BOTTOM LINE : ASSET MANAGEMENT

APARTMENT FINANCE TODAY • MAY 2008

Guard Duty

Don’t minimize the importance of the basics like tenant screening and lighting. Plus, new technology has made intrusion alarms possible in individual units.

By Dana Enfinger

Security measures are likely to save you more than peace of mind even if no crime is ever committed on your property. Residents who feel safe at your apartment complex are less likely to move.

Apartment communities with moderate rents tend to have high turnover, according to data from the National Multi Housing Council. Many of these properties experience annual tenant turnover rates of more than 50 percent. The higher your turnover, the more it costs you—whether you are looking for new residents or addressing the wear and tear related to high turnover.

What are the best security measures to protect your properties? That depends on how big your security budget is and the specifics of each multifamily asset you may have in your portfolio.

“It’s best to remember the basics, and one of them is good resident screening,” said Patrick Conn, president of property management for the Charles Dunn Co., a real estate firm based in Los Angeles. “Outsiders should always be more of a threat than the insiders, meaning your residents.”

Crime-free lease addendums

Conn encouraged apartment owners and managers to have potential residents fill out a crime-free lease addendum, particularly if the complex is located in an area known for criminal activity.

“This addendum would be a good idea when there may be an existing problem at a property or if the property is located in an area where there’s a high crime rate,” said Conn. “You don’t normally see this addendum used at more upscale apartment complexes.”

The addendum states that if a resident is involved in any criminal activity he or she can be evicted. This document is one facet of the Crime Free Multi-Housing Program, which was first successfully developed in Mesa, Ariz., in 1992. Approximately 2,000 cities and several counties in 44 states have adopted the program, which was created to reduce crime at apartment properties.

Owners and managers may need to seek legal advice to determine how to implement stronger eviction policies at their communities.

Let there be light

Adequate lighting is another essential security measure. This means enough lighting to make sure building numbers are visible at night and allow anyone nearby to identify a possible threat from 100 feet.

Entrances to any access gates and units should have plenty of light, said Mark Szittai, senior sales executive with Network Multifamily Security Corp., a security firm based in Irving, Texas. Szittai works with market-rate and affordable multifamily clients in Alabama, Florida, Georgia, North Carolina, and South Carolina.

Szittai said that one popular security device, controlled access gates, might not be worth the expense for the costs incurred to maintain them.

Gates and video monitoring

“A gate around a property may be good in that you can see into the property, but a controlled-access gate tends to require a lot of maintenance,” said Szittai. “That expense can eat into your bottom line, and it isn’t going to keep the bad guys off your property.”

Video surveillance might be better suited to higherend properties because of the manpower required for monitoring the feeds.

“Video surveillance is much cheaper than it has been in previous years,” said Conn. “Those systems, while they might be a slight deterrent, are only going to be valuable if someone’s actually watching the video.”

If you want to use video surveillance at your property, it makes more sense to monitor certain areas instead of trying to monitor every inch of the complex.

“Forget trying to monitor the whole parking lot or garage,” said Szittai. “That is going to get quite expensive. Stick to monitoring the property’s main entrances, some walkways, and common areas.”

Unit alarms

Intrusion alarms in individual units at apartment complexes are becoming more popular—and not just at luxury communities.

“Owners of Class B and C properties are getting alarms for individual units,” said Szittai. “It translates into value for residents. Most would be willing to pay more in rent for that amenity.”

With new wireless technology developed by Network Multifamily and General Electric, units no longer need to be equipped with a telephone landline to use an alarmmonitoring device. The average cost of individual alarms is about $25 to $30 per month per unit.

Remember to show off extra security measures—like individual alarms and anti-tamper sliding glass doors— to potential residents. But you want to be careful when you do.

“You don’t want to give people a false sense of security,” said Conn. Security measures can help you attract potential tenants, and residents who feel safe are most likely to stay.