- Established – 2013
- Headquarters – Los Angeles, CA
- Regions Served – The West (Arizona, California, Colorado, Nevada, Oregon, Utah and Washington), Florida and Maryland
- Units – 34,000
- Rainmaker Products Used – LRO
Seeking to take the emotion out of pricing and incorporate true data-driven decision-making, TruAmerica Multifamily began implementing Rainmaker LRO across its portfolio in 2014. The company, which along with its institutional investment partners, owns nearly 34,000 apartment homes in the West and along the East Coast, uses third-party firms to manage its portfolio.
LRO's sophisticated algorithm, powerful analytics and comprehensive comp data have given the onsite teams at TruAmerica's communities the confidence they need to push rents when possible and to navigate all types of market conditions. In one Northern California submarket where rent growth averaged 7 percent in 2016, the rents in TruAmerica's portfolio increased by an average of 12 percent. Likewise, a submarket in Denver featured an average rent increase of 6.5 percent last year; TruAmerica's portfolio there outperformed the market with an average growth of 10 percent.
- Remove the emotion from pricing and provide the framework for onsite teams to push rents when possible.
- Have access to real-time pricing.
- Reduce the number of units that are standing vacant because leasing teams are unsure how much to lower rents.
- Rent growth that is consistently higher than average for the surrounding submarket. In 2016, TruAmerica's portfolio in submarkets in Northern California and Denver outperformed the average rent growth by 5 and 3.5 percentage points, respectively.
- LRO's comprehensive reporting capabilities give TruAmerica the flexibility it needs to meet the various reporting needs of a large and ever-changing portfolio and group of investors.
- A pricing system that allows TruAmerica's communities to maximize top-line revenue in both bull and bear markets.
"There's no doubt about it: LRO has had a tremendous impact on our pricing," said Lynn Owen, chief operations officer at TruAmerica Multifamily. "It's so easy to learn, so user-friendly, and it really takes the emotion out of pricing. It allows you to make pricing decisions based on comprehensive analytics and data."
The Challenge: Take the Emotion Out of Pricing, Establish Consistency in Pricing Reports
Emotion has its place in many endeavors, but pricing apartments is not one of them. Unfortunately, it's not unheard of for leasing teams to be reluctant to push rents in bull markets or to be too quick to lower them when occupancies begin to dip.
Several years ago, Los Angeles-based TruAmerica Multifamily, which owns nearly 34,000 units in the West and along the East Coast, set out to take the emotion out of its communities' pricing decisions.
Lynn Owen, chief operations officer for TruAmerica, says it was important for the company, who uses third-party management companies to run its value-add Class A and B communities, to give a data-driven framework for pricing decisions. This framework would allow them to resist any pressures they may feel to keep occupancies up by lowering rents. Similarly, they didn't want the companies to be timid about pushing rent growth when market conditions permitted.
Owen had a positive experience with Rainmaker LRO while at another company, and that helped pave the way for TruAmerica's decision to engage Rainmaker for its revenue management system. The company began implementing the solution in 2014, and it now mandates that all of its fee managers use LRO on TruAmerica communities.
The implementation process was a remarkably smooth one, according to Owen. "Rainmaker can get LRO up and running on a community in a very short amount of time," she said. "That's been really great for us. And their customer service is incredible. If I have a problem or just a question, I can make one quick phone call and immediately get somebody on the other end that's responsive."
Even the requirement that fee managers use LRO on TruAmerica's properties hasn't been a major issue. "Originally when I started mandating that, I got a lot of pushback, because they felt the learning curve was going to be a real challenge,” she said. “Actually, what happened was just the opposite. The onsite people loved how user-friendly LRO is, and, in fact, LRO has now become the platform of choice for many of the companies."
Results, ROI and Future Plans
With LRO's sophisticated algorithm, powerful analytics and robust comp data at their side, TruAmerica's leasing teams have been able to drive top-line rental growth.
For example, in one Northern California submarket where rent growth averaged 7 percent in 2016, the rents in TruAmerica's portfolio increased by an average of 12 percent. Likewise, a submarket in Denver featured an average rent increase of 6.5 percent last year; TruAmerica's portfolio there outperformed the market with an average growth of 10 percent.
The use of LRO has dramatically boosted the assurance of the company's onsite leasing teams. "It's just an intuitive system, and because it's so easy to understand, they feel a lot of confidence in it," Owen said. "So when it calls for a big hike in rent, we didn't have the leasing agents afraid anymore to go and ask for that rent. They believe in it."
Other notable benefits of LRO include consistency in the community pricing reports prepared for TruAmerica. The solution also makes sure that renovations are properly accounted for in the rents at repositioned communities. "Some exterior renovations are accretive to rents, and some aren't," Owen said. "But the ones that are, it's easy to implement that into LRO, and we see some real rent growth because of that."
When it comes to in-unit improvements, LRO makes sure that the post-renovation rent premium TruAmerica is seeking is protected. "It really helps us in the repositioning of a rent roll," Owen said.
Furthermore, LRO's comprehensive reporting capabilities gives TruAmerica the flexibility it needs to meet the various reporting needs of a large and ever-changing portfolio and group of investors. "I don’t have to wait two weeks or longer to get a customized report," Owen said. "They'll do it for me, or they'll walk me through it. That is really attractive."
Looking ahead, TruAmerica executives feel confident about their ability to maximize top-line rental growth even in a softening market because of LRO. With the system's real-time data, the company is on top of pricing trends in all of their submarkets, and no changes in market conditions are going to catch TruAmerica by surprise, Owen noted.
"Navigating through the submarket changes is a tricky business," she said. "If you're not on top of what's going on in real time, you can't catch the trends and all of a sudden you're always looking over your shoulder. In a softening market, you want to have as much money as you can collect before it tanks. And using LRO helps us do that by balancing the many different parameters that affect pricing."