For Highlands Ranch, Colo.-based UDR, finding new efficiencies in the turnover process is a priority for 2013.
The company’s “make-ready” count—the average time that it takes to move one tenant out and get the next one is—currently sits at around 14 days. And for a portfolio of about 55,000 units, each day the company’s inventory sits vacant is worth roughly $1.5 million. So, the REIT has a few initiatives under way with the goal of trimming at least one day off of that 14-day average.
When it comes to shaving off ‘days vacant’, big things come in small packages—seemingly small savings at the unit level can add up to tremendous savings at the portfolio level. For instance, if you can have tenants move out on a Sunday—the day before the work week starts—rather than a Friday, such a seemingly small decision can end up saving your company big bucks.
And bringing third-party functions in-house is another way to cut costs. UDR has begun assembling in-house, regional painting teams—painters who work only on the company’s properties to get vacant units turned quickly.
“An average paint job would probably cost between $150 and $200, four hours at $40 an hour,” says Jerry Davis, UDR’s senior vice president of operations. “So if you can have your own guys do it, and an average all-in cost of about $20 per hour, you can significantly drive down some of your costs.”
Another maintenance initiative the company recently began costs almost nothing, and is all about appealing to a maintenance worker’s pride. And it’s a pretty novel approach .
UDR developed maintenance standards last year—measuring the time it takes to do a specific repair. Then, the company names names, and distributes a ranking of all of its maintenance crews, showing how they measure up to the standard.
The fastest crew gets top honors, but the slowest get shamed. You don’t have to offer incentives, the company says, because the list itself is incentive enough: it’s human nature to want to be first, and disdain being last, on any list.
The third facet to UDR’s “make-ready” strategy is a concentration on its sales force. The company is hoping to get ahead of the curve and lease units the moment it knows a vacancy will occur—instead of waiting until the unit is “made-ready” to find a tenant. UDR supplies its sales staff with dashboards that rank all of its leads, from highest propensity on down.