Jared Hutter, Co-Founder and self-proclaimed “Chief Snow-Shoveler” (more on that below) of Aptitude Development, joins Daniel Cunningham on Apartment Academy to discuss overcoming challenges and achieving success in student housing.
Unpacking the Value of Student Housing Investments 🎓
The traditional perception of student housing rarely scratches the surface of its potential. It offers unique challenges and opportunities for real estate investors. Jared explains that, unlike traditional multifamily properties, student housing demands a nuanced approach to both investment and operations.
“I talked to some big New Jersey multifamily developers. They all gave me very similar answers – you lose 100% of your tenants on the same day, they’re going to destroy everything. They gave me all these reasons why it’s a bad investment. And my mindset was good, you guys stay away from this. Everything you’re saying is completely valid, but there’s still a need for it.” – Jared Hutter
The Key to Operational Success in Student Housing 🔑
From shoveling snow to streamlining construction schedules, Jared has encountered his fair share of operational hurdles since founding Aptitude Development in 2014.
“We had sold our first job. I’m constantly on site. The concrete pad had been poured on the second floor and I see these guys not working. It was union labor union carpenters who were doing the work. It was the coldest winter in 114 years. Snow all over the place. I’m getting nervous because we have a schedule to keep these guys weren’t working.
So I asked the site supervisor, ‘Do you know what’s going on here?’
He said, ‘Well, the extension cord that was there to melt the snow and keep these guys warm was 26 feet long and OSHA regulations said it could only be 24 feet long.’
So I asked the question, ‘You’re telling me if the snow goes away, then these guys will get back to work?’
And he’s like, ‘That’s what they say.’ I started shoveling the snow. And then these guys had no excuse to not go back to work.” – Jared Hutter
Despite the early obstacles, Jared came to find the biggest challenge in student housing is managing the annual turn. Jared encourages operators to take proactive measures, such as pre-scheduling vendor services and conducting thorough inspections well before lease expiration dates. These practices help mitigate the rush and potential chaos of moving periods, ensuring a smoother transition for both management and residents.
The Misperception of Student Housing 😕
Investors initially envision student housing as dealing with irresponsible tenant behavior and constant property damage. Jared points out that while there are indeed challenges, they are not as insurmountable or as frequent as one might think.
“When you think about student housing, the first thing that pops into people’s minds is Animal House. Right? And you’re thinking that’s what you’re getting if you’re buying into this. And it’s the complete opposite. There’s always going to be exceptions. You have damages, people knock things over. But if you give people a good product, they typically will take care of it.” – Jared Hutter
Yes, incidents still occur (the theft of a golf cart or the destruction of exit signs). However, these events are exceptions rather than the rule. Jared emphasizes the importance of designing buildings and operational protocols that are “dummy-proof” to mitigate these risks.
Demystifying Annual Turn Season🔄
The annual turnover, or “turn,” in student housing can seem daunting to those unfamiliar with the process.
“It’s a crazy two weeks, right? There’s no question about it. You got two weeks to turn this building. I think the keys to getting that done are, number one, being really well prepared. Having the vendors, having everybody in place. And in full disclosure, we don’t manage our buildings. I like to think we know how to manage the manager very well. We’re about as hands on as an ownership group can be from that perspective. We know everything that’s going on, but we rely on third party management companies, some of the biggest in the country, to really guide that process and push that forward.” – Jared Hutter
A proactive approach to managing student housing involves more than just focusing on the weeks of turnover. Jared points out that management teams conduct regular inspections throughout the year, especially during times when students are likely to be away, such as Thanksgiving or the December break.
The success of the turnover process, according to Jared, is largely attributable to the effective preparation and execution by the management companies. Their experience and organizational skills ensure that even this hectic period is managed smoothly, with minimal issues.
Episode Links
Follow Daniel Cunningham on LinkedIn: https://www.linkedin.com/in/cunnuh/
Follow Jared Hutter on LinkedIn: https://www.linkedin.com/in/jared-hutter-42a215a/
Follow Apartment Academy on LinkedIn: https://www.linkedin.com/showcase/apartment-academy/
Check out Aptitude Development: https://www.aptitudere.com/
About the Apartment Academy: The Apartment Academy podcast is hosted by Leonardo247 founder, CEO, Daniel Cunningham. Each 20 to 30-minute episode features an insightful and educational conversation with a leader in the multifamily industry.
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