[Note: To follow is an excerpt of an interview with Joe Bailey, President and Founder, and Kara Rice, Chief Information Office and Co-Founder, of Grace Hill, Inc., the multifamily industry's leading provider of state-of-the-art online education. To listen to, or download the show archive MP3, go to www.IncomePropertyInvestmentTalk.com/091708.]
Mosca: Your membership has grown to include about 200,000 members worldwide, and those members represent multifamily associates in every job description in every state in the country. In addition, you're doing more than 300,000 courses a year online at GraceHill.com. That is impressive.
Bailey: Thank you Peter. We are celebrating this November our 10th anniversary. Today we are having close to a hundred classes taken literally every hour of every day of every week. When we first started Grace Hill, we went down the traditional marketing routes to try to get our message out there and we met with some success. Our popularity has grown and word-of-mouth today is by far our greatest source of new business and new membership.
Mosca: That's viral marketing at its best. That said, do you think this industry might be a little slow in terms of adopting and making technology a part of their daily business practice?
Rice: Real estate is a conservative business. There is certainly a sense of, "if it ain't broke don't fix it," so it can take some convincing to show operators that technology really can improve their operations. In the multifamily industry, we saw a boom of new vendors and new services available to the industry in early years of the new millennium. However, you can probably count on two hands those groups that are still standing today. Multifamily operators are inherently suspicious when they hear there's a new solution. Their radar buzzes, their guard goes up and they want it to be a proven success.
Mosca: Has social media improved the multifamily industry?
Bailey: At this point, the votes aren't in yet. Granted, the prospect looking for an apartment would rather hear comments and critiques -- both good and bad -- about the place they're thinking about renting from people who actually live there. They don't want hear the marketing message from the management company, especially the 18 to 24-year-old age bracket. That said the number of instances where someone has rented an apartment site unseen has grown tremendously. It is a trend and something that the industry is going to have to deal with, especially because customer service becomes even more important than it has been in the past.
Rice: Social media is helping to tear down the walls. Managers and operators are being less proprietary about their knowledge and their skills and they're willing to share information with each other, which benefits us all.
Mosca: Are you seeing more transparency throughout the commercial real estate business?
Rice: Absolutely. We are adapting to this technology that perhaps the younger folks who work or rent are more born to. The aggregation of data has made a tremendous impact on onsite operations. Fifteen years ago when I was onsite managing an apartment community the reporting was such a burden. It could take at least half of a day, once a week to generate the reports the home office needed. Month end reporting, would take one solid day. That's just gone away because of Web-based solutions.
Mosca: What are some of the advantages of online training?
Bailey: With anywhere from 50 to 80 percent turnover on an annual basis, an operator's training needs are through the roof. They have to train frequently, and in a lot of different locations. When you look at the time it takes to put together a live class and the costs of travel for the students, the instructor, or both, a single day of training for one person is at least $500, upwards of $1500. An online course is self-paced. The student has the course material and learns on their schedule. From a cost perspective it is a no-brainer. One other great advantage to this is that with online training, content is delivered consistently.
Rice: An added benefit of online training is the ability to get your associate or yourself trained exactly when you need that education. Here's an example. A new associate needs to get trained in housing laws but you do not have an in-house training department. Instead, you rely on the local Apartment Association for that training but their annual Fair Housing Seminar was last month. So what options do you have? You may have to wait 11 months for this associate to get their fair housing training. That's not a very good solution. Distance learning solves that by making the courses available to the student at their convenience. We've actually seen an interesting trend with our training. We see training at unusual times. Sunday mornings are a very big time for training. Plus, utilizing online training offers tracking tools so you can see exactly who has taken what. This can reduce risk. For example, if you are able to track and document and verify that everyone has received fair housing training, should you face a fair housing allegation, you can show with certainty that an effort was made to get your folks knowledgeable and compliant with fair housing law.
Mosca: One word we keep hearing in this presidential campaign season is change. What do you think is the biggest change in the commercial real estate arena in the past couple of years?
Rice: There has been a lot of change and to point to the biggest is hard. Consolidation of owners and operators is one change. There are less management companies than there were at one point and then the same can be said for service providers as well. The breaking down of the barriers and people being more willing to work together, collaborate, and share information is good for the industry as a whole.
Mosca: What is your golden nugget for today?
Bailey: Educate your employees upfront, and early. Somebody once asked me if I have turnover why should I spend money on education? My response is would you rather have uneducated employees that stick with you for eight years or someone who knows what they're doing and stays with you for two.
Rice: Education is the key to success in multifamily management. I encourage individuals and owners, and management companies to take advantage of opportunities they have to educate themselves, to educate their associates for the good of their products and for the good of their company as a whole.