The passage of the Dodd-Frank Wall Street Reform Act has amended the Fair Credit and Reporting Act which governs access to credit information. As a result, landlords potentially need to augment the information they provide to applicants on their notice of adverse action (denial) or conditional acceptance (with adjusted terms).
If a landlord takes an action other than acceptance with respect to an applicant that is based in whole or in part on any information contained in a consumer credit report, the landlord shall provide the following additional information to the applicant.
• Numerical Score (the Credit Score – found on the credit report)
• Score Range of the Scoring Model Used (e.g., Transunion (350-900) – Experian (300-900))
• Score Factors (factors affecting the score – found on the credit report)
• Score Date (the request date on the credit report)
• Score Source (the credit bureau that supplied the Credit Score – found on the credit report)
By William Tingle
“There has never been a better time to start investing in real estate than today!”
This statement is true no matter what year it is.
Real estate has always and will always be one of the most valuable commodities on this planet. No matter how we may change its landscape, develop, improve or alter its appearance, we simply can’t make anymore of it.
In the movie Gone with the Wind, Gerald O’Hara told his daughter Scarlet that, “Land is the only thing that matters, because it is the only thing that lasts.” Of course Gerald O’Hara is a fictional character but his words are very true.
Real estate is one of the greatest wealth builders of all time. It is hard to find any of the names associated with wealth in the history of this country who were not substantial investors in real estate. They knew its worth and you do, too.
- Is it presentable and well-maintained?
- Easy to find what you’re looking for?
- Friendly, helpful, and not cluttered with hard-sell advertising?
- How many good testimonials?
- Experience with your type of work, including tenant relations
- Years in business. Most companies which have stayed in business a long time have managed to keep their customers satisfied. They’ve also gathered a lot of useful experience and competence.
- Contractor’s License number. California electricians must have a “C10” (Electrical Contractor) license.
- Liability Insurance and Workers Comp Insurance. It’s desirable that the company carry at least $1 million in liability insurance to protect your building should their work create property damage. Workers Comp provides for medical care for the electricians should they be injured on your job. Again, this protects your building from liability.
- Guarantees. Some companies offer a lifetime guarantee on their work. This wouldn’t generally include the electrical parts that they install – that’s covered by the manufacturer’s guarantee. However, the electrician should give you at least a several-year guarantee on labor. A guarantee up to the life of your building is best.
- Better Business Bureau (BBB) rating. Ask for the exact company name that you should look up in the BBB and in which city. Sometimes, the BBB will use a slightly different name, possibly the formal legal name of the company.
- How jobs are billed and the electrician’s billing cycle
- Website address if you don’t already have it
- Names and contact info for five clients, preferably apartment or other property managers
- Do you like the electrician?
- Do you feel comfortable and not under pressure?
- Does the electrician inspire your trust?
- Do the electrician and company employees seem to know what they’re doing?
- Do they seem to operate legally and behave ethically? Are they acting the way that you would want them to act towards you?
- Do they return phone calls promptly?
- Are they timely when meeting you for appointments?
- Do they listen to your questions and concerns and answer them in a way that is forthcoming and that you can understand?
- Does the electrician dress neatly and have a vehicle and tools that look well-maintained?
- If you haven’t already, check customer reviews. The first section of this article gives details.
- Enter the Contractor’s License Number into the California Contractor’s License Board website. Here’s the page: California Contractor’s License Board. See if there are any “black marks.”
- Check the company’s rating at the Better Business Bureau. Ratings run from A+ to F based on customer complaints made to the Bureau. As a note, an “A” reflects the same level of customer satisfaction as an “A+.” The “A+” is earned by an “A” contractor becoming a paying member of the Better Business Bureau, which supports the Bureau in its work.
- How did your job go?
- Was your job done right the first time?
- If a return visit was needed, was the electrician easy to work with and prompt?
- Was company pricing competitive?
- Was the electrician within budget and schedule?
- Would you be happy to continue to use this electrical company?
By: Houston Neal
In the latest of our Expert Roundtable Series, we report on best practices for managing leads. We interviewed three experts in the multifamily housing market to learn about the technologies and procedures they use for successful lead management. Among our experts are executives from Gables Residential and Archstone – both are ranked in the Top 50 Apartment Managers report from the National Multifamily Housing Council. Let’s meet our experts:
Donald Davidoff is Group Vice President, Strategic Systems for Archstone, a large privately held multi-family housing developer and operator. His teams manage Archstone’s entire marketing platform, which includes ecommerce, field marketing, creative services and corporate communication. He also pioneered Archstone’s industry-leading business process management solution to automate key forms and processes resulting in a “less paper-full” office.
Lynette Hegeman is Vice President of Marketing for Gables Residential. In this role, Hegeman oversees the development and execution of general marketing, internet marketing, public relations and advertising. With 19 years of experience in marketing, sales management and real estate development with companies such as Intrawest, Hilton Hotels Corporation and Preferred Hotels and Resorts Worldwide, she leverages her experience to further establish Gables as a leader in the multi-family industry.
Tracy Guillen is the owner of Esquire Property Management. She has many years of experience providing Ventura County property management services to real estate investors in Ventura County. Tracy is passionate about the real estate business and takes a personal interest in this field as she actively owns, sells, buys, and manages her own property management portfolio in Ventura, Oxnard, & Camarillo. Her affiliations include: California Broker’s License, California State Bar Association and the California Apartment Association.
Lead management is a critical component for any property management company serious about marketing. In a study from the Aberdeen Group, 90% of companies using automated lead management had average yearly revenue growth of 59%. So without a strategic and organized process for vetting prospective tenants, you may be leaving money at the curb.
What Technology Do You Use to Manage Leads?
Technology is central to any lead management process and infrastructure. Whether it’s a simple contact management system or a custom lead management system, you cannot scale your lead management efforts without technology.
Experts from our roundtable use three general types of applications to track leads. From least to most sophisticated, they are: contact management systems, property management software with customer relationship management (CRM) functionality, and customized lead management software.
In general, small property management companies use less sophisticated technology than their large counterparts. First, small companies don’t need the functionality, automation and scale included in best-of-breed lead management software. Secondly, they don’t have the budget or resources to warrant buying a dedicated lead management system. Instead, most will do happily with a simple contact management program.
Tracy Guillen – “Currently, we just use our website’s contact form to track leads. We use a system called Formstack. It allows us to create a custom, online contact form in HTML, then track inquiries by email and in an online database.”
On the opposite end of the spectrum are large commercial and residential firms that manage thousands of units and field thousands of property inquiries. They often need property management systems with CRM functionality, or stand alone lead management systems. Both Gables Residential and Archstone have developed proprietary lead management software to track prospects.
Donald Davidoff – “We have a comprehensive set of tools to manage leads. We built our own Lead Management System (LMS) as a standard interface from lead sources into our property management system (PMS). Leads from Internet listing services (ILSs) come directly into our LMS which notifies our community associates when they have a new lead and tracks their response. For inbound phone calls, we use Level One which sends leads into this same LMS and provides independent reporting as well.”
Lynette Hegeman – “Gables Residential utilizes a custom built, proprietary system called Insite to manage all referral sources, prospects and conversion results to lease. In addition we have launched a custom analytics tool that tracks lead data, cost and conversion attribution.”
How Do You Prioritize Leads?
According to a Raintoday.com report, fewer than 25% of new leads are sales-ready. The report is not specific to the property management industry, but this industry isn’t very different to others in that regard: not all prospective tenants are ready to sign a lease. So what do you do with the “leftovers?”
To begin, you should create a formal lead scoring process. Identifying qualified leads can have a big impact on the productivity and effectiveness of your sales teams. Without prioritization, your sales rep could hound a prospect who is six months away from moving while another “ready-to-move” goes untouched.
An effective lead scoring system will rate a lead based on a number of criteria. Take Gables Residential for example. They consider a prospect’s apartment preferences, budget, location and time-to-move before prioritizing.
Lynette Hegeman – “All leads go through our “funnel” and are prioritized by the level of information received. For instance, two-way communication indicating apartment preference, budget and preferred location would be deemed a priority lead if the community being looked at meets the prospects requirements. Another priority factor would be timing of move. Those with short time frames would be considered a priority. However, in general, we treat all leads with equal care and attention and follow-up on all.”
In some cases, a simpler strategy may be just as effective. Both Esquire Property Management and Archstone take a hot-or-not approach to prioritizing leads.
Tracy Guillen – “We have a simple rating system. They are either hot, or warm and need more nurturing. If the lead is cold, we typically let them go without any further follow up.”
Donald Davidoff – “There’s really not a formal scoring process. We follow up on every lead we get. We identify very quickly if the lead is unqualified (price/quality too high or too low, location doesn’t work, etc.), so those leads fall off very quickly. In fact, many of those are filtered out through Level One, so we don’t even waste time with those. Once we have a qualified lead, we try to time the follow up with their desired move-in so that we don’t push them too quickly – or too slowly – for what they want.”
What is Your Lead Nurturing Process?
After you prioritize leads, what do you do next? This is where a lot of companies drop the ball. Without a good follow-up or lead nurturing process in place, many companies miss out on revenue opportunities. As a general rule, you need to deliver the right message via the right communication channel at the right time. Gables Residential and Archstone use a a multi-touch process for following up with following up with opportunities.
Lynette Hegeman – “The sales team nurtures each lead by following up within a 2 hour window either via phone, or email. A guest card for each prospect details all conversations and recaps prospects’ needs, wants and price range. Coupled with the tactical approach of three touches, the sales associates work to engage each prospect and guide them through the buying process – ensuring that all objections are overcome.”
Donald Davidoff – “We use a variety of tools including phone follow up, visits and tours and email. We try to understand how each prospect prefers to be communicated with and therefore follow up in the ways and means each prefers.”
How Do You Track Effectiveness of Marketing Campaigns?
At the end of the day, the best lead management still relies on good marketing to bring in prospects. To know that your marketing is working effectively, you need to be able to track its return on investment (ROI).
First, you need to define your marketing metrics. Is cost per lead or cost per lease more important? Or a combination? Archstone uses several:
Donald Davidoff – “We have real-time reports in our PMS, and we do monthly and quarterly reviews using data from our ILSs and Level One to continuously evaluate critical metrics like lead volume, cost per lead and cost per lease.”
It’s also important to track the origin of leads. Did it start with a Google search? A phone call? An advertisement? Companies that track the origin of leads will better understand the value of their marketing campaigns. Fortunately, there are several ways to get this level of detailed information using the right technology.
Lynette Hegeman – “Gables has been using a custom-built analytics tool that tracks each lead by lead source(s), cost and results. Essentially, using a myriad of tracking tools such as Google Analytics, Web Trends and Hit Wise, we created a tool that ties together and scrubs all referral source data.
As a result we follow each piece of traffic through the sales life cycle and gauge the referring source, how many sources did they view in the process (as best we can), how much budget did it take to drive that piece of traffic to the source, and the quality of the lead. We are also geo-targeting to see where traffic comes from in relationship to the proximity of the community.
Another important tactic is our lease matching process that we continue to refine and filter through the analytics program. By understanding who leases and the steps they took in their search process, we can create communication strategies to improve our resident retention programs. The end goal is closing the loop from generating traffic to closing a lease to increased resident retention with lease renewals.”
What’s your lead management process? Do you use technology to automate lead management activities? Do you have formal lead scoring and nurturing procedures? Tell us about your best practices in our comments section.
Please visit www.propertymanagementsoftwareguide.com for more information.
By: Eric Paulos
Should you buy terrorism insurance or save your money? The answer may depend on how you perceive your building(s) will be affected, at all, in the foreseeable future.
Following the 9-11 attacks on the World Trade Center and Pentagon, damage was estimated at $40 billion dollars. Other than the first attempt to bomb the World Trade Center in 1993, which was limited to the parking garage, and did $300 million damage, 9-11 is the first foreign attack of its kind that has taken place on U.S. soil. Following the 9-11 attacks, the insurance companies were obliged to pay for the damage to property and had no exclusions for terrorism. Similarly to the way that homeowners company previously had no exclusions for earthquake damage prior to the 1971 Sylmar earthquake, after which homeowners’ policies carried earthquake exclusions thereafter, the commercial insurance industry saw the enormous losses they stood to take and moved to draft terrorism exclusions while they worked with the government to find a solution against this new problem.
The Terrorism Risk Insurance Act of 2002, approved by Congress and signed into
law by President Bush in November, established a reinsurance program to be administered by the U.S. Treasury Secretary. The program provides reinsurance to reimburse insurers for certain losses arising from terrorist acts. A loss has to cause $5 million to be certified as an act of terrorism.
Congress created the program for the following reasons:
The terrorist attacks of September 11th, 2001 resulted in a huge loss of both property and life. It cost insurers an estimated $40 billion according to the Insurance Information Institute (III). This was easily the largest disaster in the history of the insurance industry.
Reinsurers, who are essentially the insurers of the insurance companies, feared that future terrorist attacks could bankrupt them. As a result, many reinsurers began excluding coverage for terrorism losses from their contracts with insurers.
As a consequence, a number of insurers, now lacking reinsurance protection, started to exclude terrorism coverage from policies they sell to businesses and other organizations.
For example, one result of this was that construction projects could not get financing from banks because the owners and developers could not get terrorism insurance. This alone aggravated the slowdown in the nation’s economy.
An Explanation of the Terrorism Risk Insurance Act:
The Terrorism Risk Insurance Act legislation provided that private insurers and the federal government would share the risk of any future losses from terrorism for a three-year period. Commercial policyholders were notified of the existence of the federal backstop, and then offered terrorism coverage, specifying the cost of that coverage. Policyholders obtained the option to accept or decline the coverage, or negotiate other terms. Those provisions applied to new policies written after enactment.
There were several benefits resulting from the new legislation:
This bill brought much needed capacity back to the market at a critical time.
Without this legislation, insurers were looking at an almost incalculable risk. While still large, the potential risk to individual companies could be quantified, which enabled the insurance market to function again.
Reinsurance companies are the companies that insure the insurance companies. The reinsurance industry took the most significant hit from September 11, more than half of the losses. Since they are not currently in a position to assume the same amount of terrorism risk as they were on September 11, that explains why the federal backstop was critical.
Many small- and mid-sized businesses across the country experienced little change. Their premiums went up for other reasons, but the terrorism coverage itself did not add much to their insurance costs. The major problem remains the threat of chemical, biological, nuclear and radiological attacks on high profile structures or businesses with large concentrations of employees.
Terrorism Risk Insurance Extension Act of 2005
The government passed legislation extending the Terrorism Risk Insurance Act until December 31, 2007. The government has set aside up to $25 Billion in 2006 and $27.5 Billion in 2007 as a backstop for insurers. If you are interested in reading the actual bill, computer users may find a copy of the Act at http://www.ustreas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/pdf/tria_pl-109-144.pdf (or call us and we will email you a copy of the Act).
What Does Terrorism Insurance cover?
Terrorism Insurance covers many lines of insurance including property (buildings, business property possessions and loss of rents and other business income), liability, and workers compensation. The new bill excludes commercial auto, burglary and theft, surety, professional liability (other than directors and officers liability).
Under what circumstances is there coverage?
For the terrorism coverage to be triggered under TRIA for commercial policies, a terrorist attack has to be declared a “certified act” by the Secretary of the Treasury.
On some policies a doctrine know as “fire following” applies. This means that in the event of a terrorist-caused explosion followed by fire, insurers could be liable to pay out losses attributable to the fire (but not the explosion) even if an apartment owner had not purchased terrorism coverage. Insurers are now seeking to limit fire coverage resulting from a terrorist attack, because commercial policyholders that choose to reject TRIA or other terrorism coverage are effectively paying no premium for the protection offered by fire-following coverage. So far, seven states have amended their standard fire policy laws to exclude acts of terrorism.
What is not covered?
There are long-standing restrictions regarding war coverage and nuclear, biological, chemical and radiological (NBCR) events in both personal and commercial insurance policies.
War-risk exclusions reflect the realization that damage from acts of war is fundamentally uninsurable. No formal declaration of war by Congress is required for the war risk exclusion to apply. Nuclear, biological, chemical and radiological attacks are another example of catastrophic events that are fundamentally uninsurable due to the nature of the risk. Under the Terrorism Risk Insurance Act (see below), if some NBCR exclusions are permitted by a state, an insurer does not have to make available the excluded coverage.
For apartment owners, this means that nuclear, biological, chemical, and radiological attacks are excluded although biological coverage can sometimes be bought back from private insurance companies…at a price.
Business Interruption Insurance
Property damage to commercial buildings from a terrorist attack also may include claims for business interruption. Business interruption insurance (sometimes referred to as business income coverage) covers financial losses that occur when a firm is forced to suspend business operations either due to direct damage to its premises or because civil authorities limit access to an area after the attack and those actions prevent entry to the business premises. Coverage depends on the individual policy, but typically begins after a waiting period or “time deductible” of two to three days and lasts for a period of two weeks to several months.
Business interruption losses associated with acts of civil authority (e.g., closure of certain area around the disaster) can only be triggered when there is physical loss or damage arising from a covered peril (e.g., explosion, fire, smoke, etc.) within the area affected by the declaration. The loss/damage need not occur to the insured premises specifically. Reductions in business income associated with fear of traveling to a location, in addition to closure to areas by authorities because of a heightened state of alert, would not be covered by business interruption policies.
Workers compensation and other coverages
Workers compensation — a compulsory line of insurance for all businesses with employees — covers employees injured or killed on the job and therefore automatically includes coverage for acts of terrorism. Workers compensation is also the only line of insurance that does not exclude coverage for acts of war. Coverage for terrorist acts cannot be excluded from workers compensation policies in any state.
There are essentially three types of workers compensation benefits. The first reimburses workers for lost wages while they recover from their injuries. The second covers workers for all medical expenses incurred as a result of the injuries they sustain. The third type of benefit provides payments to the families of workers killed on the job.
Life/health and disability insurance policies may provide coverage for loss of life, injury or sickness to individuals in the event of a terrorist attack.
Should You Buy or Pass on the offer for Terrorism Insurance?
Whatever the decision, most carriers invoke a “do or die” rule that the coverage may only be purchased or rejected on the effective date of coverage. If you think you want to buy coverage, you must do it at the time you renew your policy. If you change your mind, you can not go back to add the coverage later. On the other hand, if you buy the coverage, and then have buyer’s remorse, you are stuck since the companies generally will not cancel the terrorism endorsement.
Since nuclear, biological, chemical and radiological attacks are excluded from coverage, the scope of risk is from explosion, fire, smoke and other debris (but not radioactive fallout). If your concern happens to be radioactive fallout from a dirty bomb explosion, for example, and your apartment building is located on the outskirts of the city, terrorism insurance will not offer you that protection.
Most policies also exclude for domestic acts of terrorism. If another Timothy McVeigh ever wreaked havoc upon another building, it is likely the act would be excluded. Only foreign acts of terrorism are covered by the coverage.
One consequence of the 9-11 attacks were the giant clouds of dust that swept through southern Manhattan’s financial district, containing pollutants such as asbestos and other toxic materials. An explosion nearby an apartment building would cause an evacuation and a business income loss as well as pollution cleanup expenses.
In a post 9-11 world, we live in an age when we can no longer take it for granted that our oceans will protect us. With a porous border and tensions between the west and Middle East at an all-time high, it may just be worth parting with a few dollars to spare yourself the gamble and avail yourself to a good government program.
Eric Paulos is an advocate for apartment owners, licensed California insurance agent, author, speaker, and owner of Eric Paulos Insurance Services, an agency dedicated exclusively to serving apartment owners. He can be contacted toll-free at 800-974-6787, or by fax at 800-959-9603, or by email at email@example.com. Apartment owners can visit www.paulosinsurance.com to download free articles, free special reports and receive free monthly apartment insurance tips and bulletins or call 888-566-1687 to have a free report sent to you (articles and subjects updated periodically).