Question

Scenario #1 owner: Sarah. Sarah owns a 100 unit apartment building that her grandfather built in Los Angeles shortly after WWII ended in 1945. Many soldiers returning from the war lived in the building including Sarah's mother and father. Sarah's mother and father managed the building and Sarah lived there all her life making friends with all the other families that lived there. Sarah met many movie stars who lived there as they were beginning their careers and Sarah loves the building. Her goal as owner is to take the best care of the building and tenants as possible. As property manager what type of plan would you propose to Sarah?

Answer 1

Sarah clearly has an emotional bond with the building and has amazing memories and connect with it. At the same time, there should not be any doubt that it is her business of leasing the apartments units to tenants and hence, it must be seen not just as a personal passion but should be considered along with the risks, responsibilities and opportunities of running a business.

As a property manager, I should suggest her a plan that helps her fulfil the goal of taking best care of the buildings and tenants, as well as helps her realize the true business potential from the activity of leasing apartment units of the building.

The two objectives in fact are interrelated and would reinforce each other. If Sarah's business is profitable and healthy, it will help her taking best care of her tenants and building. Similarly, if her tenants are happy and building is well taken care of, it will increase her chances of sustaining a blossoming business.

As Sarah's property manager, I would suggest her the following plan for managing her property's operations:

• To gain competitive advantage over her competitors by investing in maintenance and upgrades of the building. This will help her give great convenience and quality to her tenants, keep building in great shape as well as charge a premium as compared to her competitors
• To brand her building in the locality by using the historical heritage it possess, i.e. the heritage of having hosted WWII soldiers which will create an inspiring perception in the minds of potential future tenants and will create differentiation for her building in the market as compared to other buildings in the locality. At the same time this will cement the legacy of the building meeting her personal objectives as well
• She must ensure that she charges rents that are competitive in the market and at the same realizes the true potential of the building given the quality of her services and heritage/image of the building
• To automate the processes that don't necessarily require human intervention, including security, cleaning, mobility, etc. which will help her expand her margins, increase the free cash flow from the business and enable further investment in the upgrades and maintenance of the building

Therefore, as a property manager I will suggest the above plan to Sarah to maximise the potential of her business and take care of her building and tenants at the same time.