Optimizing multifamily profitability is a bit art and a bit common sense. Two areas where underperforming will impact cash flow are: 1. Failure to work renewals proactively, and 2. Poorly managed “Make Ready” costs. Below is an article by John Wilhoit Jr. with some great pointers on both. Click on the title to go to his site for additional great articles…he’s the real deal.
The best way to assure easy make-ready’s is to have as few as possible, right? How to make that happen? With an earnest focus on lease renewals. Focusing on renewals reduces turnover. Concessions at lease renewal are almost always less expensive than turnover expenditures. Be it carpet cleaning, painting an accent wall or a few new light fixtures, any of these require less cash than a full make-ready. Considering potential days vacant they are a bargain.
What else makes make-ready’s easy? Preparation. Preparation is having a handle on the resources required to perform make-readys thirty days prior to requiring those resources. By resources we mean lining up labor, material and equipment. Simple, right? But where to store that roll of carpet?? We’ll get back to that. More importantly make-ready’s begin with the lease renewal process.
The backbone of being prepared for make-ready’s is in the leasing renewal process. Lease renewals are your “leading indicator” to up-coming turnover, right? Without pro-active renewals it is impossible to prepare for pending turnover. Renewals cannot be taken for granted. Beginning the renewal process 90 days prior to the end of the lease term, anymore, is becoming standard operating procedure and represents the best tool in preparing for make ready’s.
Back to carpet. Most major metro’s have a selection of vendors on carpet. Inquire with yours about their ability to store rolls for you (whole or part) for free. The caveat is that they will want you to use their installers. Well, if you are doing this anyway this is a win/win. You obtain free carpet storage and your vendor knows you think of them as your “one stop shop” for carpet and installation. This is built-in work for the vendor going forward as the roll is used up.
Be fast, but do not be in a hurry – John Wooden (Legendary UCLA basketball coach)
Few property management companies keep much inventory on hand anymore. Many of us consider Home Depot and Lowes as our inventory warehouse. But when it comes to turnover a lack of inventory can add days to units being off-line. So stock certain items in advance because, as you know, most properties in your market area are in turnover mode at the very same time. To remedy this, if there is no other on-site storage, consider utilizing a vacant unit for temporary storage.
Let me repeat; consider utilizing a vacant unit for temporary storage- only. If there is any chance this “temporary” staging/processing area will become permanent just pass- don’t do it. Now, assuming use as a temporary staging/processing area is available then only place boxed, non-liquid and light weight materials here. No paint, no HVAC units. Items include; blinds, air-filters, plumbing and light fixtures (boxed),
The positive outcome to having a systematic make-ready structure is minimizing unit down time, or off line days per unit. Most professional management software will have a report option for tracking this.
Then there is the paperwork. Any and all advanced documentation in hand will decrease days off line. Performing a pre-exit walk-through when the tenant notifies of move out places your team in position for quick turnovers.
Electronic files, paper files, personnel- Oh My! It is true, your best maintenance guy can fix anything. Even so, getting him to put down the paint brush and plumber’s putty to type a few words into an iPad is very unlikely. For some processes paper is still our best friend. Having a record paper record of turnovers is important, albeit a two-step process; converting paper records into electronic documentation. It is a worthwhile step to avoid duplicity and track inventory.
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