Property scores a massive REAC turnaround

Edgewood Village

By LANCE CRANMER                                           lcranmer@nationalchurchresidences.org

RICHWOOD, W.Va. – It’s thorough. It’s critical. For many people it’s a really big deal. And for even more people, it’s a complete mystery.

Hard to believe that one four-letter acronym – REAC – could make the difference between a strong, viable property and a struggling one that might be in a whole lot of trouble.

“REAC is the Real Estate Assessment Center,” said Bruce Hogan, a Regional Director with National Church Residences. “It was established by the federal government as kind of a policing agency of HUD and its programs. They deal with finances, they will review audits and the physical aspects of buildings. They have these ratings, and if it falls below a certain percentage point of all the things they look at, then it could become a troubled property.”

Hogan has been handling REACs for years and said that the key to getting a good one is simply being thorough with maintenance and upkeep. Even the smallest oversight can lead to major point deductions.

“A leak in a hot water tank, that’s 18 points,” he said.  “One, there was no stove in a community room. A manager had taken it out and never replaced it. That was probably about 10 points. Those are the kind of things. It really sometimes does not tell you the true condition of the building.”

If a building scores in the 90s (it is a 100 point scale) on a REAC, then its next inspection is not needed for three years. A score in the 80s closes that gap to two years. Anything lower … you get the picture.

“You are in default of your mortgage agreement if you get a bad REAC score,” Hogan said. “At that point, they can repossess the property. They can make you change owners. They can make you change management companies. There are a lot of different things they can do. The viability of the property and the safety of the residents are their two major concerns.”

Edgewood Village in the quaint mountain town of Richwood, West Virginia, is a property in Hogan’s portfolio that is managed by National Church Residences.

The last time Edgewood underwent a REAC evaluation, it came back as a troubled property.

“At Edgewood we got a 46,” Hogan said. “The property really wasn’t bad. We didn’t get the score because we had some issues that took a lot of points away. The property was not prepared for the REAC inspection. We had some poor staff and they were refinancing the property so they weren’t looking to make any major repairs.”

The next time Edgewood Village received notice that a REAC was on the horizon, Bruce, and an entirely new staff including property manager Kim Carpenter and maintenance supervisor Kim Mills, were prepared.

“It’s been quite the experience,” said Carpenter, who entered the world of property management with National Church Residences in March 2014 after a 30-year career as a legal assistant in a law office. “I’ve learned a lot in a year.”

Mills joined National Church Residences in January 2014 splitting his services between Edgewood Village and the nearby Elk Riverview Terrace Apartments. He had been working in property maintenance since 1998 and was familiar with the challenges that inspections posed.

“Over the years they have changed a lot of (requirements). They look at everything the same, but they look at it differently,” he said. “Overall, we knew what they were going to be looking for and we were right. We just fixed everything. We didn’t know what apartments they were going to go into, so we just made sure they were all ready to go.”

To perform a REAC, inspectors and building management reach an agreed-upon inspection date – either with 30 or 60 days of notice.

The date that was set for Edgewood Village’s REAC fell on a Tuesday in April – the day after Carpenter was to head to Orlando for the National Church Residences Puhl-Sanchez Regional Conference.

“I’m not a quitter,” said Carpenter. “I’m always up for a challenge.”

With scoring poorly on a second-straight REAC not being an option, Hogan, Carpenter and Mills set out to get their property in top shape.

“We started doing inspections on the apartments so we knew what we were up against. We knew what needed to be done. It just took time and we had to get extra people in to get it done,” Mills said. “It went right down to the wire.”

The group brought in other National Church Residences employees from Twin Oaks Plaza in nearby Oak Hill, and went to work as a team.

Eight leaks were found and fixed in the first floor hot water pipes.

Fifty new windows were needed, ordered and replaced – only after the first company hired to do the job backed out less than a week before the inspection.

A new hot water heater wound up stranded in Princeton, W.Va. (roughly 100 miles away) and had to be picked up, driven back and installed.

Cracks were caulked. Messes were cleaned. Paint was touched up.

“A lot of work,” said Carpenter. “We cleaned. We scrubbed. I came in on weekends. I gave up my Easter weekend.”

“I was here for two weeks straight,” added Mills. “Fortunately nothing major happened at my other building.”

Finally, with the REAC looming less than 24 hours away, all appeared to be well.

“I came in on Monday thinking my building looks great,” Carpenter said. “I walk in and there’s a drip behind one of my hot water heaters at 3 o’clock in the afternoon. No way! I was just beyond words!”

A frantic call to the plumber garnered an appointment to fix the leak at 7 a.m. the next day … with the REAC inspectors due two hours later.

“Tuesday morning at 8:15 (the plumber) rolls in,” said Carpenter. “At 8:25 a head pops around the maintenance room door. ‘We’re here for the REAC inspection.’ I told them, ‘I’ll be with you at 9 o’clock.’”

With the plumber hard at work on the ground floor pipe, the REAC inspectors were lead to the third floor to begin their work.

By the time they reached the ground floor, the drip was fixed, the floor was dry and the plumber was long gone.

After Edgewood Village scored a worrisome 46 on the REAC before, this time, with a new staff and a new commitment to excellence, the building earned a stellar 99.

“I am amazed at the staff and how they worked together to get things done. Even during the times when it got a little bit tense,” said Hogan. “These people know their building better now than they ever did before. They got a 99. That really speaks of who they are.”

“I was pretty proud of it,” said Carpenter. “My residents were happy. They saw how hard we worked. They appreciated the efforts we put into it, too. I love my residents. I think they’re really, really happy. And it looks good.”

Mills said that just a few years before Edgewood Village wasn’t as beautiful of a facility as it is today, and that everyone there is proud of the hard work they put in to make it better.

“As a team we all worked really hard getting it to this point. Now it just needs to stay that way. It was a lot of work to get it to this point. And we’re not done yet. We have to continue moving up. There’s other things we still want to do here,” he said. “It’s the way it should be. As long as you take care of a building, it should get a good score.”

Edgewood Village now has three years until it needs a REAC inspection again.

“The building looks wonderful. It was a tremendous team effort,” said Hogan. “They do a fine job here. They work well together. They are part of the community.”

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