Wednesday, January 26, 2011

Apartment Had A Bad December

The financial report from the Houston apartment complex for December was not good. Occupancy dropped to 88% due to a large number of move outs in November. About 40% of the move outs were people who left without notice. This most often happens after a job loss, so it would seem November was a bad month for unemployment in Houston. The good news is occupancy is currently back to 92% with 96% leased. Still waiting for the clarification on the difference between "occupied" and "leased," but I'm guessing "leased" includes people who have signed leases but have not yet moved in or started paying rent - for instance, people waiting for the first of the month to move in.

Rent concessions, which I wrote about last time as something I hoped would be able to be reduced, went up, due I'm sure, to the large number of unexpected move outs. New playground equipment was installed, which should attract more renters. One half of the cost of that was paid for from funds in the lender's replacement escrow account, so it did not affect cash flow.

Hopefully, December was just momentary setback on the path to recovery. Management expects January revenue to be only slightly improved due to the increased rent concessions, but they think February will see a decent increase in revenue. The loss for December was approximately $7,500 compared to a loss of just $1,500 in November. The biannual investor conference call is coming up soon, so hopefully, we will get some more detailed information then.

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