Approximately 60% of U.S renters — that’s 56.8 million people — live in multifamily housing. A smaller percentage of Texas’ population lives in apartments compared to most states, but that’s still amounts to about 3.6 million. In 2014, Texas added 64,000 new apartments units with a median rent around $880. The apartment market in the Valley is strong, with more than 23,000 apartments, counting only those that are in the RGV Apartment Association.
Demographics vary: in Edinburg, units have a high proportion of residents under 35, but Valley people of all ages choose apartment life. Demand is very high for amenity-rich apartment communities designed for seniors, while young professionals seek out the few downtown loft apartments.
Although this region consistently lands on the “cheapest places to live” lists, apartment owners and managers can command higher rents based on amenities and demand. Affiliated businesses with a keen interest in apartment communities include property management companies, painters, roofers, heating and air condition repair firms, plumbers, coin laundry services, appliance dealers and storage unit complexes.
Independent apartments
Steve Guinn’s mother rented out houses in Harlingen, so he grew up scraping paint and painting walls. Years later, after managing apartment complexes with 1,800 units in the Dallas area, Guinn returned to the Valley and built nine duplexes at Griffin Park on land his family had owned for generations. “The market is getting better, catching up with rest of the country, and new apartments are getting higher rents,” he said. Nevertheless, he knew going in he could not compete with the 200-300 unit complexes that have pools and gyms. “So I went after a niche market, with big kitchen islands, backyards and walk-in closets. Those are things you don’t find in standard apartments, and that was the appeal.”
The goal for apartment owners and managers is low turnover, so the long-term renter is handled like a jewel of great price. He purposely built only two- and three-bedroom apartments, aiming for settled families. “If they are good tenants, I don’t pass on rent increases to them. I don’t mind getting a little less, because new renters will pay more than current ones,” Guinn said. “Normally it will take me a month to fill a vacancy. That includes time for painting, changing out faucets and doing repairs, so it looks all shiny and new for a new tenant.” Tenants find his rental through Craig’s List and Guinn’s own website.
Karen Klopotoski, president of the Rio Grande Valley Apartment Association, is also regional manager for the United Apartment Group, a property management company that handles 18 Valley properties, including Santa Lucia in Mission and Heritage Square in Edinburg. The association serves property owners and management companies as well as vendors supplying services to apartments. Comprehensive leases available only to members reflect current laws and balance the rights of property owners and tenants.
Property managers preach the same gospel as Guinn. “Managers will fight to keep a lease, because it takes $1,000 to make an apartment ready again,” Klopotoski said. “Nine out of 10 times, we have to paint when a tenant moves out. We would rather keep that resident. Our retention rate is high. We lose people to home purchases and job transfers.”
After five years in a unit, when tenants request new coats of paint, some properties gladly
provide the paint, aiming to keep the renter happy and deter turnover.
In the same vein, the association fields calls from upset tenants, who admit they have not talked to the property manager about what is bothering them. “The manager wants to fix what’s wrong because they don’t want you to move,” Klopotoski said. So the association mediates and helps get the relationship on the right footing.
“Where 10 years ago, apartment rent here used to be 92 cents per square foot, now they are $1.10 for new and rehabbed units. Demand is still high in the Valley,” said Klopotoski, who has a regional view. Market surveys show average occupancy rates are in the low- to mid-90s, with the highest rates in Brownsville and Edinburg, areas which have the highest influx of new businesses and employees.
“Financing is affordable (for starting new apartment communities) and more apartment communities are in the pipeline: growth is happening,” she said. It takes about two years from the planning stage to the first rental. The newest apartment complexes abound in amenities: spas, gyms and business centers.
“Our senior communities have a wait list,” Klopotoski added. “Many seniors live in affordable apartment properties, because they don’t want to live with their kids and they like all the amenities, including beauty shops.” She noted “affordability gets a bad rap.” Some developers are mandated to have affordable units in their communities, so they set aside a certain number of units at below market rate.
Small, independent apartment complexes don’t use outside management and save themselves the 4-5% of income in management fees. Yet Klopotoski pointed out, “Our really large apartment communities in the Valley are small compared to the rest of the country. They are easier to manage, they really are (and bring economies of scale). Three hundred units is nothing big.”
Vantage at Harlingen’s 288 units include some fully-furnished corporate units, according to Becky Noyola, property manager. Traveling nurses, temporary duty law enforcement and businesspeople use the units for a few months at a time. The three-story buildings opened 18 months ago and the vacancies filled up as projected. One of the most popular features, besides the 24/7 fitness center, pool and fenced bark park, is the free Starbucks mini-cafe in the lobby, next to the cookies, candy and ice tea. “People come in and out of here all day long for coffee,” Noyola said.
The RGV Apartment Association actively promotes its vendor members. Sergio Solis, owner of the landscape maintenance company AIM Services, said attending association meetings has brought him a lot of contacts and, even better, contracts. “I’ve picked up a lot business. You meet owners, apartment managers and leasing agents. You make friends.” While his Mission-based company also works for hospitals and other businesses, his apartment clients are so Valley-wide and numerous that he has hired more people. You can spot his crews at Alta Vista in Weslaco, Las Canteras and Parkview Terrace in Pharr, Rancho del Cielo in Brownsville and Vantage in Harlingen.
Another member is Shepard Insurance Agency, which is able, as an independent agency, to tap into different insurance companies to write coverage for property owners for liability, fire and the like, along with providing renters’ insurance. Kent Shepard, a member for at least 20 years, said, “We enjoy the relationship.”
Good neighbors — good relationships – are even more important when you have apartment walls in common. The Valley has more and more apartments that foster a community spirit.
For more information, contact aavalley.com, AIM Services at 458-3704, guinnproperties.com, shepins.com and VantageAtHarlingenapts.com.
March 2016 cover story by Eileen Mattei
