Since things slightly slowed down after turn and move-in for student housing, I recently had the opportunity to sit down with our company’s President, William (Bill) Levy, and ask him some questions that I thought would be golden nuggets to some of us that are forever learning what goes into a successful property management company. Bill formed his property management company in 1984 in Madison, Wisconsin.
1. What qualities should a property owner look for when choosing a property management firm?
a. The first thing is experience. How many years does that firm have in those types of markets?
The biggest mistake I have seen is when a conventional management company manages a
student housing community. They not only think that they will interact with their customers
move-in and move-out similarly as conventional management, but they are completely unequipped to handle the situations that arise in student housing.
b. They build party palaces. In conventional management, a great level of importance is placed on the living space. In student housing, a great level of importance is placed is in the academic environment. I always say there are four customers in a student housing community:
- The Student
- The Student’s Parents
- The College or University
- The Owner
c. Students pay more per square foot than conventional in the exact same markets. Management
firms that are inexperienced will staff their communities like a conventional apartment community. Their management begins without adequate student housing staff to deal with the customer’s needs. That is the tip of the iceberg and it follows suit from there on down.
d. What is the baseline of their operations? I feel The Institute of Real Estate Management is the
baseline of our industry. All my staff, within two years, are trained to be an Accredited
Resident Manager (ARM), my corporate staff then is introduced to become a Certified Real
Estate Manager (CPM). Personally, I am an Executive CPM which entitles our firm to hold
the Accreted Management Organization (AMO). These designations are what defines an
extremely well-trained company. The National Apartment Association also has classes in
leasing the (NLAP) and another in maintenance (CAM) which we find to be very successful
training tools as well. I have worked with firms that take the position that their training in
house is the best. An outside, impartial perspective is one of the main benefits of training. Not to mention, laws and ordinances are continuously changing, and we rely on external training to provide us with that knowledge. This frees up our executives to do what they do best: LEASE apartments and COLLECT rent.
To summarize what I think owners should look for when selecting a management firm:
- Experience in that niche, that community or region
- Training on a national level or platform
- The ability to respect the four customers
Consider how many times the firm has sued past clients. Look at on-line reputations and ask colleges that they are currently working with, what they think of the firm you are about to hire. Another great trick sees who shows up for your initial meeting. If it a group of good looking national staff members that have been trained just to sell their services, but once you hire them you will never see them again, not
good. Have a Manager, Regional Manager, and Regional VP come to interview them and not just
the corporate staff. These are the people that you will be working with.
2. What trends are you seeing in the two-year colleges and technical colleges student housing
a. I was blessed to have begun working for Allen and O’Hara at the time of a Northwestern Mutual Life
Insurance company investment. That portfolio was bought by a Philadelphia firm with
investors like Goldman Sachs and GE Capital where I was again blessed in growing a multi-billion dollar fund consisting of approximately 50,000 student beds, military housing and some
conventional apartments all over this county.
b. Today, a market that has not been oversaturated is the smaller D2, D3 and two-year schools. The big firms do not want to spend the time or their money chasing this type of product. Which is great for experienced investors.
A couple of years ago I had the experience in selling a Florida big D1 investment of over 3,000 beds. It
ended up selling for about $11,000 a bed. At the time, you still had the fly by night companies
building in that same market at a building cost of $75,000.00 a bed. I know why people build in those markets (because they build and then leave), I just don’t understand why people invest or banks finance deals in those conditions.
c. Two-year schools traditional have no competition. Sometimes we are lucky enough to have
the colleges provide land for us to build on their campuses. The school works with a college
housing specialist. We are provided privileges that the big heavy competitive campuses
would never get. We respect and trust each other and both the school and our firm
understand that the students experience is paramount in this relationship. They are our
d. We do not build water slides, computer golf games, jacuzzi tubs, saunas and the like. We
build collaboration rooms, group study rooms, living/learning environments, multipurpose
rooms, fitness center and a large screen TV theater for relaxation. The apartments are typically
4 bedrooms with 2 bathrooms, a TV and a washer and dryer in each apartment. A functional
kitchen and a small living room that is just large enough to have a friend over but not large
enough to have 20 of your friends over. Outside, we place a barbecue area, a fire pit (where allowed
by law) a basketball and sitting area with tables to study outside.
e. We tend to build a 250-bed community, so managing the community makes sense. The land
is normally on campus and parking and lawn care maintenance are taken care of by the college. We
build pedestrian based products so that the students can walk across the street or the next
building over to go to class. A covenant location is paramount.
f. Residence Life is a major priority. The two-year schools tend not to have the staff dedicated to
managing the entire housing burden that is brought with having students on campus 24/7. Unlike
the big firms, where Residence Life has often been eliminated, we believe
on the old school ACHUO–I.
“The rapidly rising enrollment on U.S. campuses after World War II overwhelmed the housing capacity of many campuses. The need to house and feed these students—including an unprecedented number of married students—focused the attention of campus administrations on housing problems never before faced.
S. Earl Thompson, then director of housing at the University of Illinois, proposed that campus housing officers from across the country should meet to discuss these challenges. He and his staff prepared a program and invited delegates to attend a national housing conference at the University of Illinois in July 1949. The attendees of that first conference are pictured above.
From that event grew the Association of College & University Housing Officers. Through the years more institutions joined the association, including those from countries outside the U.S. Responding to the expanding worldview, in 1980 the “I” was added to the acronym and we became the Association of College & University Housing Officers–International.”Learn More About ACUHO-I Here
We deal with many student’s situations within our communities and hire an outside consultant when issues grow beyond our capacity. This is an important piece of a dedicated student housing management company.
This is part one of a three part interview with Mr. Levy. Be sure to subscribe to our blog to be the first to read the next in the series.