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On-site automation and performance tracking.

Both owners and on-site managers of apartment communities benefit when managers' performance can be measured objectively. But objective performance measurement demands that timely and accurate information be collected from each property. That data-collection task inevitably falls to the on-site manager. The more time he or she must spend filling out forms, however necessary those forms may be, the less time remains for the goal-achieving work of renting apartments and caring for the needs of residents.

For our company this dilemma was crystallized one afternoon in 1985 when a "shopper" reported that a manager whose property she visited was "too busy" filling out reports for the home office to be able to spend time with a prospect. We decided right then that an on-site computer system was necessary.

Since then, the cost of computer systems had declined steadily while the capabilities of software for property management have improved. While manual information systems continue to work, as they have for decades, in our experience they are no longer competitive from a cost or an efficiency standpoint. We have installed a computer system at each of the more than 50 communities we manage and estimate that each system pays for itself within six months.

The computer installations began approximately five years ago. We used IBM-compatible PCswith "OnSite" software from Prentice Hall Professional Software, Atlanta. The PCs at the communities send information over phone lines to a PC at our home office in Charlotte, which is used to manage the entire operation. Summary information from the PC property management system is entered into a mainframe computer in Charlotte that handles our general accounting.

Before we installed computer systems at the communities, managers had to post every ledger entry manually as well as prepare detailed reports by hand, The computers made it possible to speed up that work--so much so that we were able to reduce labor costs at our communities by enough to pay for the system. More importantly, community managers have immediate access to the information they need, yet spend infinitely less time creating that information.

We also have been able to increase the number of apartments we have under management by more than 50 percent within the past 18 months. The computers made that with easier by keeping pace with us.

Specific benefits on cash flow

Previously, it was necessary to flip through cards in order to fill out monthly vacancy reports. If a card was lost or misfiled, a vacant apartment could easily be overlooked. It was extremely rare, but far from impossible, for an apartment to remain vacant but unnoticed for as long as two years.

In addition to vacancy reports, site managers filled out weekly occupancy reports by floor plan and unit type. We could have as many as 75 individual rental rates at a single location, and with a paper and pencil we categorized each of them by occupancy and percentage leased. It was an incredibly cumbersome process that we went through each week. We had to post receipts to the general ledger by hand which could mean some 600 separate entries for a typical commmunity. Rent rolls were done by hand each month, or were supposed to be. These were sometimes let go for as long as three to six months, which was not a good way to do business.

Now, in addition to cost saving from the elimination of people whose primary job was pencil-pushing, we are able to bring in more revenue by allowing fewer dollars to slip through our fingers. The biggest impact is in the area of forfeited security deposits and bad debts. It used to be fairly easy for a resident to move out owing us money. It was easy to forget about it because bad debts were thought to be the least of our worries. But bad debts in this business can add up to significant dollars.

The on-site systems have enhanced our ability to collect forfeited seecurity deposits, whether from past-due rent or fees outstanding; late charges or NSF charges; charges for damages to the apartment; or liquidated damages from early termination of the lease, including the payback of any rental concessions.

We now have a system that makes it easy to total up all of the charges before the tenant moves out. We have a complete record on the screen, immediately available at the manager's fingertips. Although the system does not force residents to pay what they owe, it does give us a clear and specific basis for reporting the delinquency to the credit bureau and our collection agency. When residents understand that we are able and willing to do this, they are far more likely to pay than they would otherwise be.

Among the specific economic benefits of the systems:

* Accounts receivable have been reduced from more than 1 percent to 0.5 percent of potential revenues.

* Late charges, security deposit forfeits, lease termination fees, and other fees are now assessed consistently, resulting in approximately $1 million in additional revenue annually; an average of $20,000 per community.

* Rental revenues have increased because the list of available apartments is always accurate and up-to-date.

Because community managers now spend less time on paperwork, they have more time to spend building good relationships with our residents and watching problem areas more carefully than otherwise possible. The system tracks rental payment histories, and if a normally prompt resident is late with a payment, a polite inquiry may be sufficient. If payments are chronically late, or checks returned for non-sufficient funds, the computer can automatically flag the account as "cash payment only," and assist in more intensive collection efforts.

Similarly, the computer automatically assesses late fees; this removes the onus from the "warm-fuzzy," sales-oriented community manager who may be hesitant to be firm in collecting these fees. She or he has the authority to make exceptions and cancel late fees, but those decisions are monitored at the home office.

Only through that combination of local autonomy and central control can we continue to attract, motivate, and compensate the caliber of community managers we need and at the same time be able to manage communities over a very large geographic territory.

Analysis aids marketing

The computer systems also have made it possible to manage more astutely, not only by identifying problems early on but also by identifying the root causes of those problems.

For example, one of our properties in Florida had suddenly begun to experience an occupancy shortfall. Logically enough, it was proposed that we expand our advertising; however, a computer report on traffic flow clearly indicated that the number of rental prospects which the community received was not the problem.

We turned next to a report on productivity per leasing consultant, and, after some further investigation and discussion with the community manager, learned that a top performer was experiencing personal difficulties. A short leave of absence solved the problem, and cost far less that the $15,000 we would have spent on a needless ad campaign. It is certain that we lost money while that salesperson was unproductive, but we would have lost more without the ability to recognize the problem quickly and identify its cause accurately.

At another property, we were advertising in both of the area's apartment guides. We were surprised to learn from a computer report of media effectiveness that one of the guides was seven times more producutive than the other As nice as that guide's salespeople were, we had little difficulty deciding to eliminate the less effective publication. Without the ability to keep track of such niceties as advertising effectiveness, we would never have known and would be spending with them to this day.

The computer system makes such analysis and insight possible because it simplifies the task of capturing information for people for whom paperwork is drudgery. The secret is in scheduled system processing. While the systems demand little from users, either in prior computer experience or data entry time, they do demand daily attention. The community manager must advance the date, which cannot be done unless the previous day has been properly closed, and must complete both a beginning of the day and an end of the day sequence.

This scheduled system processing does away with the problem of forgetting to do a key task at a specific time. The system will not allow the date to be advanced without completing all of these essential tasks.

Using an on-site computer

To start each day, after advancing the date, the system prints a task list of pending activities; a sort of "To Do" list for the day (move-ins, move-outs, and so forth), and adds whatever late charges may be due. At the end of the day, the manager enters traffic counts, and the system prints a summary of that day's activities.

The reports available to community managers at any time include:

* Month-to-date (MTD) property status.

* Month-to-date activity: rentals vs. traffic (%).

* Occupancy: occupied/available/vacant/moves in-out (%).

* Income.

* MTD marketing source analysis.

* MTD leasing consultant analysis.

* Occupancy and availability by apartment (unit type).

* Apartment status report (by date unit was vacated).

* Unrented on-notice units (by expected move-out day).

* Apartment status summary (by expected move-in day).

Of these reports, our community managers consider "Apartment Status" their daily bible. It indicates not only how many apartments of each type are available to sell, whether they are vacant or on notice, and the price of each, but also whether or not the apartments are ready to be shown.

Also valuable is a traffic report that indicates how many people have visited the property month-to-date, and which of 12 possible sources of information (e.g., drive by, signage, radio ad, newspaper ad) attracted them. Sources may vary from one property to another, but as indicated, this report gives a clear indication of advertising effectiveness.

The discipline of scheduled system processing virtually eliminates the possibility that a manager could forget to process a move-out, as happened in the past when we were on a manual system. Neither do we sorry as we once did about the possibility that vacant apartments might go undetected for weeks or even months.

The reports available to regional and home office managers include:

* MTD occupancy statistics.

* Lease renewal report.

* Property status report.

* Property performance worksheet.

* Property trend analysis.

* Leasing consultant analysis.

* Marketing source analysis.

* Leasing traffic recap (demographics).

* Resident recap (demographics).

* Rent roll.

* Deliquency report.

* Prepaid units report.

* Collections summary.

* Activity reconciliation summary.

* Security deposit report.

We examine occupancy status reports each day to see how our marketing efforts are progressing. The system throws up a red flag whenever a community goes three days without a sale. Without the computer's help, it would likely take at least three times as long to discover such a problem.

The leasing consultant analysis report mentioned earlier measures the number of prospects per agent against the number of sales. The report tells us how well each rep is meeting our expectations and who, if anyone, may need additional training. Before we installed the computer systems, it was difficult enough to measure traffic flow, There was simply no way to link performance measurement with sales opportunity.

Another valuable report, concessions and discounts, tells us the extent to which a particular community may vary from prevailing market rates. While managers have the authority to rent apartments at discounted rates, within established parameters, it is important that the home office know when, how often, and why it happens.

We operate on the "unit president" concept in which everyone within the orqanization is encouraged to consider him- or herself as the president of a small part of our company. Tracking discounts is one of the ways we use computer systems to measure community managers' performance. They are rewarded for their ability to exceed expectations.

For examples, we set annual revenue expectations and can compare expectations with MTD collections at any time. We measure economic occupancy (rent collected vs. rent potential) as well as physical occupancy and percentage leased.

Because we can accurately quantify performance our bonus programs are based on results rather than on activity, and our business success is measured in cash-on-cash NOI. Without real-time management information, it is all but impossible to keep track of the many variables required to maximize NOI.

We have found such attention to detail to be critical to our success and of tremendous value in maintaining the confidence of our owners and lenders.

Attention to detail is most critical at our communities. If our residents a happy because their communities are well maintained, and because their community managers are professionals with the time and energy to care about their needs, they will recommend us to their friends, and our economic success will be assured.

Our company's success is based on the success of people who are well selected, trained, and empowered to put their full capabilities to work through self-management. For this to happen, expectations must be clearly defined, and people must be given the tools necessary for successful self-management. The computer system is one such tool.

Computer Developments

Site Manager joins Skyline

The Softa Group, Northbrook, Ill., producers of the Skyline Solution line of property management software, recently acquired the Site Manager and Home Office software products from Masco Business Systems, Tulsa. In the coming months, Softa expects to integrate the Site Manager program into the Skyline product line, and already is available now to offer support to existing Site Manager and Home Office users.

Skyline, already used by more than 10,000 property and asset managers, offers modules for property management, accounting, reporting, HUD interfacing, MICR check printing, and other features. Site Manager, now in use at over 500 sites, handles accounting, leasing, rent collection, and accounts payable support, and is popular with novice computer users. For more data, circle no. 221 on card.

Commercial Management System unveiled

New from Prentice Hall Professional Software, Atlanta, is the Commercial Management System, designed to handle the daily management of retail, office, and industrial properties. The system is fully integrated with Prentice Hall's General Ledger system.

To allow users to maximize cash flow, the system can generate past-due reports, letters to delinquent tenants, rent reminders, invoices and statements, "Notices to Quit," and mailing labels. Monthly tenant bills for rent and other charges are generated automatically, including allowances for different billing cycles as well as late fees, fines caused bt the return of nonsufficient-funds checks, and credit adjustments. For more data, circle no. 222 on card.

Maintenance management

Project Data Systems, San Rafael, Calif., has introduced a new maintenance management software package: FACTS, or Facilities Analysis, Control and Tracking System. The program automates a variety of maintenance analysis functions, including work orders, inspections, and warranties. FACTS is capable of handling multiple properties with unlimited items in units or common areas, as well as extensive task codes. The IBM-compatible program uses drop-down menus and pop-up selection lists, and may be used with a mouse. For more data, circle no. 223 on card.

HUD help

Prentice Hall Professional Software, Atlanta introduced its latest program, OnSite HUD, as a stand-alone software program for managers of U.S. Department of Housing and Urban Development-subsidized properties. The program handles the majority of required government processing, HUD recertification, and worksheet and voucher production. It has been approved by HUD for use with decentralized, on-site property management and is compatible with Onsite, Prentice Hall's existing property management program.

Standard product features include on-screen resident listing, customized letter and notice preparation, lease expiration tracking, and move-in/move-ourt processing with prioritization.

The program automatically performs recertification and rent calculations and prints standard forms and vouchers directly, thus making them as soon as they are processed. In addition, the program retains all entered data, allowing easy and accurate updates, modifications, and recertifications.

Other HUD questions can be answered in an electronic version of the new HUD audit guide, Handbook IG 2000.4: Consolidated Audit Guide for Audits of HUD Properties, now available from Project Data Systems, San Rafael, Calif. The HUD Master Audit Guide operates on IBM compatibles and includes the complete text of the General Accounting Office's Government Audit Standards (known as the "Yellow Book") and other HUD-related documents, plus on-line help and a cross-referencing system.

In addition, the program may be combined with Project Data edlectronic version of HUD's 4350.3 handbook, Occupancy Requirementsof Subsidized Multifamily Housing Programs. Updates to both programs, as they become available, may be added via modem. For more data, circle no. 224 on card.

Project tracking

Primavera Systems, Inc., Salt Lake City, recently introduced the SureTrak project scheduler, a low-end project management program that allows easy scheduling and management of engineering and other projects. The program is built on four existing programs and performs several functions, from critical path scheduling to resource loading, for projects with up to 4,000 separate activities.

SureTrak includes time-scaled graphics, which allows the user to plan projects, coordinate resources; track related costs, evaluate different "what if?" scenarios, generate reports, and update schedules based on progress. It produces planned vs. actual bar charts, as well as time-scaled network and pure logic diagrams. These diagrams plot at once the progress of different activities within a given project, allowing the user to quickly evaluate progress and delays. SureTrak is compatible with a range of printers and may be integrated with Primavera's Project Planner or use on large projects. For more data, circle no. 225 on card.

Windows-compatible systems

Wind-2 Software, Inc., Fort Collins, Colo., recently completed the first of its software programs compatible with Microsoft Windows. Win2-Bill, an invoice preparation program with advanced graphics and customizing capabilities.

The company also is working on four other Windows-compatible programs, all concerned with financial management. Still on the drawing board is Win2 General Ledger, which employs graphics to allow general ledger accounting and financial statement formatting; Win2 Accounts Payable; Win2 Business Management; and Win2 Payroll, each of which employ graphics to perform general business and financial tasks.

Wind-2 Software, which already offers a non-Windows-compatible series of financial management programs, anticipates releasing the remaining programs in the series over the next several months. For more data, circle no, 226 on card.

John T. Gray, CPM, is president of Summit Management Company, Charlotte, N.C., one of five operating companies that make up Summit Properties, one of the nation's top 100 developers. Prior to joining Summit Management in 1986, Mr. Gray held property management positions at Lincoln Property Company. Earlier, he was a member of the Management Advisory Services group at Laventhol & Horwath, CPA, working in the hotel and apartment industries.
COPYRIGHT 1992 National Association of Realtors
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Title Annotation:Computers; Software Review
Author:Gray, John T.
Publication:Journal of Property Management
Article Type:Evaluation
Date:Mar 1, 1992
Words:3087
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