Multi-Housings News: Tom Bozzuto Facebook Chat Transcript
January 25, 2012
New York—Tom Bozzuto, CEO of The Bozzuto Group, a real estate firm based in Greenbelt, Md., participated in a live chat on Tuesday, January 24th, on the MHN Facebook page to answer readers’ questions.
Below is the transcript of the chat session.
Tom Bozzuto: Good morning, everyone. I’m happy to be here.
Question: Thanks for being on the cutting edge. Please spend a little time discussing how BMC [Bozzuto Management Company] is leveraging social media to extend your brand.
Bozzuto: We believe that our online communities are an extension and a continuation of the real communities we try to create at our properties. For example, at one of our properties a few of the residents have used Facebook to create a “Glee club” that gets together in the theater to watch the TV show Glee.
Question: Great to see you on Facebook and congratulations on being named NMHC’s Chairman last week. I wonder if you might offer your key takeaways from the conference and your outlook for 2012.
Bozzuto: NMHC’s conference was terrific, and attendance was overwhelming. I guess the principal take away is that the industry has some positive years ahead of us, and that we need to do a better job of letting the politicians understand the important role apartments play in providing housing choices to America. President Bush’s comment that while in the White House he never heard anyone question the wisdom of homeownership was the best argument I’ve heard for supporting NMHC’s PAC. We need a louder voice so renters stop being discriminated against in our country.
Question: On the property management side, do you think it is a good thing to have everything in-house, even things like the eviction attorney and maintenance repair company?
Bozzuto: My immediate inclination is to say “no,” but I suspect it depends on the size of your portfolio. We manage something in excess of 30,000 units, and while we do maintain a great group of people to do minor rehab and non-routine maintenance, we contract out legal and insurance and the like.
Question: With respect to your Green initiative, is the company making significant investments in solar energy and solar-powered housing units?
Bozzuto: We keep trying to figure this out. At one of our properties we spent an extraordinary amount of time trying to figure out a way to justify using solar panels. In the end, the return wasn’t there to justify it. We do continue to look at Power Purchase Agreements as a possibility.
Question: What does Bozzuto look for when hiring outside vendors? Where do they get recommendations and references?
Bozzuto: I am, and the company is, a big believer in loyalty. In our construction company, for example, we have some subcontractors with whom we’ve been working for 20 years. And we use an architect with whom we first worked with in 1982. However, as the company has grown and diversified, we have had to expand our resources. Like everyone else, we rely on word of mouth and the persistence of the vendor to get our attention. What we look for in a new vendor is reliability and commitment to the relationship as well as reasonable pricing and great service.
Question: I would love to hear your thoughts on developing for “long-tail” apartment dwellers—the many small subgroups of people with unusual housing tastes. How can developers provide more unique properties when the financing system is structured to support lowest-common-denominator rentability?
Bozzuto: For most of the first years of my career, we in fact did design and develop for the lowest common denominator. We had three to four unit types in ever project and often, even they were variations of the same layout. However, for the past decade, and increasingly, projects are ending up with a myriad of floor plans. We have one 270-unit project with more than 55 floor plans. So I would say that to a much greater degree than ever we are trying to appeal to a diversity of tastes and needs.
This is equally true with amenities. It used to be that you’d have a big screen TV, a swimming pool and an exercise room. Newer properties have a wide range of amenities from “faux driving ranges,” Wii consoles, conference rooms, gyms with child care rooms, pet amenities…the list goes on.
Question: Which secondary markets do you feel will significantly outperform in rent growth and occupancy compared to the national average over the next three to five years?
Bozzuto: This is a tough question for a guy whose principal focus is in major markets in the Mid-Atlantic and Northeast. I do have an opinion, however. While apartment starts nationally have increased materially over the past year and will continue to do for a while, most of the starts are in a handful of major metropolitan areas. What this means is that the smaller markets have not seen significant starts since well before the recession. I think this means there will be a terrific demand in these communities as the economy recovers (and I suspect that has to happen at some point soon), and—if you can get the money—great opportunity in these markets.
Question: I’d love to hear your take on the role of technology in leasing efforts at Bozzuto.
Bozzuto: I don’t know about my being tech savvy. What I am is smart enough to surround myself with people who are. So, we are using iPads and touchscreen kiosks for leasing in a number of our communities. We are rolling out a program that allows for digital property tours through the use of iPads. (The very first digital tour led to a lease.) “Technology”, though, is a funny word because it is so pervasive in everything we do that I sometimes think we don’t recognize it. For example, the use of technology has made our leasing centers more relaxed and less formal—the fact that our staff can be unwired gives us flexibility in design. But even little things we all do, like the use of 24-hour telephone response through companies like Level One, have changed the lives of our staff, and more importantly, our prospects and customers.
Question: What do you find are some of the low-cost but effective marketing tools a growing property management company can use to reach potential tenants?
Bozzuto: Obviously, social media and public relations are two of the most low-cost and effective tools for getting in touch with your customers. I can’t reinforce enough the importance of a good website, “good” being pretty subjective, but principally defined by ease of use. We have a corporate website and then one for pretty much every one of our properties.
Question: Has Bozzuto used social media as a two-way communications tool? For example, can occupants report problems, compliments, etc. through Twitter/Facebook?
Bozzuto: Absolutely. As I said earlier, we are trying to use social media to reinforce communities. So we have trained our site staff through in-person training and webinars to respond to every comment and every online review, whether positive or negative. We have tracking so that every time a review or comment is posted it comes to our attention both in the corporate office and at the affect property.
Question: Bozzuto has an impressive portfolio of Green buildings. Has this demand been driven more by consumers or government regulation, or a combination of both? Do you expect demand to continue?
Bozzuto: It’s really not been driven by government demand. We are committed to ensuring that all of our new buildings and anything we modernize be as Green as possible. The motivation for this, other than our belief that it is the right thing to do, is that our investors want it and our customers expect it. And no, neither of them will pay extra for it!
Question: The people that work at your company have an exceptional attitude. Can you explain what your hiring process is like for property personnel and for other leaders at your company? There seems to almost be a “hire positive attitude first, then look for other qualities” approach.
Bozzuto: The key to our hiring, and I think the key to the personality of the organization, is two-fold. First, we hire nice people, and then train them in their craft. It’s a lot easier to hire nice people and train them to be skilled than it is to hire skilled people and train them to be nice! Additionally, we have [a few] simple values that guide everything we do: simple, understandable and reinforced endlessly.
Question: There’s been a trend for facilities to offer a “one-stop shop” for amenities included in with rent—gym membership, phone, cable, Internet, pool, dog-walking services, etc. Is this a trend you see continuing, or are folks going to move away from this all-inclusive mentality?
Bozzuto: Interesting question. First, we provide all our amenities at no extra charge, but of course we do let our customers pay directly for their utility bills. Secondly, a very smart fellow said to me last week that the Tea Party types and the Occupy folks have one thing in common, and that is something they share with a lot of Americans. He said that they have divided the world between partners and predators. Partners, he said, are companies like Southwest and Apple. Predators are companies like Goldman Sachs, Bank of America with their $5 debit card charge (my friends at Bank of America should note that I’m quoting here) and Sprint with their connectivity fee. Think about it!
Question: Is it too late to come to D.C. metro for new development?
Bozzuto: I hate to admit it, but I do have some concerns about D.C. If the government cuts back, as pretty much everyone seems to think is likely, this metro will not continue to lead the country in job starts. Without that, and with the projects underway, we could reach equilibrium in the market sooner than later and run the risk of overbuilding.
Question: In this economic crisis, how is it that Bozzuto has been able to maintain a steady delivery of projects when other contractors/developers have been stagnant?
Bozzuto: We decided in early 2009 that, contrary to what everyone was telling us, the world wasn’t coming to an end. Fortunately, we have some partners who shared that conviction. As a result, we were able to tie up some land at prices that allowed us to predict returns that justified investment.
Note from the editor: Please note that information, such as names and locations, were omitted from the transcript to protect our readers’ privacy. Additionally, the questions and answers have been edited for spelling and grammar.