Shane’s notes from at the recent Calgary Multifamily REIN event .
These are my personal notes. I’ll give credit to the Speakers as I remember them. If there are inaccuracies, let me know and I’ll fix it.
You will find how this information relates to Calgary Multifamily properties – helping fill vacancies and stabilize rents.
Todd Hirsh ATB’s Financial Chief Economist:
Oil prices are volatile– which means, they have not found an equilibrium.
- Some oil experts say the reason oil prices have risen as of late is because short sellers are having to buy back their positions and is pushing oil prices up.
- AB really needs $50-55/bbl oil to maintain jobs and would likely want $70-75/bbl for new projects to create new jobs.
The unknowns today are:
- China- will their economy crash or continue to grow, albeit at a slower pace?
- US is known as Just-In-Time Oil Producer. With Shale technology today, US frackers can ramp up production very quickly when it it’s numbers that make sense ($55-60/bbl).
- Alberta’s main problem- no Access to the international markets.
Bank of Canada (BofC) in a recent speech used the term – Negative Interest Rates. The BofC is intentional in what they say, so for them to put it out there, they could be preparing the public for lower interest rates.
The problem for Canada today is simple: Low Commodity prices. This is not an AB problem, it’s a Canadian problem.
Importing costs are going up with Cad $ dropping, inflation is starting to show up on imported goods.
- Example, the cost of 4 heads of cauliflower = 1 bbl of oil (when oil was $27/bbl)
- Econ 101: Low Cad $ = Inflation Increases
- BUT, with low oil (cheaper gas), is offsetting Inflation. The Cad government can keep interest rates low (which means, lower Cad $).
Last time unemployment in AB was 8% was in 1993. Today, we are at 7.9%
In 1984 – we hit 12%
Between 2010-14, we sat at 4.5% (which is perfect), in 06/07 it was 3% (which was too low).
There will be Net Migration out of AB. The difference today is that in the 80’s and 90’s there were jobs in ON, so people left AB to work there. Today, there really isn’t a boom of jobs in ON. Lower mainland BC is growing, but it’s so expensive to live there.
- ATB believes there is a 3:1 chance 5-10% correction will occur in 2016.
- There is a small chance we could see a 20% drop, but that is more like 7:1
- Low interest rates are helping support the prices.
- Lower oil prices are likely the new paradigm. So, it’s important AB learn how to be profitable in low oil.
- Important to remember: the Housing Market lags GDP/Job Growth by 18 months.
- The first ones to feel it is the Rental Market.
Property Management Ideas: LLR Property Manager (Jared Hope)
Defense wins championships- protect what you have now, before you start going out trying to get more.
The Foundation: Excellent Customer Service to create Loyal (not happy) customers (tenants)
Today there are less tenants looking and more supply. Creates an imbalance in the market.
The tenants know this, and are negotiating harder.
23 Ways to keep your apartment tenants happy?
- Gift baskets
- Coffee and muffins on first day move in.
- Handwritten thank you card
- Shoot a video to welcome the tenant
- Find ways to connect with the tenants personally
- It’s always harder to break up in person, vs. text or, if they have done something nice for you lately.
- Become likable to your tenants (not their buddy, but likable).
- Get them to meet 2 or more people in their complex– they are more than 75% likely to stay if they know their neighbors
- Gift cards
- Quarterly calls to check in with them
- Know what’s important to them (asking questions and know who they are, first name)
- Be aggressive
- Incentives- lower rent, free month, TV’s
- Call them 90 days out and ask if they need anything done in their unit.
- Call 2 weeks later, and ask them what their plans are when their lease comes up?
- Are they going to renew?
- If they are going to move, then you need to start marketing the rental 60-75 days out
- Friend referral program – $100 off if they refer someone who qualifies (only to the tenants who you want more of)
- Free Draws when they refer someone- they are put into a ballot and every 3-6 months draw a name. this keeps people around to win
- Gas for a month/year, 1 night stay in Banff
- Good Renters Deferral Program. The lease is $1,500/month, but, if they pay on time, they get a $100 credit. If they are late, they pay $1500/month.
- If they complete the term of their lease, they get a gift
- Secret shop your own properties
- Backend your incentives (vs. frontend)
- Get co-signers on the properties with poorer quality tenants
- Professional pics and prof written sales copy
- Consider allowing smokers (in room of 600 landlords, only 3 allowed smokers)
- Send a follow up email after the tenant views your property- no one else is doing this and they can’t remember the places they’ve seen.
- Thanks for viewing our property. We just wanted to let you know we believe in providing a safe and friendly place for you to live. We pride ourselves on being responsive to your questions and requests.
The 4 Place to invest for Calgary Multifamily Owners:
- Curb appeal
A few idea’s on how to fill your vacancies fast:
- Deposits go towards first month rent- this way, if they don’t do the deal, we get their first month rent.
- Can we do Instant Rental Approvals?
There is no question it is getting harder to fill vacancies. The true difference among those who will be successful, and those who feel the pain of lower rents and higher vacancies, will be their ability to be Creative and take action. You’ll notice, many of the ideas above do not require big investments of money. Instead, they require time and personal attention.
Good luck and feel free to leave comments below on what you’re doing to fill vacancies and keep your properties full.