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Should You Diversify Into Multifamily, Part 2

Property Management

Effective Property Management = Higher Likelihood of Success

You may have heard that you make your money in real estate when you buy a property, meaning your purchase price determines success. However, while there is some truth to that, if you don’t have effective property management, it will be very difficult to maximize the returns no matter the purchase price. 

Not all property management is created equal. Here are some of the many things property management does for an asset and some of the key issues to remember when evaluating multifamily investments through the lens of property management.

Inspections and licensing

City inspectors are people too and making their jobs more straightforward could be the difference between passing or failing an inspection.  This is one of the key ways that onsite management is a difference maker. Professional property management will know what issues to fix before an inspection and will be quick to make the correction if there is an issue.  They build relationships with cities and make sure issues are addressed quickly and efficiently.

One of Exponential’s points of difference is our in-house property management team. They understand the value of maintaining relationships with city officials built on trust. These relationships are backed by a track record of successful inspections and quick responses to issues. We take that reputation very seriously and do everything we can to protect it.

Crime prevention and response

By making early contact with community policing resources and building a rapport with the beat officers, professional property management begins making critical inroads with law enforcement.  Making them feel welcome often leads to a greater law enforcement presence and a safer community.  

At Exponential, we welcome our law enforcement partners. We open up our facilities to give officers a comfortable place to work. There have even been instances of law enforcement using club houses as a substation. We’ve even kept a favorite brand of coffee on hand.  It’s the least we can do.

Human Resource Management

Unless you’re a CPA, salesperson, referee, social worker, and babysitter with the construction know how of Chip Gaines… you’re going to need a team to run a property.  This is generally where apartment owners see the most immediate benefit from professional property management.  

At Exponential, we pride ourselves on well trained teams. Each team member at our properties understands the numerous issues that are involved in running a property and is trained in how to respond. Whether it is handling work orders, finding new residents, handling new leases, or keeping accurate accounting records, our teams are prepared.   Knowing this value, we keep our teams even after a transaction. That means we can place people where they want to be and in a position for which they have a passion. This allows us to continuously coach our people for the long-term benefit of our investors. 

Weather and Disaster Response

When weather strikes at 2 AM, someone is getting that phone call that the power is out or there is a problem with the roof.  Most investors would rather that call go to property management. In a third-party management situation, often the owner will hear about the event on the news before the office is open again.  

Exponential’s in-house management team is on call to coordinate response and communication during severe weather or unforeseen events. Whether it is calling the power company, tarping the roof to prevent leaks or removing fallen branches, our team can quickly respond.

Market Trends for Rents and Amenities

One of the clearest advantages of professional property management is first hand knowledge of resident expectations for amenities and the amenities’ value in monthly rent.  With more data points across more properties, there is an understanding of what rents and amenities may command in a submarket. For example, their knowledge of neighboring properties would let you know that a dog park might be standard for one area and a differentiator or simply unnecessary in others.  

At Exponential we understand there is a difference between knowing how much to charge and actually leasing for that rate.  We not only have the market knowledge, but the ability to implement updated rents. There have been occasions when our management team has taken over properties from third party management groups that have not raised rent to keep up with the market and immediately increased rent $200. This was before even beginning to renovate the property.  

Monitor construction workflow

If your property is undergoing renovation, property management can be the difference between efficient rehab and budget busting cost overruns.  Having a property manager that will work with the contractor to keep the job on time and on budget is invaluable.  

At Exponential, our property management sets the scope of work and timelines with the general contractor and ensures that materials are ready for the subcontractors, saving time and material markups.

Coordinate unit turn prioritization

When going through a value-add on a property, knowing which units to renovate and when to do the work is critical to maximizing value.  Often, the choice of which unit and when to renovate it is left to the maintenance team rather than using predetermined business logic to inform that choice.  Professional property management will know which unit types are most in demand. Exponential’s property management weighs every notice to vacate against dozens of factors including current rent, potential increase, and renovation team availability to determine which units to make-ready and which to renovate.

Lease enforcement

Whether a resident is late with the rent, brought home a new puppy or violates his lease in another way, someone has to communicate the issues and, potentially, assess fees or initiate eviction.  A professional property manager can help ensure that the lease terms are enforced legally and according to local statutes. Remember, lease enforcement goes both ways and the property owner must comply with the lease terms as well.  Property management takes on much of this responsibility. 

Expense Controls

It’s easy to be focused on the income side of a P&L statement, but it’s often the expenses that make or break an investment. On many work-force housing properties, implementing a water conservation program can lead to big cost savings. Further, making sure there are spending controls on office supplies, maintenance items, and other purchases can hold on-site teams accountable.

At Exponential, we look for every opportunity to reduce expenses. Each employee has oversight to prevent unauthorized or wasteful spending. We have had occasions where prior owners did not have tight controls on spending, and we were quickly able to improve the property’s profit via our training and spending policies.  

Ultimately, the role of a property management company is to protect your investment and earn you money, so be sure to remember that when you’re out there interviewing. Will the management company closely watch the accounting? Will they make sure units are quickly ready to rent when someone moves out? Will they treat it like it’s their asset? Will they look for ways to achieve cost savings? It’s your hard-earned money, make sure you have the right team protecting your investment!

Over the last decade, Exponential Property Group has given hundreds of investors the opportunity to grow their net worth using multifamily real estate.  Go to exponentialpropertygroup.com/invest to learn how you can too.

In Part 3 you’ll learn about the benefits of investing in the value-add category of multifamily.

 

 

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ADMIN

EXPONENTIAL PROPERTY MGMT. DIRECTOR OF OPERATIONS

Lisa Harris

Lisa Harris is the Director of Operations for Exponential Property Management. In this capacity, she is responsible for driving property performance, monitoring market performance, and providing leadership oversight to a growing team of regional and property managers. 

Lisa has over three decades of experience in multifamily operations and property management. Prior to joining Exponential Property Management, Lisa served as a Regional Director for W3 Luxury Living. In this capacity, she provided directional leadership supporting the businesses property management efforts. She has also held significant regional leadership roles with Monogram Residential Trust, Behringer Harvard, and Lincoln Property Company. 

Lisa studied Advertising and Public Relations at Texas Christian University. She is also a Certified Apartment Manager via the National Apartment Association, as well as a Certified Property Manager via the Institute of Real Estate Management. Lisa is an active member of the Apartment Association of Greater Dallas. 

DIRECTOR OF CONSTRUCTION

Stan DeMille

Stan DeMille is the Director of Construction and Development for Exponential Property Group. In this capacity, he provides strategic leadership and direct oversight to the construction aspects of the firm’s ground-up development and value-add renovation projects.

Stan has nearly three decades of architectural and construction management experience. Prior to joining Exponential Property Group, Stan was a Senior Project Manager for Jones Lange LaSalle where he was directly responsible for managing the ground-up development and redevelopment of Chick-fil-A’s throughout the Southwest. In this capacity, he handled all aspects of development from managing relationships with municipalities, architects, civil engineers, and vendors to ensure timely project completion. He also held various construction and development leadership roles with Bar Louie Restaurants, Lact Call Operating, and Consolidated Development Services. 

Stan holds his Bachelors of Science in Architecture from the University of Texas at Arlington. Stan spends most of his free time with his wife and twin boys. He is actively involved in his sons’ extracurricular activities including theater, rock climbing, and baseball.

VICE PRESIDENT FINANCE AND ACQUISITIONS

Sterling Worth

Sterling Worth is the Vice President of Finance and Acquisitions for Exponential Property Group. In this capacity, Sterling leads all investment sourcing and analysis efforts for the firm, as well as debt and equity raising, and asset management. 

Sterling has nearly two decades of institutional commercial real estate investment experience where he has a multi-billion dollar track record of successful capital placement spanning all commercial real estate asset classes. Before joining Exponential, he spent over a decade with Invesco Real Estate, and several years with Clarion Partners.

Sterling holds his Bachelors of Business Administration from Texas A&M University. Most of his free time is spent with his wife Natalie, his daughter Lily, and son Turner. 

EXIST MULTIFAMILY DIRECTOR OF OPERATIONS

Francis Murphy

Francis Murphy is the Director of Operations for Exist Multifamily. In this capacity, he leads a team of operations, sales, and business development professionals for the materials and graphics businesses, respectively. 

Prior to joining Exist Multifamily, Francis owned and operated a Junior Soccer Club in the United Kingdom. His passion for teamwork, development, sports, and giving back to the community fueled his leadership and propelled his success for over a decade in the profession. Prior to this, Francis was an Operations Manager for one of the United Kingdom’s largest pharmaceutical companies where he managed a large team of professionals and maintained direct responsibility for all supply chain operations. 

When Francis isn’t building the materials and graphics businesses at Exist, you can find him spending time making close friends laugh over a competitive game of Texas Hold’em Poker or traveling. 

DIRECTOR OF INVESTOR SERVICES

Amanda Schwarz

Amanda Schwarz is the Director of Investor Services for Exponential Property Group. In this capacity, she oversees all aspects of capital raises, investor communications, and database management for our Investor Services team.

Prior to joining Exponential, Amanda spent over two decades in various client and office management capacities. She brings extensive management and interpersonal skills alongside her multifamily real estate experience, making her uniquely qualified to lead in her current role. 

Amanda holds a Bachelor’s degree from the University of Illinois. When she isn’t spending time making sure Exponential investors have a top-tier client experience, she loves spending time with her family. She also enjoys hiking with her husband and traveling.

CHIEF FINANCIAL OFFICER

Heather Goodell

Heather Goodell is the Chief Financial Officer for Exponential Property Group and it’s affiliated companies. In this capacity, she is responsible for leading and growing a team that oversees all Accounting and Financial statement reporting, Federal and State tax reporting, Treasury Management services and other supporting areas for the firm’s various lines of business.

Prior to joining Exponential, Heather served as CFO for RealManage where she supported all Finance and Accounting activities, including deep involvement with middle-market M&A activity for the firm.

Heather is a licensed CPA and holds her Masters of Accountancy from Auburn University Harbert College of Business as well as her Bachelors of Business Administration from Florida Atlantic University. She loves to spend her free time with her family, friends, and reading a good book.

CHIEF OPERATIONS OFFICER

Natasha Austin

Natasha Austin is the Chief Operating Officer for Exponential Property Group and Exponential Property Management. In this capacity, she acts as the strategic leader over all property management operations and value-add renovation strategy for the company. 

Natasha has deep domain expertise having spent over two decades in multifamily property management and operations. Prior to joining Exponential Property Group as the Director of Operation in 2015, she led property management efforts in various capacities with DD Fire, Pegasus Residential, Guardian Real Estate Services, and United Apartment Group. 

When Natasha is not leading her team of over 100 professionals at Exponential, you can find her with her husband traveling with her kids who are avid baseball players. She also acts as the Executive Director of the Martha’s Ranch Foundation, a 501c3 created to provide a source of fun and support tailored for families with autistic children.

PRINCIPAL CHIEF DEVELOPMENT OFFICER

Matthew Bays

Matthew Bays is the Managing Principal and Chief Development Officer for Exponential Property Group as well as the Chief Executive Officer for Exist Multifamily, Exponentials materials and graphics company. Matt oversees the identification and execution of new property development opportunities for the firm, as well as leading and growing the multi-million dollar materials and graphics company.

Prior to joining Exponential in 2017, Matt oversaw all U.S. operations for Renew Sleep Solutions where he led all aspects of operations, business development, new site development, and design/implementation of workflow technologies. He also held senior level roles with Davita, Varsity Shoppe, Iron Mountain, Pinogy Corp, and Dell Corporation. 

Matt holds his MBA from Southern Methodist University Cox School of Business as well as his Bachelors of Science from the University of Texas at Austin. When he is not creating new business ideas, or developing new technology, his efforts are directed towards his role as Chairman of the Board for the Martha’s Ranch Foundation, a 501c3 he created alongside his wife to provide a source of fun and support tailored for families with autistic children. When not working, you can find Matt spending time with his wife Kim, son, Jett, or twin step-sons James and Nathan. Matt is an avid traveler and scuba diver.