Sometimes wishful thinking pays off. Just ask FPI Management, a Folsom, Calif.-based fee manager. Last February, the company nearly doubled the size of its headquarters with the hopes of dramatically growing the company's portfolio. “We designed and built our new office building with the intention that we could grow the company up to 50,000 units with no idea where the 50,000 units were going to come from,” says Dennis Treadaway, FPI's president.
Thanks to savvy business skills, FPI is well on the way to its goal. In 2004, the company absorbed 8,000 units and an additional 250 employees from Group Interland Management, which was based in Davis, Calif. FPI now manages 35,322 units, landing the No. 24 spot on the MFE Top 50 managers list (up from No. 34 last year).
Treadaway attributes his company's success to a simple motto: Charge the most amount of rent possible and keep expenses low. But this strategy isn't always an easy one to follow. In 2004, management companies battled skyrocketing utility costs, challenging markets, and high vacancy rates as renters swarmed to buy homes in a low interest-rate environment.
To maintain occupancy in hard-hit markets, companies doubled their efforts at providing resident satisfaction. “[We are] much more focused on customer service so that our residents feel they are getting more for the dollars they are paying,” says Bill Wollinger, president of WinnResidential, which ranked No. 11 on the list.
While Winn has always emphasized employee training, the company devoted more time and money to regional training initiatives in 2004. “We have to have good people in order to maintain the occupancy in these challenging times,” Wollinger says.
Stan Harrelson, CEO and president of Pinnacle, an American Management Services company, agrees. Strong customer service at all levels—from the maintenance crew to the leasing staff—was a big factor in helping Pinnacle (No. 3 on the list) keep occupancies above market averages, says Harrelson. For example, in the Atlanta market, Pinnacle kept occupancy levels in the 93 percent area with relatively low concessions. “It goes back to product preparation, staff selection, and appropriate pricing,” says Harrelson.
But not all companies fared as well in 2004. As a result of these operational challenges, a handful of companies on the Top 50 list took a revenue hit last year. The revenue for Westdale Asset Management dropped nearly in half. On its MFE Top 50 form, the Dallas-based company said its goal was to simply survive until 2006—a view expressed by many multifamily companies on this year's batch of surveys.
To keep up with the competition, management companies continued to invest time and money in technology initiatives in 2004. More companies got on board with Web-based software (see “Click to Lease: Apartment Owners See a Big Increase in Online Leasing” on page 55). Some spent the year evaluating their options, while others took the plunge and rolled out the software.
Pinnacle, which rolled out Yardi's Web-based accounting and maintenance software in 2004, is now implementing a purchasing system and marketing solution. The company started the switch about two and half years ago. “We feel that our decision to do it ahead of the curve is paying dividends for us now, as we see a lot of our clients trying to do it, and it's painful,” says Harrelson. “For however long it lasts, we have a competitive edge.”
WinnResidential isn't too far behind, now that it's in the test-piloting stage of its Web-based property management software. Wollinger's biggest concern: getting the staff to learn a whole new way of business. “In some ways, a software change is like asking your people who are right-handed to become left-handed,” he says.
But Wollinger believes the software switch will pay off. “It will buy back people hours,” he says, “particularly at the property level so they spend less time doing administrative work and more time being able to deal with customer service, selling, and resident interaction.” And that should translate into every manager's dream—reduced concessions and lower vacancies.