In our "Big Ideas for Owners with Small Portfolios" series, we share how successful IROs, such as Hains, Bryson and Ridgway, operate their properties. This is the final article in the series. Links to the rest of the series articles can be found below.
Whether it is product suppliers, mortgage brokers or tax consultants, industry supplier partners can provide expertise for small apartment owners.
For most apartment owners, a visit to the exhibit hall at Apartmentalize, or any other major trade show, can bring anxiety.
“Initially, I thought that if I could avoid eye contact when I passed a booth, I wouldn’t be called out by the sales reps,” says Steve Lightner of Jefferson City, Mo. “What a huge mistake that was. Now, each year, I speak with as many as I can. I pick up several valuable new ideas that help me lease my apartments.”
For small owners — those who may not be able to afford to hire consultants or a larger staff — vendor connections can serve as a guiding light or even part of the team. Whether helping with fair housing, legal issues, accounting, payroll, training, human resources or even lease-ups, a good service provider can be worth its weight in gold to a small owner.
“We have worked with great vendors,” Stephanie Bryson, Founding Partner, Stellar Equity Management in Houston, says. “They point me in the right direction when I have questions or need additional assistance.”
Lisa Pelloni, CAM, CEO of AdaLease Property Management in Summerville, S.C., has found success by outsourcing human resource functions and working with insurance consultants. It has led to getting more favorable group rates for property liability and workers compensation insurance.
“This gives us the opportunity to work alongside other small businesses and offer benefits similar to those given by large companies, such as Greystar,” she says.
When looking for outside sources, John Boriack, President of Veritas Equity Management, says IROs should avoid simply choosing the cheapest option.
“Mom-and-pop business owners too often just get three bids, and then, no questions asked, they go with the cheapest,” Boriack says. “But usually it is not worth the brain damage to go with the absolute cheapest bid every time.”
For instance, Boriack makes it a point to always hire an experienced attorney and a mortgage broker, even if it costs more than going directly to a bank or a Delegated Underwriting and Servicing (DUS) lender.
“I heavily rely on my mortgage broker to explain market conditions for specific areas,” Boriack says. “If I’m deciding whether to buy a property, I’ll drive by it and then call my mortgage broker. Nine times out of ten, they are familiar with it and have many times even financed it in the past.”
Boriack also recommends having a credible securities attorney, knowledgeable real estate attorney and proven general contractor for rehabs.
“It took me a couple of years to find core people who I can work with really well and understand how I run my business” he says. “Once you find them, and rely on their expertise, it makes your life so much easier. It ends up saving you in the long run. Even though it’s more expensive up-front, you will save more money [and frustrating headaches] in the long term because of it. Once you have your established team of professionals in place, you become a better and more reliable buyer which means better deals will come your way.”
Product suppliers can also be lifesavers.
IRO Joe Bryson has relied on his vendors to provide help with everything from choosing exterior paint colors to installing vinyl planking and carpeting.
Lightner relies on his vendors as a valuable resource to provide state-of-the-art products and services.
“Recently, I was building new four-plexes that we were designing to be pet-friendly,” Lightner says. “The vendors helped me pick out materials, such as flooring, that hold up better with pet wear.”
If you are an independent rental owner with a solution or story to share, please contact Les Shaver, Senior Content Editor. For Big Ideas for Owners with Small Portfolios Series: There are Many Routes to Success for Small Portfolio Owners, Avoiding Maintenance Pitfalls & Small Companies Can Offer Big Service.