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11:50 AM
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I've got two updates today. First, the sale of HML #22 has fallen through. Our borrower is looking for a new buyer. I don't have any info as to why the deal didn't happen.
I also received the October update for the Houston apartment complex. Things have gone wee bit south since the last yearly conference call several weeks ago, although some offsetting factors have prevented that from being reflected in the bottom line. Occupancy decreased to 89%. Management says this is due to a combination of factors, including some crime issues that have affected not just our property, but other apartment complexes in the area as well. In addition, we have seen some increased competition from nearby properties in the form of increased rent concessions. There was also some management turnover in the front office and the interim property manager was not up to the task of running the property. Management has addressed these issues by bringing in a more experienced manager from another property to run ours. Perhaps a more seasoned manager would not have allowed the competitor's rent concessions to have had such an impact on our occupancy.
Management says they have also worked with the Houston police department to increase patrols at our property. I'm not sure how effective this will be. If crime is an issue at other properties as well, I imagine the police may be stretched a bit thin trying to increase patrols at all properties. We may end up seeing a return to the use of a private security company for patrols.
Expenses declined due to seasonal decreases in utility usage, as well as the previously mentioned staffing decreases. Overall, we saw a reduction of $10,000 in expenses for October, bring our net operating income to a positive $4,200, the second highest monthly total of the year. Given that this increase is based mostly on one-time events, I would not expect this type of performance to continue.
Or should I? We also received the 2012 real estate tax bill, which features the new property assessment value. As a result of the lower assessment, the amount our lender is collecting for the property tax escrow account is decreasing by about $8,300 per month, beginning in December. That is a huge savings that will go straight to the bottom line.
I also received the October update for the Houston apartment complex. Things have gone wee bit south since the last yearly conference call several weeks ago, although some offsetting factors have prevented that from being reflected in the bottom line. Occupancy decreased to 89%. Management says this is due to a combination of factors, including some crime issues that have affected not just our property, but other apartment complexes in the area as well. In addition, we have seen some increased competition from nearby properties in the form of increased rent concessions. There was also some management turnover in the front office and the interim property manager was not up to the task of running the property. Management has addressed these issues by bringing in a more experienced manager from another property to run ours. Perhaps a more seasoned manager would not have allowed the competitor's rent concessions to have had such an impact on our occupancy.
Management says they have also worked with the Houston police department to increase patrols at our property. I'm not sure how effective this will be. If crime is an issue at other properties as well, I imagine the police may be stretched a bit thin trying to increase patrols at all properties. We may end up seeing a return to the use of a private security company for patrols.
Expenses declined due to seasonal decreases in utility usage, as well as the previously mentioned staffing decreases. Overall, we saw a reduction of $10,000 in expenses for October, bring our net operating income to a positive $4,200, the second highest monthly total of the year. Given that this increase is based mostly on one-time events, I would not expect this type of performance to continue.
Or should I? We also received the 2012 real estate tax bill, which features the new property assessment value. As a result of the lower assessment, the amount our lender is collecting for the property tax escrow account is decreasing by about $8,300 per month, beginning in December. That is a huge savings that will go straight to the bottom line.
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