Case-in-point

With 26 years as a professional property manager (www.LightnerGroup.com), I spent years working to keep our overhead low and our efficiency high.  Having started our business in the early 80’s, we had the benefit of launching LPG at the same time the personal computer became an affordable small business tool in the Bay Area where technology has always been seen as part of the solution, regardless of the problem.  We began Lightner Property Group with the benefits of computerized accounting, computerized property management files, and a computerized lease, which could be modified at will.  We were networked as soon as we had two computers. 

But this reliance on technology has come with a price.  Because technology has grown up with us, rather than before us, we have been forced to make decisions to rely upon a technology before the market was given sufficient time for one path or another to win the marketplace. 

Case in point – the cable wars.  There was a time when Ethernet cable had not yet won the hearts and computer ports of the technology world.  There was a time when a technology named token-ring by IBM had equal footing with Ethernet.  Token-ring was a faster and more reliable technology according to those “in the know”.  In reliance on that information, Lightner Property Group made the decision to invest in token ring, a more expensive and larger footprint technology.  End result: bad decision.  Token-ring is now part of technology history right next to film camcorders and 8-track tapes. 

That process of competing and mutually exclusive technologies has been played out in a multitude of areas since the 80s.  We’ve seen it most recently in CD technology, e-readers and phones.  Many unanswered technology questions remain to be answered.  So, how do you make informed and economically reasonable business decisions, while maintaining a cutting edge footprint?  By taking advantage of the trial and error of others in your field. 

There are many articles, such as this one, which will provide you years’ worth of information and experience for the sole investment of 15 minutes of reading time.  There is no better investment you can make and no better return on investment to be achieved. 

Recently we made the decision to reduce our paper print, as well as create a work-flow that was transparent and as fool-proof as we could design.  We were interested in reducing our costs, greening our office, and reducing our risk as a company which operates in a highly litigious environment and business arena. 

Two years of trial and error resulted in a shared working platform that’s efficient, transparent, includes task redundancy, is easy to use, flexible and almost paperless. Grueling as it was, we achieved our objective.

In the end we developed a powerhouse of tightly integrated, supportive and redundantly designed tools. Our tools are client-centric, while aligned with company policies. And each element of this electronic equation is essential to the ultimate success of our almost paperless office. 

Shared Virtual Workspaces

The skeleton of our virtual workspace is Central Desktop (“CD”) (www.CentralDesktop.com).  Lightner Property Group creates a password-protected Internet workspace for each client and then invites the client and client approved vendors (generally attorneys and CPA’s) –– to use this highly supportive and collaborative tool.

Email reports and discussions are posted in this virtual workspace instead of cluttering and becoming lost in individual mailboxes. Conversation threads are found and can be viewed in a single location, rather than opening and closing a dozen email messages.  A centralized location for files, discussions, databases and task lists allows Lightner Property Group clients and vendors to access essential data and information – 7x24x365 with only a web browser and internet connection.  Clients have access to their historical and current building financial information in a single location.  They do not need to gather and store documents and information, as that is done by the system, automatically.  Historical information is as accessible as current information and will remain that way. 

Lightner Property Group benefits as well.  Electronically executed lease documents are uploaded just once and reside in a secure virtual library, hugely reducing paper waste and the time required to make repetitive paper copies.  Team members can even create and revise Word and Excel documents stored on the Central Desktop site, from directly within Microsoft Office. Users document and organize, link and reorganize their research. They can also create custom databases for storing information, and stream-lining the workflow of their business information documentation. 

Important too, Central Desktop provides a time ticket function for billing purposes, as well as a calendaring system that’s tightly integrated with Microsoft Outlook, allowing staff and clients to maintain a single calendaring system. These are just a few of the available built-in tools for day-to-day usage. Because Central Desktop is very flexible, we can customize each client’s virtual workspace on a case-by-case basis.

Lightner Property Group staff and clients enjoy the benefits of teamwork without distracting complexities. And they save paper, time and money in the process!

Creating PDF’s

Because case documents are often transmitted using Portable Document Format (“PDF”) technology, it is essential to have a tool to create and manipulate PDFs.  While most people use Adobe software, it is also expensive and a known resource hog. If you are in the market for a PDF alternative, we have found FoxIt Phantom (www.foxitsoftware.com) to be a cost-effective and computer-resource-friendly alternative. 

The iPad Revolution

If there is one personal device I think every property manager should have, it’s Apple’s iPad. The iPad allows me to read, highlight and annotate financial statements and reports just as if I was reading them on a piece of paper with pen in hand. I can also create research notes with either a keyboard or in handwriting. My iPad also allows me to take notes during site visits, just as if I were using a pad of paper. Though a bit heavy, it is the perfect size.  Within a year or two, I expect that all of our resident managers will operate with iPads.  They will enter the results of their daily building inspection as they conduct the inspection, rather than waiting until they are back in their home office.  Leases will be signed on an iPad, in the apartment unit.  Marketing materials will be reviewed on an iPad or electronic picture frame that is left within the available apartment unit. 

A few apps that make the iPad truly useful include Penultimate, Noterize, Noteshelf and iAnnotate. These applications are particularly helpful for building notes and PDF review.  Note all of the iPad tools are created equally and smooth writing in an area that is particularly troublesome.  Penultimate and Noterize are two apps that have been able to successfully master the feel of writing so that it is comfortable and reminiscent of actual writing. 

Forms are king in property management.  Property managers need information documented in a consistent fashion.  Many of us are buried in paper forms that are mailed or faxed, or even scanned and emailed only to be printed out again.  A couple of apps not only allow PDF document review but will also allow you to create forms as PDFs and then complete the form by hand, using your finger or a stylus.

For research, the key apps include File Browser, Good Reader, Evernote (a must-have) and DropBox (a must-must-have) for file access. DropBox installs on each of your computers and devices, making files in the DropBox accessible on each of them. Other useful apps include QuickOffice, Index Card (for case development brainstorming), DocuSign (for contract signatures), Popplet, iThoughtsHD, GoToMeeting and iBooks. 

Pen or Stylus?

Handwriting in a paper-free world necessitates new writing instruments. Unfortunately, there are few decent choices right now. I keep wondering why one of the high-end producers (Mont Blanc where are you?) hasn’t heard the call for a high-end stylus for those of us who enjoy the process of physically writing. 

As the price of styluses is relatively low, I recommend you purchase one of each of the most often used products, experimenting until you find the stylus best for you.  My favorite for now is the Pogo, but this is a highly subjective purchase and only trial and error will lead you to the right instrument for you.

The Kindle isn’t a Second Choice

There are times when the iPad is not as user-friendly as the Kindle. I find the Kindle is better for al fresco reading, longer reading sessions and for reading unplugged and disconnected. It also weighs less. If you know you will have some down time, toss the Kindle in your purse and you can be reading anywhere. Of course, you can always combine the two, using the Amazon app on your iPad to transfer your Kindle’s documents and books to the iPad. 

Electronic Signatures Made Easy

Lightner Property Group has for a long time used DocuSign for electronic lease signing. E-signatures are faster, far more convenient, easier to collect and nearly fool-proof. 

I can’t count the number of times we’ve had to ask for physical documents to be resigned. Thankfully, DocuSign doesn’t allow an incomplete or incorrect signing job. DocuSign offers an iPad app and can be used on a smart phone, making it even more convenient.  

This means case contracts are fully and accurately signed within days not weeks, and staff is free to focus on what counts – client support and customer service.

You don’t have to Re-create the Wheel

A firm’s selection of technology partners is as important as its hiring decisions, but the vetting process takes a lot of time and trial. Thinking about it, I realize that Lightner Property Group has been heading in this direction and perfecting our toolbox of procedures and tools for decades, with a load of questionable decisions and detours along the way.

Save yourself the struggle and take advantage of the lessons we’ve learned.

What lessens have you learned?  What advice can you share?       

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No incentives or gratuities were received by the writer or Lightner Property Group for the writing of this article or the mention or review of any product.  The opinions expressed here are those of the writer based upon her real-life experiences with the products discussed.  

Rent Control Economics 101

It is not a surprise that the benefits and costs of rent control are hotly contested and debated in San Francisco. Most tenants, especially those who are long term residents, will espouse the benefits of rent control concluding with the very real and very personal benefit:  “I couldn’t live here without it.”

But when you ask a rental property owner, you hear a very different story.

More often than not, a property owner will have a rent control horror story which often ends with the owner selling the building in frustration, taking their housing units off the market in protest, or out of fear, the payment to of thousands of dollars to a hostile and unappreciative residential tenant, merely for them to vacate the unit.

Rent Control Benefits

Still, there is no doubt that rent control in San Francisco has legitimate benefits to identifiable San Francisco renters. No doubt some of these renters need financial assistance. No doubt, some actually deserve it.  No doubt there are societal benefits that stem from rent control that should not be dismissed or overlooked.

The question is not can we find some good in rent control; of course we can find some good. The question to be asked of all of our social safety-net systems spawned before the turn of this Century is: could there be another, better way to get to the same, or even a better result?  

Narrow Cast Rent Control Benefits

A look at the available evidence leads down a road which suggests the current rent control system is outdated, inefficient and overkill in the new economy we face in 2010.  Like so many of the programs of the past, rent control as a “public policy” is ready for a major overhaul and improvement.  It is time for rent control to become surgical and to narrow cast the benefits, rather than broadcast the benefits.

The San Francisco rent control public safety net, which is entirely privately funded, is too wide, too deep and too inefficient. Like so many of the entitlement programs of the 1970s, it mis-allocates and overspends limited resources.

The current rent control system transfers resources to the entire general populace of renters, when only a few are in need.  Instead of providing $50 of assistance to a single needy resident, the current system takes that $50 and distributes it among 10 residents, irrespective of need. The deserving few are forced to share assistance benefits with renters who can and should take care of themselves.  Imagine food stamps for everyone, just because a few people deservedly need them?  It makes no sense and we can’t afford it.

Marketplace distortions 

In addition to the public transfer of private resources for a public good, rent control distorts the behavior of the market place.

Go to any free market city, even a desirable one with a tight housing supply like San Francisco, and you will find rent specials and promotions, as building owners attempt to entice customers into moving to their complex or building. 

Missing concessions

Now look at San Francisco. No promotions. No market incentives.  No negotiations.  No DEALS. The dynamic market is dead.  Why?   Because concessions- inducements- incentives- and negotiations can be and have been used against property owners to reduce the base rent of tenants. The result?

New San Francisco residents receive none of the typical market concessions we see in dynamic free markets. Concession dollars are reallocated in budgets by San Francisco owners to allow longer periods of vacancy.  Money that could be in the pockets of residents, remains locked inside the building.

Price reductions slow to occur

A related distortion is that rental rates are not lowered as quickly as they are in other cities. Go anywhere else and you will see a market that reacts in real time.  Rents are reduced –and discounted and adjusted sometimes daily and even hourly.  These market adjustments happen quickly, in prompt response to a changing market.  As a market slows, rental rates go down.  It if slows further, the rates go down further.  You will not find these consumer benefits in San Francisco.

In San Francisco you can see pricing stagnate week after week as owners refuse to drop pricing because it is permanently lost.  In todays environment of annual increases that are typically only $1 per thousand in rent, a $50 per month price decrease equates to a lifetime of rental increases. 

Do price controls work? The anecdotal evidence is lush with stories of inequities and problems. The academic literature indicates “no”.  A Goggle search comes up with paper after paper and research article warning of unintended consequences and market distortions resulting from price controls.  Economic models teach us price controls provide a short term solution at a significant long term cost. 

But for a real answer look at the San Francisco rental market. At times of increasing vacancy the San Francesco rental housing market does not react as a typical healthy free market.   But it could; it should; and it can.

Do you have an opinion about San Francisco rent control?  How would you improve the system?

Share you ideas through Comments.  

 This blog post was first published on Examiner.com. 

Newest assault on San Francisco property owners comes from the Board of Supervisors

Seven members of the SF Board of Supervisors have put forth a sweeping proposal, in the form of a Charter Amendment, to fundamentally change the way the San Francisco Rent Control Ordinance is implemented and monitored.  The measure should appear on the November 2010 ballot where San Francisco voters can approve or reject it.  Perhaps not surprisingly in a city like San Francisco, the proposal is unabashedly and mathematically pro-tenant. 

Current Rent Board Commission structure

Currently the Rent Board Commission is appointed by the Mayor and is made up of 10 members, 5 of whom vote and 5 of whom are alternates and vote when a voting member is absent.  Each body of 5 is made up of 2 tenant commissioners, 2 landlord commissioners and 1 neutral.  The qualifications are simple.  To be a tenant commissioner you must be a SF tenant and not own property.  To be a landlord commissioner you must own SF residential rental property.  To be a neutral you must not be a tenant or a landlord.  Generally this has meant the neutral is a homeowner. 

The Commission structure has changed only once since the inception of the Ordinance in 1979.    Previously, Commissioners had designated alternates; if both a voting commissioner and their specified alternate were absent, there was no vote for that seat.  Now if that occurs and the other alternate is in attendance, the secondary alternate can vote instead.  

The Commission is important because it holds two critical functions.  First, the Commission makes the rules which implement the Rent Ordinance.  Over the years, it is rule changes that have provided some of the most important shifts in the implementation of the Ordinance.  Second, the Commission is responsible for the hearing of cases that are appealed from the administrative hearing decisions of the Administrative Law Judges, as a result of cases filed with the Rent Board by both landlords and tenants.  This appellate judiciary function is critical to the fair implementation of the Ordinance. 

The Charter Amendment proposal

The new proposal changes every aspect of the Commission structure formula.  First, the Commissioners would no longer be appointed exclusively by the Mayor, but appointments would be shared with the Board of Supervisors, furthering weakening the position of the Mayor in San Francisco. 

Second, the Commission would mathematically favor tenants, who would own the largest number of voting representatives with three, landlords with two and neutrals with two, for a total of seven voting members.  With this guaranteed built-in majority, the tenant community would effectively and easily block any future landlord sponsored legislation or changes.  Any successful landlord vote would always require both neutral votes.  The other unlikely scenario is that one tenant commissioner would have to break ranks with the other tenant commissioners along with a single neutral vote and vote with the landlord group. 

In comparison, the tenant community four votes would need only a single neutral vote to move forward with any change.  And with four tenant votes, a missing neutral would always result in either a tie vote or a tenant win.  The built-in imbalance would always favor the tenant community. 

Finally, since over the years the tenant community has lost some of their favorite commissioners to home ownership, the requirement that tenant commissioners own no property is removed from the tenant qualification standards.

Perhaps the most alarming part of this modification stems from the Rent Board Commission’s function as an appellate adjudicatory body.  Any quasi-adjudicatory body should be balanced and fair.  A built-in numerical advantage is neither balanced nor fair. This new structure would undermine any remaining public confidence in a Rent Board where fair results are possible. 

The last time a proposal was put forth to change the structure of the Rent Board was in 2003, when Supervisor Daly attempted to have the Rent Board elected. 

The current seven sponsoring supervisors are Campos, Alvalos, Daly, Mar, Maxwell, Mirkarimi, and Chiu.  It takes only six supervisors to place a measure on the ballet. 

What do you think of this proposed change?  Please respond in Comments, or share you point of view privately at Examienr@LightnerGroup.com



PCBC

For more than five decades, PCBC has connected the homebuilding industry with the ideas, inspiration and innovation to grow and thrive. From development through design and construction, PCBC has proudly served as an incubator of excellence – encouraging all who imagine and build the places where we love to live.

The core events are preceded on Monday June 7, by the Leader to Leader Forum, an Invitation Only program.   The PCBC conference opens to the public on Tuesday, June 8 with the Bay Area Housing Tour, and a social media workshop.  But the conference floor and the full day events kick off on Wednesday, June 9 with the two-day Executive Conference and the one-day Multi-Family Trends Conference, followed on Thursday by the Capital Markets Forum.  Scattered among the various programs are single add-on seminars on hot topics such as green building, energy and marketing. 

All of the seminar topics are relevant to multi-family housing and would be of use to a property owner.  Whether you want to understand where the investment market is in the post-financial melt-down, or you are interested in hearing about future trends, or just want to understand how to market your units in the social media world, the conferences have something to offer you.

The PCBC Exhibit Floor opens on Wednesday at 10:00 am and is generally open for the balance of the conference.  The exhibit floor conference includes a Town Square, the Green Standards Pavilion, and an Exhibitorium with a learning center.  Within the exhibits visitors can dig deep into the latest industry related products and procedure breakthroughs.  Industry experts will be available to answer “the big building science and energy questions”, both essential to residential building today, and in the future.

The exhibit pass is a bargain at $25-$50, depending upon your package and registration timing.  The conferences are more expensive, but worth the money if you make your living in residential real estate. If you have the time and resources, there is a lot to learn, experience, and share at PCBC. 

I will see you there! 

Interested in the Speaker List?

http://www.pcbc.com/theshow/Attending/speakerlist.html



There is currently no one size fits all solution to monitoring action at the federal level.  The California Apartment Association, the state’s largest representative of residential property owners and managers, is no longer associated with the National Apartment Association.  Large residential property owners and managers are generally members of the National Multi Housing Council (NMHC), but the entry membership fee is steep if you own only a few units or a single building.  The National Association of Property Managers (NARPM) is primarily focused on property management companies who manage single family homes and condominiums. So, if you are an owner who manages exclusively your own units regardless of the building size, or a property manager who manages buildings with 5 and more units, the focus of these advocacy groups will not align with your focus. 

So, what can you do?  If you are willing to monitor the federal government actions yourself, here are some Internet tools to assist you.

From the Library of Congress:  Thomas

http://thomas.loc.gov/

“THOMAS was launched in January of 1995, at the inception of the 104th Congress. The leadership of the 104th Congress directed the Library of Congress to make federal legislative information freely available to the public. Since that time THOMAS has expanded the scope of its offerings ….”

 Government Track

http://www.govtrack.us/

• Members: http://www.govtrack.us/congress/findyourreps.xpd
• Committees and Assignments: http://www.govtrack.us/congress/committee.xpd
• Bills and Resolutions: http://www.govtrack.us/congress/legislation.xpd
• Voting Record: http://www.govtrack.us/congress/votes.x

Open Congress

http://www.opencongress.org/

Learn about using Open Congress:  http://www.opencongress.org/#pitch

Includes information regarding political donations.  From their web site:

“OpenCongress makes it possible to draw connections between campaign contributions, the specific content of bills, and important votes by Members of Congress.  Figures below are individual contributions from 2008, which is the most recent data set available because Congress refuses to report its contributions in timely, digital formats. (More detailed info on PAC contributions is coming soon.)”

The OpenProject Wiki  http://www.opencongress.org/wiki/Wiki_Home

• Members:
• Senators:  http://www.opencongress.org/people/senators
• Representatives:  http://www.opencongress.org/people/representatives
• Bills:  http://www.opencongress.org/bill/all
• Votes:  http://www.opencongress.org/roll_call/all
• Committees:  http://www.opencongress.org/committee

  Tools to separate fact from fiction! 

PolitiFact from the St. Petersburg Times  http://www.politifact.com/

from their web site:

“PolitiFact is a project of the St. Petersburg Times to help you find the truth in American politics. Reporters and editors from the Times fact-check statements by members of Congress, the White House, lobbyists and interest groups and rate them on our Truth-O-Meter. We’re also tracking more than 500 of Barack Obama’s campaign promises and are rating their progress on our new Obameter. “ 

Open Secrets

http://www.opensecrets.org/

focuses on political donations 

Want to follow the Tweets of Congress?

Tweet Congress

• Directory of members of Congress on Twitter, with links to their official accounts

http://tweetcongress.org/

• A blog about Congressional Tweeters -Twitter Room http://thehill.com/blogs/twitter-room



The National Multi Housing Council (NMHC, Washington, DC) has released the results for their quarterly survey of market conditions, according to Michael Tucker in a May 7, 2010 press release. 

For over a decade, the organization has surveyed CEOs and other senior executives of apartment-related firms who serve on the Board of Directors or Advisotry Committee in four key areas:  market tightness, sales volume, equity financing and debt financing.  The quarterly nationwide results are available to interested persons HERE.

April 2010 numbers reveal an improving residential rental market. 

• Market tightness made the largest gain quarter over quarter by increasing, meaning demand and rents are up. 
• Sales volume is up, indicating the market is moving again and there are both buyers and sellers in the marketplace. 
• Equity financing is generally available, indicating there is interest in the market and optimism for residential real estate. 
• Finally, debt financing showed slight signs of improvement, indicating it was more available than it was in January 2010 by returning to levels reported in October 2009. 

For a complete look at the historical numbers since 1999 visit:  www.NMHC.org/goto/QuarterlySurvey09.



• It is different every day.
• It becomes more complex every day. 
• And on the day you think you have seen or heard it all, it will all change the next day.



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This article was first published at Examiner.com

No matter what industry you read about, you are reminded the world is changing, and doing so at a rapid pace. 

• Financial markets are faced with unprecedented levels of potential new regulation: from limits on their size (too big to fail), to limits on what will be considered “lawful” activities.

• Journalism is faced with competing delivery methods, the plaguing question of monetizing their content and the challenges of finite budgets in a world where news stories cross all man-made boundaries.   

• Traditional television broadcasting models are now competing with a content world that narrow-casts on multiple technologies. 

And each and every industry, from A to Z in the alphabet, faces questions and challenges never faced before.  What does this mean for the traditional real estate service business model?   How will real estate companies of all sizes compete in their changing environment? 

Thirty years ago, property management was not a standalone service business.  Typically, a brokerage house offered property management services in order to not lose control of a brokerage client. The profit was brokerage commissions.  Property management services were, at best, a break even service offering. 

The property management business of 2010 has emerged from the historical business model where it was only a tangential business division, to a reliable steady source of income stream, which in many companies stands alone.  Today most developers, as well as owner-operators, have in house property management divisions.  Many of them offer their property management services to third parties.  This competition has kept property management fees competitive and property management profit margins very slim.

On the expense side, technology has increased overhead expenses.  Government regulation has increased the complexity of even the simplest transaction. Increasing concerns over liability have resulted in a heavy obligation to document and report every action, and sometimes every inaction, on the part of staff members to protect the company and client from litigation. 

Property management firms chase increased efficiencies, which results in increasing their reliance upon technology and ultimately overhead expenses.  But they find that the cost of the “efficiency” forces them to grow, in order to justify the new overhead.   Ultimately, it becomes a never-ending circular chase.  You are forced to grow to justify the overhead that you have taken on because you have grown.  What is the future of the small to mid-sized property management company?

If you are a property manager, what trends do you see?

• What changes have you made in your business model in the last twelve months?
• If you employ a property management company, what trends have you seen in the level of service or the quality of the service?
• If you are a resident or tenant, what changes have you seen?  Is the digital age improving the quality of the service you receive, or the type of service?  Are repair response times better or worse?  Is it easier or harder to find and rent an apartment in 2010?

I invite all readers, owners, managers, tenants and residents to share their experiences and insights. Engage in the dialog and together we can explore the changing environment in which the business of property management exists. 

And we can learn how it impacts the various stake holders: is the trend improving the property management experience, making it more user friendly?

My goal is to use the comments and the dialog as a foundation for a series of articles on the changing world of property management. You can also share your comments privately at Examiner@LightnerGroup.com. 

This article has also been posted on Examiner.com.