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3 Thoughts on Amenity-Based Rent Pricing

  As a landlord or property manager, setting rents is a high-stakes exercise.  Set them too low, you might get a tenant but you are leaving money on the table.  Set them too high, you could be unnecessarily extending your vacancy loss.  And it is with this backdrop that rent setters employ various strategies and technologies to help with pricing.  Finding that equilibrium point is not easy, especially in a dynamic market like New York City.                Amenity-based pricing is a common way to set rents, and this article is mainly in reference to such models.  Amenity-based pricing is a methodology in which a base rent is set for a unit type of some kind, then various amenity prices/values are added in, creating the all-in rent that renters see and pay. Individual amenity prices are set by a variety of factors, including the cost of developing the amenity, the desired payback (to the landlord), and perceived value to renters. The percentage of amenity value to total rent varies a lot, but consider it to be about 5-10% of the total rent.               Aside from landlords and property managers, renters also have a vested interest in how rents are priced, because they want to know they are getting a fair market deal, and because, naturally, it is a lot of money.                So we wanted to provide a few thoughts on how rents can be set and to encourage landlords and property managers to re-think the exercise in ......
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Resident Retention Starts Before a Lease is Signed

 Resident retention is usually thought of in terms of what the landlord or property manager can do around the end of a resident’s tenancy to encourage them to stay: clear communication, responsiveness, concessions, a new appliance, and so forth.  But in this article we take a position that resident retention should start much earlier in a tenancy.  In fact, before it even begins.  It should start with apartment marketing. A resident can decide to vacate for any number of reasons, including significant life events or other rigid issues that cannot be negotiated away, no matter what rent concessions may be offered.  But for other renters, it comes down to “fit”.  Is the apartment the ideal aggregation of attributes, quirks, and benefits that they want in a home, given the rent, or not?  Is it “best-fit” housing? On renter surveys, there is usually no option to cite “not a good fit” as a reason for moving out, but this reason can be disguised in the answers to other questions, most often ones that ask about rent.  According to Zillow’s Consumer Housing Trends Report of 2019, 55% of renters nationwide say a rent increase contributed to their decision to move out.  Moving out because of the rent or a rent increase, if not a strict budgetary decision, is just another way to say the apartment’s perceived value does not match up with the rent being paid.  It is not a fit for the resident anymore.  And that is an unfortunate reason to lose a resident, becau......
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The Importance of Property Manager-Tenant Communications

The Importance of Property Manager-Tenant Communications
One of the most important responsibilities for any property manager is to communicate with their tenants.  In the long-term, communicating frequently with tenants will enable many benefits for the property manager.  Keeping communication at the center of the customer service strategy helps managers to better understand and cater to their tenant’s needs while tenants will have gained better insight into the unit they invest in.  In this blog post, we discuss the long-term benefits that consistent property management communication has for the company. 1) Increased value for your business Tenant retention drives immense value for your business and increases the bottom line, which is why it’s one of the most important functions of managing apartments.  According to RentPrep, when you successfully retain one tenant itself, the company can save an average of $1,750 per unit per month from tenant turnover costs like administrative work, vacancy, and marketing. For a property of 100 units with a 95% retention rate, property management companies save close to $2 million per year.  The best way to avoid turnover and increase retention is to keep your communications with tenants ongoing. 2) A sense of community in your properties Following up with tenants regularly helps you to build a long-term relationship with them.  In turn, they feel that they are part of the community. They will be more invested in the place they call home.  Building positive relations will also lead to more harmony and fewer conflicts that managers would otherwise need to dedicate their time to.  Her......
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Many Performance Metrics Holding Steady as Summer Comes to an End

Many Performance Metrics Holding Steady as Summer Comes to an End
Labor Day marked the unofficial end of summer. And what a summer it was for all of us! On a national basis, multifamily data and metrics have been hovering around the same points since mid-summer.  When measured year over year, traffic has not yet fully recovered since the beginning of the pandemic, when it saw a massive 75% drop. But in the week ending on Sept. 6, we saw the biggest closing of that YoY gap since March.  Interestingly, the leases per property metric was actually ahead of where it was when compared to one year ago. Since the middle of the summer, this metric has been basically the same or slightly ahead of where it was at the same point in 2019. As we examine the remainder of the summer months, national occupancy and leased percentage rates were down anywhere between 0.1% and 1% YoY. However, broadly speaking, this was a better performance than was expected considering the impact the pandemic has had on every sector of the U.S. and global economies.  Conversely, national net effective rent has been consistently down about 8% YoY, although certain individual markets have experienced steeper drops – particularly the coastal MSAs.  With the broader context in mind, here are some of the specific takeaways from the week that ended on Sept. 6:  Nationally, traffic was down 0.4% WoW and 8.3% YoY. Leases were down 4.8% from the preceding week but up by 6.7% when compared to the same time last year.  The national occupancy r......
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Gyms Deemed Safe with Sanitizing Protocol

Gyms Deemed Safe with Sanitizing Protocol
Pandemic or no pandemic, sanitization is always in style. Property managers stretching their maintenance team thin trying to keep up with the recent increase of cleaning demand can be stressful to everyone, and if the standards can’t be met, residents ultimately suffer.   In this post, I'll share the latest news in sanitizing and disinfecting to prevent COVID-19, how it may affect your property, and provide tips for what to do next. Safe & Sanitized The International Health, Racquet & Sportsclub Association (IHRSA) and MXM, a technology company specializing in member tracking within the fitness industry, found that fitness facilities are safe and are not contributing to the spread of COVID-19. They analyzed member check-in data across 2,873 gyms, sports clubs and boutique fitness centers from May to August 2020. “The check-in data proves that health clubs – when following strict cleaning and safety protocols – are safe,” said Brent Darden, IHRSA interim president and CEO.    Overall, the data they gathered proved two major points:  1.) Properly sanitized gyms are safe for employees and members and  2.) Gyms are not linked to spikes or spreading of COVID-19. Our Survey Results Gathering feedback from residents is important to understand their wants, needs, and priorities. In our most recent survey, we asked more than 1,000 residents about their interest in group fitness activities. 98% of residents at two properties surveyed said they would take a class if, and only if, protocols and CDC guidelines were in place. With the help of an online am......
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More Residents 'Seeing Right Through' a Community's Lack of Transparency During the Renting Process

More Residents 'Seeing Right Through' a Community's Lack of Transparency During the Renting Process
Grumblings among resident prospects about transparency within the leasing process continue to pick up volume – both in number and sound. It’s an issue the apartment industry is aware of and is working to address. Operators are finding that greater transparency – especially in regard to cost – can lead to a greater number of signed leases and higher resident satisfaction – something that also will show up in online reviews and reputation management. Surveys and studies continue to show "authenticity" to be among the most desirable features for consumer activity, especially among younger people. Virginia Love is a long-time property management professional who now works for Entrata, a provider of property management software. “We are hearing from clients that they want to include more transparency in the leasing process, from top of the funnel down,” she says. “Our clients are interested in making sure there are no ‘hidden fees’ or processes for the renter, so prospects aren't feeling like bait-and-switch victims once they start the application process. This also eliminates uncomfortable conversations with leasing team members who really haven't had the opportunity to first build relationships with prospects. It also reduces the emails and calls between the property and the prospect about what is required to apply and questions about fees, utilities, etc. “When you think about the popularity of self-guided tours – where the renter prospect does not meet first, in-person, with the leasing agent – the first true ‘visit’ to the community is the property website and ratings and reviews.” Based on an informa......
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New Leases vs. Current Resident Satisfaction: Where Should You Devote More Time?

As property managers and multifamily marketers, our daily tasks have always blown past our original job descriptions. In truth, we hold more than one title — we are each a jack of all trades and that fact has never been more evident than in this COVID-19 world. There’s just not enough time to do it all. More specifically, we are juggling too many projects to have any “free” or “extra” time. That means we need to maximize our time.   You want to attract new renters and you want to keep your current ones happy — but with only so many hours in the day — where should you devote more time?  Let’s discuss:  Reasons to Focus on New Leases Besides being a new property, here are the top reasons we find our multifamily clients focus on winning new leases: More units available than current residents — the ratio between these two is important data to keep track of as you re-evaluate your strategy every quarter. Money has been invested into unit upgrades or new amenities.  There has been a change in rental price.  New demographic to target — as time goes by, the type of people you want to rent to changes; for example, many properties are slowly attracting more Gen Z than Millennials as they become the dominant renter demographic.  Reasons to Focus on Resident Satisfaction Here is when we see that our multifamily clients need to focus more on resident satistication: Relatively new property — being that the property is new, it has yet to e......
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Apartment Market Showing Slight Dips in Operating Statistics

Apartment Market Showing Slight Dips in Operating Statistics
With the coronavirus pandemic continuing to rage in many parts of the country, the week ending on Aug. 9 showed most of the major apartment metrics experiencing slight declines, according to Radix data. For example, the average apartment community in the U.S. had a traffic number of 9.37 leads, down from 9.54 leads during the preceding week. Also, the average property signed 3.24 new leases, a dip from 3.43 new leases the week before.  Meanwhile, the national occupancy and leased percentage rates were essentially flat on a week-over-week basis, while the metrics' year-over-year deficits continue to shrink.  Unfortunately, while the national net effective rent was also slightly down WoW, its YoY gap is growing.  Here are some of the specific numbers from the week of Aug. 9:  Nationally, traffic and leases were down WoW by 2.4% and 4.7%, respectively.  Traffic was down 15.7% compared to the same time last year; that marked its lowest YoY gap since the pandemic hit in mid-March. Five metropolitan statistical areas – Orlando, Fla., Portland, Ore., San Diego, San Jose, Calif., and Seattle – had higher YoY traffic numbers.  On a national basis, leases were up 2.9% YoY. The national occupancy and leased percentage rates stood at 93.95% and 95.31%, respectively. Occupancy was unchanged from the preceding week, while leased percentage was down just a sliver – 0.1% – WoW. Both metrics also were down when compared to the same time last year – occupancy by 0.6% and leased percentage by 0.4%.  Five MSAs showed YoY improveme......
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Staying Well Inside and Out

Staying Well Inside and Out
In times of Covid-19, we have to get creative with how we navigate fitness and wellness in public spaces. Multifamily communities have shared amenity spaces in addition to the apartment rented by a tenant that allow residents to enjoy the perks of the property they've chosen to call home. The infographic below contains four options for indoor and outdoor health and fitness activities that can help residents coordinate different ways to stay mobile and well.   Group Fitness Social distancing doesn’t mean being antisocial! Group classes can be hosted in a gym or outside in a parking lot, and are a great place to meet new friends and neighbors. If your schedule is packed and you can’t make the class time, catch up with a virtual recap if available! Yoga Classes Yoga is a versatile way to practice focus, deep breathing, flexibility and strength. It can be done in-studio, or on the lawn! This is another great virtual option if you prefer practicing solo. Virtual Meditation If a desk is your home away from home, it’s almost effortless to log off of work and log on to a guided meditation or relaxation exercise. We like Mastermind Meditate (@mastermindmeditate) because they do short, guided mindfulness exercises at least twice a week! Remember: stress reduction is a way to stay mentally and emotionally healthy. Trail Jog State of the art treadmills come equipped with the option to take a virtual tour in gorgeous faraway landscapes. But nothing beats the real fresh air, so hit t......
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Increase Renewals with Pet Inclusive Practices

Increase Renewals with Pet Inclusive Practices
The COVID-19 pandemic created unprecedented challenges with lease renewals for the apartment industry. One of the lasting impacts will be the pausing of renewal rate increases. Recent data from Entrata indicates that renewals have been on a trending decline. As of July 8, renewal have slowed to 44% down 14 percent year over year and 11 percent since May.  With renewal rates declining, now is the time for apartment operators to look for new ways to deploy innovative renewal offers. One innovative technique forward-thinking operators are implementing is easing pet restrictions.  On the surface, this change might seem minor. But, easing pet restrictions can have a big impact on demand for apartment housing. As more residents are looking for pets to give them company while spending more time at home, they’re also looking for pet-friendly housing for whatever pet they want to adopt. According to research from the Pet Inclusive Housing Initiative, a research and resource development initiative that promotes access to the joy of pets, residents in pet-friendly units stay 21% longer versus non-pet friendly units. With the far-reaching impacts of the pandemic, more residents are submitting assistance animal accommodation requests for emotional support animals. By reducing pet restrictions, residents know the pet they adopt can live at the apartment without special designations. And most studies show they’re willing to pay pet deposits and rent.  But reducing pet restrictions isn’t the only innovative way to leverage your pet-friendly community to improve renewal rates. There are several more: Communicate Pet Policies  When ......
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