Chip and Joanna are beloved lifestyle entrepreneurs, with a home improvement empire that includes the Market, Magnolia Homes, books, the Hearth & Hand line at Target, a restaurant, vacation rentals, a magazine, and multiple branded product lines.
At Magnolia Market and Silos, I was blown away at the incredible attention to detail in every facet of the store. Around every corner, there were vignettes set up in ways that looked fresh, friendly and inviting. Even the guestbook when I walked in the store looked like I was coming to a family store. That’s the beauty of a powerful brand. It’s much more than just a logo. Do your properties have a memorable brand? Do they make residents and their guests feel welcome and at home? Here are a few things we can learn from Chip and Joanna’s branding that we can incorporate into our own businesses.
1. It’s More Than A Logo
Whether you’re into home improvements or not, it’s unlikely you haven’t heard of at least one of Chip & Joanna’s business ventures. But did you realize all of their brands have a similar look and feel? They are all based on the values of fresh, classic and functional. Whether you’re looking at their line of paints at Ace Hardware or spending a small fortune on home décor at Target, the Gaines have both aligned themselves with trusted brands and BECOME trusted brands. Their Magnolia-branded lines evoke the feelings of family, comfort and freshness before you even see them.
How would your clients and target audiences describe your brand? Have you asked them? At NEX-GEN Management, we have built our brand on the foundation of expertise in the multifamily industry, advanced technological capabilities and the firm belief that __________________________ is the future of our industry when it comes to __________________________.
2. Be Real With Your Clients
There is truth to the adage that “people buy from people they know.” Our target audiences, especially millennials and Gen Z, are inherently skeptical of companies and brands they don’t know or trust. That puts the responsibility on our shoulders to be as real as we can in our communications with them.
Joanna and Chip are as real of a couple I have ever seen on TV. They tell stories that aren’t flattering because they know we remember how they reacted to situations, not how the situation came about. Joanna has famously said, “I always thought that the “thriving” would come when everything was perfect, and what I learned is that it’s actually down in the mess that things get good.”
Her message, like her brand, is one of acceptance. It permeates every line she has, and she never deviates from it. We should all strive for the same message in our properties. If prospective tenants know your brand is behind the property, will they be more or less willing to spend their money with you? Or will they move on to another brand they know?
3. Find your style
Joanna Gaines had a distinct style long before it became popular. Her base of white colors with mixes of old and new pieces highlights her attention to minimalism. Do your properties have a distinct style? If you specialize in turning around old properties, do you update them with modern touches to create a perfect blend of “classic” and modern? If you specialize in building or managing new properties, do they have a unique mix of amenities for the modern renter?
Research has shown that renters enjoy social activities far more than those who live in single-family homes. Do you create spaces for socialization at your properties? Whether you have a unique style for a movie theatre or game room, or a special look for your pool furniture, those visuals let current and prospective tenants know that management cares about their comfort.
Whether you own 30-year-old or brand new properties, your branding matters. It does more than tell your customers you care about them. It shows them. You don’t need to make a trip to Waco to imitate the style of Magnolia Market. You can create your own.
Get in touch with Billi Jo at Nex-Gen to learn more about how you can improve your corporate and properties’ branding and build your portfolio.
Some apartment owners may think that turning a profit at their community is easy. These owners may believe that as long as they stay on top of work orders, collect the rent and maintain a quiet place to live, the money will come rolling in, right? Well, not quite. Although all of these daily activities are crucial, more is needed to truly compete within the marketplace. There are four common mistakes apartment owners make that can quickly cause them to lose their competitive edge and hurt their returns. We’ll go over each mistake below, and how to make corrections before it’s too late.
1. Not hiring the right people
Most apartment owners claim they have the best people working for them, but what is the best way to recruit, train and retain employees? When should an owner do the hiring and when should they outsource? Hiring a Certified Apartment Manager may be the answer. A Certified Apartment Manager (CAM) is an experienced property manager licensed with the National Apartment Association. As is the case with an experienced Realtor assisting buyers and sellers, these professionals live and breathe property management. They are proficient in understanding a community’s industry essentials, marketing, risk management, legal responsibilities, human resource, resident relations, property maintenance and financial management.
Although other organizations such as the National Multifamily Housing Council and the Institute of Real Estate Management also certify managers, the National Apartment Association zeros in on training managers to specifically run apartment communities. Curious as to how to recruit CAM managers? Hiring websites such as Indeed and ZipRecruiter are excellent platforms for recruiting. These sites allow employers to post qualifying questions that filter through resumes, selectively matching employers with qualified applicants. With this in mind, look for the CAM certification on resumes. Most Certified Apartment Managers will also designate the CAM abbreviation after their name. Another place to look is the local apartment association. In addition to being a great networking and training resource, apartment associations are great resources in identifying certified apartment managers who may be looking for work. Prior to making a new hire offer, owners should check references with the candidate’s last three employers and run both a background check and drug test. How to keep a good manager? Pay them well and keep them engaged. Having an established employee manual in place that outlines boilerplate employment policy, base pay and bonuses, holiday schedules and employee evaluation schedules is a good start.
In general, hiring the right property manager is one of the most important things any owner can do. Once hired, a good property manager will be able to use their experience and judgment to help make important decisions regarding whether to outsource or do the work in-house.
2. Not having a budget
A budget is a fundamental property management document. It’s simply a plan with numbers. If you don’t have a budget, you don’t have a plan. By the same token, a budget acts as the glue that holds a community together. Without it, owners are unable to know how well the community is performing. How can anyone be held accountable without first having a standard to be held accountable to? Budgets provide this standard. They give owners the ability to evaluate how their community is performing for the month and how to better prepare. If you are operating without a budget, chances are you are imprudently spending money without rhyme or reason.
What’s the best way to create a budget? Start by opening an excel document and creating worksheets for each section from your community’s profit-loss statement. Examples of these sections include debt expenses, payroll, utilities, repair & maintenance, marketing & advertising and general & administrative costs. After labeling each worksheet, begin importing the actual costs associated with these sections from the last 12 months. Once all the data is entered, it is time to think critically about how and where to spend money for the next 12 months. This can often be an arduous and frustrating process. Don’t get discouraged. Once you’re somewhat satisfied with the numbers, populate the data into one “master budget” spreadsheet and continue to think critically about where the money is going. It is important to plan the income side this way as well. After all, increasing a property’s income begins with a plan. Smart, experienced operators have their onsite staff create the budget for their community. Not only are the people who work onsite mainly responsible for adhering to your budget, they also best understand the day-to-day costs. When onsite managers create their own budget they are more inclined to take ownership of it and more effectively manage the community.
3. Not using property management software
What property management software do you currently use? Does it generate accurate balance sheets, PL statements, rent rolls or other executive-level reports? Does it include lead tracking, a work order generator, check writing and web portal capabilities? Is it a cloud-based system or do you host your own data?Does your firm use one system or many systems that all perform separate tasks?If you feel confident with your answers to these questions, give yourself a pat on the back because you have tackled one of the biggest barriers apartment owners face when running their communities.
If you feel a little uneasy about your answers to these questions, you’re not alone. According to a 2017 Property Management Software (PMS) Buyer Report, 51% of multifamily buyers use spreadsheets or other manual methods to manage their properties. So, how do you fix this problem without blowing the budget? Research industry-leading companies and keep things simple. Two specific property management software platforms I recommend using are Yardi Genesis2 and Resman. Genesis2 is a more affordable version of Yardi’s premier platform – Voyager. Since it was originally a DOS-based system, Genesis2 can at times load slowly. It does, however, deliver all the must-have capabilities for today’s operators including lead and work order tracking, full AR and AP functionalities, analytical reporting with drill-down capabilities, email and letter templates, renters insurance module, and an online resident web portal. Because of its affordability and simplicity, Genesis2 is ideal for smaller firms that control less than 500 units.
Another popular PMS product is Resman. Resman is a cloud-based (software as a service system, SaaS) system that was originally created by onsite property managers. For this reason, Resman is a surprisingly simple program with a strong accounting framework that is geared towards larger firms with 500 units or more. Because Resman began as a cloud-based system, it possesses newer technology than Genesis2, enabling it to load faster and be more compatible with SMS texting software and smartphones. In short, a property management system is crucial for keeping an apartment community organized. The system is a tool used to assist with running a community. What is keyed into the system is what is reported: garbage in, garbage out.
4. Not effectively using the internet.
The internet has generated boundless gains for many organizations. It has streamlined communication between businesses and customers in a way not imagined 10 years ago. As a result, this technology has greatly impacted the multifamily industry. Cloud-based storage platforms such as Google Drive and Dropbox provide owners with file and document access on their laptop and/or smartphone. These secure outlets prevent owners from falling victim to dangerous ransomware viruses and allow them to operate in a virtually paperless manner. Have you ever heard the saying “a business with no sign is a sign of no business?” In today’s market, not having a website is the equivalent of not having a sign.
Through a community’s website, prospective residents should be able to view and apply for an apartment 24 hours a day, 7 days a week. Costar cites a study done by Apartments.com and Google stating “…72% of Americans turn to the internet first when searching for an apartment.” In addition, a website must be compatible with smartphones because according to Rentping.com, “91% of all apartment residents are likely to use mobile next time they are looking for an apartment.”
Savvy operators who keep their sites up-to-date and smartphone-friendly often show up to work with one or more online applications sitting in their inbox waiting to be processed. That must feel like Christmas morning!
And the process for both landlords and residents only gets easier from there. Through online portals, residents can check their account balance, submit work orders and pay their rent. Some portals even allow owners themselves to log in and review their K1’s and quarterly statements. By receiving payments through a property’s portal, onsite staff at some communities no longer handle money, lowering risks of entry error and theft. But simply having an up-to-date, smartphone-friendly website and resident portal is no longer enough. Thanks to digital marketing outlets such as Google, Facebook, and Yelp, prospects are able to easily locate an apartment community best tailored to fit their needs.
Owners who neglect to utilize these marketing platforms often miss out on vital opportunities to reach their target audience. By the same token, through online reviews, residents are able to rate landlords and give feedback on their performance. In a recent article titled Common Marketing Errors Property Managers Should Avoid, Lisa Calgar sites a Kingsley Associates survey that states, “…90 percent of potential tenants rely on online reviews and ratings when searching for a new home.” If this survey is true, that would mean that firms with poor or no reviews are potentially losing 90 percent of their prospects!
As an illustration, there are very little, if any, guidelines to be followed when posting a review. This means reviewers can be as candid and as harsh as they want. These types of reviews could scare prospective residents away and cause long-term damage to your brand. What can you do to mitigate these issues? Be proactive. Establish and review your website frequently and make sure you are using a template that is smartphone friendly. Ensure that your website is compatible with an online portal where prospective residents can view their account balance, pay their rent and submit work orders. Assign a credible company to consistently monitor your online marketing and reputation management. That way, you know when your property has been mentioned and can continuously promote the property to interested residents. In conclusion, operating an apartment community is not as easy as it looks. It involves experience and dedication. Watch out for these four mistakes. Failing to do so could result in a diminished value.
Released at the end of last year, Bohemian Rhapsody, the story of Freddie Mercury and the band Queen, is already the highest grossing music biopic movie in history. And while Mercury was an amazing singer, it’s his strong business acumen that I most often remember. The man’s mind focused on solving problems, capitalizing on opportunities, and standing out from the pack – a mindset that would have no doubt served him well if he’d ever gone into the multifamily industry!
Mercury was an expert when it came to developing Queen’s unique brand and identity. Born Farrokh Bulsara, he renamed himself Freddy Mercury, and later designed the band’s iconic eye-catching logo, all to draw interest for the fledgling group when it was young. He also encouraged the band to explore several diverse musical styles in their early albums – such as the eight-minute canon-included “The Prophet’s Song”, or the operatic masterpiece “Bohemian Rhapsody” – to help gain musical acceptance in a time when rock music was just becoming widely appreciated.
Another area the band excelled in was scaling. While the group had some early problems getting a record company to sign them, they quickly scaled their group with local concerts and new albums. They continued this rapid scaling by performing at larger and larger venues, capped by the Live Aid performance at Wembley.
Queen also knew how to build a unique brand that gave them notoriety. At a time where rock had just become regularly accepted, the band pushed the envelope, adding several diverse musical styles into an album, as well as experimenting with stereo sounds.
Take, for instance, the A Night at the Opera album. The album featured a track that had an eight-minute run time, complete with a canon in the middle. Another track on the album had a harp and vocals dubbed over each other. Of course, “Bohemian Rhapsody” was also on this album, complete with its operatic tones and additional vocal overlays.
The band also developed strategic partnerships with other major artists along the way, including Monserrat Caballe, David Bowie, and even Michael Jackson, and performed with these musical masters to further Queen’s notoriety and fan base.
Mercury found success by taking a practical business approach to Queen; he differentiated the band in the marketplace, taking advantage of the opportunities he was presented, and he leveraged his network to elevate everyone involved. This stand-out approach has proven paramount for many business leaders in the past, and is exactly the mindset that can help your multifamily management organization shine.
Great businesses promote the differences that exist in people or opportunities and take advantage of them. Famed keynote speaker David Rendel notes that these differences are often the key to providing sources of potential, advantage, effectiveness and joy. Even Sally Shaywitz, a neuroscientist studying dyslexia at Yale, notes that those who turn their talents into disadvantages “are overrepresented in the top ranks of [business] people, who are unusually insightful, who bring a new perspective, who think out of the box.”
Look at Richard Branson. Born dyslexic, he was branded lazy and unintelligent in school. Being an individual that always turns challenges into strengths, he adapted his management style in a manner that would work with his dyslexia, rather than against it, and it’s proven successful for him ever since.
Challenges can present themselves in a variety of outlets, like Branson’s dyslexia or Queen’s uphill battle. To identify where your biggest challenges may be, and how to overcome them as a leader in your business, consider these questions:
We all have unique qualities that come naturally; things we do well that make us exceptional. Great leadership is about recognizing the things we don’t always do quite as well, and working to capitalize and improve on those things. When looking to set your goals for 2019, remember to stretch those goals further than you know you can reach, and always continue to strive to achieve them.
Don’t let your perceived weaknesses hold you back. Start looking at them as strengths, and take advantage of them to help your business grow in the New Year!
We are the champions, my friends.
It has been more than a year since Qualified Opportunity Zone legislation became law, though not all the details have been released.
Developers and property owners in many major markets are taking advantage of a new law that presents an incredible potential for profitability: the ability to develop projects where the appreciation in property value could be tax-free.
A new report from Real Capital Analytics shows that on average, land prices in census tracts designated as opportunity zones are not significantly lower than outside of them. Since the Tax Cuts and Jobs Act was passed, transaction volume for land purchases have grown in every quarter, with Q3 seeing a year-over-year increase of more than 50 percent. Deal volume outside of opportunity zones have remained stagnant over the same period, according to RCA.
The Opportunity Zone program, established in The Tax Cuts and Jobs Act of 2017, is a tax incentive designed to encourage long-term private investment in low-income communities. Opportunity Zones are in census tracts must either have poverty rates of at least 20 percent or median family incomes of no more than 80 percent of statewide or metropolitan area family income.
In California alone, there are 3,516 census tracts in 54 counties that qualify under one or both of the criteria. California’s Governor designated 879 tracts, and the U.S. Department of the Treasury certified all 879 of them.
At a recent conference I spoke to about Opportunity Zones, the group was shocked at the number of great areas that are prime for development within designated areas. Tracts that are not totally in distress but prime for development have been certified as Opportunity Zones, giving developers a big incentive to invest in redevelopment.
Among these incentives is their eligibility for four tax benefits under the new law:
If an investment of existing capital gains is held for 10 or more years in an Opportunity Fund and eligible Opportunity Fund investments, at disposition or sale of the Opportunity Fund interest, the appreciation on the initial investment would not be subject to taxation.
A developer must improve the property substantially to benefit. One just can’t buy a property in the zone to benefit.
The Internal Revenue Code defines “substantial improvement” as follows – during any 30-month period beginning after acquisition date, additions to basis exceed an amount equal to the adjusted basis of such property at the beginning of such 30-month period in the hands of the QO Fund, so long as “during substantially all of the QO Fund’s holding period of the property, substantially all of the use of such property was in a Qualified Opportunity Zone.”
For example, if a multifamily developer would invest $20 million in an Opportunity Fund that invests in eligible qualified Opportunity Zone property (i.e. new apartments in the zone and other commercial properties) and the investment appreciates to $35 million over a 10-year investment horizon, the $15 million of capital gain would be tax-free to the investor at disposition or sale of the interest in the Opportunity Fund.
This tax-advantaged treatment of long-term investments in qualified Opportunity Zones provides significant planning opportunities for real estate, project finance, and infrastructure projects.
Investors will benefit most in Opportunity Zone financing when the underlying assets, real property or business investments are subject to rapid 10-year appreciation. Because of this, utilization of Opportunity Zone financing with structured leveraged may result in substantial tax-advantaged appreciation vis-à-vis traditional real estate investment models.
If you are interested in Opportunity Zone investment in your state, email me to find out which tracts have been designated and are available. You will be surprised how many there are!