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Adding Value & Maximizing Revenue from Income Properties

Written by Peter L. Mosca on Wednesday, 22 October 2008 7:00 pm
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[Note: To follow is an excerpt of an interview with Toni Blake, an international speaker, author and comedienne with more than 28 years in multifamily housing. To listen to, or download the show archive MP3, go to www.IncomePropertyInvestmentTalk.com/100108.]

Mosca: Excellent. At the turn of the 20th Century apartment living was considered fashionable. American cities were bustling communities, professional centers of life. After World War II with the arrival of new transportation systems and evolutions in the mortgage system, the American Dream of home ownership came to be defined exactly as that, owning a single family detached home. Today, history may be repeating itself in that more and more Americans are looking toward apartments. What do you see in terms of multifamily and apartment living in today's American lifestyle?

Blake: Consider the social trends. People used to work for one organization and earn the gold watch. That doesn't really happen anymore. People have four or five different careers. Today people are mobile. Their careers are mobile. Today's rental properties are fantastic with every kind of amenity and feature that you can imagine. The commitment to the individual and the choice of the individual is to be serviced fantastic by maintenance teams and have their lawn mowed for them and to spend their weekends not at Home Depot but to spend their weekend somewhere else playing and not have to do home repair and home maintenance. Today's renter is happy to rent and excited about the flexibility and the mobility that renting offers them. They're making other choices with their investments.

Mosca: Most Americans have their wealth built in real estate. Unfortunately, I don't think they have a voice. We're trying to be a small media voice for Main Street America. Do you think the media is being fair to Main Street America?

Blake: We have had problems with the media in the sense that the only time we wind up on the news is when we're burning down or some criminal is held hostage in the complex. It is quite annoying to not have as much positive feedback into the media as there could possibly be. I am working with some of the national organizations and associations and cities and states to put together PR firms and PR teams in which we find positive rental stories and positive rental experiences and we're getting that into mainstream media. There is not as much good press for us although today with a look at foreclosures, you are hearing the word renting more but it should be seen as an absolutely positive, fantastic choice that 77 million Americans today make.

Mosca: Can you tell us about the new designs, the new technologies, and the renewed emphasis on customer service that are attracting renters?

Blake: It is important to understand that in perception versus reality, perception wins. It doesn't matter what the physicality of your property is, it matters how people perceive it. The most important perception is your own perception. If you say I'm going to take a look at what could I improve, you can make minimal investments and have maximum returns on investment. It's really about creating a perception. I'm all about having that absolutely highest perception so that when people are looking at option A and option B and even if I'm option B, I'm the absolute best choice they can make. The more they perceive value in your property the more they're going to be willing to pay for it. We know that several things impact consumers. We know visually they are impacted. We know that we have five senses that we work with and that smell trumps sight. Value perception come from all five of those senses.

Mosca: Is there an example you can give?

Blake: Nobody does this better than Disney. They own the market. Disney knows they manipulate your scent and the senses. They have an entire laboratory that invests millions of dollars a year in making sure that even in the open air they pump a fragrance over Main Street Disney. They know that no matter what you're visually stimulated by, if your nose doesn't believe, you are not where you are. In our industry I find apartments that we lock up in the heat of the day and we send maintenance in. The need is to send marketing in. Every time a piece of inventory has gone from a maintenance aspect it is placed into what I call the store and each piece of inventory that comes into the store, it's my job now to package it, to market it, to create the highest perceived value so that I can charge the highest possible revenue for that piece of real estate. One of my favorite new products is from a company called Paint Scentsations. It is a couple of ounces of a fragrance that you literally dump into a five gallon of make ready paint and every wall that you paint becomes scented. The scent will last from between three to six weeks and longer. Every time you walk into that apartment or into that piece of real estate it smells good and smell is a critical aspect that a lot of people are ignoring and it should be paid attention to.

Mosca: That is one choice, are there others?

Blake: There are a thousand million white paints to choose from. There are blue white, pink whites, green whites, all kinds of different whites. We found a series of colors that look like the apartment has been kissed by the sun. It is a soft, white yellow that's a rich, deep, vanilla color but the warmth it adds to that tone, it just makes that apartment home seem visually so much nicer. This color is brilliant and if somebody will e-mail me with the type of paint they buy, I can send them back the color chart for that particular brand of paint that falls in these categories.

Mosca: You spoke about smell and about sight, what would be the third sense?

Blake: You can't take a bite out of an apartment so that eliminates taste but I do have a little trick I call an "invitation station" where in every single apartment that's become vacant, I have maintenance clean it. Then it is turned over to marketing to maximize the perceived value on it. When it's given over to me, I go in, I literally take applications and a pen and I put a little tent card that folds and stands up so that you can look at it. If you took a birthday card and put both ends down on the table that would make like a tent, so these little tent cards and then I put some kind of little incentive. I like to have fun, I'm all about comedy and humor and one of my favorite ones to do is on a counter I'll put a little six-pack of Oreo cookies. I'll have a little note that says, "These cookies are for the new resident of this apartment while they do the paperwork." Then, underneath it in big letters it says "Hungry?" Underneath that it says, "How do you eat an Oreo cookie?" Here's the pen, here's the cookies, here's the paperwork. It is goofy but I'm going to tell you I have rented thousands and millions of dollars worth of real estate with a simple six pack of Oreo cookies.

Mosca: Any other ideas that work?

Blake: Absolutely and I call it "the golden path". Frito-Lay positions themselves when you walk through a grocery store and they buy these end caps and they work hard to be within "the golden path". I've taken that same concept and overlaid it over a multifamily housing investment. That front area -- the flowers, the landscape, an office or an awning -- make that "golden path." Whatever money is available, put it into touching up that golden path.

Mosca: How do you get someone to accept this message that little things can add revenue to your property?

Blake: We can see examples of packaging and merchandising all around us. It's not just product, but how it is presented. Somehow the concept of merchandising and packaging seems to have been completely missed when it comes to housing, especially in multifamily. I have a series of 48 "self-closing apartment cards" that have little sayings on them to position throughout an apartment. Of the 48 messages almost 27 of them are at flat out close. They say, "Aren't you excited? You're standing for the first time in your new apartment home." One says, "You look good here. You should move in" and you put it on the mirror. By simply adding these messages around a vacant apartment, we've seen an increase in leasing between 12 and 37 percent.

Mosca: Do those cards also serve as a demonstration technique for the person showing the property?

Blake: They were borne out of that experience. I was inside an apartment with a brand-new leasing agent who said, "Oh my gosh Toni, I'll never remember all of this." I made her cue cards to stick around the apartment to remember to discuss all these great attributes of this apartment. The closing cards were actually originally designed as cue cards for a new leasing agent but because the customer reads them and they are such a fun, fantastic little touch, they have been used repeatedly by very talented leasing agents. They are positive, well-written, closing statements that enhance the tour.

Mosca: You mentioned three words in the course of your explanation of these cards. You mentioned fun, fantastic and positive. I couldn't think of three better words that describe the attitude that you have about this business. Should others have a similar attitude when trying to rent property?

Blake: We attract the customers based on what our property looks like. I always like to tease managers and say if you let your property go to hell, the devil will show up to rent. I believe little things are powerful. I came from the restaurant business where we had a saying, "When you've got time to lean, you've got time to clean." You attract the customer based on the decisions that you make and these decisions to improve the color, the scent, the sight, the feel of your product absolutely, positively are going to attract a higher grade of customer who are willing to pay a higher rent.

Mosca: What is your golden nugget?

Blake: Always end your rents in a 9; never do a 5, a 4, or a 3. Always end in a 9.

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