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L & Tea Time with Michelle: Episode 9

Topic: L & T Tips In A Co-Op Setting
Guest: Joe Chajmovicz, Property Management Technology

MMI: We’re back having tea with Joe Chajmovicz of Tree Top Development. Now we’re going to shift the focus to talk about property management technology, but this isn’t a commercial. This is going to be useful information because we’re not just going to talk about using big sophisticated pieces of management software, but what I thought was so interesting when Joe and I were talking is that he uses small, cheap, easy-to-use pieces of software, like MailChimp, he incorporates – it’s very interesting stuff. So first, Joe, I want you to start with the 3 C’s – this is your thing – the 3 C’s – but I really like it, so just tell us: what are the 3 C’s?

JC: Sure – Consistency, Commitment, Communication.

MMI: Consistency, Commitment, Communication. Okay.

JC: When you take your 3 C’s, you can start with consistency, or with commitment, whichever way works for you better. The consistency is the very important part. As far as commitment, you want to do a good job, you want to commit yourself to doing the best job. If you’re the owner, you want to have the right property, you want to run a good building, you want to make money. The same thing as a manager, if you work for a company, you have that duty to do that, so you need the commitment above all. The consistency comes in with how you operate. You can start with the easiest thing: mail your bills on time. If you want to send them out five days before the month begins, make sure you send them out every time, so tenants know they get it – not “Oh I forgot, you didn’t mail it to me.” That, by default, starts your cash flow coming in.

MMI: Alright, so moving in to the technology.

JC: Right. The way we do the mailing is through email. Any program you use today – any cloud-based program, which is ideal to use in property management because there’s software you can buy that goes on the computers, but those are computer-based, so if you’re not in your office, you cannot do the work. The ideal would be to go to cloud-based, which you can log in from any system if you have a username and password, and you do your billing, and the first thing is to start using emails.

MMI: Let me ask you this – I think with the cloud-based, the tenant portal would be much more doable than with something out of your own server room in your office?

JC: Absolutely. That’s where you come into different cloud-based programs – not to name any of them – some are better for others. There’s always that portal, like you said. There’s the Resident Portal, which they call it, and the Landlord-Owner Portal. The Landlord-Owner Portal would be to deposit checks or make payments online, and works together with the Resident Portal, and they can also see their bills. Before that, all of the tenants need to have an email address, so you have to educate the tenants with what you’re doing, your technology, because if they don’t have an email, you can’t communicate with them.

MMI: You know you were telling me the other night – you gave me a number that I thought was interesting. When you implemented this, and I think it’s a 400-unit building, the first month that you used it, you still had to mail out bills hardcopy to 230 people, so less than half. Then you noticed – was it the next month? – somewhere down the line it went down to 167 people.

JC: That is correct. It took a couple of months, with new tenants moving in, the younger generation. Even with the older generation, especially in this building we had a lot of older tenants – I’m talking 60s, 70s, 80s – they couldn’t get used to email, but some of them changed on for the same reason. They get their bills, even building notices, anything going on – if it’s a holiday, if the office is going to closed, we’re shutting down the water, somethings going on.

MMI: That’s where MailChimp comes in.

JC: That’s where it comes in, correct. There’s a company you can get a bulk dialer for people that don’t have email. There are other companies that actually combine both – you can import your email addresses and phone numbers. You can type up your messages: “Today, Thursday, we’re shutting down the elevator for three hours,” and we’ll send an email or we’ll send a robocall, so all this goes back to communication.

MMI: Let me just ask you this because a lot of the membership – some people have six units, some people have sixteen units, twenty-six units – at what point would you say that a manager or an owner should start investigating this kind of stuff, where the investment, the time, locating the technology, implementing the technology starts to make over time in terms of return on investment?

JC: I think anytime, especially in New York City, once you start dealing with HPD, MCI’s, MDR’s.

MMI: And rent stabilization.

JC: Correct, so anything 4 and above I should say. It might be easier to pick up the phone with 4 units or 6 units, but at some point, when you need the communication, back-and-forth with the tenant, it’s either for violations – where you want to be consistent and check your violations, you can set yourself up with a service that’ll alert you. HPD you can actually put your email address in with your building as a registered agent, they will send you alerts if there’s a Notice of Complaint before a violation was ever issued.

MMI: That’s important.

JC: You can actually jump on it, and take care of the problem. If the inspector shows up the next day or two days later, it’s taken care of and no violation exists.

MMI: I don’t think anybody on the show has said that tip. So you’re telling me you can, through HPD, not a third party, have HPD tell you when an inspector is on his way.

JC: Not even. Even before that Notice of Complaint. If a tenant makes a phone call that I have no heat in the building, I will get an email and I will get a phone call with the number that’s registered on the MDR with a complaint that was just registered for this and this apartment. They don’t even tell you for what, but you could at least go to the apartment and say “Hey tenant, what’s going on? What do you need? What’s happening?” And that’s where the consistency comes in, and the communication also, where you constantly in touch, and you want to have your tenants in touch. I’ll give you another example: I use Google Contacts a lot. You set up all your tenants, it comes onto your phone, and you have your tenants listed – a thousand tenants.

MMI: On your phone?

JC: On my phone. Through a Gmail account. It’s simple.

MMI: So who is managing that? In all honesty, with a thousand tenants, in any given month, there’s 10 people coming, there’s 10 leaving – who’s managing that? That’s not you?

JC: No, but I have system managers, we have leasing agents, we have maintenance directors, supervisors, superintendents…there’s a lot of people on staff, but even with a thousand units, I’m always on top of everything. Of course, I don’t follow every work order, but every day I try to make sure that the work orders get closed out, and that’s where consistency comes in. If a work order closes out, there’s an option you can say call the tenant and verify that the complaint is done. Out of every 4, 5, 6, you make the phone call.

MMI: And you do that?

JC: I will do that. When you go back to the technology, when the tenant makes the work order through an email, through the tenant portal, which will make a work order in the back-end system, so your superintendent has a copy, you get an email from it. I could email the tenant two days later, “Are you satisfied?”

MMI: This must make it 1,000 times easier when you are in the HP Part – if God forbid you’re in the HP Part, when a tenant takes you in on repairs and violations.

JC: It makes it easier throughout, not only HP, but when the tenant has a nonpayment case and they claim repairs, or for a rent abatement – “Oh, I had a leak for five months…my fridge hasn’t been working.” Can you show it? Have you tried to contact your landlord, and have you tried to contact your manager?

MMI: It can’t be anymore of this “I called and no one showed up” because there’s a trail.

JC: There’s a trail of communication. People have said, “I don’t want to be connected all the time. I don’t want to hear all the complaints.”

MMI: It doesn’t mean they’re going to go away if you don’t hear them.

JC: Exactly, that’s exactly what I was going to finish off with by saying problems don’t go away, and they will have to get fixed. Rather fix it now when it’s still a small problem. There’s a drip in the bathroom.

MMI: Today’s drip is tomorrow’s flood.

JC: Right. Like I said to you over the phone, we got a call from a tenant – I have the voicemail set up in my office in the general mailbox for complaints, it comes through in an email. So I’ve gotten calls at 4 o’clock in the morning – a bing, an email – and she’s saying she saw a roach in the apartment, 4 o’clock in the morning, and the first thing is like, “Are you kidding me?,” but this tenant is not sleeping. By 7 o’clock, the super came on to knock on the door and exterminate. It makes the tenant feel happy, or the tenant feels that you’re taking care of them. So the next time something’s happening – we have tenants calling us all the time. “I think that somebody is subletting next door…there’s a party going on…I’ve seen people that I don’t recognize.” That comes back to your communication part. If they feel you communicate with them, even if you’re the big bad landlord that takes their money, but if you give them service back with the consistency, the communication, they’ll come back. They’ll tell us things that we’ll never know if the tenant next door wouldn’t have said.

MMI: Right, and if the tenant hates you and isn’t interested in working with you on stuff.

JC: Right. It comes back to repairs also. “Oh, you weren’t going to come anyway.” I don’t have that… I haven’t had it in a long, long time. Things happen. Back to the communication part – where we constantly try to utilize every way. With technology, it’s not that it’s always to do it the easiest way; it’s just to do it.

MMI: I like that. You have a whole bunch of good sayings.

JC: And I utilize it. It works – 99% of the time – it works. Of course, it does not always work out the way I want or the way I wish.

MMI: Neither does my life.

JC: My life’s pretty good; I’m just talking about the management. I’ve been doing this many, many years, about 15 years or so. I started out with slum landlords in the Bronx, and I’ve moved to Manhattan, Jersey, and Queens – luxury buildings – and you can see the difference. The service you provide is the service you get back. It works both ways – the collection for the tenants to pay their rents on time, you’re talking about no violations, or at least they let you know, please take care of it. I have a building with 400 units and 14 violations – 10 of them is from one tenant who wouldn’t give us access.

MMI: It’s always that one guy. Joe, that’s all the time we have. We have to move on to the next time that hopefully you’ll give us some more information. Thank you.

JC: Definitely.

Teaching Segment

MMI: Today’s teaching segment is on landlord-and-tenant tips in a co-op setting. This is the first thing that you need to know that’s very important: when someone owns a co-op, they don’t really own real estate. What it is is the co-op shareholder owns shares of a cooperative housing cooperation, and because you own those shares for that unit, you are entitled to a lease for that unit that’s called a proprietary lease, so that shareholder is in essence a tenant. I know they’re paying maintenance, but that’s just kind of a fancy word for rent. A co-op case – when a landlord needs to sue a shareholder for maintenance – guess what? That’s a landlord-and-tenant matter, and it’s in landlord-and-tenant court. Let’s start with the fact that co-op cases have their own special part in the housing court, so you want to make sure that you make the case returnable to the correct place, or they’ll have to correct that, and that will cost you an adjournment. Here’s the real important thing – a lot people miss this – and it’s very important: when a closing happens, if there’s financing and there’s so often is, there will be a three-way agreement between the shareholder, the co-op, and the shareholder’s financing bank. The three-way agreement is called the Recognition Agreement; old timers’ call it the Aztec Agreement because…I don’t know why, but that used to be the form. Anyway this three-way agreement is really where the bank is saying “Listen, Co-op, I promise, if the shareholder goes into default, I’m not going to run after the shareholder, and terminate their lease and cancel their shares without telling you. I agree that I have to tell the bank first.” This makes sense, the bank wants to protect its collateral. So if you are going after a shareholder, you want to make sure to get a fully copy of their file and a copy of the Recognition Agreement, and to alert the bank in the exact way that the bank says you should notify them. If it says certified mail, do certified mail and on the number of days’ notice you need to give them. My advice is also – some of these recognition agreements can be 20-30 years old – so what you really want to do is find the bank. The address for the bank is probably ancient, and these loans get sold every 2 seconds – really find the financing bank. I’ll tell you why this is important. Guess what? The bank will pay you; the bank will pay the co-op in many, many circumstances because the bank wants to protect its collateral, especially now, because the value of the real estate has gone up, so there’s equity in there and they want to protect their investment. A lot of times banks will pay you the back-maintenance, and maybe even some legal fees. I had one where the bank seemed very uninterested, very uninterested indeed, and we were 12 hours before the auction when the bank said, “Stop! Don’t do it!” and they came in and paid $200,000 to the co-op. Now the bank pays the ongoing. How does that play out between the bank and the shareholder? The bank is going to add that onto the shareholder’s indebtedness, and that is going to become part of the foreclosure, but my experience is this always works better for the board because now they’re getting the life-sustaining maintenance they need and now the apartment situation is moving toward resolution. That’s our tips for today: Co-op L&T.

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