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The New Revenue Recovery: Efficient Evictions to Make Properties Whole

The New Revenue Recovery: Efficient Evictions to Make Properties Whole
In a perfect multifamily world, monthly rent payments would always arrive on the first of the month and any outstanding debts would be settled at the time of move-out. Unfortunately, that’s not the reality. Debt recovery has become just another part of the leasing lifecycle, and the economic implications of the pandemic haven’t done anything to alleviate the potential for rent loss. Typically, the task of tracking and pursuing resident debt falls to onsite property managers, who are overburdened and time-taxed with the day-to-day responsibilities of running an apartment community. Property managers already juggle multiple administrative processes, and debt recovery can become the stressor that begins to expose cracks in the dam. It’s not a part-time endeavor, and without a diligent, automated approach an operator will inevitably begin to leak revenue.  Multifamily is beginning to realize the operational benefits of technology solutions and third-party services to free up onsite teams to perform the jobs they were hired for. A new revenue recovery process built with automation and integration better positions operators to mitigate the risk of bad debt and optimize the debt recovery processes. Finding and implementing best practices in eviction processes and installing a stopgap to prevent revenue from slipping away, ensures properties are made whole.  Take the task from property teams Property teams are not debt collectors. When encumbered with the responsibility of debt recovery, they are generally ineffective for a number of reasons. First, onsite associates have too many other responsibilities on their plate. They’re focused on the tenets ......
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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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Decision 2020 - A Revenue Management Parable

It's election week, and there is an air of limbo in the country as we wait for the result and generally try to make sense of one of the strangest election cycles in memory. But when the no-doubt extensive obituaries of "Decision 2020" come to be written, the question most will have to attempt to answer is this: "What the **** happened with the polls?" The inaccuracy of polls leading up to this week's election was nothing short of astonishing, particularly those taken in the all-important battleground states. Generous predictions for Joe Biden evaporated, with huge polling leads in states like Michigan and Wisconsin translating to the narrowest of wins, or narrow Biden leads in states like Ohio and Florida turning into comfortable Trump holds. Similarly, Senate seats that were "in play" according to the polls appear so far to have attracted vastly more money than votes. The non-performance of reputable polls in key races has left even the most seasoned political analysts asking where polling goes from here. As we wonder what polling data will be useful for in future elections, we are reminded of another ubiquitous but potentially misleading form of market intelligence: pricing data. Multifamily revenue management decisions are frequently guided, or at least heavily influenced by competitor pricing data. But whether the data improves the quality of the decisions is far from clear. When the data gets it wrong Don't get me wrong; local market conditions are a vital input to pricing, and the movement of competitor prices is......
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Drive Revenue By Eliminating Pet Restrictions

Drive Revenue By Eliminating Pet Restrictions
Apartment operators who have taken steps to responsibly lessen pet-related restrictions are experiencing more than just the positive benefit of an increase in demand at their communities. Many are experiencing an increase in pet-related revenue, as well.  This additional revenue, naturally, is particularly timely as operators aim to recover lost revenue due to the pandemic. The ever-growing segment of pet owners comprises a large share of the apartment market, yet many communities have pet policies that do not accommodate some of their unique needs.  Whether they possess a larger pet, a young one, a perceived dangerous breed or simply more than the community will allow, pet-owners face an abundance of challenges when searching for a home that will accommodate their furry friends. While not advocating that communities allow residents to have nine large dogs, six cats and a miniature donkey in their homes, some subtle adjustments to pet policies can lead to a pronounced uptick in revenue.  Camden, for instance, helped establish an emerging standard in 2019 by eliminating weight restrictions. Leon Capital is among the many that has worked to reduce or eliminate breed restrictions. Here is a look at four common restrictions and cases for the multifamily world to responsibly reduce them: Weight/size restrictions The prevailing conception is that larger animals cause more damage. That is not always the case, and in fact, no significant data exists to support that assertion. Great Danes, Border Collies, Labrador Retrievers and Greyhounds, for instance, are generally great house pets and often cause......
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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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3 Steps to Avoiding Pricing Complacency

  The legendary golfer, Jack Nicklaus is often quoted as saying, "Complacency is a continuous struggle that we all have to fight." We have frequently argued on this blog and elsewhere that the decade of growth has blunted many of the tools that have delivered success and shareholder value in our industry over the last couple of decades. Rising tides lift all boats, and when growth is all-but-guaranteed, competitive capabilities atrophy. We found ourselves pondering this issue after reviewing the research for our recent 20 for '20 white paper. Having spoken to 20 technology and operations senior executives about their priorities, and the outlook for the next few years, we grew concerned that Pricing and Revenue Management (PRM) may be falling victim to complacency. One of the most salient findings among those detailed in the white paper is a strong reason to fear that almost all operators may have taken their eye off the ball. When speaking to heads of technology, every single one of them shared that they had not been close to PRM for years; and of the 20 executives that we interviewed, none had an obviously pre-conceived answer to the question "what's next in PRM."   We found a pervasive attitude of "we've checked the PRM box"; and that, in our view, is a problem, for a couple of reasons.  First, PRM systems are complicated and require constant monitoring and regular reviews of, for example, system settings. Further, markets change, which means your PRM practices also have to. Multifamily communities ......
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The Next Big Thing in Multifamily Revenue Management

  Pricing and Revenue Management (PRM) in multifamily turned 18 years old this year. For those interested, the first-ever deployment of a PRM system took place in February 2001 at the Hunters Run apartment complex in Austin, TX. When we sat down recently with 20 multifamily executives to discuss the industry outlook towards 2020 and beyond, we invited them to provide their perspectives on the current state of PRM. We discuss the results of our research in greater detail in our 20 for '20 white paper. Below we have summarized the feedback that we received on possible future PRM advancements and areas of opportunity.  We found that PRM system-specific feedback fell into two broad categories: how to improve the current models; and more radical improvements and future direction.    How to improve the existing PRM models All 20 of the companies interviewed were experienced PRM practitioners, with at least one PRM system implemented in their portfolios. These were the suggestions for how those systems and processes can be improved: The systems still lack sufficient lease-up modeling capabilities; even advanced PRM system-users reported that their companies manage lease-up pricing manually The renewal process is not as sophisticated as it could be. Discussion included improved workflow and integration with PMS and better modeling to bring predictive analytics into the renewal process rather than merely the execution of user-defined strategy Applications lack a reliable, systematic way to characterize local market conditions. The data currently available is either too highly aggregated or inaccurate Systems could provide ......
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6 Indicators that it's Time for a Pricing Health Checkup

6 Indicators that it's Time for a Pricing Health CheckupModern pricing strategies and revenue management systems have had a tremendous impact on the performance of multifamily owners and operators. While systems like LRO and Yieldstar are quite robust and continuously improved, they are not infallible on their own. In fact, the flexibility they give operators to implement a range of strategies means that users need to review and modify settings as market conditions and strategies change. Forward-thinking and high-performing property management companies realize that, as with any system, a routine assessment or checkup is a powerful tool. Inevitably when you look at your pricing and revenue management system in depth, you find areas of meaningful improvement. Here are six indicators that the time has come for a pricing health checkup: 1. Large Occupancy and/or Price Swings If you see that your occupancy is spiking up and then spiking down, either your system may be configured wrong or there may be something about how you're executing the use of the system that needs to be looked at. This could be caused by a variety of factors, including overrides or lack of compliance with the revenue management system’s pricing. The whole point of a revenue management system is to have much more stable occupancy and steady revenue per unit growth, so if you see volatility in occupancy or revenue per unit, that means you're getting the opposite results from what the system is supposed to be delivering. If you see an occupancy drop of a point or a point and a half in a s......
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Lessons Learned: Conducting a Pricing Review

Lessons Learned: Conducting a Pricing ReviewWeekly or bi-weekly pricing review calls are a great forum to learn more information on why a property is or isn’t leasing. But sometimes when helping teams the answer isn’t as simple as just “the price”. You may be surprised what may arise as part of these regular communications. Here are three lessons learned from leading these pricing review calls:  1. Managing the Fear is Very Important: One of the main reasons for having a pricing call is to help the operations team understand your revenue management system’s pricing recommendations. Additionally, these calls assist in soliciting important feedback from the sites.  However, it’s not quite that simple. The natural side effect of these conversations is that the emotions of the operations team come through, and it’s up to the revenue manager to help manage these responses and not overreact. When a revenue management system sees opportunity, the price can rise to a level that feels uncomfortable for the field. Managing the fear by explaining the data behind the system can help, but oftentimes it’s not just relaying the numbers- a good pricing manager needs to be part motivational speaker to achieve that support. Of course, as time goes on and teams learn to trust the pricing recommendations, the opposite problem may arise. Be careful that your teams don’t get too overconfident, as overriding a revenue management system upwards can be just as detrimental as overriding the price downward.   2. Over-Amenitizing Amenities are often initially established with a piecemeal approach. On the pricing calls, we look at pricing h......
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3 Qualities Successful Pricing and Revenue Managers Share

Pricing-Revenue-Management-MeetingA revenue management system is a large company investment. We expect site teams to comply with this pricing and train them on what information they should be entering in our systems. However, you may hear that teams aren’t showing up to pricing calls or have failed to mention the road construction deterring prospects from visiting their property. If this sounds familiar, you do have a problem. But it may not be your sales team...have you hired the right person as your Pricing and Revenue Manager? The most successful Pricing and Revenue Managers share certain qualities that give them the ability to effectively run revenue management systems, but also manage the relationships involved. Here are the top three qualities that ideal PRMs share:   1. Analytical Chops It’s no secret that a successful revenue manager needs to have strong analytical abilities. In addition to basic understanding of supply and demand economics, we rely on the revenue manager to interpret complex data sets as well as do analysis outside of our core systems.  The successful PRM needs to have an appetite for analysis - not only to maximize your revenue, but also to help gain the trust of the operators they work with. If operators consider the PRM to be the expert on all things analytics, they will come to rely on their help and feedback. Not only does this help more clearly define roles, it can make this oft-mercurial relationship more pleasant.   2. Sales Skills While having analytical skills may be enough to ......
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