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Money on the Table, Finding the Hidden Opportunities. Part 3.


Lately I have been hearing questions about whether to raise prices or not to raise rates. There are many strategies to increase revenue and some that are right there glaring at you, but seem to be hidden. Let's uncover some of the hidden opportunities.

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Don't Worry Too Much about Average Metro Rents – It's the Rents of Your Comps that You Really Want

Don't Worry Too Much about Average Metro Rents – It's the Rents of Your Comps that You Really Want
When it comes to apartment market data, it's important to make a distinction between "macro" and "micro."Macro data refers to statistics like a metro area's average rent or its occupancy rate. Micro data refers to the average rent or vacancy rate of a competitive set of communities. Think of it in terms of a photo – macro is the whole photo. You can see the entire picture but not the details. Micro data is like zooming in on that photo. You can now see things like a ribbon in someone’s hair or a flower just starting to bloom. When evaluating the performance of your apartment properties, it's helpful to consider both macro and micro statistics. But in the end, micro data – the more detailed, closer view data – will provide by far the most valuable, relevant insight.The Fallacy of Averages To be sure, reading third-party monthly or quarterly reports detailing a metro area's apartment macro data can give operators important context for their communities' performance. It's always good to understand the broader market in which your properties operate and to take in the numbers, insight and analysis regarding trends in your metro area.But here's the thing: in the end, when it's time to truly put the performance of your community into perspective, micro data eats macro data for breakfast. Put simply, if your property is located in say the booming Midtown area of Atlanta, you can't really evaluate your property's pricing based on the average rent in metro Atlanta. Even the ave......
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Why Now is the Time to Stop Using Excel

Why Now is the Time to Stop Using Excel
  Everyone knows how important it is to capture asking rents from competing apartment communities. And conducting weekly market surveys is the most common practice to secure this vital business intelligence. When done right, market surveys can provide invaluable insight into whether a community's rental rates are too high, too low or competitive. A key part of the previous sentence is found in the word “right.” Today, the vast majority of operators aren't getting market surveys right. Too many companies use an inefficient process to compile market surveys and performance metrics. Overworked and under-prepared onsite associates conduct time-consuming phone calls to comparable properties. This process alone can take anywhere from three to four hours a day depending on the number of properties within a comp set. And let’s not forget the time needed for follow-up calls, because you know associates often aren't getting the info they need on the first call. Once the data is gathered through weekly calls to competing properties, associates input the data they collect into Excel spreadsheets. In fact, I would venture to guess that 99 percent of properties still rely on Excel as the repository of information gathered during market surveys. However, this use of Excel represents a significant hindrance to understanding a submarket and how a community is performing within that submarket, particularly how its pricing compares to its comps. Here are the top five reasons you need to stop using Excel to track market survey data: Excel becomes unwieldy. We all do it. We adjus......
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Check Out the 14 Most Expensive Neighborhoods to Rent in 2014

Check Out the 14 Most Expensive Neighborhoods to Rent in 2014
As the number of renters packing up increases, during one of the busiest moving months of the year, Apartments.com has compiled a list of the 14 Most Expensive Neighborhoods for Renters in 2014. By adding up a variety of financial factors contributing to the overall cost of living—including average cost of rent, household income, percentage of paycheck spent on rent each month and inflation—renters can now see what it takes to live like the glitterati.   1. New York City: Penn Plaza/Garment District  Average Cost of Monthly Rent (1 BR): $4,440 Also known as the Fashion District, this neighborhood of less than one square mile is home to the majority of New York’s showrooms, numerous fashion labels, businesses and talent.  2. New York City: DUMBO Average Cost of Monthly Rent (1 BR): $4,023 An acronym for Down Under the Manhattan Bridge Overpass (DUMBO), this Brooklyn neighborhood is walkable, has waterfront access, and is abuzz with a thriving art scene, designer boutiques and Indy bookstores. DUMBO is also a hub for tech companies. 3. San Francisco: Yerba Buena  Average Cost of Monthly Rent (1 BR): $3,643 One of San Francisco’s most dynamic areas packed with cultural institutions, shopping, urban green spaces and fine dining, this neighborhood attracts an eclectic crowd made up of urbanistas, fashionistas, entrepreneurs, foodies, retirees, night clubbers, hard workers and technologists. 4. Boston: Government Center  Average Cost of Monthly Rent (1 BR): $3,782 Located in downtown Boston, the most dominant feature of this neighborhood is Boston City Hall, which was bui......
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Other Income is a Gold Mine

Ancillary Income for Apartment CommunitiesAre you unconcerned by those ‘inconsequential’ miscellaneous income lines?  Well, “there’s gold in them thar hills.” Frequently in our multifamily property evaluations, we see money left on the table. IREM’s Income and Expense Analysis shows a downward trend in Other Income from 2006-2010 perhaps following the recessionary decline in rents during that time. That needn’t be the case. For example, in the category of Low Rise Buildings of 24 units or more, IREM reports for 2010 medians of $.30 per square foot, 2.7% of Gross Potential Income and $266 per unit, down from $.47, 4.2% and $406 in 2006. How about $1.03 per square foot, 9% of GPI and $931 per unit? There may be differences in terminology but we count the following as Other Income: Termination fees Late and NSF Fees Application fees Pet rent and pet fees Parking fees Vending income Telephone, data and cable TV commissions Administrative fees Short term premiums and amenity surcharges (often considered “rent”) When rents are soft, Other Income can generally be collected with regularity. But you need to make sure that they are clearly provided for in your lease documents. There are many more areas that provide opportunities for ancillary income, particularly in data technology. However, you must provide value to the residents.  Jim Carrillo, portfolio director of the Towbes Group who manages 2,200 units concludes that, “Residents may not mind that they are charged for ancillary services as long as they believe they are receiving high-quality service…. If you back it up......
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