenes work that has to be done, and then there’s not guarantee that the transition will be seamless.
As expected in a robust apartment industry, asset ownership changes last year were brisk. About 5,800 properties and 1.5 million units changed hands at a record cost of $150 billion, says Kevin George, President and COO of InfoTycoon, a provider of asset management lifecycle software that includes new acquisition management.
“2015 was a very active year,” he told a full house at June’s National Apartment Association Education Conference and Exposition. “It was the largest year on record in terms of asset transitions. We are expecting to see another large one this year. We are hearing about some softness in market, but 2016 will be another substantial year for transactions.”
Given the robust acquisition culture, George hosted a panel of executives from some of the top property management companies in the industry on the due diligence involved in transitioning properties into operational brilliance. Offering their thoughts were Ben Smith, Cortland Partners; Sherry Freitas, Greystar; and Nancy Smith, Bozzuto Management Companies.
If executed properly, acquisitions can be transitioned quickly. One example given was the transition of 22 properties in two states in one day.
Among the key takeaways were to plan ahead and communicate:
Establish a checklist to institutionalize best practices
It is important to gather as much information as possible about the condition of the property and the status of current resident leases during the pre-acquisition due diligence process, panelists say. Technology should be leveraged to enhance your team’s ability to be prepared for the transition.
Use a detailed checklist to ensure that all bases are covered during an acquisition. The checklist should include tasks in order of importance for each week of the transition.
An important part of the transition process is to integrate acquired employees into the payroll system so that everybody gets paid.
Also, SalesForce was suggested to keep everybody in the loop until the acquisition is complete. The program enables key stakeholders to receive and monitor deadlines, as well as updates on the transition.
Communicate and respond to residents quickly
Staffing the leasing office for immediate business is a big priority. Residents and prospects should have someone to talk to from Day 1. That’s especially important when a prospect visits the community during the transition. Often, management companies will have additional team members onsite to answer questions and help during the first two weeks.
Also, make sure that the customer service staff is available to walk units and talk to residents. A common concern for residents is how the transition will affect rent, amenities and other aspects of the community.
Do your research prior to the transition
Along with the acquisition comes the reputation of the apartment community, so it’s a good idea to explore reviews and comments about the property in advance.
Reach out and encourage residents to share their thoughts and ideas about the community. Doing so enables the property to resolve unsettled issues and start fresh.
Build excitement and focus on the positives
Panelists agreed that making an initial splash is a great way to help residents and staff settle in more quickly with a new management company. Some residents typically get attached to the onsite team and may be concerned when there is change. Strive to build new relationships by hosting a Meet the Team night to introduce staff and talk about any improvements planned.
One executive suggested looking for opportunities to enhance service programs and increase resident satisfaction. One way is to invite an interior designer to the introductory event to talk about changes, and even ask residents to participate in a ceremonial remodeling demo as improvements begin.
Customize your approach based upon the community
A full transition can take several months, so start early and do your homework on what improvements can be made to the community to retain residents and attract new ones. Work closely with the investment team to determine the best use of funding to make the property better.
Avoid a cookie-cutter approach to improving the property and create a unique living experience. That could mean focusing on better kitchens, and enhancing lighting and fixtures to create impact with residents.
Plan ahead and be prepared for the unexpected to occur
Plans don’t always go according to Hoyle, so be prepared for surprises like what may be in office drawers. Thoroughly examine the onsite office for invoices, vacancy notices and other crucial documents that may not have been entered into the property management system before the deal closed.
The online payment process, which more residents use today to pay rent, may be different. So work toward a seamless transition and help residents learn the process if it’s new.
And expected the unexpected. Shortly after one company acquired a property it was determined that the previous owner took all of the phones the day of closing.