Host: Trey Stone
Topic: How to Build Wealth by Multi-family Investing- discussing successes of property manager, Lupita
Lupita’s Background & Current Status
Lupita runs a 488 unit property for Trey with 2,000 residents. It’s like running a small town with a population that size. Lupita explains that it’s been challenging during this time. Each year the managers set goals for the properties from 6 months to a year out. When COVID hit all of the goals and plans fell through. It’s hard to regroup from that and that’s what the team had to do. Instead of planning remodels and design upgrades to increase rent, they had to shift gears to just trying to retain residents who were struggling from the pandemic. There was a brief period where occupancy dipped but as of last week they reached 99.4% occupancy.
Occupancy rates are the percentage of occupied vs. unoccupied units. So if you are managing a 100-unit property and your occupancy rate is 99% that would mean you have 90 units rented and 10 units empty. With large apartment complexes with 488 units, a difference of 10% in occupancy is 49 units either bringing money in or costing money staying empty. Occupancy rates are a big benchmark of success for a property manager and a 99.4% rate during a pandemic is quite the achievement.
Lupita Shares Insight into her Success in 2020
Lupita says that the news can be too scary and too negative. One of the first things she recommends is less news and more action. She personally just keeps up with a summary of the news at the end of the day rather than dwelling on it all day long.
When COVID first hit and they had their first meeting about beginning their remodels, they had to pull the plug on the plans just a few days later. At times like that you can sink or swim. Lupita maintained her focus but shifted perspective to determine how to just maintain where they are rather than reaching for growth as they planned previously. At that point they were at 96% capacity and she recognized that it was a good percentage for the circumstances. Lupita aimed to keep 96% for one month so everyone could focus on a plan in that one-month time period.
Lupita set forth a marketing plan by first determining how many units she needed to stay occupied to maintain the 96% occupancy rate. You have to know who you are marketing to- who is coming to your door to view your properties and make a plan geared towards them. A marketing plan like this includes tools and strategies that appeal to the target resident. You’re focusing on closing every deal that walks in the door by convincing every potential resident to rent from you rather than someone else down the street.
Maintaining Residents in 2020
Right away, Lupita’s team focused on the stress the residents were feeling. She considered the sentiments of the residents and by putting herself in their shoes, she found some key insights. She considered that if a resident makes a complaint about something, they are going to think to themselves “why am I even renting here instead of somewhere else and pay them my rent.” To be proactive, Lupita’s team focused on being sharper and quicker at maintenance requests. They assured their residents that they would get there in a timely manner. Normally you wouldn’t think something as minor as a lightbulb out in the kitchen would be a big deal but Lupita factored in the stress and the fact that everyone was home during the pandemic and gave these minor issues high priority. They found new ways to do their old job so the residents don’t consider giving someone else their rents. Instead of starting with new marketing techniques and ways to lure people in, Lupita started with the residents’ feelings and really aimed to sharpen the customer service standpoint. That type of compassionate response is what makes Lupita a great property manager and led to her success.
Lupita set this tone of compassion with her entire staff. She told them the goal was to keep everyone happy and prevent any residents from getting upset. She quickly equipped her staff with PPE to keep them working on property. She had masks and visors with the safety protocols to keep the team in place and keep them comfortable while doing it. She was asking for excellence during a pandemic and did that by ensuring they were comfortable as well. She also led by example and worked right alongside them. This also showed the residents a compassionate response.
The staff is now relieved and they feel accomplished because they did something that very few properties in the area are doing. They take pride in their work and Lupita couldn't be more pleased about it. The results encouraged them and motivated them to keep doing it. At Trey’s suggestion, the team is getting together for a celebration in recognition of their success.
Lupita’s Struggles of 2020
After a few months of maintaining the 96% occupancy rate, the feeling of success brought Lupita’s focus back to their original goals of increasing rent. She felt confident that she could do a slight rent increase so she did and it worked out. That second success led her to push it further and try another slight increase. That is where Lupita failed. She pushed too hard too soon. She failed but she recognized the failure and turned it around.
She believes that you have to keep an eye on anything new that you try. You must be watchful and ready to react if it’s not working. She noticed her traffic wasn’t returning the way it normally did. She quickly adjusted the rent to previous numbers and it quickly put them back to previous occupancy rates. She learned not to push the market yet even though she has a great product and great feedback.
Good People on Your Team = Success
Trey attributes much of his success to the people on his team. He believes in empowering them to make decisions about his properties as needed for the business. Lupita was able to raise rents and adjust them backwards without going back and forth with Trey. This independence is also part of her success. The beauty of investing in apartment complexes is the team of people you employ to manage the properties. You don’t have to be consumed with late night calls and day to day management as a real estate investor if you empower your team to work independently but also you have to pay them well.
Trey believes in paying employees more for higher quality work so he pays above market salaries and offers bonus incentives to his staff. Recently, one team earned $20,000 in bonuses but by doing that he incentivizes them to earn his business more money. This is one of the many things that sets Trey apart as an investor/owner of multi-family real estate investments.
Employee Satisfaction at Multi-Family Properties
Lupita has 9 people on her team. She approaches work orders and maintenance requests with compassion and attention to detail. She built camaraderie with her team to take care of these residents by building morale. She lets employees know she cares by treating them to lunch or other food treats. They love when she orders pizza or provides ice cream for them. Those small gestures make a difference.
Lupita’s perspective as an employee is that she loves the independence Trey gives her. She understands the vision and the goal and has the freedom to go after it. She is held accountable for her goals but it’s up to her on how she decides to reach them. Trey hires professionals and treats them that way. This keeps Lupita happy in her position working with Trey and it keeps Trey happy as investor because he doesn’t have to micro-manage his investments.