A lack of trust in pricing is detrimental to any apartment community.
Why Multifamily Revenue Management is More Than Just Pricing
Multifamily revenue management is more than setting rent prices; it’s aligning your apartment community’s whole operation—leasing, marketing, management, and pricing—toward achieving your desired financial outcome.
Yet pricing is still the first lever some pull when trying to improve their community’s revenue, which is a backward approach. In this blog, we’ll explain why it’s necessary to account for those other areas of your community, too.
Rent prices alone won’t drive revenue growth.
Whatever your community’s revenue objective, price alone cannot be the only way you achieve it.
If you immediately increase pricing because you’re trying to show steady rent growth, you’re negatively impacting existing residents and making it harder to attract new ones.
Or you lower rents quickly to increase occupancy, hoping that you maintain your community’s debt-to-income ratio when the irony is that you risk losing financing this way.
In either case, it would’ve been better to implement management practices that keep apartments attractive and rentable, a marketing plan consistently producing qualified leads, and a leasing strategy that sets your on-site teams up for success.
The other problem with focusing solely on rent prices is it’s a sensitive topic that creates internal and external tensions. On-site teams and renters need clarity on pricing decisions.
Unexpected price changes erode trust in your pricing strategy. Regardless of how rentable its units are, how solid its marketing strategy is, or how the leasing staff performs, a lack of trust in pricing is detrimental to any apartment community.
Leasing has a crucial role in revenue management.
Avoiding unnecessary vacancies is essential whether you’re trying to attain rent growth or increase occupancy fast. That’s where leasing factors into the revenue management equation.
First and foremost, you need a well-trained leasing staff on-site at every apartment community. They are your company’s frontline personnel who must be able to:
- Effectively communicate with and guide prospective renters through their leasing journeys.
- And, in many cases, also serve as your current residents’ customer service representative and improve their living experience.
If you’re neglecting their needs, any efforts to improve those other areas of your community are for nothing. Ensure your on-site teams are well-supported, as their success directly impacts your community’s overall performance.
Secondly, you must examine your leasing strategy and determine if you’re unnecessarily making achieving specific revenue goals harder. Have you been holding vacant units for too long? Are you allowing leases to expire simultaneously?
You can avoid these bottlenecks and make things easier for your leasing staff by carefully spacing out the timing of when leases expire and avoiding wasteful vacancies with a dynamic hold policy.
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Strong management makes apartments more rentable.
Remember, multifamily is a people-first business, and revenue is a byproduct of your apartments’ value, lifestyle, and experience, which ties directly back to management.
How difficult would it be for your leasing agents to sell if the appearance of your units, amenities, buildings, and outdoor areas is poor?
Or how difficult would it be to justify a rent raise when there’s a negative perception of your community’s experience?
Or how difficult is it to keep occupancy high because not enough current residents wish to extend their lease because their maintenance requests aren’t fulfilled fast enough, and there’s no one in the leasing office available to help address their issues?
The management team’s objective is to make their apartments rentable, making it easier for leasing staff to close more leases, retain residents to avoid vacancies, attract future residents with marketing, and justify pricing.
Apartment marketing and revenue management are interconnected.
The role of your apartment marketing strategy is to attract qualified leads who ultimately sign leases.
The best multifamily marketing plan can:
- Connect you with the right in-market renters at the right time (paid digital advertising and organic presence).
- Pre-qualify those prospects into leads (website content, virtual tours, and quality of your apartment’s photos and videos).
- Simplify the leasing process (online application, appointments, updated pricing, and availability).
Once your marketing strategy operates this way, you can change pricing according to your revenue goals and limit any potential backfires elsewhere.
Marketing Can Justify Rent Adjustments
Marketing is also deeply ingrained in your revenue management strategy, and it must establish trust in your prices by reinforcing their value—no matter what your revenue objective may be—so that any demand it generates can support whatever your rent prices may be.
Want steady rent growth? You can justify increasing rents when there’s a line of prospective renters who wish to live in your apartment community and are willing to wait for the next available unit.
Want to increase occupancy faster? You can do this without drastically lowering your price, running a special, or some other costly concession because it’s easier to generate demand—especially when you have more availability than you like.
The Takeaway
To truly improve your apartment community’s revenue, don’t rely solely on adjusting rent prices. Take the time to review how your leasing, management, and marketing strategies are performing. Are they supporting or limiting your ability to achieve your revenue goals? You’ll create a balanced approach that promotes long-term revenue and occupancy growth by aligning these areas with your pricing.
Source: RentVision
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