D — July 12 - 25, 2013 — Property Management — Mid Atlantic Real Estate Journal
www.marejournal.com
P roperty M anagement
By Dan Berger, Berger Rental Communities Berger raises the bar for management transparency
T
ransparency has been a focal point for own- ers employing property
internet connection. After all, if you are going to trust someone to manage a multi-million or even billion dollar asset, you are going to want to know how the management company is performing. This has not only become the standard; but, prop- erty owners are now requiring and even demanding this level of access and transparency from their third-party manage- ment companies. Let’s step back for a moment. If it is so important to have this information readily available at our finger tips after a property management company is hired, shouldn’t we expect comparable
metrics made available while undergoing the initial property management selection? Recently, Berger Rental Communities formed their new Third-Party Property Management Division, “Berger Real Estate Services”. After scouring the internet for the best property management websites; President of Berger Rental Communities, Dan Berger, made a surprising discovery. “Virtually no third- party property management companies are sharing what property owners can expect in terms of income and expenses. Granted, every property and
market is different; however, with the industry average information that the National ApartmentAssociation publish- es on an annual basis; there are surely relevant metrics than can be used to measure overall management performance.” Berger began comparing their nearly 3000 unit portfolio averages to the NAA reported industry averages. In addi- tion to these averages, Berger identified the information that they felt was most relevant to a property owner evaluating and comparing third-party manage- ment firms. The information is as follows:
• Average of 1.1% higher profit margin compared to the indus- try average. • Our communities’ bad debt loss is 37.3% less than the in- dustry average. • Our communities’ turnover rate is 14.3% less than the industry average. • Our communities’ average occupancy is 2.5% better than the industry average. • Our communities’ average annu- al rent increases are 1.25% higher than the industry average. • Our communities’ average property and liability insur- ance premiums are 26.5% lower than industry average. • 23.4% of new residents have been referred to our communi- ties by other residents making this source our company’s num- ber 1 advertising source. • Our communities annual operating income increased by 4.88% and 7.80%, 11.89% in 2010, 2011, and 2012 respec- tively. • Our communities’ occupancy has been 95.15%, 96.9%, and 96.3% while our annual rental increases have averaged 4.50%, 3.80%, and 4.85% for 2010, 2011, and 2012, respectively. • Average of $73 per apart- ment per year in trash removal which is achieved through economies of scale and contract negotiations. • Over a 15 % reduction in electric and natural gas costs through aggressive procure- ment of the commodity with 3rd party suppliers • Over a 50% reduction in water expense through water conservation initiatives. “This is the type of infor- mation Owner’s should have access to, and demand, when evaluating third-party man- agement providers. In ad- dition, owner ’s should not hesitate to request a pro-forma for the subject property that demonstrates the performance that the owner can expect from the new management company prior to ever signing a management contract. Fur- thermore, even after the 3rd party management company has taken over management, the assets operations should be routinely benchmarked against not only industry averages, but averages for the Management Company” cited Zack Moore, VP of Business development at Berger Rental Communities. Dan Berger is president of Berger Rental Commu- nities. n
management c omp a n i e s since the in- ception of the industry. In recent years, t h e d e v e l - o pme n t o f new technol- ogy has given owners the
Dan Berger
ability to print a variety of re- ports on-demand as well as the ability to view financial and op- erating data in real-time from just about anywhere with an
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