By Carm Gullo
In light of the negative news reported by the press, tv, and political leaders, you might ask yourself “How is my business faring? “ How has the business environment affected my revenues? Will the business climate further affect my revenues?”
It is essential to track sales, revenues and expenses for any business (and managing apartments buildings is a business). This is what we at CFG Investments, Inc. do in examining the rental properties we manage. We have tracked performance on a daily and monthly basis for many years. CFG Investments manages over 200 properties throughout Orange County, and this gives us a fairly large data base in our statistical analysis.
Collection Of Rents
In comparing the collection of rents and filling of vacant units, we have based our observations on the last 15 months, from January 2008 throughout March 2009, before and into the midst of our current business crisis.
Despite many negative vibes in the media, we have found that there has not been a deterioration in our rent collections. The performance data for the beginning of 2009 shows that there has been an 00.50% (half a percent) better performance so far this year, 2009, in rent collections over the beginning time period of 2008, before the negativity of recent months. Evictions and returned NSF checks have also decreased.
We are in a business where people want the stability of their home. In order to foster tenant stability as well as ours, we as a company have been vigilant in addressing tenants if they have not paid their rent on time, issuing the proper 3-day notice and calling to clarify when the rent will be paid. It is very helpful to try to get a commitment date for when to expect payment. Follow up and follow through. The 3 day notice should be issued early; waiting too long simply prolongs the process, and your goal is to incentivize the tenant to keep current and out of a difficult situation.
Renting of Vacant Apartments
Since the beginning of 2009 there has been an increase in vacancies similar to what was experienced in the beginning months of 2005. In 2005 our vacancy rate of un-rented apartments was 1.30%. In the same period in 2009, the vacancy rate of un-rented apartments is 1.40%, a slight increase, but a trend we don’t want to continue.
Vacant apartments need to be excellently presented in this market. This is a competitive, challenging, bargain-hunting rental market . The unit needs to be clean, fresh, with some update of desirable features like carpet, lighting, counters.
In addition to normal advertising services we are using internet advertising and encouraging our current tenants through an incentive program to refer prospective renters. This seems to encourage stability and good tenants. Our large base of buildings throughout Orange County allows for a good networking of tenant referrals.
It is, of course, important to verify the application thoroughly. Credit check, verification of income, previous residency, jobs and references should be diligently investigated.
Ownership of Rental Property is anything but passive.
Carm Gullo is the president of CFG Investments Inc., a 30-year residential multi-unit Real Estate Brokerage and Property Management firm. CFG manages over 200 buildings in the Orange County area with an emphasis on excellent rent collections, and low vacancy rates for property owners who live in many diverse locations. As a Real Estate Broker, Carm is experienced in 1031 exchanges and installment sales of multiple unit Real Estate properties. He has also originated and managed limited partnerships and LLC’s, and a tax prepartation practice of 35 years adds a perspective to his brokerage specialization. Carm’s B A Economcs and MBA in Finance give added depth to a previous background in banking, sales, and financial analysis.