ResMan Recaps NMHC’s OPTECH 2021

Last week, the ResMan team headed to National Harbor, Maryland for the first in-person OPTECH event in two years. OPTECH 2021 was hosted at the newly renovated Gaylord National Resort and Convention Center just south of Washington D.C. The hotel and convention center made for a large space, covering three floors for sessions and the trade show floor. 

Over 2,000 attendees and vendors eagerly arrived Monday evening, all of them excited to see both old and new faces at this year’s event. The first night was a great networking opportunity both in and outside of the trade show floor.  

Our Booth at OPTECH 2021 

optech 2021

ResMan’s booth featured our dual touch screen demo stations where attendees could experience first-hand how intuitive and easy-to-use our conventional and affordable solutions are, with many taking the lead in demoing the accounting, budgeting, payments, and online leasing capabilities within the comprehensive platform.  

Our favorite points of conversation revolved around both old and new features launched here at ResMan. Our popular Credit Builder feature allows residents to report their on-time rental payments to credit bureaus, ensuring their largest monthly payments are rewarded with credit growth. Along with that, we shared our new payments feature which will help property managers collect rent hassle-free. The other eye-catching solution we shared was ResMan Websites, which offers high conversion features such as interactive site maps, virtual tours, neighborhood explorers, and unit-specific floor plans. The best part? There’s no coding knowledge needed. Teams are allowed to easily edit website content on the fly, including videos, photos and text.  

Sessions 

The sessions this year were the talk of the conference. NMHC did a wonderful job at providing thought-provoking sessions from knowledgeable leaders in the industry. A majority of conversations revolved around data, technology and the impact of COVID-19 on both businesses and people within property management. 

The Keynote speaker, Suneel Gupta, CEO of Rise, concluded Tuesday’s sessions with a particularly insightful conversation around burnout and coping with feelings of failure in the workplace.  

“We’ve been told success is a result of hard work and grit,” Suneel remarked. “And yet, if you look at the definitions of grit – relentlessness, instant responsiveness, being always on, doing whatever it takes to win – those are also the same actions that lead to burnout. It suggests employees to see grit and burnout as the path to success.” 

$500 Travel Voucher Giveaway 

Giveaways and swag are always a fun part of trade shows. We offered a $500 travel voucher giveaway to booth visitors at OPTECH 2021 as a thank you for stopping by. We will be selecting a winner this week and are excited to give out a nice gift that hopefully brings a much-needed chance to disconnect, relax and recharge! If you visited our booth, be sure to check your inbox this week to see if you won!  

Wrapping Up A Great Event 

It was a fun and exciting week at OPTECH 2021 and we cannot wait for next year’s event. Until then, we’ll be working on enhancements that bring even more efficiencies to our customers in 2022. All in all, NMHC’s OPTECH is a great event and we hope attendees and vendors alike appreciated all of the great content and conversations like we did. Hope to see you in 2022! 

If you attended OPTECH and didn’t have the chance to visit our booth or talk to one of our team members, we would love to connect! Simply fill out a form here to chat with one of our experts! 

Credit Building: What is Multifamily’s Role in Helping Residents and Tenants Achieve Upward Economic Mobility?

Credit Building: What is Multifamily’s Role in Helping Residents and Tenants Achieve Upward Economic Mobility?

The United States has a level of wealth inequality between the rich and poor that is larger than any other major developed country. While there are many reasons for this divide, one of the key contributors is unequal access to credit and other mainstream financial products and services. The last 18 months have opened many eyes to the severity and impact of this divide, leading many organizations and investors to commit to making change happen.

Elizabeth Francisco, President of ResMan, sat down with Talia Kahn-Kravis Manager of Program Innovations & Business Development at Credit Builders Alliance, Alex Buchanan, COO of Rent Dynamics, and Myles Howell, Credit Builder Account Manager at ResMan to discuss how limited access to financial resources and education is hurting both residents and property managers.

“Credit health impacts every aspect of resident’s lives,” Elizabeth starts off. “When I was in my early 20s, I was a single mom with two kids trying my best to pay my way through college. I had two jobs and like so many others in the industry, I fell into property management. And to say that my credit was less than stellar would be an understatement.”

“I had been a victim of predatory lending, having an interest rate on my car payment at 18%. Had I been able to benefit from the reporting of my on-time rent payments, I would’ve been able to secure a better credit score and a better interest rate.”

Credit Building in Multifamily

The opportunity for multifamily operators to help renters build credit is highly overlooked. At Credit Builders Alliance, Talia Kahn-Kravis has seen firsthand the impact credit has had on both property managers and tenants.

“1 in 3 are credit challenged,” Talia asserted. “There are nearly 53 million people who are un-scorable and approximately 38 million people with credit scores below 600.”

One might not realize how costly poor credit can be but the fiscal difference is staggering.

“Having a poor credit score can cost people $250,000 over their lifetime,” Talia added. “Renters are 7x more likely to be missing credit scores compared to homeowners. Renters of color are even more likely to be credit challenged. We see even senior housing in need of credit visibility. Many senior residents have never established a credit score at all.”

“The idea of going a lifetime being credit invisible is mind blowing.” Elizabeth responded in surprise. But just as homeowners pay their mortgage and get credit for on-time payments, shouldn’t tenants and residents be allowed to get credit for paying their rent on time? Whether it’s a mortgage or rent payment, housing is typically the largest monthly payment people make. Renters deserve the same opportunity to report their monthly rent payments.

Rent reporting is not a new concept, but it is a widely overlooked amenity by property managers. Talia mentioned how reporting on-time rent and utility payments to credit bureaus helps residents establish, maintain, and build their credit scores by simply paying their normal bills on time.

And it makes a massive difference. According to Credit Builders Alliance and their internal studies, 100% of residents with no score became scorable through rent reporting and those who had a score under 600 increased their scores by an average of 32 points.

“The FHFA (Federal Housing Finance Agency) is considering and in the process of adding on new types of scoring models for credit,” Alex Buchanan of Rent Dynamics chimed in. “And Fannie Mae just announced they are going to take bank statements as proof of rent payments for credit reporting. It’s really cool to see how this has evolved already. People are recognizing how important that reporting is considering it is most people’s largest monthly payment.”

Why Rent Reporting is a Win-Win-Win

Rent reporting isn’t just beneficial to the resident. While the resident is building credit without acquiring anymore debt, properties that offer it have a competitive advantage over others in the area. Rent reporting not only helps attract and retain residents, but it also incentivizes residents to pay their rent on-time.

Elizabeth chimed in to add some compelling statistics from Credit Builders Alliance around the benefits of rent reporting and credit scores:

· On-time rent payments increased 25% in one year since implementing credit reporting.

· 79% of residents saw an increase in their credit score, increasing by 23 points on average.

· The number of renters with a credit score above 620 increased 65%.

“The question is not why should you be doing this for your residents, the question is why not?” Elizabeth argued. “If you and your residents are both benefitting from rent reporting, it’s a no-brainer.”

Alex piped in to bring up how the market is changing as new generations come through multifamily. He mentioned how Gen Z is forcing property managers to step up their game when it comes to resident support.

“Gen Z is driving Corporate America to be more responsible,” Alex said. “They are voting with their dollars on which corporations they choose to support and they want to know they’re interacting with a brand that is doing something positive.”

Alex introduced some used cases, where property management companies saw resident retention increase by 1.28 months. Along with that, the property’s residents doubled their average credit score. The property teams and residents are both winning with this simple add-on.

Even better, property owners are benefitting massively from this, too.

“We always wondered what property owners were seeing on the other side in benefits,” Alex said. “It turns out, some of our properties reported $13k a year in ancillary income and sold at a 3.5% cap rate while also creating $386k in additional value at time of sale.”

“So, when we’re talking about this virtuous circle of everyone winning, it’s not just residents. Credit building is so impactful and boosts revenue for operators yet, adding a credit building feature doesn’t have to take any work to implement or manage as an operator.”

“For those working at an executive level, ask your property managers how often they are talking about credit scores,” Alex added. “I promise you it will surprise you. Property managers are thanking us because their residents are constantly asking about how they can build their credit.”

Trends and Legislative Activity

A focus on ESG (Environmental, Social and Governance) is absolutely critical to capital raising in this day in age. Those who don’t prioritize ESG programs, initiatives, and goals will not be able to keep up with investor demands and expectations.

“You can have a real material impact on the social side with your resident population,” Alex mentioned. “I was out at an event with some friends and they said this was so important. Their cost of capital was cut in half when they could show their ESG initiatives were having a positive impact. This trend is only accelerating.”

“Rent reporting is a socially responsible initiative that makes building credit simple for residents while still avoiding additional debt.”

Along with the capital market, legislation is beginning to spark around rent reporting. Today, we are seeing states intervene on behalf of rent reporting. Senate Bill 1157 in California went into effect in July. Multifamily portfolios with affordable communities are now required to offer rent reporting to their residents and must do so in writing. Colorado and D.C. are also following in California’s footsteps.

“Multifamily and affordable properties need to start getting ahead of this,” Alex said. “The impact is powerful, and it’s so much easier to get ahead and start offering this now instead of worrying about fire drills or adding something to your system later.”

“This should’ve been done decades ago,” Elizabeth remarked. “I’m glad to see this happening.”

Already a ResMan customer and interested in our Credit Builder feature? Email your Account Executive to learn more.

Not a ResMan customer and interested in our software with Credit Builder? Book a demo with us here.

Getting Ready for the Trickiest Budget Season in a While

Getting Ready for the Trickiest Budget Season in a While

All things considered, the Apartment industry is performing quite well in the majority of the U.S. Even the gateway markets are indicating they are on the upward trend to business, as usual. Owners are optimistic and their thoughts of ongoing success are top-of-mind.

But – and there’s always a but – how tricky will budget season be for management companies with the possibility of rising inflation, supply chain management issues, the eviction moratorium’s fallout and the threat of natural disasters?

ResMan held a webinar “Natural Disasters, Pandemic, Recession, Inflation – How the Heck Do We Budget for 2022?” in late August, featuring its President and moderator Elizabeth Francisco along with panelists Mary Gwyn, Chief Innovator, Apartment Dynamics, High Point, N.C.; and Jennifer Triptow, Director of Analytics & Project Management, City Gate Property Group, Dallas.

The discussion covered the state of the industry, including 2022 forecasting (plus rising expenses and rent growth) and strategies for projecting revenue and occupancy. The group also shared best practices for educating owners and investors about the economic challenges they will face with budgeting for 2022.

Solid Performance in Apartments Lately

Apartments have performed strongly the past 14 months, particularly during Q2 2021. There were 197,000 apartments absorbed, a number which hasn’t been seen since the late 1990s. The average market rent increased 3.5 percent quarter-over-quarter – the kind of growth not experienced since 1Q 2020. The overall vacancy rate fell by 70 basis points to 4 percent. Moody Analytics projects the U.S. national multifamily vacancy rate to remain within 5.25 percent and 5.75 percent by year-end.

Cautiously, Francisco said, “Unlike previous economic downturns, the government stepped in with funding to support renters and their rental obligations, begging the question: to what degree is the additional funding supporting the positive trends? Will the trends continue at the same rate now that the economy and renters have to stand on their own?”

Francisco added, “Operators in the sunbelt states benefited greatly from the population migration into those markets providing significant rent growth opportunities. But, if the migration patterns shift or slow down, will we see the same levels of rent growth?  Are we setting realistic expectations going into 2022?” she asked.

Investors are excited about rent growth,” Gwyn added, “but we have to tell them about rising expenses needed to run the property, too. North Carolina, for example, is a hot market, but 20 percent rent growth is hard to envision.

It’s our job to keep our investors informed about what’s happening with expenses and evictions, supply challenges and regulatory issues that could affect performance.We’ve had about one and a half years of this, so you should have some history on forecasting how this could play out.”

Gwyn said that the No. 1 “proforma pain point” right now is supply chain management because costs are going up and contractors are overbooked so projects take longer. “You will see increased vacancy loss because of this,” she said.

Triptow urged managers to have a conversation with their clients ahead of budget season to see if their goals and strategy have changed.

“There’s so much uncertainty,” she said. “The eviction moratorium leads to restrictions and constraints on budgeting for any pie-in-the-sky numbers. We’re being more conservative on the revenue side because the contractor shortfall means that turns, renovations and capital expenditure projects will all cost more and take longer.”

Net Rental Income

“Our data reflects net new leases are consistently being singed at market rent levels. Renewal leases, on the other hand, are reflecting concessions or discounting anywhere from one percent to even ten percent,” Francisco said.

Gwyn said she was “really bullish” about 2021 with the thought that we’d be coming out of the pandemic. She said her renewal rents and rent growth were up by 10 or 11 percent, and she believes rent will continue to grow in 2022. “Unless the government steps in with something, I don’t think we’ve seen the next ‘top’ for rents yet.”

Gwyn has been pre-leasing more quickly than normal, and with higher rent rates.

“We need to remind our team, if we’re 100 percent occupied, our rents are too low,” she said. “I’ve coached our team to test the water, ‘If you get a 60-day notice, mark it up $200.’  This way, you are being aggressive, but if you can’t find a taker, you have time to drop it a bit.”

Triptow expects they will continue to see strong renewal performance because many residents are in “uncertain situations” and will want to stay put. In-place residents will renew, she said, we expect to continue offering discounts to some degree into next year.

“When you think about the possibility of a fourth or fifth wave of COVID-19, I’m having to be more conservative in my budgeting,” she said. “This way, I don’t regret anything I’ve told to the investors that doesn’t come through.”

Occupancy Projections

Occupancy forecasts are sitting in the 94 to 95 percent range, but there are lingering effects from COVID-19. Francisco pointed out the high number of month-to-month renters from 2020 who have carried over to 2021 and now into 2022, according to ResMan data.

“As confidence in the economy rises, I expect to see a return to pre-pandemic retention rates.  However, the increase in month-to-month renters over the last year and half have not been good for lease expiration management,” Francisco said. “I’m seeing some communities with as high as 25 percent of total unit count expiring in fall and winter months for both this year and already into next year.”

Triptow said month-to-month leases are always a threat to the rent roll, no matter the circumstances, “but even more so right now given all of the uncertainty,” she added. “They don’t know where they are going or what could happen next and want to hold that rent for one more month at a time.”

Triptow tells her leasing team to give these residents some stability, and to make them a good offer and use lease expiration to try to extend them by six or seven months. “This will make your lease expiration management more manageable,” she said.

Gwyn said it’s important to “hold tight” to your lease expiration schedule, even in unpredictable times. For example, “3-bedroom units that haven’t rented by the time school has started are going to be really tough to rent and your vacancy loss will rise.” She sees some owners offering an $1,800 apartment at $1,200 to $1,500 just to get it occupied.

Use lease expiration to your advantage, Gwyn said. “Most renters look for 12-month leases because they’ve been trained to do so, and our leasing teams have been trained to sell them,” she said. “They need to be trained to offer lease terms that are best for the lease expiration matrix and help renters to realize they are available.”

For example, after taking over a community with all month-to-month leases in July and August, Gwyn offered two lease expiration choices, attached “painful” month-to-month fees, and went door-to-door and marketed those choices. She said the strategy worked well.

Gwyn also recommends creating and marketing a waiting list; those who are on it can fill in for those who have to leave in October and beyond, in some cases, for those who are evicted, she said.

She cited leasing consultant Jennifer Nevitt, who advises that by keeping a waiting list for at least 10 percent of the community’s overall units, the property will always be okay when it comes to lease expirations.

Operational Expenses

“You can’t save your way to profitability for the long term,” Francisco said. “Market changes equate to marketing changes. Don’t just do what you always do. Question it and dig into what you’re spending on.”

Gwyn said that the industry learned in 2020 that you could lease well without a lot of Internet Listing Service (ILS) spend.

“So many people were stuck at home and were shopping online for apartments,” she said. “It created a lot of less-qualified leads and our teams were only addressing about 50 percent of the leads they were given because of that.”

Today, she uses “free” channels such as Instagram and Facebook to market apartments, taking advantage of the friend referrals that come with that. Facebook Marketplace is another effective and inexpensive platform to use.

She’s also using geo-targeting and the Wayz app to draw prospects.

“With geo-targeting, the technology lets us set it up so that our apartment homes show up on the prospect’s phone while they are visiting a neighboring, competing community,” Gwyn said, who added the importance of maintaining the community’s Google My Business page.

“It’s amazing how few of your competitors are doing this,” she said. “Their listings aren’t accurate and they aren’t responding to reviews posted there.”

When it comes to supply chain constraints, most of the talk has been about construction, but operational expenses are taking a hit as well, Francisco said.

“Expenses rising for materials because of supply chain management issues; this is not something new,” Triptow said. “Investors should be familiar with its continued delays and effects. We’re in a global economy so you never know when or what might shut things down again in China or abroad. We have no control over it. Budget for an aggressive cost rise in these materials.”

Investor Approval/Buy-In

The age-old question around budgeting season is figuring out how to gain approval of owners.

“Some investors just want to know when you are sending them their income checks and others (more institutional) are on a two-year pro forma and are much more focused,” Gwyn said. “If focused two years out, this is really tough when it comes to value-add properties given delays in supplies, getting contractors, timelines.”

Triptow said making her case is not an issue as long as “she comes to the table” with diligent facts and research.

“We are the experts,” she said. “We know the micro markets and what our competitors are doing. We need to show that expertise to the investors on how we can make up for revenue shortfalls. Yes, there could be some pushback, but in the end, they will always understand a fact-based case.”

Property Management: Why Bad Debt Doesn’t Have to Be a Bad Thing

Bad debt doesn’t have to be a bad thing.  

 Many residents have suffered economic hardships in the past year as a result of uneven employment, and other personal life factors. The federal eviction moratoriums – which protected residents to some degree – have delayed, and in some ways, made things more challenging for residents and owners to pay their bills. 

It reminds me somewhat of what happened after September 11th and the ensuing widespread financial downturn the country endured. And years later, again, the economy fell on hard times during the Great Recession from around 2008-2010. 

Working in property management in both instances, I spoke on a personal level with many of our residents, residents who were significantly impacted and that spanned every demographic group.  We had dealt with residents who failed to pay rent, but what I was hearing from the site level team was different.  We hate to see things evolve to where eviction is required, but there is a difference when you have consulted with renters who continue to deprioritize paying their rent from those who have had the rug pulled out from underneath them and cannot meet their rental obligation for the first time.   I remember sitting with residents while on site visits that were my parents’ age at the time, they had used up their savings and cashed out 401k’s hoping they could hold out until the job market improved.  Hearing their stories really hit home for me.  

Sadly, many of these same people were unable to regain employment in time to avoid eviction proceedings. Across the country we saw evictions increase and with that an increased number of renters who had significant damage to their rental history and credit reports.   Evictions not only damage a consumers’ credit scores for years; the eviction is a public record that can follow them for 10 years or more.  

Now, here we are in 2021 and we are looking at a backlog of eviction filings with more on the horizon.  Eviction should be the last resort, because it is hard for these unfortunate residents to start their lives over without quality housing.  The industry stepped up and worked with renters like never before. I have no doubt that operators of all sizes are willing to work with residents to help them file for rental assistance and for those who must move, they are open to payment plans.  

Working with residents to set up resident debt relief programs is a smart course of action. The challenge has always been that there was not much serviceable technology to help property staff offer, set up and track payment arrangements for former residents. If the management company had a way to effectively deliver payment plans while having visibility so that balances do fall through the cracks, they would be happy to offer this an alternative to eviction and negative reporting to the credit bureaus.  

Today, ResMan, is here to help you with this. 

During those past financial crises, we created a solution in house to manage former balances which in turn increased the revenue from bad recovery.  Revenue that was desperately needed as we faced decrease effective rents and saw our occupancy drop.  (The functionality is now part of what later became the ResMan’s Core Platform) Not only did the in-house collection model prove to be impactful financially, but it also provides an alternative solution that helped us to do the “right thing” for our residents. My recommendation is to rethink your bad debt policy and aim to avoid collections agencies, because when using those, you recover only a tiny portion of the back rent owed.  

You can send your bad debt (unpaid rent after 30+ days) to collection agencies, but you’ll only get about percent of what they can recover, and they won’t recover a lot. 

As an owner or manager, you have to ask yourself: How much of our rent write-offs are collectable? Are we paying for someone to manage something we could have done on our own?  How many days does the balance remain unpaid?  

We have found that when you work to recover it yourself, it oftentimes can lead to a significant financial bonus. We realized that we could collect on 85% of the balances when we worked them in house with the right tools.  

Forecasting Bad Debt Recovery for 2022 

Here are some national numbers on what our industry is facing in terms of bad debt: 

According to Moody’s, CBRE and National Multi Housing Council, 22.2 percent of the nation’s units owed approximately $70 billion as of year-end 2020 on rent and utility payments, that totals 12 million renters. 

Say you write off $21,000 to your collection agency, it might capture $3,150 of that and keep 65 percent of it for its efforts. So overall, the owner recovers just $1,102 of that $21,000. 

If you attempt to collect that same $21,000 in-house, you likely will still end up writing off 15 percent of it as truly, uncollectable rent. But if your software helps you to put in place a resident payment-plan strategy that recaptures 85 percent of it, the owner recovers $17,500 of that $21,000. 

Evaluate your residents’ debt load on an individual case basis. For example, if the resident owes $2,000, you could give them 12 to 14 months to repay it. When doing so, it’s important to let them know by agreeing to this, and by fulfilling their promises, you won’t report the debt to the credit bureaus.  

Visibility is key, the property manager and corporate accountants need to know collection status on all payment plans in place.  When you don’t have the right tools in place, setting up and tracking falls to manual processes which is where the problem was to begin with. Ever taken over an asset and found the formers who have balances that are not being worked and that were never processes to collections? When you have technology in place to manage the process, you can effectively administer payment plans and increase your bad debt recovery.  

There are plenty of reasons why apartment operators should avoid letting bad debt become a bad thing. Here is one more: Have you anticipated spikes in move-out damage expenses and other oddities that might come from what figures to be a volatile 2021? For this and variety of reasons, recovering money owed becomes even important. 

Property Management: Leveraging Resident Fees as Ancillary Income

With the country full-speed ahead on its pandemic recovery, there are many ways to define the new normal and offer what to do about it. 

Here’s my take: It’s time to restore your pre-Covid resident fee schedule. Many suspended parts of it – and for good reason – during the pandemic as the country’s economy struggled. 

The hangover effect of the pandemic is leveling off. Job creation is healthy. Wages are rising from the competitive demand for labor. Today, even struggling gateway cities are seeing boosts in rents and occupancy. In fact, our data is suggesting that we are not only seeing rent growth come back, double digit growth in some regions.  Interesting that ancillary revenue has not bounced back at the same rate.   

Typically, 7 to 9 percent of effective rent comes from ancillary income. It can be higher. Restoring your resident fees and even adding new ones will help to revive your NOI.  

Reinstate Resident Fees

The market is well into recovery at this point, and so should your fee collections.  Economic challenges are still lingering in many areas to be sure to evaluate where the asset is located when you reinstate fees.   Don’t assume that your competition is charging what they use to, as with all things you need to know what the market will bear, so do shops the comps.     

Take this advice to heart:  

Figure out what’s important to your residents and come up with ways to monetize it. 

The biggest no-brainer is to focus more on residents with pets. Don’t underestimate the value of pets. We have seen record numbers of adoptions across the country and many residents welcomed in new pets during the pandemic.  The U.S. Pet Market Outlook Report 2021-2022 reported that retail sales of pet products and services reached $107 billion in 2020, up 9% over 2019, due largely to a COVID-19 driven spike in the pet population.  

Residents are more emotionally attached to their pets than ever. People are willing to pay whatever it takes to keep their pets as part of their family.  

Re-evaluate your breed and weight restrictions and with that your fee deposit and pet rent.  Offer pet engagement activities for a fee. Provide mobile pet services. Offer pet clinics and grooming services, along with the standard pet fees and deposits as part of your lease.   In years past, we have seen communities set up a mini store for convenience store items, why not work with a retailer to have cat and dog items for purchase.  

multifamily-cta

Try It, You’ll Like It 

Another idea: Continue things that worked for you (and that your residents loved) that were offered during the pandemic. 

Did you offer classes in alcoholic beverage mixology? Host wine tasting parties? Cooking classes? Don’t be afraid to continue these events if they worked the first time. Regional managers need to give their onsite staff members the confidence to execute them. Remember: People will pay for value. 

Some more: Have you done a deal with your popular, local food trucks? Identify the best ones in your neighborhood and arrange for a revenue share with the truck owner. 

It can’t hurt to create fees for VIP parking, package concierge services, scooter rentals, mobile car detailing and premium fees for convenience-based services. 

 Here are the numbers: 

For a 270-unit garden-style community, with $1,318 in average monthly rent and $2.5 million in annual net operating income, the impact of even small fee increases is significant. Think of it like this:  

$5 per month, adds $270,000 in property value. 

$15 per month adds $810,000. 

$50 per month adds $2.7 million. 

We’re in a period now where there’s no better time for businesses to latch onto the economic recovery – and that can happen in your apartment community. 

Resident Retention Tips: Your Best Response to Curbing Resident Move-Outs

Proactive Ways to Improve Resident Retention

You and your residents have been through an awful lot the past year. Many of them have been facing difficult situations personally, in their living arrangements and financially. Fortunately, well managed communities and their staffs have been with them every step of the way. 

This is something worth reminding them when it comes time to renew. 

Retention can and should be more than just reporting on renewed leases; your software should allow employees to chronicle activities by its staff members at the individual resident level that improve resident satisfaction. 

Is the past year a blur? Probably. Residents might only remember what’s been happening with them since that morning, or maybe just the past week. So, it’s important for your team track all those positive moments. 

Imagine. While on a service call, the maintenance tech notices a beeping smoke detector so they go ahead and take care of it much to the resident’s delight. Or maybe on the walk to the office, an onsite team member helps a resident clear snow on their windshield or help them manage packages. 

I know, these kinds of nice deeds happen all the time, but wouldn’t it be great if what your employees did to make their residents’ lives more pleasant was recorded in your property management software instead of being written on a note that was left in a drawer in the office somewhere and forgotten? 

When it comes time for residents to renew, have that documentation out and ready to show them. Not in an obnoxious way, but as a reminder. Residents often forget all the little things you might have done for them. 

During this past 15 months, you’ve built up a lot of emotional credit with them. 

This is a simple thing. It works. And while tracking these types of events, if the onsite team notices that some residents’ “good deed” files are empty, then those are the residents you should target. Look for ways to engage with them and to do something special. Really, retention efforts start the minute they first walk into their new apartment. 

This is something worth reminding them when it comes time to renew. 

Retention can and should be more than just reporting on renewed leases; your software should allow employees to chronicle activities by its staff members at the individual resident level that improve resident satisfaction. 

Is the past year a blur? Probably. Residents might only remember what’s been happening with them since that morning, or maybe just the past week. So, it’s important for your team track all those positive moments. 

Imagine. While on a service call, the maintenance tech notices a beeping smoke detector so they go ahead and take care of it much to the resident’s delight. Or maybe on the walk to the office, an onsite team member helps a resident clear snow on their windshield or help them manage packages. 

I know, these kinds of nice deeds happen all the time, but wouldn’t it be great if what your employees did to make their residents’ lives more pleasant was recorded in your property management software instead of being written on a note that was left in a drawer in the office somewhere and forgotten? 

When it comes time for residents to renew, have that documentation out and ready to show them. Not in an obnoxious way, but as a reminder. Residents often forget all the little things you might have done for them. 

During this past 15 months, you’ve built up a lot of emotional credit with them. 

This is a simple thing. It works. And while tracking these types of events, if the onsite team notices that some residents’ “good deed” files are empty, then those are the residents you should target. Look for ways to engage with them and to do something special. Really, retention efforts start the minute they first walk into their new apartment. 

A Fresh Look at Four Walls 

When trying to make up for move-outs, it’s too easy to just try to buy occupancy. You don’t have to. During my property management days, our goal was a 60 percent retention rate. That’s high, but it was our bar. If we fell behind, we’d know it and try to fix it. Dropping rents does not have to be the answer. 

Some say, during good times, if you’re 98 percent occupied, your rents are too low. But wait: You can be 98 percent occupied and also lead your market in rent if you do everything right. You have to remember that this is your residents’ biggest investment. It’s the place they call home. Doing the little things will add up to make that difference. 

In 2021, we could see big swings when it comes to year-over-year numbers. Many residents, at this point, are sick of staring at their same four walls and will want to move. 

When you meet with them, ask them what you can do for them. Don’t underestimate the emotional credit they help to build between you and your residents now – after everything you’ve both been through the past year. 

If you listen to what it is about their apartment home that has become stale in their eyes you might stumble upon ways to improve the environment.   Be supportive by offering alternatives to another month looking at those walls. Offer them a new environment. It might mean suggesting that they move to a different apartment in your community, or to a nearby sister community.  

Maybe there are some furniture discounts you can offer so they can make a few changes in their place. You have to get creative.  Maybe they want a view that is a little greener, so you let them pick from a catalog of patio plant options, plants that not only enhance their home they can take them with them.  If they now office from home, and are using their only bedroom due to space, you could purchase a murphy bed (a nice one not the cheapest one) that makes the room multifunctional but with space.  You can save money when you set up a corporate account with suppliers like wayfair.com.  

At the same time, you also have to do the math based on if you are a short-term property holder or a long-term one.  Incurring the turn and remarketing expense in the current year for a marginal effective rent increase could be the right call if you are looking to position the asset and need the rent growth.  If you are planning a long-term hold, getting a marginal rent increase but avoiding the turn and remarketing expense could be the right call for your cash management.  

If you budgeted for flatlined rent growth or a slight increase by unit type, now is the time to start paying close attention to your value propositions and the demand for individual units. No two units are exactly the same; otherwise, they would have the same unit number on the door. 

So, utilize unit-level demand and occupancy reporting to identify rent growth opportunities at the unit level. 

Your software should provide you with real-time visibility into the retention efforts along with rent growth analysis and forecasting at the unit type and the unit level.    

Good news: ResMan can help with this. 

Managing Lease Expirations More Than One Month at a Time

Managing Lease Expirations

When it comes to lease expirations, the need to look more than 90 days out is crucial. Disregard for long-range lease expiration planning can result in a financially destructive situation for well-intended apartment property management teams. 

While revenue management software is a valuable tool in this process, having your leasing staff address lease expiration on a regular basis eases the anxiety that can come from an unnecessary sense of urgency created to fill vacancies at any cost. 

Historical leasing cycles changed in 2020 as a result of the pandemic. Our normal spring cycle was delayed by two to three months and it extended well into the fall, leaving the industry to question what leasing cycles will look like going forward. 

Coming soon: These adjusted cycles will affect forecasting. Even more, they will make expirations from last year’s lease-ups more demanding. 

Your 2020 actuals are both different and unique, and you can’t really use them for comparative basis in 2021. As for 2022, and it is too soon to know if it’s a safe assumption that you’ll be tracking back in line with 2018-2019 trends. 

Right now, you cannot afford to have a “set-it-and-forget-about-it” lease management strategy. Once you have determined the approach most suitable for lease management at your communities, you need technology to help you to execute your plan and to ensure compliance by the site staff. 

ResMan is here to help with that. 

Our property management software was designed during the height of the Great Recession to help operators navigate down market and aid in long-term planning to create more predictable revenue flows and maintain occupancy.  Our software worked for us when we needed it most, and ResMan can help achieve your financial goals today. 

Leasing Trends

We started seeing in our customer base as 2020 progressed that there was an unusually high number of month-to-month leases at their properties, many of which were carried through into the new year.  Traditional retention rates dropped from a lease term perspective; however, residents were staying in their apartment homes, and it was much because of uncertainty about health and safety, the economy, federal support programs and their own employment. 

We are well into what is considered a seasonal leasing cycle without fully understanding what the emerging trends will on the backend.   What will retention rates look like for 2021 as hold over month-to-months may be ready to make long-term decisions.  How do you balance the leasing activity while not losing sight of the long-term impact to occupancy and rent growth?    

How to Develop an Effective Lease Expiration Management Plan

The key to your asset’s financial stability and ability to make up lost margins could lie in your lease management plan.  

We learned the hard way about the impact of not having a lease management plan during the 1990s – before revenue management was developed – when a lot of communities didn’t manage lease expirations well.   I personally learned my lesson from a group of lease-up communities I was responsible for filling up.   They were in lease-up, and back then, it was all about filling that property up! But there was not much thought beyond that in terms of how to maintain it as a stabilized community. 

In one Dallas property, we had 200 leases expiring over an April to August period.  The property also faced competition from a new development across the street.  Assuming a 50 percent renewal rate, that could have and did result in just over 100 apartments that the site team had to lease and turn in three months.    The property didn’t have the marketing budget we had during lease-up and faced increasing expenses compared to a brand-new community.  That was really a wake-up call. 

From that day forward we had a well-developed lease expiration management plan, and eventually a great set of features in the ResMan Platform to help you develop and manage your plan.   A good lease expiration plan goes beyond tracking and reporting on lease expirations, it is proactive and positions the property, the specific unit types and the team for success.  

Every time our team met about what we were doing, it wasn’t only about that day, it was about how what we do will affect things 30-60-90 days from now. And when they achieve their leasing goals through this hard work, you’ve got to reward them for it. 

Having that kind of mindset put us at ease and helped us avoid lease expiration pile-up and instead drive ahead in an efficient and on a more predictable and profitable road ahead.  Controlling how and when units are available in the market, provides you the opportunity to maximize the rent potential and creates organic sense of urgency for the leasing staff and prosects to lease the units. The last thing you want is to be forced into displaying an unusually high number of a particular unit type (such as one-bedroom apartments) on your community website and ILS listings. If you do, that’s a red flag for prospects about whether they want to lease with you. 

Does revenue management help with this? Yes. But you can handle it without revenue management – it just takes more time and more work and the desire to learn. 

This is the time to teach your staff about pricing. They shouldn’t just be blindly offering whatever the revenue management software says you should that day. 

Understanding Today’s Federal Rental Payment Assistance Programs

The federal government’s seemingly never-ending eviction moratorium made headline news twice this past week when a federal court ruled the national eviction moratorium was invalid, only to have another court issue reverse that decision for the time being. 

Apartment owners and operators continue to work to manage what’s coming next while many residents stay put in their apartments, owing millions of dollars in back rent.  

Debt is piling up all over the place for owners, too, and there is one solution that could make a difference – namely those needles in the recently allocated $50 billion-plus haystack from the Emergency Rental Assistance Program (ERAP) and The Consolidated Appropriations Act designed to support of eligible renters in need. 

I say needle because figuring out a way to get access to these funds is a 50-state journey, as each has its own criteria. Some operators have not even begun to look into the process which isn’t wise.  The allocated funding is first-come, first served.  

Solving this big problem is both good for apartment owners and their residents. And yes, you can “apply” on behalf of the delinquent renter and get those applications taken care of.  

Smaller owner-operators were impacted the most over the last 12 months; the smaller the portfolio the bigger the impact from uncollected rent.  For an owner with a smaller unit count, even a handful of residents who do not pay their rent for even one month put a strain on the owner. Several months of back owed debt starts to impact the owner’s ability to maintain the property, or worse, pay their mortgage.  But rent is rent, and income is income.  As of the end of 2020, the average delinquent renter owed approximately $5,000. So, even if you only have a handful of them, it pays to follow up and work out a payment plan for them. 

To Reach Residents, Try a New Approach 

I hear from operators that residents are ghosting them, even though they are trying to help them.  Sincere, direct and persistent resident communications is the key to building valuable and trusting relationships with those who are behind on rent.   

Those who have become chronically delinquent might not be responding – and in fact, avoiding you.  Consider referencing news updates about the eviction moratorium via text or email to create a new sense of urgency.  If standard outreach approaches, such as email or texting, aren’t effective, you need to consider new techniques to connect with them.   

Visiting them at their apartment home is a good first option. And for those who have regained employment – and keep 9-to-5 hours – it’s worth adjusting operating hours for some of your staff so that they can visit residents in the early evening, perhaps after 7 p.m. 

If this timing isn’t right, another option is contacting them by phone. Use the “emergency” contact number they gave you if you have to.  

Finally, during my more than 20 years in property management, including spanning three recessions, one successful approach was to leave residents notes that tell them they have a package to pick up at the leasing office. When they visit us, we give them a gift card (it’s the “package”), but more importantly, it creates an opportunity for the property manager to speak to the resident about qualifying for financial relief. 

It’s at this point when you can help them fill out the application. Many in the industry we speak to aren’t aware of how to apply for this aid. Each state has its own criteria and process. Here are a few resources to leverage: 

LeaseLock’s State-By-State Application List 
Emergency Rental Assistance FAQs 

Onsite staff are going to have a bigger “lift” on this – relying on the resident to know what to do is simply unrealistic.  If owners and operators are struggling to navigate the process to apply for funds, imagine how difficult it must be for the renters.  

Property management companies and their residents need to understand this and more importantly, how to access it. Companies’ corporate headquarters should appoint someone who is expert at navigating this renter support fund procedure.  

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Don’t Let Your Residents ‘Shut Down’ on You 

It’s been my experience that when renters begin to fall behind on their rent, their tough times spiral downward, and they shut down. Don’t be surprised if they display helplessness to you, and then even give up. Unfortunately, they might decide it’s best to move out, but that’s not a good solution and will harm their overall economic viabilities.  

For another group of renters, they were receiving not one, but two stimulus checks. Some were getting significant bumps on top of their state unemployment benefits for a six-month period last year. And every day, they heard from the media that they didn’t have to pay rent because the moratorium protected them. 

Misinformed residents who “feel they are safe in place” because of the moratorium, based on what they see and hear in the news, are often the ones who are most in need of accessing federal support funds through their states. 

Unfortunately, some spent their stimulus dollars to pay down credit card bills or car payments. But really, their rent payment is the biggest check they have to write each month, and it should be a priority, or else their credit score and rental payment history will be hurt. 

Some residents simply take too much of a short-term outlook on their finances and not a long-term one. They might be thinking, “Oh, another stimulus is coming. I’m all right.” 

Owners: Don’t Have a False Sense of Security 

We see in the ResMan database that more residents engaged in rental payment option plans with their owners in the first quarter.  We saw 400 to 500 new repayment plans initiated. That’s a lot more than the .001 percent from a year ago. 

Owner/managers, too, shouldn’t feel they are above it all and don’t have to participate in (the name of the support plan). In recent months, their occupancy and collections might be increasing, but unpaid rent remains and it’s important to address it. 

“Oh, this wasn’t as painful as we thought it would be,” is not the right mentality in today’s market. Don’t let the same sense of urgency you had months ago, go away. You need to get engaged with your renters and be relentless. If they move out, it’s not good for you, either. 

One thing not to do is criticize your residents on social media. You should not be callous about their situations and not rush to judgment about their behaviors because you don’t know the whole story. Therefore, if you get a chance to do so, listen. 

5 Best Practices for Managing Apartment Turnover

The Impact of Apartment Turnover

Apartment turnover has one of the most significant impacts to your financial performance. When you consider the lost revenue from vacancy loss combined with the expense to turn and remarket the apartment, the impact to the bottom line increases with every turn. While it is equally important to focus on leasing activity, you cannot lose site of the impact of apartment turnover on your budgets and maintenance technicians.    

The cost of turning a unit in 2021 could be higher than the average cost from prior years as gas and the cost for materials are skyrocketing. With increased pressure on budgeted turn expenses comes increased pressure on your maintenance team. While the financial impact is cause for concern on its own, the workload on the maintenance team members to turn the units, especially during peak leasing cycles, can be significant.   

How many times have preventative maintenance items been delayed or overlooked due to the maintenance team being consumed with getting units ready or as a result of budget concerns?  Delaying preventative maintenance has a higher cost down the road.    

While move-outs are inevitable, there are ways to minimize the vacancy loss from apartment turnover. Operators can take a variety of measures to lessen the burden on your team members and limit the impact on your bottom line.  

Taking a proactive approach to managing turns and having an efficient make-ready process will save you time and money. Here are 5 best practices to improve your apartment turnover rate. 

1. Proactive Management Has to Include Maintenance

Budgets typically align with historical leasing cycles, which are helpful for staff and budget planning purposes. Your properties are unique. Instead of solely relying on regional historic leasing cycles, you need to track each property’s projected occupancy rate and future lease expirations to forecast appropriately for apartment turnovers.  

Your maintenance team needs as much notice as possible about any potential increase in expected move-outs. Sharing the number of expiring leases for the rest of the year and expected renewal rates with your maintenance team can help them plan spend and staffing appropriately.   

With property management software, you can provide them access to information to help them understand the renewal value. Every renewal means there is one less unit to turn, which will impact how maintenance team members engage with current renters in the best way.  

Your maintenance supervisor is responsible for staying within the allotted maintenance and turn budget, and he or she may already proactively work with vendors to get products ordered and tasks scheduled in advance. If they can adjust the spend and use of vendors weeks or months in advance, they will manage the budget more effectively.

2. Create Make-Ready Work Orders

Every property has some form of make-ready board. Whether you’re using a whiteboard, spreadsheet or software, you have a way to communicate upcoming turnover tasks to your maintenance technicians. But what if your make-ready board allowed you to maximize your time?  

We all know that time is money. Leveraging property management software to manage the unit turns for upcoming notice to vacates proactively saves time and makes sure that no units slip off the radar.   

As mentioned above, visibility is crucial, but it is not the only way to help your team manage the process. Most maintenance teams are limited in size and rely on outside contractors to prepare units for a new renter. Managing the contractors is one area that turn management software can ease some of the burdens and decrease the time to get the unit ready.    

Regardless of how clean the former resident thinks they left their apartment, you know that you must send in your housekeeper or cleaning contractor, so why not automate the process? With make-ready work orders, your team no longer has to schedule maintenance after they walk the units. Routine tasks can already be scheduled in property management software. Not only does this save time, but it ensures no tasks slip through the cracks and cause delayed move-in dates and vacancy loss. 

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3. Designate Specific Move Out Dates

Taking a strategic approach to apartment turnovers can help ensure your units aren’t vacant for long periods and that the workload is manageable for the staff. Management companies have been moving away from the old concept of ending their leases on the last day of the month, which would often overload the maintenance teams the first week of the following month. 

When there are more units to turn than there is time in the day, they (naturally) don’t get turned, increasing vacancy loss. More and more management companies have lease expirations spread throughout the month—some schedule leases to expire on Saturday or Sunday. Considering the most desirable days for a new move-in are Friday, Saturday and Sunday, your team has plenty of time to complete the turn.   

If you are using property management software with turn management capabilities, the office staff can help maintenance get a jump start on even the toughest of turns while they were doing the final walk-through with a resident upon move-out.  

*Keep in mind that you should document this in the lease if you choose to designate specific move-out dates each month. 

4. Go Green to Cut Costs

Apartment turnovers are a great time to complete budgeted renovations or implement green initiatives.  

With the number of energy-saving products and appliances on the market, consider ways you can go green while saving money in perpetuity.  If going green is something you are looking to evaluate so that you can budget for an entire project in the future, consider selecting a handful of units that are not preleased to install eco-friendly products.  Some eco-friendly products, like LED lightbulbs, are simple to add to your maintenance budget for apartment turnovers.   

When your team is optimized for efficiency and expense management, testing the water for the handful of units selected might be in your budget after all. Once you see the results in net rental revenue for green apartments, you have the justification for the spending in next year’s budget.  Oh, and don’t forget the net rental improvement and increased asset value you will see!   

5. Give Your Team Some Time for Last-Minute Issues

Walking the apartment prior to the resident moving out will help you identify the work and materials needed in advance. When your team is overloaded, walking the unit in advance often gets deprioritized.  

If you have to do a final walk-through only hours before a resident moves in, you may not have time to fix any issues that come up, causing a poor first experience for new residents. When the team and contractors are rushed, there is a potential for a decline in their work quality. The move-in experience for new renters has proven to be a significant factor in lease renewal. Empowering your team will ensure an excellent experience for your renters, too.  

Your maintenance team members and your supplier partners are valuable assets. Working with them empowers them to do their best. Take the time to educate the team and show them how and why being proactive will reduce their workload in the long run.  

ResMan helps teams improve turn management, maximize efficiency and control spending! Learn more with a free demo!

5 Signs You Need a Multifamily CRM

How Does a Multifamily CRM Improve Lead Management?

Customer relationship management software, or CRMs, are the fastest growing software solutions on the market across industries, and multifamily is no exception. A multifamily CRM helps increase conversion by streamlining the lead management process. 

As a supplement to a high-quality property management software, multifamily CRM creates a more personalized experience for prospects, helps teams manage leads more efficiently and gives property managers unparalleled access to customer data in real time. It improves lead flow, increases conversion and drives higher occupancy rates. 

 Here are five signs your company could benefit from a multifamily CRM. 

1. You aren’t attracting enough leads to maintain occupancy levels  

Move outs happen, of course, but if leads are down and it’s getting harder to keep your units consistently filled, you most likely need the power of a multifamily CRM to boost your efforts.  

When coming up with a plan to increase conversion, start with the basics. Most leads come via apartment aggregator websites, but some companies struggle to keep their ILS listings updated.  Before you even have a chance to wow prospects with your properties, out-of-date information or incomplete (Internet Listing Services) ILS listings for your property could be driving them away. 

The best multifamily CRM will ensure that your ILS listings stand out on the best apartment aggregator sites, providing up-to-date and appealing details on availability, unit size, price and more. This can give prospects a strong first impression of your property and drive them to engage. From there, your CRM and your staff can get to work doing everything necessary to convert them. 

2. You have duplicate prospect records  

Inefficiency impacts your bottom line.  Duplicate leads across multiple properties and misplaced data makes it hard to effectively engage prospects. If your competition is using modern CRM solutions to manage prospects while you use outdated systems, you may lose out on deals. 

A multifamily CRM centralizes cross-property prospect records and allows you to efficiently manage leads across your portfolio. If you’re relying heavily on ILS listings, you may save money through more efficient sharing of leads across properties, reducing your cost per lead. This effectiveness also reduces prospect and team frustrations. 

3. Leads sometimes fall through the cracks 

Your leasing team is constantly being pulled in different directions. You need a solution to keep them focused. A multifamily CRM with a powerful dashboard alerts them to high priority prospects and activities ensures they follow up promptly. 

Your brand is at stake. Consumers believe the pre-leasing experience your team delivers reflects the ongoing experience they will have as a resident. If they experience hassles before they sign, what will life be like when they live on your property? An integrated property management solution and multifamily CRM enable consistent streamlined experiences that residents have come to expect. 

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4. You aren’t automating communication 

Being responsive is essential to keeping prosects engaged, but your team can’t be available 24/7. Automating communication through a multifamily CRM simplifies processes for your leasing team and shows prospects that you’re easy to work with. 

More than 50 percent of tours are scheduled outside business hours. Leveraging a multifamily CRM that offers AI-powered chatbots on your website to engage your prospects at any time. While your team is serving other prospects or off the clock, a chatbot can engage website visitors, offer virtual tours, and schedule in-person tours. 

Note that not all CRMs do this effectively. AI-powered chatbots that accurately interpret and respond in context to prospects are best equipped to get prospects the information they need to move to the next stage of the process. 

Multifamily CRMs can also streamline other forms of communication. Consider a solution that automates email and SMS-triggered dialogues to respond to inquiries and further engage prospects. The best CRMs also offer click-to-dial and call-from-anywhere options, increasing team efficiency. 

5. You aren’t sure how your lead sources are performing

Understanding where your leads originate ensures you’re allocating your marketing budget correctly. Without comprehensive lead and conversion data, you may be overspending on low-converting sources or underspending on high-converting sources.  

A multifamily CRM tied to a robust property management platform provides clear marketing attribution reports to help you optimize your marketing investments. With complete data visibility, you can make confident budgeting decisions to maximize conversion. 

Imagine more effective lead management with less effort. Learn how ResMan CRM, a fully integrated, full-feature solution delivers the kind of experience that can make the difference between a signed lease and a lost prospect. Get a free demo today!