Embracing a Technology-Focused Apartment Building Marketing Strategy

Apartment Building Marketing Strategy

Mobile technology is becoming more in demand in multifamily housing, according to some of the latest survey data. And websites need to get right to the point or prospective renters will move on to the next community.

Property managers should pay attention when creating their apartment marketing strategy, or they’ll miss the boat when it comes to attracting and retaining renters.

Finding apartments online continues to grow

Also, more prospects are searching online to find apartments instead of driving by, and online leasing and renewals are gaining in popularity. Renters are expecting to leverage online community portals, too.

The number of apartment hunters who visit a community website before scheduling an appointment is up to 85 percent, 4 percent higher than last year. Renting online and renewals each earned higher rankings than in 2019.

Engaging apartment website content is a differentiator

Lively, engaging and immersive website content sets apartment companies in competitive markets When prospects visit an apartment website, they want to experience and capture the feel of the community inside and out before deciding on a visit.

Apartment marketing is most successful when it tells a story through photos, video content, 3D imagery and storybooks.

Property management companies need to think about the lifestyle they want to sell. It’s thinking about how to ensure you have good visuals of what the day-to-day life in that community would look like. In addition to that, it’s using the content you create to be able to really drive lead conversions.”

Consider that lifestyle when creating your marketing strategy. Is the community pet-friendly? What amenities are available? Use these areas and more to develop your content.

Web presence is likely leading to more renting without visiting

Effective websites are likely a reason why renting without visiting in person is more common. Eight years ago, only 4 percent of respondents said they signed a lease sight unseen. Today, that’s up to 14.4 percent.

Properties that want to generate more sight-unseen leasing should provide as much information as possible on the website.

It has to have everything they want to know. If you can make it a one-stop shop, you’re going to get people excited about renting.

But don’t overdo it. Online renters want a quick, simple experience. If prospects have to jump through too many hoops, if there are too many steps, screen after screen, they are going to click out. Think about how your websites are laid out. Simple and quick.

A big driver of website engagement is through call-outs when apartments are limited in number. Noting a floor plan is in limited supply is a winning strategy.

That is a huge trigger for people mostly because they are starting to see it more and more in other aspects of purchasing. But she warned be aware of fair housing laws when advertising limited availability.

Apartment leasing software can transform the leasing experience for your staff and prospects. Property management companies can take prospects from search to eSignature with RealPage Online Leasing, which streamlines and simplifies the experience of leasing apartments, saves your staff time processing paperwork, and frees up more time for customer service.

Community portals are extremely important for attracting and retaining renters

Also, residents rated portals as extremely important, a higher ranking than four years ago when they were only considered important. This can be a major attraction for renters, as ninety-eight percent said they would use a portal if it were offered by the community. It’s also a powerful way to engage renters, increasing their likelihood of staying in your properties.

It is extremely important for a community to have a portal. If anyone is thinking about it, you should spend the money. It’s about education and engagement, showing them how easy it is to set up an account, how easy it is to pay rent online.

It also makes it easy for property managers to automate communications, maximize retention and optimize operations.

Commercial Construction Loans Defined

A commercial construction loan is a type of loan that is used to finance the costs associated with the construction or renovation of a commercial building.

The funds from a construction loan can be used to pay for labor and materials for the construction of a new property, the purchase and development of land for a new commercial property, or the renovations of existing properties.

Why Take Out A Commercial Construction Loan?

Business owners that plan to purchase existing commercial properties can get a loan known as a commercial mortgage.

However, if you plan to renovate your existing space or construct a new building from the ground up, you’ll need to apply for a commercial construction loan.

New construction and renovations can be expensive — think hundreds of thousands or even millions of dollars.

Most growing businesses don’t have this type of cash on hand, so instead, they turn to a commercial construction loan.

With commercial construction loans, lenders provide funds throughout the construction process to pay for labor, materials, and land development so you don’t have to cover the costs yourself.

How Commercial Construction Loans Work

Commercial construction loans are different from other loans. Most loans are structured so that the borrower receives the full amount of the loan as one lump sum. Once the loan is received, the borrower begins to pay back the loan through scheduled payments over a set period of time. Commercial mortgages, for example, often have a monthly repayment schedule over 10 years or longer.

With commercial construction loans, the full amount of the loan is not received up front. Instead, the borrower will work with the lender to create a draw schedule.

This means that partial amounts of the loan will be released as the project hits new milestones. For example, the first draw will be for the clearing and development of land.

The next draw may then occur when the foundation is poured. Another draw will be released when the building has been framed, and so on.

As each milestone is completed, a lender will typically require an inspector to confirm that the work is completed before releasing the next draw. This will continue until all milestones have been completed and the full amount of the loan has been distributed.

With a commercial construction loan, you will only pay interest on the portion of the loan proceeds that have been received. If the total cost of your new construction is $500,000 but the lender has released just $100,000, you will pay interest on $100,000.

Typically, a commercial construction loan is structured so that the borrower pays only the interest until the loan has been fully dispersed. Borrowers can then pay off the principle in one lump sum at the end of the construction project.

But once the project is done and the full amount of the loan is due, what does a borrower do next? Instead of having to make one large payment, the borrower now can receive a commercial mortgage.

The property will serve as collateral, and the borrower will use the funds from the commercial mortgage to pay back the commercial construction loan. With the new mortgage, the lender will now be locked into more affordable monthly payments over a longer period of time.

Other commercial construction loans like the Small Business Administration CDC/504 loan provides more long-term options so an additional loan following the completion of the project will not be needed.

Interest Rates

For commercial construction loans, borrowers should expect to pay interest rates between 4% and 12%. Borrowers with the best credit scores will receive the lowest interest rates. The type of lender you work with is also a factor. A commercial construction loan from a bank will typically have the lowest interest rate, while hard money lenders charge more interest for their loans.

Fees

There are several fees that may be associated with taking out a commercial construction loan. The fee types and amounts vary by lender. Some fees you may have to pay for this type of loan include:

• Guarantee Fees
• Processing Fees
• Documentation Fees
• Project review Fees
• Fund control Fees
• Down Payment

Because a commercial construction loan is a high-risk loan, a down payment is required. By paying a down payment, the borrower takes some of the risk off of the lender.

Typically, down payment requirements are 10% to 30% of the total project cost. Rarely will a lender fund 100% of the costs of a commercial construction project.

Conventional lenders use a calculation known as loan-to-cost for commercial construction loans.

The loan-to-cost ratio is calculated by dividing the total amount of the loan requested by the total project cost. Let’s say, for example, a business is requesting a loan of $190,000 for a project with a total cost of $200,000. The loan-to-cost in this example would be 95%.

Though requirements vary by lender, most require a loan-to-cost of 80% to 85%. For the example above, the lender would loan $160,000 at 80% and $170,000 at 85%.

If this occurs, what does the borrower do? While they may be forced to come up with the remaining costs out-of-pocket, there is another option — mezzanine loans — which we’ll discuss a little later.

Borrower Requirements: How Commercial Lenders Evaluate Eligibility

Not all construction projects are eligible for a commercial construction loan. There are several factors that a lender will consider in order to determine eligibility.

One of the first things that a lender will look at is your credit score. Because these are high-risk loans, lenders want to work with low-risk borrowers with high credit scores.

Though credit requirements vary by lender, you should have a credit score at least in the high 600’s before applying to qualify for loans such as the SBA CDC/504 loan. Other lenders may require a minimum score in the 700’s. Business credit scores will also be evaluated.

The lender will also consider your debt-to-income ratio, also known as DTI. This ratio shows the relationship between the income and the debt of your business on a monthly basis.

Typically, lenders look for a debt to income ratio of 43% or less, although some lenders may have stricter requirements. The lower your DTI, the higher your chances for approval. To calculate your DTI, use the following formula:

• Total Monthly Debt Payments / Gross Monthly Income = DTI

Lenders will also consider your debt service coverage ratio, or DSCR. This shows the relationship between the income and debt of your business on an annual basis. To calculate for yourself, use the following formula:

• Net Operating Income / Current Annual Debt Obligations = DSCR

The DSCR is a bit different from DTI because you want this number to be higher. This shows that your business is bringing in enough income to cover new debts.

Most lenders look for a DSCR of 1.25 or higher, but again, requirements vary by lender. Learn more about calculating your DSCR.

The lender will also look at your industry experience and your current business financials to determine if you qualify for a loan.

You’ll need to submit detailed construction plans for approval before a loan can be issued. In some cases, the plans may need to be altered based on any risks spotted by the lender, so your ability to be flexible in your plans is key.

Types Of Commercial Construction Loans

Now that you know more about the commercial construction loan process, it’s time to explore the different types of loans available.

• SBA CDC/504 Loan Program

The Small Business Administration (SBA) CDC/504 loan is one of the most popular commercial construction loans.

This is because these loans come with low down payments, competitive interest rates, and credit score requirements in the high 600s.

• Borrowing Amount
• No maximum, but the SBA will only fund up to $5 million
• Term Lengths 10 or 20 years
• Interest Rates
• Fixed rate based on US Treasury rates

Borrowing Fees

CDC servicing fee, CSA fee, guarantee fee, third party fees (however, most of these fees are rolled into the interest rate or cost of the loan)

• Possible prepayment penalty
• Personal Guarantee
• Guarantee required from anybody who owns at least 20% of the business
• Collateral
• Collateral required; usually the real estate/equipment financed
• Down Payment 10% – 30%
• With this loan, an SBA-approved Certified Development Company will fund 40% of the costs to renovate existing facilities, build new facilities, or purchase/improve land. Up to $5 million is available for borrowers.

Another lender will need to provide 50% of the project costs, while the borrower will be responsible for the remaining 10%.

In some cases, borrowers may be required to pay 20%. Repayment terms are available up to 20 years, and interest rates are based on the market rates of U.S. Treasury issues.

SBA 7(a) Loan Program

The SBA also has the 7(a) program, which can be used for the purchase or construction of commercial real estate.

Through this program, borrowers can receive up to $5 million with repayment terms up to 25 years. Interest rates are based on the prime rate plus a maximum of 2.75%. To qualify, borrowers should have a credit score in the high 600’s and a down payment of 10% to 20%.

Simplify Your Landlord Duties in 3 Steps

The digital age has brought new technology that will make your landlord duties easier than ever. Here are 3 simple ways to get your landlord tasks done faster and more efficiently.

Automatic Rent Payments:

Your first order of business is to simplify your rent collection method. Your tenants are sure to appreciate this just as much as you will. Rent is how you make money, and you should aim to reduce any obstructions that slowdown that cash from entering your bank account.

If you haven’t done so already, bid farewell to the days of mailed-in cash and check. Mailing money has plenty of inconveniences:

Tenants must go to the bank if they don’t have cash or have run out of checks

Tenants must take the envelope to the post office

You must wait for the envelope to arrive

The money could get lost in the mail

You’ll have to make your own trip to the bank to cash or deposit the rent

Mailing should always be an acceptable option for tenants, but most folks nowadays have Internet access. Use software like Cozy to let tenants pay their rent online. Rent collection software will save everyone time and inconvenience, and you’ll get your money faster.

Digitally Manage Contractors:

One of the toughest things about being a landlord is having to manage all the maintenance requests at each of your properties. If a drain gets clogged, you’re the one who must call a plumber.

If a property’s HVAC stops working, you’re the one who must hire someone to fix it. If you want to be productive in the contracting department, you’ll want to:

Keep digital lists of reliable contractors that can service your properties

Digitally record contractors’ contact information

Keeping a set list of contractors will shorten the amount of time it takes for you to respond to a maintenance emergency at one of your properties, and you’ll be able to familiarize yourself with each contractor’s pricing so that you can budget more efficiently.

If possible, find contactors who are able to do invoicing through certified software. For example, House call Pro plumbing software sends invoices and maintenance updates to the property owner and tenants automatically.

High-tech contractors are more communicative and prompter, and that’s important because you always want to know that maintenance tasks are being performed efficiently. After all, happy tenants make a happy landlord.

Hands-Off Tenant Screening:

One of the most important responsibilities you have as a landlord is to find good tenants. You probably want to avoid tenants that have:

A lengthy criminal record

History of evictions

Poor financial history

Tenants with any of these characteristics could wreak havoc upon your property and finances. Not to mention, a tenant who engages in criminal activity may very well draw criminal activity onto your property.

A tenant with a poor financial history is less likely to pay his or her rent on time. And a tenant who has been evicted numerous times could have a number of issues, such as causing property damage or consistently breaking the rules of the lease.

Suffice to say, you don’t want these kinds of tenants. And you can easily avoid them with proper tenant screening. Although tenant screenings are important, they’re also very tedious to perform on your own.

Thankfully, a middle-man exists! Tenant screening companies’ shoulder most of the workload for you.

Many of these companies perform both background checks and credit checks, and some even take on the task of collecting personal information from the prospective tenant. This is the safe, reliable, and easy way to find the best tenants for your properties.

With these 3 steps, you’ll automate and simplify your most important landlord tasks so that you can be more productive in managing each of your properties. Like they say, time is money. By reducing your workload, you’ll be able to boost your amount of free time and maximize your profits.

Fed Keeps Interest Rates Steady Despite Political Pressures

With U.S. inflation at 1.6 percent for Q1 2019, the Federal Reserve continues to hold off on any interest rate changes following last week’s meeting of the Fed’s Open Market Committee.

With both President Trump and Vice President Pence urging the Fed to cut interest rates, the central bank is working to convince observers that its goal is to see price and wage increases without the expectation of rate cuts.

Fed Chairman Jerome Powell said the Fed, as a nonpolitical institution, would not be swayed by pressure from the White House.

Powell said he expects price gains to emerge eventually. U.S. employers added 263,000 jobs in April, resulting in a 3.6 percent unemployment rate.

If the labor market continues to tighten, employers may raise wages to attract talent, while consumer demand may allow companies to raise prices. Both are slow to appear at this time.

Economists agree that today’s job boom and low inflation seem unlikely, as low unemployment tends to slow the rate of job creation.

What’s interesting is how wrong the talking head economists have been for the last 24 months.

These are the same experts that thought it was a great idea to have home mortgages of 125%+ of value some years ago.

It appears that the Q4 2019 fears of an economic slowdown are completely unfounded.