There are many things I love in life, but here are my top four things: my wife, our sons, being outdoors and my job. In the instances that I can combine any of my top four things together, it is a definite win-win for me – family hikes, traveling for work to amazing locations where I can explore, moderating a panel at the 2016 National Apartment Association Education Conference and Expo in San Francisco.
I’ll pause to let that last one sink in for a moment. Yep, I just had a blast moderating an awesome session at the #NAAEduConf and here’s why.
Lease-Ups: Avoiding the Terrible Twos with Revenue Management brought together my love for my job, helping apartment owners optimize their revenue with proven pricing strategies, with the love of my sons as they have two things in common: 1. Both are exciting, and 2. Both are stressful!
Tackling this topic with me was Sheila Byrne, executive vice president of property management for the Habitat Company; Trachelle Spencer, director of revenue management for Eighteen Capital Group; and Emily Mask, revenue management and training director for ECI Groups – and all fellow parents.
While we might not have been able to provide failsafe-parenting advice to avoid the terrible twos, I combined with these powerhouse revenue management practitioners to deliver the top tips and strategies on how to “raise” a lease-up to a stabilized property.
Communication is Key!
When you first start planning for a child, you talk with everyone you know who has ever had a child. You want their experiences, their knowledge. You want to learn from their mistakes. Beyond that you want to get everyone involved with your child on the same page – from doctors to nannies and even your spouse. You should treat preparing for your new development or lease up like you would a new child. Start the discussions early with all stakeholders – developer, owner, asset managers, leasing staff, etc. It comes with a lot of excitement and anxiety but proactive planning, realistic revenue goals and ongoing communication are key to ensuring you are cultivating a successful, long-lasting community.
Be Proactive to Avoid the Terrible Twos
While the panelists and I were debating if the terrible twos are avoidable in children… even with my top-notch parenting skills my boys challenge me on a daily basis and can frankly be a handful. We did come to a consensus that the terrible twos can easily be avoided in a lease up. By being proactive and planning for any potential problems around leasing and pricing, you are setting your property up for successful transition into year two.
Determine early if you are going to be a strict and not offer any concessions. Revenue management can help eliminate any self-doubt as it prices to market conditions. Making these determinations early (via a lease expiration management strategy) protects you from entering the Terrible Twos of a lease-up property – when all your leases expire at the same time and residents don’t renew, leaving you fighting to get your property back to being happy and well adjusted – just like your toddler…
Don’t Get Comfortable
You have now transitioned away from the terrible twos and are feeling comfortable – I call this getting your life back as a parent. You know that time when your kids are helpful, can entertain themselves and are just cool little people to be around. This is what you want for a property – for it to be running smoothly with a balanced focus between pricing and occupancy.
A stabilized community after an effective lease-up is the ultimate win. But panelists caution that now is not the time to get comfortable being stabilized. It might be time to either reestablish rules or adjust parameters to ensure you remain stabilized. Renters are coming off the first year of discounts and will expect the same when they come up to renew. Engage lease expiration management practices to ensure you aren’t offering serious concessions or discounts just to keep occupancy rates. “Remember it’s not a race to the bottom with regards to concessions,” shared Emily Mask. Set lease renewal goals and make sure your team is working together on renewals. By creating a sense of community for your residents it helps to emphasize the value that will encourage them to renew.
No one wants to be that parent whose child runs the show. So don’t get comfortable with how your property is operating that you miss when problems start to arise. Stay proactive, not reactive.
Look for New Opportunities
There are many phases of life–your child’s likes and dislikes change rapidly and they seem to grow over night. As they enter adulthood and beyond, have you prepared them to be as successful as possible? Or are they still rocking their Paw Patrol pajamas?
The same goes for a lease up. After you have worked through the tougher parts of raising a property, now comes the time to reevaluate its potential and avoid the midlife crisis in the form of lease expiration management. Consider property improvements to maximize the value of your property. Is it time to rehab or reposition your property to remain competitive in the market? And make sure you’re communicating with your residents as you start renovations and rehabs, as Trachelle Spencer suggests. “As units turn and renovations begin, you don’t want to create a second wave of residents opting to move out.”
With parenting, it is hard to not overreact sometimes. You want to protect your kids, make sure they are safe, happy and well adjusted. I believe that owners, developers and asset managers feel the same way about a lease-up and can overreact when working together for a successful lease-up. If you see your child struggling to put together a puzzle, ask yourself, does it help them to immediately step in and do it for them? Or should you give them the opportunity to learn by figuring it out alone?
When a lease-up seems to be struggling per the pro forma, it might help to step back and allow proven systems like Rainmaker LRO to react to market conditions. These systems are designed to learn from historical pricing trends and current supply-and-demand curves to adjust pricing accordingly. I’m not saying to set it and forget it and just let revenue management do its thing. But refraining from overreacting and making unnecessary changes will help deliver a stabilized lease-up.
Thanks again to my fellow panelists for taking the time to present such a forward-thinking session. I appreciate your time and effort. And to the NAA, thank you for putting on another spectacular event.
As for me, I can’t wait to get back home to my first two loves.
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