Colorado Rental Housing Journal - January 2015 by Professional Publishing, Inc

Rental Housing Journal Colorado

January 2014 - Vol. 7 Issue 1

2. Multifamily Green Light 3. Buying Twice as Affordable as Renting 5. Property Management Reference Checks

5. Is Print Advertising Dead? 6. Secret Shopper 7. Innovators Beware: Dangerous Intersection Ahead

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Five Tips Growing Denver Economy, Surging to Full Rents Stir Investor Demand Occupancy S

By John Wilhoit Jr.

n multifamily property management, there is always more to do, but there are certain things that must be done. In the effort to maintain full occupancy, these five tips are in the “must be done” category. 1. Renewals! The straightest line to maintaining high occupancy in multifamily is focusing consistent attention on renewals. Ignoring this makes maintaining full occupancy near impossible. 2. Be Ready! Never show a unit to a potential tenant that is not ready to occupy. This includes “almost ready” and “gonna be ready next week” multifamily units. It’s either ready to occupy or… wait. 3. Know Thy Competitors! Know where you can compete and where you cannot. Wendy’s restaurant has tried many times to get in on McDonald’s breakfast revenue. They just cant do it. Know thy competitors and what concessions they are offering in the present tense. Leasing agents should know amenities of competitor properties and how/where your property can outperform. Example: older units almost always have greater square continued on page 2

trong job gains in the Denver metro will drive apartment demand this year, pushing up rents and increasing property incomes. Nearly every employment sector will add jobs, strengthening economic growth. Lockheed Martin recently announced plans to create roughly 500 high-paying aerospace jobs over the next eight years. Employment increases will keep developer optimism high; however, after a near record-setting pace in 2014, the construction pipeline will begin to ebb this year. Nearly half of all completions in 2015 will still be heavily concentrated near the urban core. Over the past several years, absorption has kept pace with increasing development; however, this year deliveries will outpace demand, elevating marketwide vacancy into the low-4 percent range. Yet, the rise in vacancy will be temporary as construction slows and new projects lease up. High demand for rentals will enable operators to lift rents at one of the fastest paces nationwide. Over the last few years Denver has

well above 5 percent since 2010.

U.S. Investors Favor Renting Over Flipping

According To Auction.com Real Estate Investor Activity Report IRVINE, Calif., /PRNewswire/ --

PRSRT STD US Postage PAID Sound Publishing Inc 98204

ranked among the top major metros for rent growth, posting annual gains

uction.com, LLC, the nation's leading online real estate marketplace, today announced the findings from its November Real Estate Investor Activity Report™, a nationwide survey of real estate investors bidding on properties offered for auction during the month. This research provides insight into real estate investment trends on both a national and regional level. Survey data collected

from investors bidding on property online and at live events across the country reveals that buying property to hold and rent is currently favored

National Findings: Investor Intent Investor Profile Flip One-time purchase 24.4% Real Estate Investor 46.7% Working on Behalf of 60.4% Another Investor TOTAL 46.6%

over flipping nationwide, although investor intent varies considerably by vehicle (online or live event) and investor profile.

Rent 72.2% 50.4% 36.8%

Undecided 3.3% 2.9% 2.8%

50.5%

2.9%

Professional Publishing, Inc PO Box 30327 Portland, OR 97294-3327

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RENTAL HOUSING JOURNAL COLORADO

Multifamily Green Light U.S. Development Pace is Sustainable for Years to Come

orecasters have begun to warn of potential overbuilding in the multifamily sector, but concerns from pundits are premature. Multifamily development in the U.S. has yet to meet pent-up demand, and annualized effective rent growth was 4.1 percent in August 2014, the highest since October 2011. At the current rate of development, we anticipate production capacity and demand will reach equilibrium by mid-2015. Subsequently, the industry could enjoy up to six additional years of sustainable production, if developers and lenders carefully monitor demand and modify deliveries ac-

Five Tips

cordingly. It has been said that multifamily is in the middle innings of an extra inning game. Statistics on the U.S. supply of multifamily units clearly show the sector is not in danger of being overbuilt, although a few markets are the exceptions. Even areas such as Northern Virginia, which recently experienced oversupply conditions, are showing signs of improvement. Here are notable signs of a robust multifamily sector: • The national multifamily occupancy rate rose to 95.2 percent in August 2014 after being at 95 per-

cent since May, according to research firm Axiometrics. Occupancy rates are holding steady despite the new supply from developers. • There is fresh demand each year for 400,000 to 450,000 units, but developers are completing only 325,000 units a year. • 1 to 1.25 percent of the existing multifamily inventory in this country is demolished each year, a metric that when not taken into consideration, skews perception of demand. With considerable attention currently on urban

development, the trend will continue in the near term. “In The Top 100 U.S. Markets, Demand for Apartments was More than Double that of the Number of Units Delivered.” Fundamentals remain strong on the demand side as the need for rental units continues to rise. In the top 100 U.S. markets, demand for apartments was more than double that of the number of units delivered, with 55,561 units completed and 129,162 units absorbed, accord...continued on page 5

..continued from front page

feet than newer product. Accentuate the positive! 4. Social media is a mainstay! Integration of Internet based advertising/media is a must no matter how small the multifamily market. The renter market is younger people (still). Young people are glued/stuck/fastens to their smart phones…. smart phones with connectivity to available apartment homes. 5. Two-way communication! Leasing Agents are far from order

takers- they are the front line representing your asset. A potential tenant coming to your Leasing Office is looking for a place to live and insight on the lifestyle represented. A big part of leasing, then, is to dialogue and convey to potential tenants what they are buying. This is accomplished best by creating two-way communication. Leasing Agents should be asking open-ended questions that draw information from potential tenants to better understand their needs and wants. This allows Leasing Agents

to provide information on features and benefits offered by the development that meet potential customers lifestyle desires. People may look for features, but they buy benefits. The only way to know what benefits they are looking for is to ask. Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily

management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit: http://www. Multifamilyinsight.com

Publisher Will Johnson • will@propubinc.com Designer Steve Olsen • steve@propubinc.com Advertising Sales Will Johnson • will@propubinc.com Terry Hokenson • terry@propubinc.com

www.rentalhousingjournal.com The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. Metro Apartment Manager is produced monthly and is published by Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007. (503) 221-1260 - (800) 398-6751 © 2015 All rights reserved.

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Rental Housing journal Colorado • January 2015

RENTAL HOUSING JOURNAL COLORADO

Buying Twice as Affordable as Renting

ven first-time buyers with low down-payments can expect to pay just 17 percent of their income toward mortgage payments as rents soar • Home buyers should expect to spend 15.3 percent of their incomes on mortgage payments for a typical home. Renters should expect to pay twice as much -- 29.9 percent of their median incomes -- to rent. • Likely first-time, 23-to-34-year-old buyers should expect to spend 17.4 percent of their monthly income on house payments. Historically, they spent about 22.5 percent of their income to purchase a home.

• It was 30.8 percent more affordable to buy a home in the third quarter than it was in the prebubble years (1985 -1999). It was 19.8 percent less affordable to rent, compared to the pre-bubble years. It's more affordable to buy a home now in most U.S. metros than it was 15 years ago, even for millennials putting down less money on a home, according to a Zillow analysis of third quarter income and home value data. Renters, however, continue to pay an increasing share of their income to their landlords as

Rental Housing journal Colorado • January 2015

Says Zillow Study

rents soar and incomes remain flat. On average, U.S. home buyers making the nation's median income and purchasing the typical U.S. home spend 15.3 percent of their income on their monthly house payment, down from the historical norm of 22.1 percent during the pre-bubble period from 1985 to 1999. On average, U.S. renters spent 29.9 percent of their monthly income on rent in the third quarter of 2014, up from 24.9 percent historically. Younger buyers, earning less money in many areas and making smaller down payments on a home, should expect to spend slightly more of their income on mortgage payments – 17.4 percent. Homes for younger buyers remain affordable thanks to continued low mortgage interest rates and their tendency to shop for less expensive homes. Continuously rising rents across the country could drive more people into the home-buying market, but they also make it more difficult for first-time buyers to save for a down payment. Washington, DC renters can expect to spend 27.1 percent of their income on rent, up from 16.2 percent historically. In Miami, rent as a percentage of income has risen from 26.5 percent before the bubble to 44.5 percent currently. ...continued on page 6

Metro Area

Q3 2014 MeZillow Home dian Household Value Index Income

% of monthly income devoted to mortgage payments in Q3

United States New York, NY Los Angeles, CA Chicago, IL Dallas, TX Philadelphia, PA Houston, TX Washington, DC Miami, FL Atlanta, GA Boston, MA San Francisco, CA Detroit, MI Riverside, CA Phoenix, AZ Seattle, WA Minneapolis, MN San Diego, CA St. Louis, MO Tampa, FL Baltimore, MD Denver, CO Pittsburgh, PA Portland, OR Sacramento, CA San Antonio, TX Orlando, FL Cincinnati, OH Cleveland, OH Kansas City, MO Las Vegas, NV San Jose, CA Columbus, OH Charlotte, NC Indianapolis, IN

$53,620 $69,337 $60,650 $62,652 $61,310 $64,823 $59,953 $92,610 $47,896 $59,927 $75,059 $77,409 $52,694 $54,085 $53,487 $70,352 $69,569 $63,607 $54,746 $46,050 $72,010 $64,120 $51,668 $60,071 $59,161 $51,884 $48,905 $55,093 $49,842 $58,212 $51,609 $99,230 $55,836 $55,332 $55,238

15.3% 25.6% 40.8% 14.0% 11.3% 14.6% 11.7% 18.1% 19.9% 11.8% 22.5% 41.5% 10.0% 23.9% 16.9% 22.1% 14.3% 34.1% 11.0% 14.7% 15.6% 19.7% 11.2% 21.2% 25.6% 12.9% 16.0% 11.5% 11.3% 11.0% 16.4% 38.2% 12.0% 13.1% 10.8%

$176,500 $381,600 $531,000 $188,200 $148,400 $202,700 $150,300 $359,300 $205,200 $151,900 $362,700 $689,900 $113,500 $277,900 $193,700 $333,700 $213,100 $466,100 $129,100 $145,400 $241,800 $271,200 $123,800 $274,100 $325,800 $144,300 $168,100 $135,900 $120,600 $137,400 $181,600 $813,500 $144,300 $155,900 $128,100

% of monthly income devoted to mortgage payment for first-time homebuyers in Q3 17.4% 30.6% 50.7% 16.2% 14.5% 18.1% 15.0% 24.0% 21.2% 15.2% 26.3% 43.3% 10.6% 28.8% 20.9% 27.3% 17.7% 42.9% 12.5% 14.7% 19.0% 25.4% 11.7% 28.3% 31.1% 15.1% 19.7% 13.9% 13.9% 13.2% 19.3% 43.7% 14.1% 15.3% 13.5%

% of monthly income devoted to rent in Q3

29.9% 40.5% 47.9% 31.5% 27.7% 28.8% 29.4% 27.1% 44.5% 24.1% 34.1% 45.9% 24.1% 36.4% 27.3% 30.8% 26.1% 42.5% 24.1% 32.4% 28.5% 32.9% 26.6% 30.5% 32.2% 29.6% 32.1% 26.0% 27.7% 24.2% 27.5% 37.9% 27.0% 26.3% 25.8%

RENTAL HOUSING JOURNAL COLORADO

Renting Over Flipping Respondents who indicated that they were making a one-time purchase preferred a hold-to-rent strategy, as did – to a lesser extent – respondents identifying themselves as full-time "real estate investors." Meanwhile, flipping was favored by the majority of respondents indicating that they were working on behalf of another investor. Auction.com's findings based on responses given at online auctions

..continued from front page

show that investors bidding online generally tend to hold properties to rent rather than flipping them. This data also suggests that purchasing property to rent is more prevalent in the Midwest and South, whereas there appears to be a higher propensity for flipping among real estate investors in the Northeast. The flip vs. rent split is nearly even in the West, with a very slight preference toward renting.

November Online Investor Data: Intent of All Investors Surveyed Region Flip Rent Undecided West 49.5% 50.5% 0% Midwest 43.5% 51.8% 4.7% South 40.5% 57.1% 2.4% Northeast 54.1% 41.9% 4.1% Nationwide 43.3% 54.0% 2.7% Conversely, investors bidding at live events appear to be more likely to flip the properties they purchase, but there were very strong regional variances. November survey data collected at live events in states where Auction.com is active revealed that flipping was favored overall,

with only Georgia, Tennessee and Texas bucking the trend. Meanwhile, respondents at live events in the Western states such as California, Arizona and Nevada showed an overwhelming preference toward flipping.

November Live Event Investor Data: Intent of All Investors Surveyed State Flip Rent Undecided Arizona 66.7% 19.0% 14.3% California 65.6% 32.2% 2.2% Georgia 41.9% 54.3% 3.9% Idaho 69.2% 30.8% 0% Nevada 88.9% 11.1% 0% Tennessee 39.4% 60.6% 0% Texas 38.7% 60.0% 1.3% Washington 62.5% 37.5% 0% Nationwide 49.3% 47.6% 3.1%

"Real estate investors appear more likely to flip a property in those regions where home values are higher," said Auction.com Executive Vice President Rick Sharga. "Higher prices can translate to a faster and potentially more significant shortterm return on investment. The hold and rent strategy seems most popular in markets where home prices are lower, allowing investors to charge a more competitive monthly rental

rate and still produce reasonable returns over an extended period of time." Flipping was also the more popular strategy among investors purchasing multiple properties per year – particularly institutional investors (those indicating that they purchase 50 or more properties per year). This was true for both online auctions and live events.

November Online Auction Investor Data: Intent By Purchase Profile Purchase Profile Flip Rent Undecided 0-1 Property/ 30.0% 65.6% 4.4% Year 2-49 Properties/ 52.8% 45.5% 1.7% Year 50+ Properties/ 60.0% 40.0% 0% Year November Live Event Investor Data: Intent By Purchase Profile Purchase Profile Flip Rent Undecided 0-1 Property/ 41.3% 56.3% 2.5% Year 2-49 Properties/ 49.8% 48.0% 2.2% Year 50+ Properties/ 55.4% 38.6% 6.0% Year Auction.com, LLC, is the nation's leading online real estate marketplace. Founded in 2007, the company has sold over $26 billion in residential and commercial real estate assets. Auction.com has over 900 employees and headquarters in Irvine and Silicon Valley, California as well as offices in Austin and Plano, Texas, Atlanta, Denver, New York and Miami. Visit www.auc-

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tion.com for more information. SOURCE Auction.com, LLC Flipping was also the more popular strategy among investors purchasing multiple properties per year – particularly institutional investors (those indicating that they purchase 50 or more properties per year). This was true for both online auctions and live events.

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Rental Housing journal Colorado • January 2015

RENTAL HOUSING JOURNAL COLORADO

Property Management Reference Checks… Are They Really Necessary? ©

Ernest F. Oriente, The Coach {Article #224…since 1995}

ccording to the Society of Human Resource Management {SHRM} over 50 percent of the information presented on a resume by a job candidate may be false or misleading. These are alarming statistics, and as the executive of your property management company, it continues to be increasingly important to understand the mindset of the job candidates that are applying for positions within your company. This article will help you and your company strengthen your reference checking process and eliminate those who will not be a perfect fit, long before a position is ever offered. Some reference checking statistics: A recent SHRM survey at www. shrm.org was sent to 2,640 human resource members regarding reference checking. The survey conclud-

ed that job candidates frequently present misleading information about their length of stay with former organizations, their past/current salary levels and their college credentials. More specifically, 53 percent of companies involved in this survey discovered falsified information about length of employment from job candidates and 51 percent discovered falsified information about past salaries. In addition, 61 percent of job candidates falsify their college credentials, a credential that can be easily researched during the reference checking process. Tip From The Coach: Based on the above survey information, conducting thorough reference checks must continue to be an important step in the selection and interview process of hiring SuperStars for your property management company.

Multifamily Green Light ing to a second-quarter 2014 report from MPF Research. Job growth is expected to continue for the next five years, according to economists at Axiometrics, barring an unforeseen shock to the economy. Job growth will drive demand for multifamily projects, and as more job formation drifts to the suburbs, so will rental demand. In a somewhat surprising observation, the National Multifamily Housing Council reports that almost 50 percent of new renters are Baby Boomers, rivaling Millennials as the biggest driver of demand. Baby Boomers are becoming “renters by choice” who trade house and yard maintenance for convenient live/ work/play environments. For the time being, several factors are holding the supply/demand ratio in check. The number of Millennials entering the renter pool continues to increase a circumstance that will not change in the near term. Millennials will constitute 24 million new households between 2015 and 2025, thus driving up demand for rentals and starter homes, according to “The State of the Nation’s Housing 2014,” a report by the Joint Center for Housing Studies of Harvard University. Immigration is also driving additional household formation in ever-increasing numbers. Renter growth in 2013 remained well above the 400,000 average annual absorption rates of the last few decades, the study reports. In addition, stringent mortgage underwriting and growing student debt push homeownership further out for many young individuals and families. Also curtailing supply are barriers to entry, which exist in coastal markets as a result of the high costs of Rental Housing journal Colorado • January 2015

Developing a reference checking process: The first step is to determine how reference checks are going to be done in your property management company and to establish or strengthen your written policy for how reference checks fit into your interview process. With some of our property management clients, their human resource department handles this important step before a formal job offer is made. With other property management clients, all hiring executives handle their own reference checks, based on the specific level of position being offered or the compensation range being presented. As for references, three or more business references should be supplied by a job candidate as early in the interview process as possible. We highly recommend asking for references early in the interview pro-

cess because this will give your hiring executives additional time to contact each organization submitted by a job candidate. This also means that your hiring executives will not be rushed to do reference checks in the final hours before making a job offer. This makes for a more thorough and complete reference checking process. Tip From The Coach: In addition to reference checks, many property management companies are now asking permission to do background checks, credit checks and criminal checks as part of their hiring process. Based on the SHRM survey statistics above and your own professional experience, have you recently reviewed your reference checking process? This process will help to link talented SuperStars to compati...continued on page 7

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land and construction. Artificial barriers in other U.S. markets are a consequence of zoning restrictions and public opposition to higher density projects that are necessary to make some deals financially feasible. Finally, the lack of skilled labor is putting stress on construction capacity, driving up labor costs and lengthening construction timetables. Many former and would-be construction workers have been lured to the oil and gas industry by higher wages, leaving the development community without enough tradespeople. While commodity prices are increasing moderately, contractors are pushing up margins to recoup losses incurred during the recession, and the additional costs will price some projects outside the realm of feasibility. The same labor dynamic is slowing the building of homes, which, consequently, also adds to the number of people in need of rental units. Opportunity still abounds in the robust multifamily sector, but future projects will face greater scrutiny from debt and equity sources, particularly as interest rates begin to rise. The “easy” opportunities are largely done and developers must be creative in originating the next round of development opportunities. As long as developers exercise constraint, it appears we will have a number of years of positive investment environment for multifamily. By Mark Culwell, Managing Director, Multifamily Development Transwestern Development Company Mark.Culwell@transwestern.com 214.534.1458

Is Print Advertising Dead? The Evidence Says No!

By Devan Gilbert, Staff Writer, Rental Housing Journal

umor has it in the marketing and advertising world that print advertisements are outdated and inefficient. The numbers, however, say otherwise. It’s time to squash this misinformation and get to the truth about the power of the print. The younger generation doesn’t read print anymore: False. Many like to claim that print advertising is incapable of reaching the younger generation, but research proves differently. While social media is an effective way to target the 18-30 year old demographic, it is not the only way. National Public Radio reported a study that found a quarter of 18-24 year olds had read a newspaper within the past 24 hours. The New York Times announced that 10 percent of its hard copy subscribers are between the ages of 18 and 24. According to Mediamark Research and Intelligence, magazine readership has increased by 4.3 percent in the past five years. The Association of Business Information and Media Companies reported that 96 percent

of business-to-business clients still read print publications. If businesses made the fateful decision to disregard print advertising all together, they would be disengaging from a massive list of potential clients. Multimedia is the only way to get readers to spend with my company. False. A December 2012 Valassis survey was conducted, focusing on the connection between print advertisements and the spending habits of the generations born in the 1980s and 1990s. Here is the break-down of the results. Over half said they would spend less money if they didn’t look at print ads. 91 percent said they used coupon cutouts from print advertisements to save money. 51 percent admitted that print ads inspire their spending habits. 30 percent said they refer to online websites seen in print ads to obtain more information 87 percent use print to choose a restaurant. Print ads make it easy to target certain demographics. Instead of throwing an advertising banner on ...continued on page 8

RENTAL HOUSING JOURNAL COLORADO

Northwest

s strong market conditions continue to prevail in the Pacific Northwest, many apartment communities are maintaining high occupancy numbers, and others are full with a waiting list. Conditions are optimum for raising rents and increasing property values. Residents of these communities are getting an education in the high cost of relocating and are opting to stay put, even if they receive a significant rent increase. What all this means is that those on the leasing end are in the driver’s seat: It is a seller’s market! However, just because you are full does not mean you quit selling or stop providing quality customer service. Unfortunately, after several years of tough market conditions, some leasing staffs are ready for a break and they are taking it during regular office hours! Based on some disturbing trends that started showing up a couple of years ago and that are still going strong, the Secret Shopper is wondering if some leasing consultants

T Ask

Secret Shopper

have the following questions: When I have no vacancies or unrented notices, is it really necessary for me to answer the phone, return calls or set appointments? When I have no apartments available to rent, do I really have to keep appointments that conflict with my lunch break? When my community is full and I’m having a slow day, do I really need to stay open until closing? While the above are “imaginary” questions, I can’t help but wonder how many of these are real, unspoken thoughts in the minds of some leasing employees. It may be true that the “leasing” side of the rental office becomes less challenging when your community is 100% occupied. However, even without apartments to rent, you have an existing customer base. Your residents still must be able to conduct business with you in order to renew leases, pick up packages, request

maintenance service, etc. If you choose not to answer your phone, return calls or keep your office open, then you are not providing the level of customer service you promised when they were prospective renters

If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail.

Regarding your 100% occupancy Congratulations! - It took a lot of hard work to get there. Of course, depending on how you treat your residents will determine if you STAY there. Oh, and one last thing: How are you coming along with your waiting list? Are you keeping in touch with the people who expressed interested in renting at your community or did you just take their name and number to “humor them?” Remember: The future is unpredictable, but a current, updated waiting list is a “sure thing.” Instead of “closing up shop” early on a slow day, how about making some follow up calls. You and your future renters will be glad you did!

Twice as Affordable

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"Despite rising home values, home ownership remains very accessible for buyers that can scrape together a down payment – even if that down payment is relatively modest – find a home to buy and secure financing," said Zillow Chief Economist Dr. Stan Humphries. "But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those particular stars align, largely because renting is so unaffordable these days. It's very difficult to come up with a down payment when so much of your monthly paycheck – especially on an entry-level salary – is going to your landlord instead of into your savings. Buying conditions are get-

ting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into home ownership." Home ownership rates in the U.S. have steadily declined, even as the housing market has recovered, in part because millennials have delayed their entry into the housing market. But it is likely that by the end of 2015, millennials (aged 23-34) will overtake Generation X as the biggest group of U.S. home buyers, a transition aided by widespread home affordability.

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Rental Housing journal Colorado • January 2015

RENTAL HOUSING JOURNAL COLORADO

By: Neal Thornberry, Ph.D.

nnovation is not for the faint of heart, as Galileo learned when he said that the Earth revolved around the sun. He was scorned, threatened with death and eventually put under lifetime house arrest. Innovators are not always welcome guests even within their own organizations, and their challenges are heightened by a dangerous organizational intersection: where Complexity meets Wackiness. The more complex an organization, the more difficult it is for the innovator to figure out where to go with a good idea and how to weave it through the organization to implementation and eventually value creation. Growing organizations cannot avoid complexity. They add processes and people, divisions and specialists. Since we can now measure almost everything, they often believe if one measurement captured in a report is good, then more are better. One company, with whom I worked, learned that its sales people were losing a month of selling each year because of the time spent filling out reports required by the finance department. This example of complexity gone awry drove the organization into Wackiness -- sacrificing revenues for reports. There are many other examples of Wackiness getting in the way of innovation – and examples of stealth innovators circumnavigating them. One of my favorites is the tale of Jim Repp, head of Jeep design at the old Daimler Chrysler Corp. Jim knew that many Jeep lovers spent thousands of dollars upgrading their Wranglers for serious offroading. This gave him the great idea for a mass-produced Jeep with all the upgrades built in at half the cost. When he shared his idea with marketing, they said there was no market for that type of vehicle and besides, you’re an engineer, not a marketer. Undeterred, Jim and a small band of innovators I call Innovation Judo masters built a secret prototype. They took it out on the Rubicon Trail in California for off-road trials and invited the senior executives to watch. Jim’s prototype outperformed the other Wranglers and, as crowds gathered around it, the executives saw their enthusiasm. They immedi-

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ately authorized production of what is now a best-selling icon, the Jeep Wrangler Rubicon. Fortunately for Chrysler and other companies, there are a few passionate innovators like Jim who won’t let go of their idea no matter what. They’ve developed a special set of skills (I call them Innovation Judo) that allow them to bypass those blocks. They are: • Discipline • Leverage • Speed • Openings • Circling • Unbalancing • Redirection The Jim Repp story illustrates the application of several of these principles. The discipline to plan for building a secret prototype; leverage in getting senior executives to support his idea; utilizing the opening at the Rubicon Trail; and then using the surprise (a tactic of unbalancing) of a Jeep that looked like all the other jeeps on the trail but outperformed them. Since it takes so long to correct the dangers at the Complexity/ Wackiness intersection, identifying and supporting a few Innovation Judo Masters can go a long way in overcoming some of the most difficult barriers to innovation. Neal Thornberry, Ph.D., is the founder and CEO of IMSTRAT, LLC a consulting firm that specializes in helping private and public sector organizations develop innovation strategies. He serves as the faculty director for innovation initiatives at the Center for Executive Education at the Naval Postgraduate School in Monterey, Calif. Thornberry, author of “Innovation Judo:Disarming Roadblocks & Blockheads on the Path to Creativity” (www.NealThornberry.com), holds a doctorate in organizational psychology and specializes in innovation, corporate entrepreneurship, leadership and organizational transformation. A respected thought leader in innovation, Thornberry is a highly sought-after international speaker and consultant.

www.rentalhousingjournal.com Rental Housing journal Colorado • January 2015

agement industry professional since ble positions within your property 1988--the author of SmartMatch management company and will Alliances™, the founder of reduce the chances of hiring low perPowerHour® [ www.powerhour.com ], formers. Questions to ask when calling a the founder of PowerHour SEO [ www. powerhourseo.com ], the live weekly reference: It has been our experience PowerHour Leadership Academy [ that all of our property management www.powerhourleadershipacademy. clients want to create their own cuscom/pm ] and Power Insurance & Risk tom reference checking form. Here Management Group [ www.pirmg.com are some sample questions to get ], has a passion for coaching his clients you started with yours: How would on executive leadership, hiring and you characterize his/her success motivating property management with your company? How would SuperStars, traditional and Internet you characterize his/her energy level? How was this person viewed SEO/SEM marketing, competitive sales strategies, and high leverage alliances by his/her peers? Describe the types for property management teams and of decisions this person made on a their leaders. He provides private and daily basis? How did this person group coaching for property managemanage their time? Tell me about a ment companies around North disagreement or a challenging situaAmerica, executive recruiting, investtion and how this person handled it? ment banking, national utility bill Specifically, how was this person paid? Why did this person leave auditing, national real estate and apartment building insurance, SEO/SEM your company? Based on what you web strategies, national WiFi solutions shared today, would you hire this [ www.powerhour.com/propertymanperson back? agement/nationalwifi.html ], powerful Tip From The Coach: We know tools for hiring property management that many companies are no longer SuperStars and building dynamic giving references on past employees teams, employee policy manuals [ www. based on legal and liability concerns. powerhour.com/propertymanagement/ Most of our property management employeepolicymanuals.html ] and clients now ask a job candidate to sign a reference authorization form social media strategic solutions [ http:// www.powerhour.com/propertymanagegiving permission to their previous ment/socialmedialeadership.html ]. employers for a full and candid refErnest worked for Motorola, Primedia erence while also waiving any legal liability. In addition, we strongly and is certified in the Xerox sales methodologies. Recent interviews and artiadvise our clients to call each refercles have appeared more than 8000+ ence given by a job candidate and when the reference conversation is times in business and trade publications and in a wide variety of leading magacomplete --- ask this person, “Is their zines and newspapers, including Smart someone else within your company Money, Inc., Business 2.0, The New who can give me an additional referYork Times, Fast Company, The LA ence on this job candidate?” Speaking Times, Fortune, Business Week, Self to a second person within the same Employed America and The Financial company is the secret to getting Times. Since 1995, Ernest has written accurate and detailed references. 225+ articles for the property manageWant to hear more about this ment industry and created 400+ propimportant topic or ask some addiVALLEY, METRO, ARIZONA erty management forms, business and tional questions about how to build a marketing checklists, sales letters and custom reference checking form or to presentation tools. To subscribe to his see a sample reference authorization form? Send an E-mail to ernest@ free property management newsletter go powerhour.com and The Coach will to: www.powerhour.com. PowerHour® is based in Olympic-town…Park City, E-mail you a free TeleForum invitaUtah, at 435-615-8486, by E-mail tion. Feb, Apr, Jun, Aug,ernest@powerhour.com Oct, Dec or visit their website: www.powerhour.com Author’s note: Ernest F. Oriente, a business coach/trainer since 1995 [33,000 hours], serving property man-

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Print Advertising Dead? ...continued from page 5 Facebook or Twitter, you can send magazines, flyers or catalogs to homes in certain areas. Nordstrom, a billion dollar company, still spends a pretty penny on print advertising. Strategically, different versions of catalogs are printed and are distributed according to how much a specific customer spends annually and which departments they shop in. Nordstrom is able to target where and who its catalogs should be mailed out to. Finding the appropriate audience for a company’s advertising is made easy with print resulting is less wasteful marketing spending and increased profits for a company. Why should I use print ads? Large companies aren’t using them anymore. False. Nordstrom isn’t the only company not falling for the rumors. In 2011 Nike spent $113 million on advertising that did not involve the Internet. Google spent $1 million on non-internet advertising that year as well. We all know these companies have some of the most brilliant marketing teams in the world, which is exactly why they are still using print advertisements. Madison Hildebrand, a star of the Bravo show, “Million Dollar Listings,” has had massive success as a Realtor and is well-known by most television view-

ers and Internet users. However, it should not be assumed that every potential client uses the Internet or watches cable TV. Mr. Hildebran knew this and recently advertised himself in a four-page spread in Homes and Land magazine. If business thriving people and companies are still using print advertisements then why shouldn’t everyone else?

on your computer screen? What about the company that was advertising itself? Most likely not, and you are not alone. These ads don’t pique most people’s attention. It is not uncommon for somebody to unwind by reading a magazine or newspaper. In a relaxed environment is where information, in this case an advertisement, will be noticed.

What makes print ads “work”? Great question. As stated before, print is easy to target. People also tend to pay more attention to material they are subscribed to rather than a pop-up ad or an ad interrupting their music on Pandora. Websites tend to be skimmed quickly, advertising on TV or on the Internet is only there as long as it is paid to be there. A magazine tends to find a home on a coffee table or in a dentist’s office where it is picked up and sifted through by dozens of people over several months. The Internet thesedays is full of scams and fake “news”. Print advertisements are more trustworthy to potential customers. The Internet has helped bring us a fastpaced world. Many people turn to the Internet to accomplish something quickly and efficiently, but that is not necessarily the best place for an advertisement. Can you recall the last advertisement that popped up

New advertising techniques are always better. Wrong again. “Out with the old, in with the new” shouldn’t apply to everything. People may argue that spreads with advertisements are flipped past, happens to the hundreds of emails consumers receive a day titled “Cyber Monday sale” “Going, going, gone” or “All orders over $50 take $5 off!” They go directly into the deleted items folder. Although the saying “print is dead” has been echoing through the advertising world, research shows differently. Penn State conducted a study, that concluded that print ads stick with customers more than online ads. Print is also an advertising technique that can stimulate multiple senses. Take sample perfume ads in magazines, or shopping catalogs, or sample textures in home improvement magazines and pamphlets. A potential customer is not going to be feeling, or smelling anything through

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the Internet. By stimulating senses, an advertisement becomes more interesting and memorable. Internet and multimedia advertising is important True. Although print advertising continues to prove itself in the marketing world, other forms of advertising are important as well. Many print ads include the company’s website to provide more information. Integrated marketing programs have been proven to be extremely successful if correctly executed and almost always involve print ads. The use of print advertising is increasing. True. The biggest myth of all is that print advertising is quickly slipping through the cracks. This couldn’t be more wrong. According to Media Radar, the medical and pharmaceutical, home furnishings, technology, and beverages categories have all published more print ads than the year before. Ralph Lauren, Chanel, Calvin Klein and Louis Viton amongst other luxury brands have dramatically increased their print ad spending since 2012.

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