Property Case Studies

Asset Repositioning Case Studies:

Case Study 1: Multi-family Town Home Property of 100 units

Problem: At management assumption

Property Occupancy at 69%
Delinquency of $37,452 at month end
Only 3 of 31 units ready for rental
No on-site management present
Property Rules and Regulations were not being enforced

Solution:

Orion Property Group assumed management and converted one of the garages of a town home unit to an office. A full time manager and maintenance technician was hired for the site and opened the office 6 days per week. During the first four months of management, Orion established strict rent payment policies, started eviction proceedings and reduced delinquency 74% during the period. All vacant units were walked and a cost spreadsheet created for ownership. A market survey was completed of competing properties and a ninety day marketing plan implemented which lead to increased rental traffic and leases. By having management on site, frequent property inspections were completed and the overall curb appeal and rentability of the property was improved. The property manager enforced all rules and regulations and all new renters were screened for credit worthiness and criminal background improving the quality of renters. Daily access to the property manager greatly improved communications for all renters leading to increased renewal percentages and resident referrals.

Results:

Occupancy improved to 95% and 99% leased in a six month period
Delinquency was reduced from $37,452 at assumption to $1,200 in 6 months
Vacant units were made ready enabling leasing to show the actual unit to renters
Monthly Rental Revenue was increased 42% from $53,762 to $76,751
Renewal percentages increased to 70% cutting turn over and associated costs

Case Study 2: Multi-family property of 352 units in suburban location

Problem: At management assumption

Property Occupancy at 73% with 28 down units
Severe customer service and image problems
Low renewal percentages in the 40% range
On-site management and maintenance staffing was poor
Rental revenue and NOI were low creating cash flow issues for ownership

Solution:

Orion Property Group assumed management and re-staffed the entire management and maintenance departments and established customer centric management policies. Orion Property Group employees gave excellent management and maintenance service to the property residents, enabling lease renewal percentages to increase from an average of 43% during the previous six months to 77%, 82% and 75% of expiring leases being renewed in February to April. As each lease renewal saved an average of $2500 in turn and vacancy costs, the improvement in renewal percentages from the previous levels saved the property $17,500 per month in operating costs. In addition, 12 of the 28 down units were brought into service without the use of outside vendors and the maintenance team completed many projects such as fence and deck repair, asphalt patching and retiling and resurfacing the main pool to save funds. Orion personnel implemented consistent collection policies and during the winter months, rental collections increased from $206,066 in December to $240,173, an increase of 16.6% in three months without significant occupancy increases. A spring marketing campaign was developed and implemented which contained themed marketing, goals for leasing, renewals and goals for the maintenance department to provide product ready for rental. During the 60 day period, the Orion property staff leased and approved 42 leases and exceeded the goals of the campaign. The 42 units rented in the 60 day period represent an increase of $36,205 in rental collections monthly and the property hitting +90% leased for the first time in over 3 years. During the first nine months of management, Orion Property Group successfully stabilized the property and increased occupancy from 73% to 90% dramatically increasing collected revenue.

Results:

Occupancy improved from 73% to 90% leased in a nine month period, improving revenue collections $40,020 per month
Marketing campaign produced 42 rented units in a 60 day period.
Collection practices were implemented and revenue increased from $206,066 to $240,173 or 16.6% during the first three months of management.
12 Down units were brought on line with in house maintenance in a three month period, creating $8,004 per month in additional revenue.
Apartment Ratings increased from 35% to over 70% in nine months.
Renewal percentages increased to 78% cutting turn over costs $17,500 per month

Case Study 3: Multi-family property of 77 units in suburban location

Problem: At management assumption

Property Occupancy at 77%
Rental rates below average for the area
Customer service and image problems with office only open half days
No advertising or business to business marketing being completed.
Rental revenue and NOI were low creating cash flow issues for ownership

Solution:

Orion Property Group assumed management and hired a new property manager and trained the maintenance department. At assumption, no internet advertising was being done with only one small print ad in a rental magazine. Orion trained the staff in our customer centric management policies, created a new marketing strategy, opened the office six days per week and advertised on Craig’s list four times per day at no cost. Also during this time, the entire rental and concession structure of the property was reviewed and Orion developed and implemented a 90 day marketing plan with detailed goals for leasing, renewals, concessions, market ready product and resident functions in the office/clubhouse. Within six months, vacancy was reduced from $11,458 per month in June to $0 in December with the property 100% occupied. Also during the lease up, rental rates were analyzed and determined to be too low for the property and area. Orion raised rental rates on one bedroom units from $630 to $679 and on two bedroom units from $730 to $789 at the beginning of the lease up. Once 95% occupancy was realized, rental rates were again raised on one bedroom units to $719 and on two bedroom units to $829. Total monthly rental collections have increased from $42,238 to $54,283, an increase of 28.5% in an eight month period. At 95% occupancy, a water and sewer bill back system was introduced with 90% of the water and sewer costs billed back to the residents. This will result in savings of $16,894 per year to the owner in water expenses once the system is fully implemented. The increased net operating income from the water bill back savings of $16,894 per year will increase the value for the property $211,175 on an 8% cap rate. The property continues to be 100% occupied with all notices pre-leased.

Results:

Occupancy improved from 77% to 100% in a six month period
Rental rates increased $89 on one bedroom and $99 on a two bedroom or 14% at assumption after market was analyzed.
Total monthly rental collections increased from $42,238 to $54,283, an increase of 28.5% in an eight month period.
Water bill back system implemented saving $16,894 per year in water costs
Value for the property increased $211,175 on an 8% cap rate from the water bill back system
Rental Revenue increased $144,540 per year with rental rate and occupancy increases.

Case Study 4: Multi-family property of 208 units in suburban college location

Problem: At management assumption

Property Occupancy at 81%
58% of all existing leases expiring within 90 days
Classes starting at the University in 90 days which will end leasing season
Property Manager began her duties only 10 days before assumption
52 units needing turned and re-occupied in a 30 day period to make goal occupancy

Solution:

Orion Property Group assumed management and the new property manager had only been at her position for ten days. The property was located in a university town and it was imperative the marketing, leasing and renewal structure of the property be brought up to speed quickly as the school year started in 90 days, effectively ending the leasing season. Orion implemented the 90 day plan and re-focused the entire staff on customer service and improved leasing and renewal strategies. The office hours were changed and the office began opening seven days per week. Leasing and renewal goals were implemented so the entire staff could benefit from increased commissions as goal levels where attained. At the end of September, the goals of the 90 day marketing plan were achieved. The property staff had made ready and re-rented 52 units with 22 units turned within six days after move out, allowing all new residents to move into the property in time for the start of school. End of the month delinquency was reduced from $3,890 at the end of June to $97 at the end of September. Property occupancy increased to 94.7% occupied and 96% leased at the end of September. Gross possible rent revenue at the property increased $19,727 per month or $236,724 per year from the levels in June. Using a cap rate of 7.5%, the value of the property was increased $3,156,320 during the initial 90 day period of management by Orion Property Group. The property continues to be highly occupied with stable staffing.

Results:

Occupancy improved from 81% to 95% in a four month period
Rent revenue increased $19,727 per month or $236,724 per year
$236,724 in yearly increased rental collections represents an increase in value of $3,156,320 on 7.5% cap rate
Property staff made ready and re-rented 52 units in 90 days with 22 units turned within six days after move out and reoccupied
Delinquency was reduced from $3,890 at the end of June to $97 at the end of September