In today’s rental market, life couldn’t be better for the owners of multifamily developments.
Rising rents, declining vacancy and a positive economic outlook suggest that the market could be robust for some years to come.
Gone are the days of deferred maintenance, A/P extensions and heavy scrutinization of financial profit and loss statements and general ledgers. Apartment owners can finally take their foot off of the gas and effectively focus on the next stage of evolution in their organizational path.
When business is good for apartments owners, it’s great for third-party management companies as well. The ease of client pressure often translates to better operational harmony between owner and manager. Effortless gains are realized, and in many cases, consequently, financial decisions of the manager can be less examined.
It’s in moments like these – with perfect harmony taking place – when all of sudden, new information comes along and changes the game. Will you be able to adapt? One Phoenix company is revolutionizing the property management business, and many apartment owners are starting to take notice.
Stellar Residential, a Phoenix-based property management firm, has launched an innovative management platform and concept that not only creates a whole new level of transparency to property owners, it demands it as well.
Management company overhead, and all of its ambiguity, has officially left the building. Most owners realize that they endure management company-related expenses and may even expect it to a degree. But few take the time to really drill down into a true conceptual understanding of what they are paying for precisely, and whether it truly benefits the property or the management company
The first ‘ride-share’ of property management
Dale Phillips, Jay Dassele and Tanner Bickelhaupt had no interest in creating another traditional management company. Actually, they wanted to do the exact opposite. They set out to design a platform that eliminates the need for virtually any and all backend office management.
“We have seen such an explosion of expertise-based companies launch in recent years, all surrounding the specific and unique facets of multifamily management,” said Dassele, Vice President and Co-Founder of Stellar Residential. “Whether it be accounting, HR, training or marketing, their wheels are already in motion, and we just hitch an economical ride.”
The liberation from the backend office management alone eliminates any pressure of hypervigilant line-towing when it comes to determining what is deemed appropriate to charge back to a property.
“In my experience, I’ve seen so many instances where there would be a massive disposition of assets within a management company, yet no change whatsoever to corporate structure,” said Bickelhaupt, Partner at Stellar Residential and multifamily investor. “One can’t help but wonder where these expenses go.”
Although corporate positions aren’t usually subsidized through properties, they can, without doubt, create line-blurring positions and justifications on what other operational items a management company ultimately decides to charge an owner.
“We made the switch to Stellar, transferred all of our same onsite people to its platform with not one change and saved 10 percent for the year on our overall expenses,” said the ownership group of Timberline Place in Flagstaff, one of Stellar’s clients. “Of the 10 percent savings, 80 percent of that came in the administration and payroll line items. It was really eye-opening and most of all, revenue increased 5 percent for the year which I attribute to the training that our onsite folks receive.”
Brand separation ‘a la carte’
Stellar’s concept and philosophy is that a client’s asset should not be financially impacted for carrying the heavy weight of brand-management to the degree that exists today. Nor should it be required to participate in the systems and arrangements that feed it.
Stellar is passionate about ensuring the client does not bear the burden of such item as company-wide tenure bonuses, district manager/service manager commissions, roving leasing consultant/maintenance tech payroll and burden-share, job postings and swag for internal company events. Circumventing backend office only adds to the savings by reducing the necessity of items such as postage, delivery and IT service that is often levied as a subscription.
“These things add up,” said Phillips, President and Founder of Stellar Residential. “We believe that there are thousands of dollars each month that simply do not benefit the property directly. There is no upcharge, vendor ties, or inhouse services. We are confident in our recommendations.”
Further compounding the value in operating through this method, Stellar streamlines its employee benefits through its HR firm, latching onto big company pricing structures that offers employees superior coverage in most cases.
The expense savings Stellar Residential has experienced as a result of its company structure has been just that. A result, but never the initial intent. Perhaps the real value Stellar Residential offers is the reason that its sets the company up this way.
Stellar wants direct involvement and influence in the owner’s asset and the teams that represent it. The organizational structure creates a clear pathway to do just that.
“We believe this is the way of future operations, and someday, will be the only way. When you’re hiring us, you’re truly hiring us,” Phillips said.