News and Information

2024 with Drexel Properties

President and Founder of Drexel Properties, Jeff Weinberg, shares industry insights and what sets Drexel apart.

If you’re managing more than 10 units, it’s time to change how you think about leasing. Every time you allow a unit to become vacant for one month between tenants, you lose 8.3% of that unit’s potential revenue. The good news is that if you have a 10-unit property and a unit sits vacant for a month, it’s really only a 0.83% loss of revenue. However, if you turnover 4 apartments on average, letting these units sit vacant results in a 3.3% revenue loss. In real dollars, if the average rent is $1,200, you have a $4,800 loss of annual revenue. If you are looking to sell or refinance, the impact is significant. At a 6% cap rate, $4,800 of additional NOI amounts to $80,000 of value. The bottom line is that you want to avoid letting your apartment sit vacant. This means you need to know when a current tenant is moving out. You do not want to learn this just a few days before they leave. Leasing begins with renewals! Send out renewal notices early (remember in Chicago, you need to do this 120 in advance for any tenant living in their home for 3+ years). Follow up with them to sign their renewal or confirm they plan not to renew. It’s completely reasonable to expect tenants to commit to their renewal at least 30 days ahead of lease expiration. In fact, 60 days ahead is reasonable as well. Knowing a unit is coming available sets you up to get it leased. Knowing a unit is leased allows you to plan for the turnover between tenants. Knowing ahead of time when you need to prepare and clean an apartment allows you to plan and schedule resources to get the job done quickly. . You may ask, how do you manage turnover when you have tenants moving in and out on the same day, or a day apart? The answer will surprise you. Drexel Properties has been doing this for 21 years and we have learned that overwhelmingly, people are reasonable and flexible. It appears that 80% of the time one of the parties has flexibility - either the tenant moving out can do so a few days early or the one moving in has the ability to move in after the 1st. It turns out that only once in a while you need to deal with what I refer to as the “clown car move” - the move-out and move-in happen the same day. Keep in mind that leases end on the last day of the month and begin on the 1st. This means that people are homeless overnight. Of course in the real world, it doesn’t work that way. The bottom line is, having the lead time, planning ahead, and communicating often will make the transition between tenants go smoothly. If you are on the north side of Chicago and looking for better property management solutions, please contact Drexel Properties for a consultation.

Property Management is a High-Touch Customer Service Business If you think property management is just about managing buildings and collecting rent, think again! Property management, at its core, is a customer service business. Successful Property Managers understand that their customers are not just the property owners, but also the residents who call the property home. Property management is a high-touch customer service business and why it's crucial for property managers to prioritize excellent customer service.  Tenants are customers : Tenants are the lifeblood of any rental property. They pay rent, follow rules and regulations, and expect a safe, comfortable living environment. As a customer, tenants deserve to be treated with respect and professionalism. Good property managers respond promptly to tenant inquiries and maintenance issues. They provide clear and consistent communication. Excellent customer service helps build positive relationships with tenants, which leads to tenant retention, positive reviews, and word-of-mouth referrals. Tenant satisfaction affects property performance : Happy tenants are more likely to renew their leases, which reduces turnover and vacancy rates. Satisfied tenants are also more likely to take care of the property, report maintenance issues promptly, and comply with rules and regulations. On the other hand, dissatisfied tenants may withhold rent, damage the property, or even take legal action, resulting in financial and reputational damage to the property owner. By prioritizing excellent customer service, property managers can ensure high tenant satisfaction, which directly impacts the overall performance of the property. Reputation matters : In today's digital age, online reviews and ratings can make or break a business. Property management is no exception. Tenants and property owners alike can leave reviews and ratings on various platforms, such as Google and Yelp. A property management company with a reputation for outstanding customer service is more likely to attract new and retain existing tenants, and maintain a positive brand image. Property owners are customers too: While property owners are technically the clients of property managers, they are also customers who expect professional and reliable service. Property owners trust property managers to protect their investments, generate income, and handle day-to-day operations. Property Managers must be responsive to property owners' needs, provide accurate financial reporting, and keep them informed about property performance. Excellent customer service builds trust and fosters long-term relationships with property owners, leading to repeat business and referrals. Property Management is a high-touch customer service business where tenants expect professional, responsive, and reliable service. Excellent customer service leads to higher tenant satisfaction and retention, positive reviews, improved property financial performance, and repeat business. Property Managers should prioritize customer service as a core aspect of their operations to succeed and be competitive. By understanding and meeting the needs of customers, Property Managers can build strong relationships, foster loyalty, and achieve long-term success.

Anyone who owns a dog or cat can attest that just like humans, pets will likely add additional wear and tear to an apartment’s floors, walls, and other surfaces. Many ap artment owners choose not to allow pets as they feel this move will minimize damage to their units. However, at Drexel Properties we strongly encourage owners to allow pets in their buildings. First and foremost, according to the 2022 APPA National Pet Owners Survey over 70% of U.S. households now have a pet (thanks COVID lockdown!). Every demographic is different, but no matter the community, an owner dramatically minimizes the pool of eligible renters by not allowing pets. This can lead to longer vacancies or even settling for a less-than-desirable tenant; both of which are NOI killers. Owning a pet can also make the apartment unit feel more like a permanent residence. This feeling of stability not only provides a better experience for the tenant but also increases the chance that they are likely to renew. In turn, renewing good tenants minimizes your risks, turnover, and vacancy. Is it best practice to screen each animal? More times than not, responsible people will raise responsible animals. However, Drexel advises not to blindly accept all pets, but to appropriately screen each pet just like you would a tenant. This screening process includes a picture of the animal, talking with the previous housing provider to get their take on how the pet behaved, potentially meeting the animal in person, and if necessary, leveraging a third-party service to dive deep into the animal’s tendency, behavior, and personality. To protect yourself you can also charge a pet fee in the form of a non-refundable upfront payment or an additional monthly charge. Drexel Properties works with owners to determine the best route of action to ensure owners are providing potential tenants with a great experience at a competitive price. Want to learn more about some of Drexel Properties' lessons learned and best practices to accepting and operating with pets? You can reach out at help@drexelproperties.com for a free consultation.

The Residential Landlord and Tenant Ordinance (RLTO) covers the legal rights and responsibilities of both landlords and tenants. From the city’s website, the purpose of the ordinance is to promote the public health, safety, and welfare of its citizens. The RLTO does a nice job of establishing minimum guidelines and standards to protect tenants, and rightfully punishes housing providers that do not adhere to these standards. However, it is a long ordinance laced with unintended consequences for simple, honest, mistakes such as miscalculating interest on a security deposit. Drexel Properties works with owners to ensure compliance with the RLTO, but ultimately investors should consult with a knowledgeable attorney familiar with the ordinance. The RTLO is not applicable to all situations and below are several examples not covered under the RTLO: If the building is six units or less and owner-occupied. For example, if you buy a 3-unit property and live in one of the units, the RTLO does not apply to this building while you remain a live-in owner. Non-residential units. If you buy an 8-unit apartment building with a mix of six residential apartments and two storefronts, the two storefronts are not covered under the RTLO (the ordinance does apply to the six apartment buildings) A dwelling unit occupied by an employee of a landlord whose right to occupancy is conditional upon employment in or about the premise. If you have a unit rented out to your maintenance employee, and the lease is contingent on him working for you, the RTLO does not apply to this unit. Student housing where the housing agreement is entered into between the student and an institution of higher learning where the institution exercises control or supervision of the students. Note that just because a housing provider is advertising and renting to students, the RTLO would still apply as you are likely not an institution of higher learning. Dwelling units in hotels, motels, inns, bed-and-breakfast establishments, rooming houses, and boarding houses, but only for the first 31 days of a tenant’s stay (short stay). If you have questions on the RTLO or any other property management-related topics,, feel free to reach out to Drexel Properties at help@drexelproperties.com .

If you own a building with 5 or more units, you are required to have a private company haul away your garbage. There are so many companies to choose from and while they all kind of suck, there are certain things to know so that you are protected and have control of your account. If you are working with the larger national haulers such as Waste Management (now simply WM) or Republic Services, do you look at your bill every month? You should. We routinely find that for a contract that when signed, monthly service fee was $250, now 9 months later you find that the monthly charge (before added fees) is $700. Fee creep with many of these companies is unconscionable. They will always lower the fee when you call but to do so, you are required to renew your contract with them for an additional 2 to 3 years. Which leads to the next big problem, they write their contracts so that they automatically renew. When you sign a contract with these services, always insist that they DO NOT automatically renew. This will at least allow you to terminate a contract at any time (maybe with a 30 day notice). If you find fee creep, I recommend switching services. In Chicago, we find PWD and Chicago Disposal to be among the most flexible haulers to work with. In a recent property management assignment, we found that a 42 unit building received a bill for $2,800 for one month of service. $460 of this was “extra pick up” This still left the monthly service at a staggering $2,400. Upon discussion, WM was willing to reduce the following months to $900. Both Chicago Disposal and WPD were around $500. Also the latter two services did not require a contract. The new contract will save the owner over $20,000. The bottom line, pay attention to services such as garbage hauling which if left on autopay can result in huge and unnecessary costs. If you are on the north side of Chicago and looking for better property management solutions, please contact Drexel Properties for a consultation.

Here are some of the benefits of partnering with a property management company: Provide an enhanced experience to your tenants with professional customer service experts. Property Management professionals use the latest technology and platforms to be responsive, always available, and keep excellent communication records. Peace of mind to address tenant demands in a timely and efficient manner. Property managers act as buffers between tenants and property owners at all hours. For example, you don’t want to receive emergency calls from your tenants in the middle of the night. Property management services provide 24/7 availability with an emergency after-hours system and a dedicated maintenance staff. Robust reporting and financial analytics provide a current and historical snapshot of the financial health of your investment. Receive ongoing preventative maintenance plans and bids for capital improvement projects. This is to make sure you are aware of current property conditions and projects that need attention. Most importantly, being proactive will help ensure your building’s health now and in the future. Professional advice and insights. Property Management companies offer access to licensed professionals who stay up to date on market research. This ensures you comply with housing regulations and local property laws. The ability to invest in long distance properties (investing outside of Chicago). The real estate industry offers many opportunities for out of state investments. Finding the right investment opportunity can be a difficult task if you don’t have in-depth knowledge of the local area.

What Goes Into A Multifamily LOI Offer? If you are new to purchasing multi family properties in Chicago, you may be unaware that many times a Letter of Intent (LOI) precedes an actual contract offer. The purpose of the LOI is to outline the general terms and conditions of an agreement before the actual contract is negotiated and finalized. LOIs are popular as they are easy to negotiate back and forth without fear of missing a minute  point that can set up one of the parties for failure. LOIs are a tool to come to agreement on the main big ticket items and then hash out the smaller details within the contract. LOIs can come in many different templates and level of granularity, but below are some of the key bullet points that an LOI should encompass: Purchase Price - clearly define the purchase price including personal property. Earnest Money - what is the amount of earnest money, when is it due, and if applicable, under what circumstances would the earnest money be returned to the buyer? Inspection Period - here is where the buyer defines the time period allowed to not only physically inspect the property, but also inspect all of the seller’s documentation (rent roll, service agreements, T12…etc). Given that sellers may be slow to find all documentation Drexel recommends the following language “ buyer will have XX days from the time from the date of receipt of all requested sellers documents and records to perform inspections and examine the records of the Property.” If an LOI states your inspection period is 10 days but the seller doesn’t hand over documents until day 8, you may not have adequate time to review (and the seller is also demotivated to provide everything in a timely manner). Financing - This portion states if the offer is contingent on the buyer securing financing. If there is a financing contingency, how long does the buyer have to lock up a mortgage commitment, what are the expected terms of that commitment, and is there an allowable extension period? Closing Date - what is the expected closing date and what are some of the potential factors that may cause the closing date to move? Non Solicitation - It’s beneficial to add a non-solicitation clause to ensure the seller is not bringing in any other parties to cause a bidding war. Here is an example of the clause: “Upon the execution of this letter of intent and until the transaction is closed or sooner terminated, neither Seller nor its agents shall seek or solicit any offers for the Property, nor shall they discuss or negotiate a possible sale of the Property with any person or entity other than Buyer.” Although you will have the chance to finalize a contract after the LOI, the terms of the LOI are expected to migrate to the contract. If you have put a 15 day inspection period in the LOI, the seller is going to expect that same 15 days in the contract so it is important to put time and effort into your LOI and ensure it is indeed setting you up for success. Questions on how to structure your LOI? Feel free to reach out to Drexel Properties for a free consultation at info@drexelproperties.com