COVID-19 Special: Managing Multifamily through Crisis with Clarke Arnold

spk_0:   0:00
on how we were gonna look things, and that was really the care of our employees. Um, you know, was very important obviously to us how we were going to care for our residents. Um, And then, um, you know, also any operational or procedural changes? Uh, address kind of the current situation.

spk_1:   0:19
Welcome to read around realist show about how passively invest like a pro. On each episode, I interview relisted experts to give their top investing advice, strategies and tools. I break down inside. So practical steps to avoid the pitfalls make better investments. I want to help you passively investing, approach thistles. Veteran. Realistic. I'm your host. Welcome to Ritter on real estate. I'm your host, can't redder. And today we have a very special guest. We have Clark Arnold, who's the vice president of operations for Birgitte held asset Management. In his role, he oversees marketing. Human resource is operations, client asset and training teams. And that includes property management, which is ah, lot of what we're going to talk about today. Think Clark. It has a really unique perspective of being on the front lines of what's happening. Um, with the cove in 19 outbreak right now in their portfolio. Burgeon held currently housed about 11,000 units, of which Clark overseas as we said, all the property management. So he's working toe coordinate with his teams to manage the process. So really wantedto really One thinks Clark for ah, for being on today. I know you're extremely busy with, um everything that's going on, so I appreciate a few minutes of your time. Um, you know, I think the listeners air be really interested to hear what's happening on the front lines. How are you? How are you managing the process and and what are the, You know, what are the things that are that are working and what are what are some of the lessons learned? Um, you know, to manage such a large portfolio. So you just take it back to the beginning. When all of this started happening that the outbreak was announced, Um, and things started getting really serious. I mean, what was going through your mind? Thinking about your tenants, And then how did how did you guys start to actualize a plan or the steps you went through? What was there something that she had in place or is this? Are you kind of developing on the fly made? Maybe it's a mix of both.

spk_0:   2:25
Yeah, um, I would say, uh, unchartered territory for most of us out there, uh, situation that, um probably none of us have had to deal with, uh, in the scheme of things, especially in the industry, on management property management. But, um, you know, the first thing that was important to me in a very process driven type individual and I wanted to have a process where anything and everything was to develop a protocol. You know, one of the things, uh, also a couple of having a protocol was communication and the leverage, Jean, um, you know, intellectual capital that we have, you know, within Bergen held the first thing I did was jump on a call with my team, um, and discussed you know, what they were hearing from the ground level Andi, and start from there to develop a particle on approach. So, you know, uh, most most importantly, like I said was to get across is in place and get a protocol That was kind of a living, working, breathing document that we were changing by the day you know, we have two weeks ago, um, and we took a new approach on books three, major, um, are three different approaches that three different angles on how we were gonna look things, and that was really the care of our employees. Um, you know, was very important obviously to us how we were going to care for our residents. Um, And then, um, you know, also any operational or procedural changes address kind of the current situation, things that we would have to change on the procedural front as it pertained to how we handled employees, how we handle their residents

spk_1:   4:16
on,

spk_0:   4:17
and they pertain to those you know, those to, um, you know, pieces of the business so came out at three angles, developed a protocol that is still changing to the day a situations arrived because the three things that were really important to identify out of the gate with how we're going to care for the employees, how we're gonna care for our residents and then, um, any changes we need to make to our current processes.

spk_1:   4:45
I think that's great. I mean, that sounds like a sound framework, and I appreciate that it starts with taking care of your people and taking care of the residents. So I mean, I think that shows you have your priorities in the right place. You dig into that a little more and talk about so in this he said first, you're taking care of the employees. So how do you do that? What are some of the things that you put into place or some of the communications and the protocols?

spk_0:   5:12
Yes. I'm actually gonna put my critical that you really quickly can, uh that's gonna have all the information for

spk_1:   5:21
Assad.

spk_0:   5:23
Faras care for our team members and care for our employees. Um, uh, one of the first things we did which I think was in line with most in the industry. Uh, actually most in line with in our industry and outside of the industry was to spend all nonessential travel for all of our corporate insight level employees. I think that was, uh, one of the first things we did, Um, and then as things, 30 progress. And I think we were a little bit more proactive on this front than a lot of the a lot of people in the industry or outside the industry was that all corporate employees, uh, must work remotely. Um, you know, being a company, a fairly sophisticated company in the sense that we have the technology that we can leverage to continue to move operations for at the corporate level. Ah, and meet remotely video chat, things like that. Um, you know, we required all in corporate employees toe work remotely about a week and 1/2 ago. Um, uh, and, you know, put a put a time frame of mind. Although I think it's gonna extend far past that,

spk_1:   6:32
um,

spk_0:   6:34
a scars are Sites are concerned. You know, we're unique in that, you know, we have our corporate office, But then we also have, you know, before 50 plus, uh, satellite offices out there for say, you know, you know, we have, um You know, all of our sites on our site path on our

spk_1:   6:51
teams that are

spk_0:   6:51
out on you. No boots on the ground. Um, uh, we developed an approach that with situational for each site. So in at sites that had confirmed cases of the virus or had employees had symptoms of the virus, um, we closed down the office at the site. Um and, uh, we were still able to have our employees work remotely. We had all phones forwarded from the site to our employees. We had a schedule put together for all the state employees where they would be responsible for handling the essential duties that needed to happen. A sites where we had to close down. Thankfully, today, we've only had a couple a lot of our entire portfolio that had to be completely shut down due to exposure to a positive, Um uh, test test for the virus. So, um, we did still have for those sites. We had one maintenance staff member that would still the grounds. Make sure that ground clean for sanitation purposes, Um on. And then, um uh, like that have the office that answering phones continuing to follow, but residents and communicate with residents.

spk_1:   8:09
The sites

spk_0:   8:09
that didn't have confirmed cases of the virus or have the employees with symptoms. We operated on a skeleton crew. We add on alternating schedule for the site team members, where we had 1 to 2 people back in the office with the office locked down. Um uh, pretty much on an appointment only basis. Uh, really encouraging our residents and prospects toe leverage. Uh, you know, the Internet on different means of communication. A supposed to coming into the office. So far, care of our team members. You care of our our staff. You know, those two things were important to make sure we reacted very quickly on the front line to prevent the exposure there. Um, you know, again speaking back to going back to leveraging technology are regional property managers were setting up daily phone calls with our site. Team members and the group. Uh, answer any questions, make sure that we're still moving toward a So faras operations. They're concerned. Um, So they were having, uh, daily phone calls with their teams, and so are having daily from calls with their teams. Um, we also set up in operations phone call where the marketing team's HR teams training teams are regional managers all happen to call daily. It's in an to, uh, discuss any processes that were changed to essentially create a think tank daily on how to address certain situation. So, um, uh, again, uh, kind of speaks to how we're caring for our team members there.

spk_1:   9:48
Uh, we also

spk_0:   9:50
are just street. Yeah, We're also distributing our response plan, uh, to all over employees that things progress. So how are responding? You know, in specific markets to the current situation and maybe some market specific, uh, situations that are going on like this. Shut down. Uh, in certain states that we operate things

spk_1:   10:11
like that.

spk_0:   10:13
Um, the other thing to wait for the team members. Waas um you know, out of the gate, which I think is gonna change. Uh, just, you know, um is gonna being ongoing somewhat of a struggle. For us, it was a was be established what we called catastrophe pay, which was essentially pay for those employees that needed to be off work. Todo illness,

spk_1:   10:38
symptoms of the

spk_0:   10:39
virus. They were asked if they home or they had Children at home that worked in school on making sure that they were taking care of financially through this process.

spk_1:   10:51
It's really great.

spk_0:   10:52
Yeah. Yeah. And you know, again, it's probably gonna extend through a paid leave type program. But our goal is to make sure that our employees they're not only safe, that they're still feeling apart and connected with ah Virgin held and other employees feel able to new operations Ford on,

spk_1:   11:13
then also be

spk_0:   11:13
taking care of and not have to have the, you know, additional anxiety of not knowing where their next paycheck gonna come from. So addressing those things, I think we're, uh, uh, you know, important is that pertain to the care of our team members.

spk_1:   11:27
Yeah. Wow. I mean, that's Ah, that's a fantastic answer. It sounds like you guys have a very mature process. It's you've adapted very quickly, and, um and you're offering. You're really taking care of your people. You're keeping them getting paid, even know they're there, not on site. That's that's pretty impressive. So it just speaks to the, uh, culture of the organization so that that's fantastic to hear. So, you know, going back Teoh, obviously in an apartment complex that it's it's got to be difficult to socially social distance because you've got all these people living in a little on top of each other, right? So how do you manage? How do you How do you manage that? I mean, how much I guess How much do you manage that as the management of the of the apartment? Are you Are you enforcing social distancing or you a part of that are. And how do you, um I guess how do you What are best practices to do that in an apartment complex?

spk_0:   12:26
Yeah. I mean, again, I think it goes back to communication. You know, with our residents in communication being the key here. Um, you know, unfortunately, don't have any. Uh, we wouldn't have any sort of enforcement, uh, brights and handling and handling. Uh, they stay at home order. Um, but be equipping them place. Uh, you know, by, um, you know, making sure that our offices airlock suite trip. We've shut down all of our common area amenities. The fitness centers, club rooms, you know, anything that would be open. Azad common amenity has been closed down. Bestow, you know, eliminated crowds from

spk_1:   13:07
gathering. Um

spk_0:   13:09
uh, you know, we've put into place just with our staff in their interaction because you are goingto have emergency situations. Come up where you have a water leak or something that a maintenance team member is gonna have to address. We couldn't replace the PP protocol in a personal protection equipment task. Worse, um, to address those concerns to make sure that our staff members are well protected if they had to enter in the occupied units. Um uh, again, to help protect our residents in the spread of the virus. So,

spk_1:   13:41
um,

spk_0:   13:42
um, uh, that's, you know, faras, uh, communication is I like the communications. Extremely. Keys were sending things out through social media, bulk email, tax communication to our resident, keeping them up to date on what the response plan is in their local markets and how people are best practice

spk_1:   14:02
on bond.

spk_0:   14:04
You know, obviously the CD were using the CDC and local health department in MHC n A. Have fantastic resource is as well on. Um, you know how to address some of these concerns.

spk_1:   14:18
Great. So let's let's talk about the residents. So how? I mean, obviously there's a lot of people are being sent home from work. I mean, a lot of people that probably living in your apartments. And what do you guys seeing from, you know, from the resident perspective, you know, what are you doing to assist residents as they're going through tough times, you're being out of work, being at home, other programs or things that you all have put in place or How are you thinking about the next? You know, 30 60 90 days of Of what, um, you know, of of rent payments and bad dad and things. And yeah, I mean, how how are you guys thinking about that?

spk_0:   14:57
Yeah, and I think that was you know, again, I think we were somewhat proactive on this front and maybe a little bit ahead of the curve as it pertains

spk_1:   15:05
to

spk_0:   15:05
how we're handling, um, our resident days, Uh, that has been affected whether it's, uh, lost their job. Work hours cut down significantly. Um, you know,

spk_1:   15:19
So

spk_0:   15:19
we put several, uh, uh, procedures in place to help address that. So, um, you know, we are offering, um, in the month of the April on potentially do extend beyond April were rocketing $50 off alot of our residents rent that they pay between the first of the fifth of the month. We are offering payment arrangements throughout the month of April. Uh, it was a simple completion of a form that we created that they would then, uh, you agree to date in which they would make some payment toward

spk_1:   15:57
their April

spk_0:   15:58
run. Um, you know, most leases again. state that, you know partial payments are not accepted and that rent has to be paid in full on. We have, you know, side tracked that for now, in the sense that we are just accept partial payments in the months of April and may just again help help residents, uh, you know, a to pertain Teoh financial situation. So, um, obviously, many markets that not all are not allowing for landlords and property managers to file any evictions in the month of April. Um, you know, and so it's in our best interest, obviously toe work with her residents to ensure that they can stay in their home and get this time. So, um, uh, we're offering incentives on renewal. So any leases that expire between now and 120 days out, we're not doing increases on the renewal, which

spk_1:   16:56
is probably

spk_0:   16:57
not typical, but again, in an effort to help both are residents financially and keep them in their home during a time when really no one wants to be moving,

spk_1:   17:06
I think

spk_0:   17:07
is, uh uh also a fantastic idea. So

spk_1:   17:13
wow, So you're you're not only offering discounts in the near term, but you're offering if they release is coming up for renewal to renew him at the same rate.

spk_0:   17:22
Correct. Yeah.

spk_1:   17:23
Wow. Yeah, I think that is pretty progressive, but I imagine that that will help. I mean, obviously helped the residents and hopefully, you know, help help the business too long term as you keep those people in their homes.

spk_0:   17:38
And the other thing to for residents, I think, is really important, as we have another task force to be created at our corporate corporate team eyes the resident resource, past force having properties in eight different states and ah, lot of different markets within those states. You know, every market has their own resource. Is is that pertains to, uh, financial assistance. So any unemployment links any local trustee offices, nonprofits, help President we have gathered that information on will be sending that to all of our residents that as everyone oversight, just providing them of the resource is you even offering to assist and reaching out to get the ball rolling person of our residents in a situation where they would need that is key as well. So really helping them with the resource is needed. Teoh get help that they need help and then trying to offer some things on our end. Uh, things like not charging the fees in April. Uh, no increase on renewals allowing for payment arrangements and partial payments. You know, all those things you know, along with. Hopefully, the stimulus build past, I

spk_1:   18:58
think will

spk_0:   18:59
help us get through this process with most of our resident base.

spk_1:   19:05
Yeah, I think that's great. It sounds like he has done a lot of good programs to help people out. I think that's Ah. I just think that's good to hear that the internet is your people's homes, you know? And, uh, we're not. It's a little more sensitive than the dealing with, you know, self storage or something. Right? You've got. So you guys, they're helping people out the right way. That sounds great. What do you see? The long term impact being of this, uh, this pandemic on on the multi family housing community on the industry is whole. I mean, what do you see? Yes. What do you see? What do you see? That impact being

spk_0:   19:43
Yeah. So I mean, I think I think on on optimistic front or a positive front. I would say that you know, the past week and 1/2 2 weeks and into the future. Uh, this is forced as to leverage technology on leverage. The tools that we have to continue to move operations forward otherwise, we didn't have could put a huge could make a huge impact long term.

spk_1:   20:11
But

spk_0:   20:12
I think that on optimistic and positive, you know, we've really been able Teoh collaborate and leverage technology to continue to operations forward. So I think long term, that means you know what that means. That just gives us additional tools, additional resources to use as we continue to expand and grow into markets to give us the ability, the experience to communicate effectively. Um, uh, you know, through a source that maybe otherwise, without this situation, uh, we wouldn't have had experience with. So I think, you know,

spk_1:   20:48
out of the

spk_0:   20:48
different I think that, uh, something that kind of definitely impact, uh, least virgin hold the next year. Uh, I think the biggest, uh, when the greatest impact is gonna make it economically. And we have you know, we're Workforce house being most of our properties. Uh, you know, Are you know, uh, you know, 30 that 50,000 in dueling Come

spk_1:   21:14
on. And

spk_0:   21:15
about a course of all of our properties in our tenant based currently are in the hospital, hospitality or service industry. So, you know, about 1/4 of all over residents have been impacted are going to be impacted. Um, you know, potentially from unemployment during this time. So, um, you know the approach, our approach, you know, anything you can do now to, uh I think the focus priorities are on our employees and our residents. But, you know, long term, you know, uh, from an economic standpoint, you know, obviously affect our tenant base and time for them to get back on their feet. Um, it's going Teoh probably set some priorities. I think, especially over the next six months, it's gonna change on what they value. And, um, one of things we have to offer and the great thing that we have the offers is really are operating and property management company. And the resource is that we have to help our residents communicate with their residents and make things this seamless is possible to relieve it in fighting on their own. They're So, um, I think that's where over the next six months was where we're going to see value.

spk_1:   22:30
Yeah, Now I think I think that's a really good answer, and I would just think about the impact that you guys have. I mean, having 11,000 units, that's I mean, that's a minimum 11,000 people. But it's probably more like 20,000 people consider families and things that were involved. So the impact that you're able tohave on on the communities where the where these properties are based on keeping these people in their homes, helping them through the process, helping him find a resource is I mean, that's a huge impact for for a pretty large population of people. So, um, appreciate the work that you guys are doing? I think it's important work, and, uh, you've got a great perspective about it. So, um, wanted to ask you, you know it in everything, right? There's always lessons learned. So I wanted to hear. I know you've never anticipated anything like this, but looking I mean, even looking at now three or so weeks in, I mean, what what's your biggest lesson you've learned so far? And what are you gonna do that to implement implements something going forward based on what you've learned.

spk_0:   23:38
Yeah. I mean, I think I think what I've learned which I probably I would say in the back of my mind has always been important to me, but kind of came to the forefront is the communication piece. Um, you know, we have had, like, I mentioned earlier, we had, uh, daily phone calls with, um, our corporate team. We've had ah, call three days a week with our entire company on the call, asking questions. Um, and so I think again from an engagement standpoint and keep people connected, that was extremely important. Um, And then you know, our again, our corporate executive team is also having calls three days a week. So we're at this point over communicating, and I think it has provided ah, lot of clarity a lot of, um uh, every with people being on the same page, people, you know, in an ever changing environment, Uh, making sure that everyone has been corn and, uh, has the right tools to communicate. I think it is extremely important. So I would say that Ah lesson. I've learned that I have always been important to me. But now the more the forefront is in the future, I think the communication piece, uh, in the tools we have to communicate with our residents with our staff, um, investors is is extremely, extremely important. Investing most likely would be a huge priority.

spk_1:   25:05
Now, I think that's Ah, that's great. I mean, that's something you can implement going forward on. Just you've got everybody on the same page now, right? That's Ah, silver lining. Teoh Two coming out of this and something could carry forward one thing you brought up was curious about. You mentioned the investors and really, I mean, that's majority of what this show is about is how to make good real estate investments. And what have your conversations been like with investors? What concerns that they had? What are they thinking about our, um, you know, what do you sharing with them?

spk_0:   25:39
Yeah, I think you know, uh, were extremely transparent in what we would share. And we've had, you know, investors reach out with, uh, identical concerns what we have, um and so I think we're all the same age and again, you know, communicating effectively and making sure we're transparent on where things stand during this time, I think there's gonna be There's really to focus points on my team. A zit pertains the property performance, and and it's obviously delinquency and managing at that and then also occupancy, being that we're not going to see the traffic we've seen prior to the, uh, over the next couple weeks to back. So in the unit retention and renewal, their utmost importance.

spk_1:   26:28
So

spk_0:   26:29
really putting, uh, you know, data in place and really understanding where we stand on a daily basis as it pertains to delinquency, bad debt and retention Renewal, they think

spk_1:   26:42
is,

spk_0:   26:43
um, you know, extremely important to us. And then also is evidence, you know, evidently, uh, equally is important to our investors, making sure we're just communicating on key points that, you know, uh, can be potentially the biggest movers as it pertained the property performance, Um, in their investors, understand where we stand on a frequent basis. Uh, I think where we landed,

spk_1:   27:11
Yeah. I mean, everything goes back to communication, right? And I think it's, uh, you know, it's exciting for me to hear what you guys are doing. It sounds like you're, um obviously the tongue going on. It seems like you're focusing in the right places. You guys are doing the right things by your people and by your residents and, uh, and having a huge impact, it sounds like so was that. I know you're extremely busy. I know that you're managing, like you said, 50 plus sites and working through this. So, um, appreciate you taking a few minutes to get on the phone with us today. And Ah, and have this conversation and gives him inside centre. What's going on on the front lines? No, thanks a lot, Clark. Appreciate you being on the show. Thanks for listening to another great episode of Ritter on real estate. Hit the subscribe button and make sure you don't miss out on the content that will make you a better investor. Also visit Kim trader dot com for articles, videos and tools curated just for passive investors until next time. This is Kent redder with Ritter on real estate and go out and invest like a front