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this is the second time I have written this post. The first time was earlier today, with a big storm outside. The power lines bounced and, well...

Anyhoo...

It's not easy for me right now, anyway. For the first time, I'm looking at going out of pocket for mortgage payments. This is my lowest occupancy ever, and I have one month to get things changed. I'm confident I will, but dang, the phone is not ringing. That's new.

I think it's time to offer free microwaves


I have done that in the past, with little success.

Sometimes vacancies go up for reasons that are not obvious and don't necessarily reflect on the management or the condition of the property.

In Jan 2000, I hit my all time low occupancy rate, with gross revenues only $3000 above my mortgage payments. Since my monthly water bills alone total more than $3000, you can see that I had a problem.

After the market crashed, I had to indulge in debt financing to pay bills. Things have turned; my revenue stream for June 2001 was an all time record high, so things have improved somewhat, but I still have this overhang to work off. Fortunately, I hit that record with slightly above 80% occupancy system wide, so I have a lot of room for further improvement, and all my projections say that I am going to get it. So things will be OK.

I also have some refinancing underway that will reduce my total mortgage payments by something in excess of 10% - mostly due to lower rates. That'll help a lot.

Now, you might want to be a bit creative about renting your places. My experience is that microwaves don't work. Your experience could be different.

Try offering rent concessions to reduce the moving cost. Maybe 1/2 off first month rent, or first month rent free. Make sure you have a tough lease if you do this, otherwise you could get burned.

I am starting a Payday Payment Program at one of my properties. Basically, this lets you pay the rent when you get paid. If you get paid every other Friday (typical) then you pay me 1/2 your monthly rent ever other Friday. Of course, this means you pay me 26 times a year, for a total of 13 months rent every 12 months, but convenience has its price and this seems to work for people who can't budget. Also, by doing this, I am being seen as flexible and willing to accomodate the needs of the tenants. They pay me more, and I am the flexible one. Go figure.

You might also start a Preferred Resident Club. Of course, everyone is a member of the Preferred Resident Club, but you don't have to let them know that. When they apply for the place, ask them if they want to join the Preferred Resident Club and be eligible for special benefits - after all, membership is FREE!!!

Of course, they join. "Now, as a member of our Preferred Resident's Club, you are eligible for an upgrade of your apartment from the Standard Model (as you see here) to the Deluxe model or the Custom model. These packages Customize the apartment specifically for you.

"For an additional $25 per month, you can choose any three of these custom options for your apartment (provide a list with things like ceiling fans, mini-blinds, throw rugs, microwave oven, stereo system, etc.). For an additional $50 per month, you can choose any 7 items from the list AND we will provide you - absolutely free - a 25" television for your living room. Not only that, IF you stay with us for 3 years AND pay all your rent ON TIME every month, you get to keep the television as your very own!" (think about it...after 3 years, you don't want it anyway since you can't reuse it. It'll be scratched and marked, and it might be coming due for service. So just give it to the tenant.)

The thing is this. When they decide to go with one of the optional packages (and maybe half of them will) then suddenly they become invested in the property. It isn't just an apartment any more, it has been CUSTOMIZED just for THEM! So suddenly you are a good guy, and your turnover drops. The TV perk works fairly well too. It'll cost you about $200 to buy it but it will act to keep them in the property; they WANT to keep that TV.

People aren't rational. Learn to take advantage of that fact.
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