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Is Raising Rents Really The Most Profitable Option In The Short Term?

Years ago, when I was just entering the industry and trying to understand pricing dynamics, at first I couldn't understand why strong communities ever struggled for prospects.  It seemed that a really good community would be awash in prospects because, frankly, there are plenty of really bad communities out there they are competing with.  But I quickly realized that as that strong community's occupancy went up, so did its pricing, which reduced demand.  The decision to raise rents seemed completely logical to me at the time - a great community should be able to charge more, and it would be foolish to leave money on the table by not charging more.  But what that did was put the community in a constant marketing push.  As occupancy went up, rents went up, and the pool of prospects who would/could pay that level of rent went down.  So we always had to push marketing to find those prospects who would fit that new requirement. After thinking on the issue for years, however, I am unconvinced this solution is necessarily ideal or most profitable.  See, the accepted path for the community has always been higher occupancy leads to charging higher rents.  But there is another factor that can be employed when you have high demand:  Increased selection criteria.  In a simplistic way, if a ton of people want to live at your community, you can "cherry pick" the absolute best prospects, who have the best traits.  For example, do they refer their friends?  Do......
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8 Tips to Increase Rent for New and Renewed Leases

Our friends at Vaultware have been tracking rents and report that rents are increasing in each region of the country when compared to rates last year. It seems everyone is doing it! Are you raising rents? Don't let your apartment community get left behind and leave money on the table. Here are 8 tips to help you increase rents. (Click on this link for the Vaultware Rent Increase Study) 1. Set yourself up for success. You can't pull a rent increase out of thin air because people are going to want to know why rent is increasing when it seems the country is still in an economic crisis. In this email you will see charts tracking rent increases across our country. The apartment industry is recovering faster than other sectors of the real estate industry. Be prepared for this conversation as there is certain to be pushback from the renter who, based on sluggish economy reports, is not expecting a rent increase. In fact, they may be looking for a concession!2. Prepare your team for this question "Why are rents going up?". Have a response that everyone understands and is comfortable delivering. Educate your team as to why rents are increasing and prepare them for this conversation with residents. Remember, every member of your team should understand this strategy and what to say to a resident. Your service team spends more time with residents compared to us. Do they know why rents are increasing and how to discuss this with customers?3.......
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