Are you ready to make the most of your 2023 leasing season? 

The last two years for multifamily have been historical and incredible, to say the least. 2021 & 2022 brought with them a myriad of firsts for multifamily including record rent growth and record high retention rates. Along with that, we’ve also seen the industry adopt self-serving leasing tools more than ever along with an increasing number of properties embracing a centralized leasing model for the very first time. 

The leasing environment over the last two years most certainly favored owners, investors and property management companies, however, it’s important you don’t get too comfortable. As we head into the spring and summer leasing cycle, properties will find themselves in a much more competitive landscape. There will be little room for complacency in 2023 and in order to maximize NOI, you’ll need to focus on leading your regional market, even in a downturn. 

Here’s how you can better prepare for the competition ahead in 2023: 

Inspect what you expect 

Conduct a detailed walk of the asset. Inspect all common areas, including trash bins, models, and vacant units. It might sound like a no-brainer, yet many properties still struggle to do this on a consistent basis. The reality is that quality matters. When you are responsible for someone’s home, the little things go a long way. Even something as little as a trash smell coming down the hall of your units could be chipping away at your rent growth potential.  

Walk in the shoes of your residents and prospects. The experience for them matters. When you walk properties or units with the mindset of checking off a task list instead of walking to see through the renter’s eyes, you will miss important details.   

Fine-tune your team 

Your team has not had to “sell” the last two leasing seasons like they will this year. Gone are the days when only a handful of units would be available. It’ll be critical to work with individual team members to help improve their skills and knowledge. Consider role-playing with your team members to help them navigate pushback from prospects or articulate what’s great and unique about your property. Show them how to validate rent prices for new and renewing leases.  

Ask your team how many touchpoints they’ve had with the leases that are ending. What was the quality of those interactions?  Even if your team has fallen into bad habits and hasn’t been engaging with residents much, it’s never too late for them to help renters make the most of the community. Consider offering things like a proactive maintenance appointment. Have an office and maintenance team member do an occupied walk-through to address any unreported or overlooked issues.   

Pull up the list of past prospects who did not lease in the past two years. If you really want to get out in front of increased vacancies, build a pipeline of potential renters from people who have already expressed interest in your community. This is often a very underutilized, yet effective strategy for multifamily. 

Consider celebrating and sharing effective follow-ups used by individual team members with the rest of the team.  As it is with most things, if you ask your frontline team, they often know what works and what does not.  

Retaining as much of the rent growth gained over the previous two years should be top of mind. Invest in your team so they understand the impact this has on the property budget and help them understand the importance of holding the line on this year’s renewal offers. Show them how follow-through and follow-up are just as essential to renewals as they are net new leases. Renewals start with the move-in. 

Improve Your Lead-to-Lease Processes 

Just as you need to understand the physical experience for your residents, you also need to understand the virtual experience for your prospects. At this point, most properties are utilizing technology for some aspect of their leasing process. Many jumped on the tech train out of necessity at the start of the pandemic, but now, they may be overdue for a reevaluation of how and what tech they are using.  

Try navigating the process like a prospective renter: 

  1. Start with the search. How easily are you finding the asset? What is the experience when going from the ILS to your website?  
  1. Visit your own website (and your neighboring properties’ websites, too). How does your site stand out from the others? Does your website capture your unique value proposition? How easy is it for a renter get to information they need? 
  1. Check out the mobile experience of your website. Most people are using their cell phones for any kind of initial research. If your website is formatted for desktop-only, you’re creating immediate friction with prospective renters who visit from their phone. 
  1. Check out the floorplans. How is the experience when selecting a unit on the web and mobile? If the images or floorplan interaction are an afterthought, you are possibly losing your prospects to someone who is doing it better. 
  1. Try out the application process. A surprising number of prospects abandon the application process when it becomes complicated, hard-to-use, or is jumping in and out of desperate workflows. Be on the lookout for those points of friction. 
  1. Pay attention to what happens next. What is the post-application experience like? Is your team following up and following through? If they are, how quickly and effectively are they communicating? 

Walking through the leasing process yourself will help you notice the cracks and holes that need to be filled. For example, you might notice your team is struggling to get to every call. This is where you can delegate a call center to help make sure you engage every caller. And it’s important to be choosey. Some call centers only take a message on behalf of your team. While this is a step up from reaching the voicemail and missing the call altogether, there are call centers out there that operate as extensions of your leasing team and can effectively move callers to the next step in the leasing process. This will be crucial in the upcoming months as a missed call can mean money left on the table.  

You might also consider adding a Chatbot to your site to answer common questions and give information to prospective residents. Even better, some chatbots let website visitors connect with live agents so they can get their detailed or nuanced questions answered without having to call your property. This helps reduce the overall call volume for your team and will also help funnel in ready-to-tour renters.  

If you are considering or evaluating Chatbots or call centers, you must  understand the ultimate goal for each. These tools are not going to convert leads for you directly. They will, however, help your team make sure no lead is missed. 

Compare performance between assets in your portfolio 

Most property management software can generate lead conversion reports. Try taking things a step further. Build a schedule where you bring team members from different properties together to review their KPI reports and share more specific details to determine why some things are working better for some. Again, you’d be surprised to find out from your on-site staff how even the slightest adjustment in strategy or tactics can make a noticeable difference in conversion rates. 

Remember, 2023 will not look like the last two years. Prepare your teams for the extra effort they’ll need to put in as leasing season arrives and do your due diligence in setting up your properties and staff for success. We’re rooting for you! 

Are you looking for extra tools to maximize your NOI in 2023? We’ve got a few we think could help. Book some time with us here

7 Ways to Reduce Turnover and Increase Employee Retention for Property Management

We’re going to rip the band-aid we all know exists and state the obvious: employee turnover within property management is a major pain point for multifamily. Phew, we said it. Now, solutions for reducing the 33% turnover rate have been talked about and with the cost of hiring, training, and getting employees up-to-speed, we want to give you the most effective strategies so you can maximize NOI for the long run: 

  1. Provide Clear Communication and Expectations: Clear and consistent communication is key to building trust and fostering a positive work environment. Employees do their best when they fully understand their roles and responsibilities as well as the company’s goals and objectives. Regular performance evaluations and feedback can also help ensure that employees are meeting expectations. 
  1. Offer Competitive Compensation and Benefits: Competitive compensation and benefits packages are an investment and can help attract and retain top talent, if you budget for it accordingly. This includes offering fair wages, health insurance, retirement plans, paid time off, and other benefits that employees value. However, you can also offer perks that aren’t out-of-pocket costs such as added flex days or providing access to benefits that are employee self-funded (retirement plans, life/accident/pet insurance, concierge services, etc). 
  1. Comprehensive Training & Resources: Onboarding employees means giving them the training they’ll need in order to be successful. Industry, fair housing, and even company-specific training around their role should be easy to consume and understand. Some properties even have de-escalation and interpersonal skills training to equip them for the inevitable conflicts between residents or staff. Additionally, training staff to use your technology can be a tough task, especially if the staff are new to your software. Talk with your software provider about additional videos, resources and support that can be provided to make sure new staff can hit the ground running when they start their daily operational tasks. Shameless plug: Many organizations that switch to ResMan report that the ease of use of the software actually reduces turnover because it saves time and makes everyone’s jobs easier from site staff to back office teams and even regional managers. 
  1. Create a Positive Work Environment: A positive work environment can help employees feel valued and appreciated. Encourage open communication, teamwork, and collaboration. We know a positive work environment comes from the top down, so help managers build leadership skills by mentoring them along the way.
  1. Offer and Encourage Professional Development: Providing opportunities for employees to learn and grow can help them feel engaged and motivated. Offer training programs, mentorship opportunities, and allow them to attend local, state or even national industry conferences and events. To those who show an interest in growing, offer some sort of reimbursement for their certification course fees. Shameless plug #2: Some property management software providers (like ResMan) offer industry and leadership skills training courses as part of the platform, making it easy for you to both offer professional development and develop the next generation of leaders for your organization.  
  1. Show Appreciation: Showing appreciation for your employees’ hard work and dedication can help to foster a positive work environment and increase employee satisfaction. A simple “thank you” email or a hand-written note can go a long way in making employees feel appreciated and valued. Host events like holiday parties or a company picnic to show appreciation to staff for their hard work. 
  1. Foster work-life balance: Allow employees to have a good balance between work and personal life. If you can manage it with the role, flexible working hours, remote working options, and paid time off can help employees feel more satisfied and less stressed. Make sure your leaders and managers are doing their best to model good work-life balance so employees feel like it’s okay to take advantage of their benefits without getting burnt out. 

Implementing these strategies can help property management companies retain their employees and improve overall employee satisfaction, which saves you time and money. It is also important to remember that retaining employees is an ongoing process that requires constant attention and effort. However, that attention and effort will go a long way in its return. Regularly evaluating and adjusting these strategies can help ensure that they remain effective over time for your company’s overall hiring and staffing needs. 

Does your current software provider support your employee retention enough? Let’s talk

The 2022 Performance and 2023 Forecast for Multifamily

In February of 2022, InhabitIQ’s Elizabeth Francisco and ALN’s Jordan Brooks sat down to talk about the 2022 forecast for the economy, specifically within multifamily. Our forecast was officially “sunny with a chance of rain,” as we were cautiously optimistic. As it would happen, some of those rainclouds are beginning to loom a bit more as properties finalize their budgets for the 2023 fiscal year. It’s important to note, however, that this is not frightening or unmanageable, but we invited Jordan back to take a look at the data and give insight into what’s to come and how to prepare for 2023. 

2022 Multifamily Performance 

2022 started off strong, though a bit of a downtick from the peak occupancy rate in October and November of 2021. Last fall, we saw the unusual trend of strong occupancy growth alongside strong rent growth. As we normally see those numbers at odds, this was unusual though it could be attributed to several factors. In the end, we’ve seen occupancy decline since its peak with the seasonal bounce in demand and has only reaccelerated the decline with the slowdown of deliveries this summer. 

Rent and Occupancy for Oct. 2019 to Sept. 2022 

Lease concessions grew until the first quarter of 2021 and have only picked up more recently in the last month or two. You might be wondering if apartment demand has been down, why have we still seen 8.5-9% rent growth year to date? Some of that has to do with bringing high average occupancy into the new year and it’s taken some time to work through that. However, as we are moving into the winter, a lot of that excess occupancy has been used, as we still have 50-80% basis points excess compared to when we went into the pandemic.  

In 2022, we’ve seen monthly net absorption has trailed new supply all year, which is a vast difference from the middle of 2021 where occupancy was clearly outpacing the production of net new units. The decline of demand in 2022 has impacted all assets, however the Class C and D assets have the most pronounced shortfall. 

New Units vs Absorbed Units Oct. 2019 – Sept. 2022 

It’s important to note when we’re talking about how the cost of capital is going to affect development, the net new units that will be available in the next two years have already begun development and broken ground. So, the slowing in development that is currently taking place will affect units that are supposed to be ready in three to five years as those are the ones under planning and financing now. 

What Has Changed & What to Watch 

The multifamily industry had over 600,000 net absorbed units in 2021, leaving many wondering why there was so much demand and how so many new households came about. One reason could be attributed to the “failure-to-launch” age range of 25-34 making a change between 2020 and 2021 as there was a clear decline in this age cohort living at home between those years. This is the first decline since 2005. It’s possible this decline came after many of these individuals found a need for space after the first year of COVID-19. Stimulus payments might have also helped or encouraged individuals to find living quarters of their own. 

Young Adults Living at Home 1990-2021 

Jobs and Labor Market 

Moving to the employment side of the economy, the labor market remains tight although we’ve seen big corporations doing layoffs toward the back half of this year. The demand picture has changed for multifamily but the shoe that hasn’t dropped yet is the softening of the labor force. When that does occur or when unemployment starts to rise, this will affect multifamily and is important to keep an eye on in the future. It’s possible that the markets with a more diversified employment base might be in a better position to weather the storm. 

Sunbelt states saw a big wave of supply and new demand as people moved to these more affordable cities. Some might think that Sunbelt states have lost some of their luster since they’ve seen rent growth and affordability go up since these migrations. On the contrary, while Sunbelt states have seen some of the highest rates of rent growth, the difference is marginal and these cities started at a lower point than other cities. If you compare cities like Orlando and Tampa to Los Angeles and Chicago, the latter has declined since the pandemic whereas Florida cities have seen a robust and inclining labor force since COVID-19. 

Labor Force in Representative Cities Sept. 2019 – Jul. 2022 

US Disposable Personal Income 2000 – 2022 

Credit Card Debt Across the U.S. 

Over the last few months, many of us have heard that Americans had a record amount of money in their bank accounts- something we were not convinced was totally accurate today. Surprisingly enough though, disposable personal income reached an all-time high in 2021. However, it dropped as quickly as it spiked. Disposable income is still higher than it was in 2019. One must wonder how prolonged inflation will impact the health of consumers’ bank accounts. Access to cash and credit is important for our renters as they try to manage through a tightening economy and possible recession, which will certainly impact their housing decisions. 

Most of us have at least some of it, but collectively, we’ve reached a staggering high point when it comes to credit card debt. Americans have accumulated an absolute mountain of credit card debt in 2022 — $887 billion, to be exact. That’s a $46 billion jump from $841 billion in the first quarter of 2022. With the increase, Americans’ credit card debt stands $40 billion below the record set in the fourth quarter of 2019, when balances stood at $927 billion. Thanks to rising interest rates, stubborn inflation and myriad other economic factors, it’s likely a matter of time before credit card balances surpass the 2019 record.    

Average Credit Card Debt from Jan-Feb 2022 Credit Reports 

While credit card debt is growing again at a staggering rate, it is important to note that only 1.81 % of CC accounts are 30+ Delinquents, up from 1.66% in 2Q22.   

Annual Multifamily Absorptions and Renewal Rates 

Renewal rates hit a new record in the first quarter of 2022 at 58.4% before moderating to 56.9% in the second quarter. The higher renewal rates can easily be attributed to the net new lease rate. The rent on a unit vacated and then leased to a new tenant increased, on average, 8.5%. Earlier in the year some markets were as high 18%. Comparatively, a tenant renewing a lease in the same quarter saw an increase in rent of 10.8%. 

At the peak of renewals, the gap between effective and net new rents was around 11%, which equated to built-in rent growth for this current year and made for an attractive offering to investors. If we look at where we are today, the picture looks very different. With Net New lease rent growth slowing considerably, you need to think about your approach to renewal from this point forward, weighing out the turn cost/renewal rent and net new rent.   

Transaction Volume 

The Fed’s use of interest rates to battle inflation is a double-edged sword for multifamily. First, inflation drives up each new unit’s cost, impacting existing and new development projects. New units initially forecasted to come online in 2022 have slowed as GMs have to deal with increased labor costs and materials. Slowing inflation would benefit new development costs.  

On the other hand, with each rate hike, the building & financing of apartments have become more expensive, making it harder for new deals to pencil out.  In addition, some properties have shared that the cost of long-term borrowing has increased significantly since 1Q22. 

U.S. Multifamily Sales Volume, Price per Unit 

CRBE, Freddie Mac, and others are all forecasting the same thing, a slowdown in transaction volume for the remainder of 2022. 2021 was a record year for transaction volume, and 1H22 started off very promisingly. However, the back half of the year could look different than initially forecasted.  

According to Yardi Matrix data, overall national multifamily sales volume surpassed $101 billion in the first six months of 2022, outperforming the $67 billion volume registered in 2021 during the same interval, while the average price per unit rose 28.4 percent year-over-year, to a new high of $218,377. The number of assets that traded also increased, from 2,362 properties during the first half of 2021 to 2,961 in 2022.  

Transaction activity will continue, but capital has become more selective and focused on lower-risk profiles; buyers should be prepared for increased pricing, lower proceeds, higher reserves, or personal guarantees. There doesn’t seem to be much of a path to multifamily having another record number of transactions by year-end.  

Looking Ahead – Q4 2022 & Early 2023 Indicators 

Many are wondering how likely a recession is and if it hits, when that could or will happen. Wall Street Journal predicts by Q4, there is a 63% chance we are heading into a recession in the next 12 months. It’s likely we will see significant signs of this come this time next year. 

Projected Fed Funds Rate 2022-2025 

A few short months ago, the Fed had projected rate increases under 4%. The Fed has raised its projections and now believes interest rates will need to increase to 4.4% by end of 2022, 4.6% by EOY 2023 and don’t expect to cut rates until 2024. Rising interest rates also impact the new development of much-needed units to meet the housing demand.   

Interest rates impact a lot: consumers’ mortgage rates, student loans, auto loans, and credit card rates.  Credit card debt, as mentioned, is already increasing for Americans and all of these things become a contributing factor as renters assess what they can pay for rent.   

Mortgage rates have already gone up from Jan 21 (2.65%) by nearly 300% (current rates sit at 6.9%). We have not seen mortgage rates jump this quickly since 1977 (8.65%)-1981(18.6%). 73% of mortgage borrowers are locked in at rates below 4%, creating an extremely powerful incentive to stay in their current homes long-term.  

You can say the same thing about long-term renters, the rising interest rates reduced purchasing power from 400K down to 274K, keeping the monthly mortgage under 2K at $1,784. What keeps homeowners in place is the same thing that will keep renters in the rental market. As interest rates continue to rise, the home buyers purchasing power will continue to compress, which I think incentivizes renters to also stay put in the rental market. 

Forecasted National Multifamily Trends 

Multifamily New Units, Absorption, Occupancy, and Rent Growth 2000 – 2028 

In the nearer term for 2023 and 2024, new supply will be more active than in previous years and will pressure occupancies downward. In general, a return to 3-5% rent growth is a reasonable expectation as well as completions on the higher end of the scale of what we’ve seen over the last decade. 

Housing Supply Likely to Remain Constrained 

According to the National Association of Homebuilders, the Housing Market Index (HMI) is currently at the lowest point since the early days of the pandemic. While high mortgage rates have helped offset recent multifamily rent growth in terms of comparative affordability, single-family permits, starts and sales are all down year over year. It’s likely we’ll see more buyers and sellers remain on the sidelines for the near term. The good news is the lack of good, substitute affordability should provide some level of support for multifamily demand. 

While there are fears around the looming recession, there are not a lot of new surprises for multifamily in the upcoming months. Ultimately, there’s a lot of data to focus on in the upcoming months as you’re finalizing your budgets for the year 2023. As multifamily saw the Great Recession had much more looming data for the rental housing industry a decade and a half ago, we are cautiously optimistic for the industry for the future. 

NMHC 2022 Fall Meeting Recap

This year’s NMHC Fall meeting drew over 700 attendees, reflecting general concerns in the industry around the economy, the midterm elections, rent control, and how the housing industry could be impacted going into 2023. Over the course of three days, we heard from economists, election analysts, and legislators who weighed in on the topics that are top of mind for multifamily owners, operators, and developers.  

Recession: to be or not to be? 

The conference kicked off with remarks from Mark Zandi, Chief Economist with Moody Analytics to address the most pressing concerns of the attendees. Are we in a recession? If we are not in one, will we be in one soon? If we are in or enter a recession, how bad will it be? 

Mr. Zandi pointed out that the debate as to whether we ended the second quarter going into a recession stems from the reality that the US economy had two consecutive quarters of negative gross domestic product (GDP). This would usually meet the definition of a recession. However, other economic factors, such as a strong labor market and corporate earnings growth, do not align with what you would expect to see if we were in a recession as of the end of Q2. There are still many unfilled positions open across the country and layoffs remain relatively low. In Mr. Zandi’s opinion, we were not in a recession at the end of H1; however, he pointed out that a recession is likely in the next six to eighteen months. 

If and when we enter a recession, it’s important to note consumers are in better shape than in prior recessions. Mr. Zandi shared that he viewed consumers as a firewall, being that we are between an economy that continues to grow versus one that declines. Government stimulus, low unemployment, and low-interest rates have contributed to the American consumer building up their savings. He shared that the average homeowner today has $185K in equity which is up from $150K in prior years.  

While inflation showed small signs of slowing over the summer months, specifically in gas prices, inflation is still high. This led to another interest rate increase of 0.75% by the Federal Reserve – a smaller increase than some had expected. The rate at which consumers continue to spend or to the degree they pull back from spending will play a key role in whether we enter into a recession or not. 

As to how bad a recession could get for the American economy, Zandi was still cautiously optimistic. He pointed out the current health of the financial system. “American businesses are in great shape,” Zandi stated. “Leverage is low, interest coverage ratios are good, banks are well capitalized, and liquidity is strong which is very different from the way the US has entered previous recessions. 

Mr. Zandi pointed out that if we start to see job loss, things can take on a life of their own as consumers start to lose confidence. A result of rising interest rates means that companies will see their earnings decline. Historically, rate hikes have led to a recession. 

While Mr. Zandi was cautious not to state whether we will or will not enter a recession, the attendees at my table seemed more inclined to believe that one has already begun, referencing the slowdown in housing due to rising interest rates, recent articles indicating that the consumer sentiment index has dropped, and the volatility of the stock market that would usually be indicative of an impending recession. If we continue to maintain strong employment and resilient corporate and personal spending, a recession may be more short term than long term. Most agreed that the apartment rental industry remains better suited to weather the storm. 

Solutions for the Apartment Supply and Demand Imbalance 

Moderated by Caitlin Walter, Ph. D. the Vice President of Research for NMHC, panelists Ethan Handelman the Deputy Assistant Secretary for Multifamily, HUD and Daniel Hornung, Special Assistant to the President for Economic Policy at the National Economic Council under President Biden. 

The relevance of the housing supply and demand imbalance was front and center as rent control activists interrupted the sessions earlier in the day. Mr. Handelman shared that the Housing Supply Action plan is a top priority to the administration, as they understand it is a central issue for the economy. Housing affordability challenges not only hold back families’ economic mobility, but they also hold back the economic progression of our country and our economy overall. He went on to acknowledge that if we are going to address the housing affordability challenge, we need to address the root cause of it which is a lack of supply in this country, particularly that which is affordable. “We need to use all of the tools that we can” at the federal, state, and local level as well as the private sector with nonprofit partners,” Handelman said. 

Handelman also touched on some of the aspects of the Housing Supply Action Plan, specifically with zoning and land use.  

“Through the bipartisan infrastructure law, we have identified around $7 billion in competitive grant programs where we now have integrated a [zoning and land use] criteria for state and local governments that are applying,” Handelman said. “If you have taken action to improve your zoning and land use policies at the state and local level, it’ll be more likely that you get this funding.” 

The second area Handelman brought up is looking at what they can do administratively and legislatively to improve existing sources of federal financing for affordable housing development. In terms of their administrative actions, the focus is really on what the administration can do to make LIHTC more available and easier to use. Handelman shared that, in the coming weeks, the Treasury Department will put out a regulation on income averaging, which will make it easier for developers to use LIHTC to build housing that can be used by mixed income households as well as rural areas. 

Lastly, Handelman pointed out there’s additional work that could be done in partnering with multifamily leadership as well as state and local governments. “We wanted this to really be an acknowledgement that we need effort from the government and the private sector to address housing affordability challenges, increase supply and increase available units.” 

Caitlyn shared that a recent survey reflected that an average of 40.6% of multifamily development costs can be attributed to regulations. While regulations are necessary to protect health and safety of renters, the survey revealed that there are a lot of duplicate regulations. 

Mr. Hornung echoed the vitality of regulations but also added there is a desperate need to avoid duplicate regulations resulting in needless transaction costs.  

Mr. Handelman pointed out that some of the regulations we face as an industry date back to periods of segregation. NIMBY’s origin stems from more than just not wanting a certain type of housing, it was about not wanting certain types of people in their backyard. 

Supply Chain Restrictions 

Another factor contributing to the slowing of development of new units is the cost of materials, particularly lumber. Q2 and Q3 have shown signs of a turnaround compared to Q1, following a significant run-up in costs over the last 2 years. The Commerce Department reduced lumber duties by about 50% in August, resulting in lumber prices dropping from about $1,500 per thousand board feet to $500. The administration stated they are continuing to look for ways to work with the industry and their desire for a continued conversation with state and local governments. 

Cost Burdened Renters 

Chris Herbert with the Harvard Joint Center of Housing Studies defines cost burdened renters as ones whose income is restricted and therefore, cannot afford rent on their own. The lines between cost burdened renters and renters who can afford an available unit on their own are becoming blurred as rental costs and household costs have climbed. Ethan Handelman shared that for families truly in need, the most powerful contribution is rental assistance. Rental assistance would allow families to shift spending to other necessities like food, medical care, and education. 

“There is a noticeable gap between where rental prices would need to be in order to align with median area income in conjunction with the costs to build and maintain quality housing. HUD needs to pay attention to both renter needs and the cost associated with building quality housing. Increasing the number of vouchers by 25K is an important step in the right direction.” 

The Emergency Rental Assistance Program (ERAP) proved effective in keeping renters in their homes along with the flexibility of multifamily housing providers. Caitlin Walker did a great job pointing out the actions taken by NMHC members across the country to provide options for renters in need. 

Rent Control 

Rent control continues to be a hot topic. Concerns were raised about the increase in market rents over the last 12 months, with the panel pointing out that 15-20% year-over-year rental increases are not sustainable. Both panelists agreed the government is pro-housing which means they are pro-landlord, pro-renter, as well as supporting those who might want to be renters in the future. It was suggested that the political energy around this topic would be better spent on increasing demand, improving housing quality, and keeping rents at a reasonable level, rather than fighting about rent control month over month, quarter over quarter, or year over year. 

The challenges renters and property management companies face are not going to go away on their own. It falls to all of us to get involved in local, state, and national associations that advocate on behalf of the multifamily industry. To learn more, be sure to also check out your state and local apartment associations or visit or to get involved. 

7 Ways to Reduce Application Fraud and Delinquent Payments at your Properties

As rental housing costs are soaring across the country, it is no secret that delinquent payments are affecting profitability for properties. Since 2021, rental rates have increased 13.4%, making the average rental cost $2495 a month, according to national real estate brokerage HouseCanary. Many renters are living paycheck to paycheck, even some of those who are making six-figures.  

Alongside the increase in delinquent payments, there is also an increase in application fraud, specifically since COVID-19. A recent survey from Snappt reveals an estimated 11 million applications were falsified or altered in the last year alone. This could also be a contributing factor to the rise in late payments. 

“We know people did not receive 15% to 30% increases in pay [to match rises in rental costs],” one regional manager stated. “So, to be able to still afford three times the monthly rent to qualify for an apartment is challenging.” 

Evictions are one of the biggest hits for properties, pinning costs at an average of $7,500 per eviction with nearly 4 million evictions filed every year. Knowing application fraud is potentially contributing to delinquent payments and therefore, evictions, here are some solutions we have for mitigating both application fraud and delinquent payments: 

Reducing Application Fraud 

  1. Passive authentication – Should a resident be filling out their application online, passive authentication technology can help confirm an identity of a user without demanding any additional authentication. Observable data can help give evidence of an online identity preventing fraudulent applicationsfrom moving forward. 
  1. Automated Verification of Income – Setting up an automated verification for income relieves both property managers and the prospective resident from issues or errors. It will also reduce the temptation or possibility for a prospective tenant to modify or create their own versions of the documents. Additionally, using software like Snappt can help detect if any documentation has been modified or altered. 

Reducing Delinquent Payments 

  1. Background checks – Rental history and credit checks can help properties better understand the qualifications of a prospective resident. Should they have no credit or rental history, properties can also ask for things like three months’ rent in advance or extra deposits to reduce risk in the event the resident doesn’t pay their rent. 
  1. Rent Payment via Flex – Offer your residents a flexible way to pay their rent through Flex. Flex will pay the full rent on the day its due while the tenant can split the payments in two according to their own paydays.  
  1. AutoPay options – Many residents simply forget to pay their rent. Give your residents the opportunity to set up auto-pay. Auto-pay is known for providing convenience, peace of mind, and significantly decreasing late payments. 
  1. Automated Reminders – You can leverage software that enables text message or email notification to remind tenants to pay their rent. While email can be useful, text messages are more likely to be seen and read.  
  1. Reasonable Penalties – While there is no set limit to penalty fees, most properties don’t charge more than 5% of the rental rate as a late fee and give a grace period of three to five days to pay rent. Reiterating your policies about late payments and fees are important as residents are not consistently reading or referring to their leasing agreement. It can be useful to share this message on a regular basis with residents as they may be more likely to pay on time because of it. 

Properties that use these practices can help mitigate risk and reduce loss of revenue to the best of their ability. ResMan also offers a robust, statistically-backed, score-based screening solution that includes identity verification to help reduce your application fraud, helping you make better leasing decisions on the available applicant pool without adding risk. Learn more here.  

Pet-Inclusive Housing Reaps More Revenue and Rewards

If you were to stop someone on the street, there’s a great chance that person owns a pet. Pets are not only incredibly common among US households, but those who own pets will tell you pets are also incredibly important members of their family. Since COVID-19, this belief around the importance of pets has only become a greater reality for renters as pet adoptions increased dramatically throughout the surge of the pandemic. However, the recent research done in the Pet-Inclusive Housing Initiative is showing quite a disconnect between renters and property management companies when it comes to pet-inclusive housing. 

Upon surveying nearly 1,300 residents and over 550 owner/operators, 98% of pet-owning residents agreed pets are members of their family and 93% of owner/operators followed in agreement. Despite this acknowledgement, 72% of pet-owning renters say it is still an immense struggle to find housing for themselves and their pets. This major gap in perception means owner/operators might be limiting their own demand and opportunities for more revenue. 

The Pet-Inclusive Housing Initiative, conducted by the Michelson Found Animals Foundation and the Human Animal Bond Research Institute (HABRI), gives telling insights as to the causes of disconnect between owner/operators in rental housing and their residents as well as providing great solutions and potential ideas around how to improve pet-positive policies that appease the business as well as renters. 

Misconceptions Around Pet-Inclusive Housing 

Many owner/operators fear the damages pets may cause, which is one of the contributing factors behind an average of $864 in pet deposits and $600 in pet rent paid by pet-owning residents each year. On the flip side, research concludes that pet damages average at $210. On top of that, fewer than 10% of pets cause damage of any kind, meaning properties are generating incremental NOI from their pet-specific security deposits and pet rent fees.  

Owner/operators also attribute concerns about insurance as a major reason for having such restrictive pet policies at their properties. Pricing for insurance on properties is determined by several factors. However, pet policies only have a small impact on insurance cost for properties compared to properties with no pet policies.  

There are also insurance policies that do not restrict pets whatsoever. In fact, almost a third of owner/operators aren’t aware that such policies exist or still have misconceptions around the cost of such policies. There is ample opportunity to attract and retain more pet-owning residents by alleviating these concerns around pet damages and insurance. 

The Benefits of Pet-Inclusive Housing 

While many owner/operators have concerns with pet-inclusive housing, it’s also important to note the incredible benefits of implementing pet-inclusive housing. Research finds that 83% of owner/operators say vacancies are filled much faster with pet-inclusive units than pet-restrictive units. 

Residents who find pet-inclusive housing stay 10 months longer on average at that property than they would at a pet-restrictive property. There is also evidence pet inclusion can also attract younger residents, who tend to be much more committed to their pets than older generations, according to research. 

Also worth noting is the reality that people will move homes on behalf of their pets. Thirty-three percent of all residents surveyed said their pet was a reason they had moved in the past. Forty-one percent of Gen Z and Millennials alone have also said the same. This only further proves that by offering pet-inclusive housing, you create a great reason for residents to want to stay at your property. 

Pet restrictive properties also see lost revenue from their residents. Eleven percent of renters admitted to having an unapproved pet, avoiding the pet deposits and fees. Having less restrictive policies would result in residents being more likely to pay those fees and bring in more revenue for properties. 

Potential Solutions for more Pet-Inclusive Housing 

For properties that are already pet inclusive or are planning to move in that direction, some recommendations emerging from the Michelson research about how you can make your pet-inclusive property rise above others are: 

  1. Consider eliminating pet deposits and fees and count on security deposits to cover minimal damage. Entice residents with a free month of pet rent or waiving pet deposits for new residents. 
  2. Create an easy-to-follow screening process and pet agreement. 
  3. Formalize the number and types of pets allowed with forward-thinking, positive pet policies. Consider allowing 2 pets per unit. Remove dog breed and weight restrictions and focus on good behavior. 
  4. Check with your insurance company for quotes and secure a policy without pet-related restrictions. 
  5. Reduce liability and risk by requiring proof of renters insurance that covers pet damages. 
  6. Have pet-friendly amenities: washing stations, designated pet exercise areas and pet waste bags. 

Research is clear that pet-inclusive properties reap more benefits and revenue. Pets are widely known to have incredible benefits to people in their health, well-being and general quality of life. With pet ownership at an all-time high, offering pet-inclusive housing is a win-win for your business and your renters. 

You can download the full Pet-Inclusive Housing Initiative Report here. 

As an open property management platform, ResMan has a number of integration partners that provide pet-related solutions to help property management companies be more pet-friendly. Visit the partners page of our website to learn more. 




Questions to Ask When Evaluating Software Providers for Property Management

The use of technology in the property management industry is not new. Technology solutions have been available since at least the 1990s – before email and internet were widely available. But even 5 years ago, there wasn’t nearly the amount nor the need for these technology solutions, especially for the industry as a whole to tie them to a specific category of tech. Now, PropTech is an established category, receiving $32B in private investment in 2021 alone. 

But it’s not just software companies that are driving the growth of the PropTech category. The explosion of technology solutions couldn’t happen without a growing appetite amongst property management companies for technology solutions that reduce costs, create operational efficiencies and improve the resident experience. Technology is only as strong as it is at making a return on investment. With this as the backdrop, the NAA Apartmentalize conference session, “Integrated or Point Solutions? Get Married or Play the Field?” focused on educating property management companies on how to evaluate new technology solutions and how to strategically manage their “technology stack”.  

Panelists, which included Jennifer Staciokas, Executive Managing Director, Property Management at Western Wealth Communities, Lucas Haldeman, Chief Executive Officer at SmartRent, Ellen Thompson, Founder & CEO at Respage, Guntram Weissenberger, Owner/President at Westover Companies, highlighted a number of points to consider when evaluating new technology: 

The need to continuously evaluate your technology stack: Perhaps back a decade or more ago, you could “set it and forget it” when it came to the technology that you use to run your property and your property management company. This is no longer the case. Technology is evolving at a fast pace and while adding and changing software isn’t seamless and easy for your organization or your staff, you need to continuously review your existing solutions and monitor the market for new solutions to address challenges you are facing or you will fall behind your competitors. Panelists recommended assembling a sort of technology steering committee composed of different groups within your organization to be responsible for identifying and evaluating your existing technology stack as well as new solutions that you want to consider. 

Meticulously defining the problem(s) you expect new technologies to solve: Before diving into the evaluation process, it’s important to define the problem the technology is expected to solve and the goals or results you expect it to deliver. Whether you’re adding a new solution or changing out an existing solution, you want to make sure you understand exactly how the solution you choose is going to solve the specific problem you have. This will guide your evaluation and selection process as well as measurement of early results as you begin implementing the new solution. 

Conduct a thorough evaluation of the solutions and providers you are considering: Walking around the Apartmentalize exhibit hall it’s easy to get excited about the providers that you meet and the new technology that you see. Sales teams will invariably push you to move fast, but it’s important that you take the time to evaluate the solution and the provider thoroughly to avoid any potential unpleasant surprises down the road. You’ll want to enlist your team in the evaluation process and pay careful attention to the following: 

  • Does the technology solve the problem you’ve identified? If so, how? What results should you expect? What results have other property management companies seen when implementing the technology? 
  • How well does the solution integrate with other software you are currently using or might use in the future? Most every software provider will claim that they can integrate with solutions, but many aren’t actually open systems that can be easily integrated with. Ask detailed questions – how many and what data fields are shared between the systems? Is there custom work required on the part of either you or the provider to make the integration happen? Be very concerned if they tell you the integration is on their roadmap. Everything is on a roadmap somewhere. Make sure you understand if development has commenced or not and consider requiring a clause in your contract if the integration isn’t available yet. 
  • Does the product roadmap align with your priorities? Ask for details about what is on their short term (3-6 month) product roadmap and their longer term product roadmap (2-3 years). Inquire about how are priorities for the roadmap determined? You should expect that customers drive the roadmap. There should be a customer advisory board in place or a process for soliciting enhancement ideas from customers and there should be evidence that enhancement ideas from customers actually get implemented. Beware that some of the larger organizations tend to build basic capabilities to address a need and then move on to something completely different versus really investing in building out capabilities in specific areas. Maybe this is fine for you or maybe it is not. 
  • Are they sufficiently financially stable and long term viable for your organization’s risk tolerance?  New capabilities often emerge from new entrants that are funded by someone – venture capital or private equity firms, property management companies, etc. The advantage of these new entrants is that they are focused on the problems they are solving, and individual customers often have a greater say in the direction their solution takes.  But when you implement a solution, you are making an investment in integrating it with your current technologies, training your organization to use it, etc. So it’s important to understand and be comfortable with where this organization might be 6 months, 1 year, etc. down the line. You need to consider whether it has a future as a stand-alone company or if it is more likely to be bought by another provider in the industry. History shows that in some cases an acquiring company makes decisions about the solution that no longer make it viable for you to use, so it’s important to weigh the value of the solution versus any risks that you may be incurring by implementing it. 
  • How will they support you in getting up and running and with any issues that arise? The success of this solution in addressing the problem you’ve identified depends on your team adopting and using the solution the way it was intended. Before you sign on the dotted line, make sure you understand: 
    • Onboarding: How long does it take? What are your responsibilities? What are the provider’s responsibilities? When can you get started? All properties at once? One or two to work out the kinks? Divide into waves?  
    • Training: How does your team learn to use the solution? Does the provider offer personalized training? Do you want train the trainer or the provider to train your entire team? Is training done through video tutorials only? Consider what will work best for your team because getting value from the solution is dependent on your team using it. You only have one chance to get everyone comfortable with using the solution. 
    • Ongoing Support: What is the customer support process? What is the turn around time on issue resolution? Some organizations will offer email only support or will charge you based on number of customer support tickets. Ask questions. Check reviews and references. The solution won’t deliver value if your team can’t get answers to questions that they have or if the value is offset by the cost of getting help. Beyond just how support tickets are handled, make sure you understand if they have an account management or customer success process, as having a point person that is familiar with your organization will go a long way in helping ensure you are getting the most out of the solution.  

If you’re interested in ResMan as a software provider for your daily operations, book a demo to see the product up close.

How to Measure Property Management Software ROI

How to Measure Property Management Software ROI

Measuring your property management software return on investment (ROI) can be easier than you think. You just need to look at the right factors. This will ensure you maximize your companies gains or justify the purchase of a new property management software platform to stakeholders.

The Formula to Measure Property Management Software ROI

ROI = (Gains – Cost of Investment)/Cost of Investment x 100

In the ROI calculation gains are any result of increased revenue as a result of your investment in a new property management platform. This could be as a result of software functions that improve processes or even from integrated resident funded programs which may offset cost associated with the platform. Ultimately your property management company needs to evaluate functional requirements and needs as well as determining how those will benefit the bottom line.

See how Rise Residential uses ResMan to Save Time and Money

This is where you can make a case for the benefits you expect. Ask yourself, what are the pain points for my business and my staff? Are you looking for something that is easier to use or maybe your current solution requires constant technical support, which is costing both time and money?
Evaluating Your Property Management Companies Pain Points and Needs

Here are some factors to consider:

– Are you working in multiple systems?

– How efficient is your staff with your current process and system?

– How difficult is it to onboard and train new staff on your current system?

– How much is technical support costing in both time and money?

There’s no set rule regarding what gains should be considered in an ROI calculation. Maybe you prefer to stick to concrete revenue gains from efficiency gains or from resident funded programs like Credit Builder. However, you can also consider opportunity costs as well, ultimately, it’s up to you and your stakeholders to decide what value means to your organization.

Determining the Cost of Your Pain Points and Translating Them to Gains

There are many different reasons for switching property management software. For some it is to increase productivity or maybe you are spending too much time and money on technical support for your current solution. Translating these gains to your bottom line will be essential for your ROI calculation.

For instance, if your staff is currently working in multiple platforms determining the amount of time, they spend each day between systems, then translating that time to either saved payroll or determining opportunity cost of the lost time will give you a concrete potential gain from working in one holistic ecosystem like ResMan.

Finding the property management platform that not only covers the needs of your organization but also creates efficiencies that translates into gains is easy when you know what to look for. Here are the most valuable features a property management software can have, and how those features improve ROI.

Making Your Purchase Decision

Once you have the ROI calculation for the property management software of your choice, you can eliminate the options and begin the decision making process. By taking the time to evaluate the features of property management software and by making a solid calculation, you’ll be able to compare the benefits of upgrading your current property management software to an integrated management platform like ResMan. You’ll also be prepared to make a strong case to your stakeholders about why your choice is the best route for your company.

Whether you define ROI in time savings or as a hardline number, the property management software platform you choose should have quantifiable benefits that you cannot gain from your previous solution.

Don’t gamble on a solution that only meets part of your needs. Discover a solution that increases your ROI and more.

5 Ways to Grow Your Property Management Company

There is a time in every property owner or investors career where they stop and ask themselves “what’s next?” or “how do I take my properties to the next level?” To transform your business into the property management powerhouse that you envision, try these 5 ways to grow your property management company.

1. Build a Team of Property Management Superstars

Whether you are an owner/operator or an investor, the equation is simple: well-run properties = happy residents = NOI growth. Great property managers not only manage leases and coordinate maintenance, but they also provide excellent customer service which can lead to better reviews and a stellar property reputation.  Simply put, when things are running smoothly at the property level, more time is freed up to strategize for growth.

If you’ve already got a great staff, explore ways to increase their efficiency through training, development, or technology. Or perhaps, leverage your cross-trained employees who can take on the tasks typically associated with multiple employees to reduce overhead and run your business more efficiently. Ultimately, by investing in quality resources for your team and hiring or training efficient and resident-friendly property managers, you’ll achieve a strong NOI for your property.

2. Research the Competition

Whether you need to catch up or sprint ahead of the competition, knowing how other property management companies are positioning themselves for growth is key to your growth. To start, sign up for their newsletters, follow them on social media, and analyze their website speed and content. Try even contacting your competitors’ leasing agents to experience their sales process firsthand.

3. Extend Your Property’s Marketing Reach

If you want to fill your vacancies faster, consider increasing your marketing efforts. You want to expose your open units to as much of the renter market as possible. Social media is a great place to start. After all, it is today’s word of mouth. Post relevant information about your communities, share original content and engage with residents and prospects.

Here are more ideas to try:

  • Make a listing or update it on popular internet listing websites like Manta, Google, and Yelp.
  • Revamp your website with fresh content and SEO-optimized keywords
  • Launch a blog
  • Experiment with other social platforms
  • Sponsor a community event
  • Advertise in local or national media

All these efforts help increase your visibility. The goal is to be top of mind for current residents and prospects.

4. Leverage Your Existing Residents

It’s a mistake to think that the only way to achieve growth is through new resident acquisition. Really, your best bet is focusing on the residents you already have. There are two ways to look at this.

The first we’ve already touched on. Keeping vacancy rates low is critical to NOI. To accomplish this, you’ll have to discover what amenities and services will retain great renters. Some property management companies make the costly mistake of assuming which upgrades their residents want to see. However, the most successful property management companies ask their current residents what they value most.

Send an email blast with a survey. Create your own focus group by inviting residents to participate in an afternoon discussion. Ask for feedback on your social channels. Basically, gather responses from as many residents as you can in formats that illicit active and thoughtful participation.

Bottom line is that it’s easier and more cost-effective to get people who are already renting from you to renew their lease than to find new renters. So, focus on tactics to get your residents to sign another lease.

A second approach is to leverage your current residents’ influence. Assuming that your residents are spreading the word about your beautiful apartment community and great customer service is not going to do much to get your more renters. You have to actively seek referrals. During a resident’s lease or even before the lease is up, ask your renters if they know anyone else who would be interested in your apartment community. Even go as far as to build a referral program that incentivizes new leases from referrals. In this scenario, everybody wins.

5. Invest in PropTech

At the minimum, you should offer online payment options for residents. To scale from there, look into solutions that give you edge over your competitors and make it easy for people to do business with you. For example, virtual reality tours allow prospects to get a feel for your community at a time and place most convenient for them.

While there are endless technology solutions out there, the challenge is identifying which is right for growing your property management company. Depending on your renters, your asset type, and your market, different technologies will fit those different needs. You’ll also want to make sure you have the right property management software that automates repetitive tasks and provides investment so that you can focus on strategy and development.

A Recipe for Growth

Try at least any 1 of these 5 methods and to see growth in your property management company. But remember, growth doesn’t have to be overly complicated. A successful company’s first step to generating growth is to understand where it should come from and being intentional in those efforts. From there, anything is possible.

Looking for a property management platform that will position your company for growth? 

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