The 5 “P’s” of Property Management:
Product – Part 1 of 5
by JIM KJOLHEDE

August 15th, 2009

My grandfather was a clothing store owner in Wamego, KS. He always made sure that he had enough inventory to “help” the Customer (sorry, I ALWAYS will capitalize Customer….it is a habit of mine), spend their money. In the apartment industry it is imperative that we have not only the quantity (the number) of READY units, but also the quality of READY units. It still is occurring today where we don’t have either quantity or quality. How can we sell from an empty wagon???? We must have inventory to sell from. As much as the residents like the internet to view properties, look at floor plans, and even close the lease on-line. I am, and continue to be, a firm believer that the resident wants to see THEIR apartment. They want to see the view from the living room, they want to see and feel the size of the master bath and kitchen and they want to see what shape the carpet is in. It has come to the point where it doesn’t amaze me that the make ready team says “every time we get a unit ready, the leasing team leases it”!!!! WOW!!!! What an epiphany!!!! Some people (even intelligent people) say, why do we need so many units ready, why not have “just in time” ready units….ready just in time for their move in. That simply doesn’t work. I would argue that you are going to get the unit ready anyway…..so what you might save is the time value of the money it cost to get the unit ready…but if you lose ONE lease by not having enough ready, then the small amount of interest saved is like loose change on the floor!!! With the new pricing model engines like Yieldstar and LRO, there are so many pricing options due to location, floor plan, lease term, etc. that the property appeals to a much broader range of residents. Some might want to get on a property at a low price and not care that it is on the first floor , street side with the dumpster outside the door. Others want the view unit on the top floor that has been renovated. If you have more units ready, REALLY ready, then the prospective resident will have options…and options are good!!! So Property Managers and Multi-site operators should focus on getting a large amount of units ready. My rule of thumb was to have 75% of all vacant apartments ready by the third Monday of the month. I could go into detail on why 75%, but suffice to say that your occupancy WILL go up if you use this “Rule of Jim”. The other “Rule of Jim” that I KNEW worked was that unrented vacant HAD to be ready before they hit double digit (10) days vacant. If you ask the service Team (again, I capitalize Team EVERY time I use it in a sentence as it is such an important term and concept NOT to) how long it takes on average to get a vacant unit ready, they will invariably say….72 hours!!! And yet they will have unrented vacant in the 30+ day range NOT READY….review this on your sites and see if my statement holds true.

In Part II of this series, I will share my thoughts on the “People” P…….one of my favorite topics and one that I look forward to sharing my thoughts on with you. Please share your comments to the PRODUCT piece above in the comment section. I would love to hear your thoughts. JK