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Up from the Pandemic Low: Leading Indicators Show More WoW Improvement

Up from the Pandemic Low: Leading Indicators Show More WoW Improvement
While coronavirus lockdowns are not over yet, as of May 20, all 50 states were starting to re-open to some degree, according to The Wall Street Journal. The East and West Coasts are re-opening more gradually.As I mentioned in my last blog, the openings were already having a positive impact on our industry. During the week ending on May 20, all the major national performance metrics except for Net Effective Rent (NER) moved in the right direction on a week-over-week basis, according to Radix. That marked the first time that has happened since the pandemic began.We seem to have bottomed out as far as declines in occupancy and leased percentage rates, and traffic and leases are gaining ground as well. NER, while still declining, experienced a smaller dip than it did during the preceding week.If traffic and leases continue to improve, the impetus for rapid rent discounts and concessions might slow down as well.Here are the notable takeaways from the week ending on May 20:•    Nationally, traffic and leases were up 13.8% and 13.3%, respectively, WoW. Those figures represent an accelerating improvement (during the week ending on May 13, the metrics increased by 8.7% and 6.6% WoW). On a year-over-year basis, leases were down only 11.6%, which is a major improvement from earlier in the pandemic, especially when considering these gains were made almost entirely while a majority of the markets were still in lockdown. Traffic was down 35.8 percent YoY.•    The national occupancy (92.90%) and leased percentage (94.56%) rates were up ......
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Lifestyle Services: The Unsung Hero of Strong Property Performance

Lifestyle Services: The Unsung Hero of Strong Property Performance
In the battle to attract and retain residents, apartment communities – especially those of the Class A variety – have incorporated ever more elaborate on-site amenities.Many of today’s residents have access to fitness centers that are the equivalent of an LA Fitness or a Planet Fitness. They might be able to unwind in a rooftop lounge with dazzling panoramic views or socialize with friends in a pool area dotted with fire pits. Co-working lounges are not uncommon; neither are pet spas, package lockers and car washes, to name just a few once-unheard-of features. Some higher-end properties even have wine cellars.The purpose of these amenities is obvious: to build a community’s brand, to compel prospects to sign new leases and to encourage current residents to renew. In so doing, a community is then able to maximize revenues and NOI.But today’s apartment operators should realize that offering lifestyle services – things like dry cleaning, dog-walking, and house cleaning – is an effective way to achieve these goals as well.Building Resident LoyaltyThere’s no doubt that physical assets like fitness centers, business centers, swimming pools and appealing courtyards can help in the effort to convert apartment shoppers into apartment residents. In fact, today’s prospects typically expect a community to have these kinds of features and may not sign a lease if it doesn’t.But once they sign that lease, there’s a strong chance that today’s ultra-busy, overextended working professionals won’t use those particular amenities all that often - which can negatively impact their propensity to renew.However, lifestyle services, throu......
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Is Web Scraping the Answer?

Is Web Scraping the Answer?
Recently I have heard many people talking about the wonders of scraping websites and how it will solve all of our data gathering problems. And unfortunately, I must disagree. But before delving into why I believe web scraping is a flawed practice, it is important to truly understand what it is. While web scraping can be done manually by a software user, the term typically refers to automated processes implemented by websites, data aggregators, and others using a bot or web crawler. Essentially, it is a form of copying, in which, specific data is gathered and copied from the web - typically into a central local database or spreadsheet - for later retrieval or analysis. I could go into further detail about all of the technical complications of web scraping and how it is a behemoth task for software developers. Still, those details are not imperative to the implications it has. Let's talk about why web scraping is not the panacea it is positioned to be. Limited unit availabilityWhen listing apartment homes on an ILS, operators may deliberately withhold the number of units that appear online. This may be due to a limited number of units available at the property or, in the case of new development properties, the operator may want to create the appearance of low supply. Either way, if you are relying on web scraping, you are only getting the data that properties are making available. Leasing StatisticsLeasing statistics, such as occupancy, leased, and availability percentage is not......
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Rental Data Delays Are Not OK

Rental Data Delays Are Not OK
  "Life moves pretty fast." So said the wise philosopher Ferris Bueller in the 1986 classic movie.I can't help but think of that line sometimes when thinking about apartment rental rates. They move pretty fast, too. In fact, they're changing on an almost daily basis.To make the most effective decisions regarding pricing and concessions, apartment communities need access to real-time rental rate data, or something extremely close to it.The problem is, though, many operators are relying on data that – especially in the lightning-fast world we live in now – seems downright out of date.Delayed DataOperators rely on a number of data points when trying to determine how rates for their communities compare to the competition. These data points include everything from market rent, concessions (upfront and/or amortized) for each unit type, occupancy and leased percentage, traffic and leases, amenities, etc. To help ease the process of gathering all these data points, operators sometimes turn to market surveys compiled by third-party research organizations. These surveys are usually conducted at the market level and then a regression analysis is performed to determine submarket data. While this methodology seems to offer the most robust and logical look at how an entire market or metro is performing there are two key areas of concern: 1) the survey data is, in the best-case scenario, 30 days old and 2) the surveys don't provide true insight into the surrounding submarket, let alone at the property/comp level. It is a common practice for research firms to collect mar......
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Is Your Property Underperforming?

b2ap3_thumbnail_building-leasing-apartments-rainmaker.jpgEvery multifamily executive knows that when it comes to analyzing property performance, they need to look beyond the basics like vacancy rates, lead generation, and operating costs. Conducting an accurate assessment of how well a property is performing demands in-depth investigation into multiple metrics and data streams to establish an accurate overall snapshot of both current conditions, and the long-term potential for future opportunities. The real challenge in evaluating property performance lies in the analytics - finding the right metrics, knowing how to weight their values, and understanding how to implement meaningful changes where necessary.   Measure Performance With RPU Revenue per unit (RPU) gathers historical performance data directly from the property management systems of participating apartment communities. From there, the data provides apartment owner/operators with a consistent and standardized means to compare the achieved revenues of their communities against those of other properties in their markets. Using RPU as a performance metric provides a unique benchmark for owner/operators. Most apartment companies today use a wide array of data sources, including secret shops, REIT filings and even calls to competitors in an effort to benchmark the performance of their communities against competitors. One challenge to this is that some of this information is gathered based on asking rents rather than collected rents. This current method also relies on manual data entry and phone calls, resulting in a greater chance of potential errors and discrepancies. Asking rents often differ from what communities actually collect from residents. Additionally, this methodology doesn't account for the rent g......
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What is Passive Monthly Cash Flow?

For an individual who has never invested before, there can be a lot of buzz words that get tossed around but not necessarily defined. One of the first questions we hear about apartment investing is ‘how does that actually work’? The concept is simple.

Investopoedia defines passive income as earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved. Passive income does not include earnings from wages or active business partnership, dividends, interest, or capital gains.

Cash flow is the total income generated after all expenses have been deducted. For a real estate investor, this means that if you invest in an apartment property, the residents (rental income) pay for the expenses, and what is left over comes back to the investor in the form of passive income. Invest in an apartment community and receive income as a result, without putting effort into the actual product that generates income.

This is ideal for those seeking a low-maintenance vehicle of generating additional income because there is no effort required. The performance of the property is not contingent on the investors’ involvement, as opposed to a home that an investor may buy and manage personally. In this scenario, the income produced from the home is a direct result of the personal effort and funds the investor is willing to provide.

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