In a pandemic, there are many moving parts to managing people and multifamily property portfolios. Rapidly changing federal, state and local regulations, real estate maintenance, property tax and apartment operating costs do not stop because of a pandemic. Managing the human condition including the flux of local business hardships, changing employment demographics, and mounting depression, stress and fear puts stress on an apartment community. Lean and experienced property management is more important now than ever. So, how do we apply Lean Apartment Property Management (LAPM) principles in these trying times? Read on to learn more.
Owners, Investors and Lenders Seek Stability
The recent pace of change has prompted apartment lenders, multifamily portfolio managers, and individual apartment owners to seek experienced, licensed professional apartment property management firms to add to their teams.
A challenge of blending agile teams into an existing enterprise is gaps can emerge between the property management team doing the work, ownership and those allocating funding. To close this gap, the Lean Apartment Property Management (LAPM) team needs the ability to:
- Apply tried and true principles– Mid-crisis is not a good time to learn how to effectively manage apartment properties. Utilize those property management firms who have applied tried and true principles in both good times and lean times and have track records to back it up.
- Gain visibility– Effective property management is hands-on and does not manage solely through digital portals or AI (artificial intelligence) apps. LAPM has their finger on the pulse of their communities. Each apartment community has its own distinct personality and quirks. A good property management company will personally get to know their residents, reach out in good times and stressful times, proactively identify weak spots and shore these up before problems become liabilities.
- Optimize assets– Persevere and pivot by utilizing quality multifamily deal structuring, and trusted commercial refinancing while reallocating funds to maximize throughput of value while staying true to long term investment goals. In times of crises, we find traditional methods of portfolio management ineffective where property management only collects the rent and punches the clock at 5 o’clock and goes home. At Better World Properties LLC, Lean Apartment Property Management practices are strategically applied to drive LAPM alignment across the entire organization.
What is Lean Apartment Property Management?
Lean Apartment Property Management (LAPM) describes how senior leadership applies lean principles to connect strategy to execution at the individual multifamily property level. Regional management teams learn about the LAPM strategy and allocate budgets towards execution of that strategy.
An effective LAPM portfolio of multifamily investments is creatively constructed and actively managed across the apartment portfolio investment life cycle. The primary emphasis of LAPM is to align agile property management with streamlined apartment operations strategies, with a focus on driving the delivery of value to owners and investors through the creation of improved ROI, both short term and long term.
Objectives of Lean Apartment Property Management include:
- Vision – What is our vision for each multifamily portfolio, owner and investor
- Deal Structure – Apartment deals are quickly lost when not structured properly. ROI is jeopardized when equity is not managed for growth. Multifamily deal structuring and equity and investment strategies are paramount to success.
- Values – Do business the way you wish to be treated. Treat others with kindness and respect. Give back to the communities you serve.
- Maximize throughput – Actively manage multifamily assets and prevent operation bottlenecks with apartment process improvements to achieve the highest-value opportunities throughout apartment investment life cycle while maintaining long term portfolio objectives
- Show Me– Accountability and Reportability. Make it easy for all to see the bottom line quickly and efficiently.
- Senior Leadership– Now is the time to utilize experienced apartment property management. In both crises and in good times, experienced property management quickly pays for itself.
Why Lean Apartment Portfolio Management?
Managing apartments in real-time, in person and not from behind a desk juggling numbers provides opportunities to solidify long term residents and identify potential risks before they become liabilities.
Lean apartment portfolio management methods streamline by:
- Shifting operations focus to delivering incremental value at shorter intervals for larger long-term gains.
- Shorter feedback loops collect real-time data allowing adjustment of real-time operations to reflect the current marketplace and regulatory issues providing opportunities for rapid optimization.
- Ruthless application of this valuable feedback is reinvested in ideas that produce best outcomes and ideas that do not are quickly set aside.
How to implement Lean Apartment Portfolio Management
Adopting lean apartment property management practices into existing multifamily portfolio leadership requires strong organizational change management practices. It often feels like renovating a house while you’re still living in it — with similar levels of stress and satisfaction.
Steps to LAPM implementation:
Who’s on First –The first step is to find the group that will successfully connect strategy to execution. This is the Lean Apartment Portfolio Management leadership team.
Due Diligence – The art of experienced apartment due diligence on an apartment portfolio provides a vast amount of data showing where bones are buried and where gold can be found. Skimping on this step can prove to be a costly oversight.
Find the money – Preparing properly for commercial lending is a job in and of itself. When presenting a deal to lenders today, underwriting wants experienced property management on board. A proven track record with a clean lending submittal package can get an apartment deal done in record time.
Lean Apartment Property Management (LAPM) brings time-tested lean principles across property management, apartment operations and multifamily deal structuring. Overall, the lean approach drives reliable results and ensures that property management teams can pivot as the marketplace changes and resident demands shift.
Is it time for an assessment of your current apartment portfolio with an eye towards LAPM principles? Are you leaving money on the table? Feel free to give us a call. We can also meet up on Zoom or other virtual platforms. We are available for in person meetings with social distancing practices in place. We love to talk apartments and would love to get to know your multifamily investment goals and share our insight with you.