Property Management Revolution

Wednesday, December 28, 2005

SIMS for Property Managers

I'm a control freak.

I loved playing SIM City 2000 when it first came out. I think some of my grades in college suffered because of my addiction to the game for a certain period of time. Now that I'm in property management, I can see all the benefits of having certain controls in place that can guide the decisions of the people who really drive the world...residents. If only I could have the cheat codes that would allow me to turn off all natural disasters, and every once in a while, I may want a directed alien attack on a certain part of my community.

I digress, but my point is that the controls offered by that ridiculous, time consuming game would be invaluable to me as a property manager. To have a software package that can effectively provide a comprehensive set of controls would be invaluable. Even more invaluable would be the ability to actually use and even manipulate those controls in an easy and logical fashion.

The property management world has some very proprietary software offerings that have been developed over very long periods of time. However, these software packages vary widely from the complex and expensive standard, YARDI, to the affordable yet limited TenantPro. Products like AMSI, Spectra and a slough of others flood the market place trying to get property managers to invest in their product. Unfortunately, these products are very standard and one must create their property management company around the software instead of creating the software around the property management company. Modification of the software packages is extremely expensive and out of reach for most property management companies.

I'm one of those companies. Being that we don't manage all of our properties first hand, we utilize the investor end of software packages by our 3rd party managers. We also need to use a software package for the properties we do manage. This is where my dilemma enters the picture. Our first self-managed property was purchased without a software package. We partnered with a commercial tenant of ours to develop an existing product for website leasing, and we are using our accounting department's accounting software, but ne'er in between do they meet. Are we to dedicate $25,000 to buy a bargain property management software or develop something proprietary?

The benefits of proprietary software are great, but so are the pitfalls. The lack of a dedicated research, software development and support departments greatly detracts from this option. However, I believe that EVERY property management software should be "proprietary". The largest asset of a property management company beyond the people that it is comprised of and the relationships that generate business is it's software package. The software package is the tools of the trade. Without the tools to succeed, a property manager is destined to fail. Part of this tool is the ability to service residents at the utmost level. A good software package will enable that.

This brings me back to the SIMS concept. As the partnership created develops this software package, we will analyze every aspect of property management. The software package will be organizationally and graphically intuitive. The controls will be comprehensive and malleable. The look and feel of the entire product will be manageable by the end user while the substructure remains in tact and unharmed. Most of all, the software package will be affordable to the end user. More affordable packages will allow property management companies to offer better service at a better price bringing greater returns to the investor.

In the end, our SIM Property Management Companies will be easier to manage, easier to provide customer service, easier to provide greater returns and most importantly fun!

Tuesday, December 27, 2005

Building from the Ground Up

A few months ago, I began working with a new company in the real estate investment industry. Along with managing the relationships with third party fee management companies, we decided to start managing some of the properties ourselves. Upon my employment with the company, a property was acquired needing the services of this owner/operator property management division. I was therefore thrust into the management of a property without any preparation for the individual property combined with a lack of policies and procedures for the management as a whole.

Trial by fire is both invigorating and draining. I was given a pro-forma budget for the property and a blank slate. I began by hiring an experienced property manager in the market local to the property. This value-add step was the most important to the successful management of the property. Being 80% student occupied, I needed someone with seasoned experience in the field and was able to find a capable person locally.

I began compiling legal documents including a lease and formulated a draft which our local legal counsel and I worked through. With the property manager in hand and a lease ready, we took hold of the property. This skeleton of a "property management company" became the operating manager of the property.

The difficulty, obviously, with all of these is that the stability provided by a proven property management company was not there. This foundation, therefore, was to be created and is being created as we speak. Now that my property manager is familiar with the property, has begun hiring a staff, working with our marketing director and preparing leasing staff, I have been freed a little to set the groundwork for our company. Although this is a bit backward, it gives me the opportunity to test different approaches, run the practical applications through my on-site staff and be creative with our strategy.

The July & August 2005 issues of the Multifamilypro Magazine featured an article entitled, "The New ROI: Return on Individuals Keeps Paying Off." This article and the headline have been my motto for the last few months. I truly believe that if I staff this company with amazing people, and I invest into those people, money will just flow out of their ears! That means I have to commit a serious portion of my capital to the property. The nice thing is, I can pretty much fund this capital with the vacancy budgeted, as it will reduce as a result of my investment. Even upon acquiring this property at 99% occupancy, I know with this staff that I will be able to increase rents and retain the occupancy levels.

Along with the Return on Individuals concept, I want to see a few other items flow from the property management company. The first is making document handling as easy as possible. There is no reason in the property management industry that paperwork has to consume so much of our time. A great relationship I was able to bring into my property is with On-Site Manager. Josh, from On-Site has partnered with me to develop a paperless product that is easy to manage. From the time a prospect fills out an application to their move-out, everything is kept online and easily manageable. All forms are auto-filled from the information the resident entered upon applying and can be kept up-to-date by my leasing staff easily. Now, of course, original documents with signatures must be kept, but that is the extent of the paper that my leasing staff has to deal with.

The second, which is tied with the first, is having a fool-proof comprehensive property management software. An article by James M. Lennox, CPM in the September/October 2005 issue of the Journal of Property Management entitled, "Sea of Change: Advanced operations structures could be future of property management.", casts a vision of a property management software that is all encompasing and brings the on-site experience of property management to the highest corporate level and integrates the expertise of upper-level management with the day to day activities of each individual property. My vision of a property management software is even more encompassing. The article states that, "Let's reach for the high ground and embark upon some truly remarkable, exciting changes in our industry." It is my desire to be the vanguard in this push for "remarkable, exciting changes." A commercial tenant at this property is in the software development industry. Part of the up front capital expenditure of each property is to invest into a comprehensive software package that will transform the property management industry.

With the skeleton of a property management company in place and the vision for a solid foundation, we are going to take this property to a new level of management. This involves day by day problem solving and revolutionary thinking for ever aspect. This blog will attempt to document that revolution and discuss the various aspects of revolutionary property management with anyone who would like to participate.

Chasten Fulbright, ARM, CPM Candidate Posted by Picasa