Part 4: Help For Apartment Leasing Professionals To Dominate The Market

May 23, 2013 in Apartment Leasing Ideas

 Learn How to Lease on Value not on Price

 

Multifamily On Site TeamsA lot of communities/companies have been utilizing this concept for years. As a matter of fact, the Johnstown Companies preached added value in their training and marketing programs, so it’s not a new concept. What is new about added value is how our residents and future residents perceive the value we are trying to add. In other words, what they thought was great in the 80s is not so great today. In the 90s, we added services such as merchant discounts, onsite convenience centers, copy and fax machine access, daycare centers, executive office centers, community tool chests, and so on. These services were designed and implemented to add value, to stand out from the competition, and to reduce resident turnover. From what I’ve seen, these things are working in many markets. The rental question is not, “Do services add value?” It is, “What do residents and future residents want?” What do they consider a value? I can share with you what national surveys have to say, but if you really want to find out what you can do to create value, you’ll have to ask them.

 

In numerous survey’s we have found that people moved because they found “a better value.” According to the National Council of the Multifamily Industry’s survey, “What Renters Really Want,” our residents and future residents are looking for energy and efficiency, less crime, less noise, and a better neighborhood. The survey stated that these preferences are similar across household type, age, and income. Renters want, in order of ranked importance, a smoke detector, a washer/dryer, a storm window and doors, linen closets, central air conditioning, a bedroom walk-in closet, an additional bedroom, a microwave, and security system.

 

Don’t get discouraged because you can’t rush out and add a linen closet, a walk-in closet, and an additional bedroom. Break it down. What they are really saying is that they want space. Can you create space for them that will add value? Your turnover cost on a $660-a-month apartment is probably somewhere around $1,300 or more, based on vacancy loss and reconditioning. You may be thinking, “Then why in the world should I raise rents and force people to move for a $300 to $400 a year rent increase, when we’ll be losing $1,000 or more if they decide to move.” Great point, if you are stuck in the 80s.

 

Many owners today are trying to maximize rents even though the markets are getting tighter due to increased home sales and new construction.  Okay, okay, some of you think this is too basic, and some of you just had a light bulb go off. Whatever the case, the fact is that it’s time, in most markets, to focus on raising rents and providing value to residents so they will stay. Let’s say we have conducted our own survey, and the results are the same as those found by Mr. Kelly and “What Renters Really Want.” We know they want, among other things, space. Can you add shelving and organizers that will create it? Compare it to your turnover costs. Is a $300 investment worth it? The same logic applies to smoke detectors, washer/dryers, storm windows and doors, etc. Is the cost of adding these items worth saving a resident? Your survey will help you determine what creates value in your residents’ minds. You may find that each resident’s idea of “value” is different. Can you provide a list of items they can select from at renewal time? You may be thinking to yourself, “We are already providing them with their choice of renewal gifts.” That may be the case, but do those items add value in the resident’s mind? Have you considered giving the incentive (stays with the apartment) 90 to 120 days prior to lease expiration, so the residents have a chance to build value in their homes before they get hit with a rent increase?