Meeting the Challenges While money plays a large role in the motivation of Pinnacle’s employees, another reason they continue to succeed is because they’re having fun, says Harrelson. “[Goodman and I] are just fun loving guys,” he says. “We like to laugh. but we take our clients’ needs very seriously.” And, Pinnacle is no stranger to challenging situations. In 1987, when the company first entered the Phoenix market, it was brought in to lease-up a 1,400-unit portfolio. The developer was two years out on his construction loan, had changed property managers three times in six months, had more than $250,000 in accounts payable (AP) outstanding and the buildings were only 55 percent occupied, recalls Harrelson.
Pinnacle moved an entire on-site team to Phoenix to start turning the property around. The company needed to act fast because the market was beginning a downward spiral.
“We filled the buildings up and we chipped away at the AP as we went. Obviously, [we] got some cooperation from the lender to give us some breathing space and succeeded in the sale [of the portfolio] within nine months,” says Harrelson.
Pinnacle filled the units using basic management techniques. “It was management 101,” he says. The company created a high customer service-oriented, on-site staff to help fill the community. The leasing presentation became crisp, the property was cleaned and the staff was highly motivated.
A bonus structure also was put in place that gave the leasing staff a flexible dollar amount for leasing a unit above the base rent. Instead of using concessions, “they were very incentivized to beat the targets that we used,” says Harrelson. “They were very motivated, because they could make as much as they wanted, and with 1,400 units that bonus could add up quickly.” The on-site staff used several strategies to attract and retain residents, from parties and giveaways to resident referrals. These efforts worked especially well since the rest of market had given up, he says. Back then, the leasing offices at most multifamily properties were closed on Saturdays and Sundays and their weekday hours were 9 a.m. to 5 p.m. Manage-ment companies didn’t want to staff a property properly because it cost too much money and the market was terrible, says Harrelson. That attitude “was the kiss of death,” he says. So, Pinnacle took a different approach. The company opened its doors on weekends and had staff stay late on weeknights, showing units to potential residents as long as it was light out.
“[We didn’t] buy into the fact that nothing could be done about the vacancy,” says Harrelson. “So we came in and just went against the grain and we were very successful.”
Now, Pinnacle has a special group of employees that it uses in drastic lease-up situations, says Graf. “We will ship them to those properties until the units are stabilized and then hire locally or replace [them] from within the organization.”