GlobeSt.com: First, let's clarify the name. Bravo Strategic Marketing sounds more like an ad firm than a strategic planning advisory. Aren't you hurting yourself?

Nevitt: When I named my company in 1993, I used the terminology Strategic Planning, and owners didn't understand what that meant. So there was very little traction in the first year. Our skill sets are very well defined in that we specialize in optimizing revenues for multifamily owners. It was suggested that we use the words Strategic Marketing as a way of getting our foot in the door and bring into play our prime skills once a client has had the introduction to our firm.

GlobeSt.com: What is most lacking in terms of the multifamily industry's revenue yield?

Nevitt: Simple. It's the understanding of how current practices accepted within the industry are not only dated but are actually eroding their income stream.

GlobeSt.com: Such as?

Nevitt: Such as requiring only a 30-day notice when residents announce plans to leave when in reality they should require 60 days to provide for that added revenue stream while the next resident is procured. This is especially dangerous in weak markets when that next resident is often more difficult to secure.

GlobeSt.com: We're always hearing about best practices at conferences and networking functions. Aren't these messages sticking to the wall?

Nevitt: In terms of the networking, since most owners are experiencing the same staleness, they're sharing only what worked in the past. In terms of conference content, there are four associations that deal in one way or another with the multifamily market, and only some of them preach about economic occupancy rather than physical occupancy.

GlobeSt.com: Economic occupancy? What does that mean?

Nevitt: You always hear owners talk about their percentage of occupancy. But typically, they look only at the physical occupancy. But if they really want to know how much money they're banking, they need to look more closely at the percentage of gross potential revenue they actually receive.

GlobeSt.com: How much of a deviation are we talking about?

Nevitt: It's great. If an owner says his building is 90% occupied, how many concessions did he have to give away to achieve that? Free rent and buildouts erode the profitability of that 90% occupancy. He might be looking at an economic occupancy that's only 82%. The more aggressive the concession, the less money that owner is taking to the bank. I've heard of owners giving away six months free rent on a 12-month lease, because they're operating in a panic-management mode. They're letting the market control them rather than employing best practices.

GlobeSt.com: So how do you bridge the gap and reconcile the two?

Nevitt: We have a contrarian philosophy. We preach that before an owner looks to the market, he should look in the mirror and assess current behaviors. Is the product market-ready? Are advertising programs sufficient, and do they use the internet to its best advantage?

GlobeSt.com: What other common practices can erode profitability?

Nevitt: Most multifamily agreements expire at the end of the calendar month. That's ridiculous. You're dumping excess inventory onto the market at the most congested period. You collect rents on the first. Service tickets increase at that time of the month. The building staff's capabilities are stretched to the limit, and they have to ready apartments for show. You're bound to get the poorest quality out of your maintenance people simply because they're being pushed to their limit. That's easily worth 3% of your NOI.

GlobeSt.com: So you incorporate all of these best practices. What's the upside in dollars and cents?

Nevitt: With approximately 90 cents per sf in rent, for every dollar in NOI, I can gain $11 in value. But it will take a re-education of the front line--the leasing people who must better understand their fiduciary responsibility. Do they really know what that means? Nine out of 10 we've talked with say no.

GlobeSt.com: What about the commercial side of the business?

Nevitt: It's odd. Commercial people are required to hold a broker's license, and very few states require apartment managers to have a license. But, despite these licenses, commercial brokers still don't employ best practices. So the techniques we've discussed are very much applicable on the office side as well as on the multifamily. These are not the latest yoga techniques of the day. These are tried-and-true, basic formulas for optimizing revenues--and they can have a far-reaching impact on NOI.

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