Unexpected move-outs are common in the multi-family industry.
One week you're comfortable at 96% occupancy and then by the end of the following week, you've dropped to 92%. Traditionally, in our industry, the reaction to low-occupancy rates has been to either upgrade your current listing service package or add new listing services to your marketing strategy. You might also have some other local networking ideas to try and get in front of prospective residents, like handing out flyers, offering employee discounts, and so on. But those generally struggle to produce measurable results.
In other words, the plan is to increase marketing with companies that require long-term commitments. The question is after you bump up your package with a few ILS’s, how long do you have to remain on the upgraded package? For that matter, how confident are you that simply upgrading to a higher package with an ILS will solve the problem?
And here’s where the problem gets really hard: Leasing problems vary from community to community. You could be dealing with a seasonality problem or maybe your rental rates are too high. Or maybe your leasing staff hasn’t been equipped to succeed on phone calls.
Vacancy constantly changes, yet apartment marketing has always remained static.
With vacancy changing rapidly, you need marketing strategies that adapt alongside you.
Therefore, vacancy, not 12-month contracts, should drive marketing decisions.
Vacancy and Marketing
Let’s return to the example above.
You’ve received notice on multiple units and you know that a problem is coming. Supposing you have a dynamic marketing strategy, what comes next?
There are several things you can do right away:
- Increase ad spend on Google Ads.
- Reduce rent on affected floorplans.
- Offer rent specials or concessions.
- Move affected floorplans to the front of the featured floorplans carousel on the home page of your community website.
Let’s discuss each of these methods one at a time.
Increase Ad Spend
One myth in the multifamily industry is that demand is purely based on seasonality and pricing. Therefore, if you’re in a slow leasing season, the only way to increase demand is by decreasing rental rates, offering concessions, or doing other things that somehow pull the price down.
Luckily, there’s a better option.
By utilizing digital advertising, you can increase and decrease demand in almost the same way that you turn the volume dial on your car radio. If you need more leads, you should increase your ad spend. Then, continually analyze and adjust your strategy. This will ensure you’re reaching the right prospective residents and generating highly qualified leads. By doing this, you can quickly increase your demand. In many cases, you’re able to generate traffic levels equivalent to peak leasing season, even during slower times of the year.
This costs money, but so do vacant units. It comes down to whether you want to spend your budget on vacant units, or if you want to spend your budget on marketing to fill those units. The best case scenario is when you can get marketing to pay for itself. As an example, $1,500 in marketing zeroes out if you rent one unit for $1,500/mo that would have otherwise sat vacant.
Reduce Rent on Affected Floorplans
Though this is not always true, it is often the case that addressing a significant vacancy problem requires reducing rental rates on select units. Let’s discuss the most strategic way of lowering rental rates. If you are proactive in reducing rent and if you combine that with a dynamic advertising strategy, you can likely turn the necessary units quicker than if you waited for occupancy to drop. Once you are at a stable occupancy, you can bring rent prices back up to normal. In fact, depending on how successful you are at turning units quickly you may even find yourself raising rents in the near future.
Why do we believe in the success of this strategy? It’s simple: If you only need to turn five or six units, it’s better to slash rent prices aggressively, rent those units quickly, and then get rental rates back up to a higher level. If you’re cautious and delay there’s a higher chance that your units will sit vacant longer, you’ll slowly slash rent, and more units will vacate. But in the meantime, you aren’t just charging lower rent on a handful of units, you’re charging lower rates across most of your floorplans—and for a longer time than you would if you had just been proactive and utilized a dynamic strategy.
Let’s put this into more concrete terms. What is worse—renting two units at $100 below market rate, costing you $2400 in rent revenue over a 12-month lease on both units, or renting a dozen units at $30 below market rate rent? The amount looks less objectionable, at first, but when you actually do the math the second option is costing you $4,320 over 12 months, which is almost double what the more radical rent cuts would have cost you.
Feature Affected Floorplans on the Homepage
On RentVision’s client websites, this is very easy to do. Our websites have floorplan specific visual content, and the homepage has a featured floorplan carousel. This allows you to drive traffic directly to the problem floorplans by featuring the floorplan on the home page.
If you are not a RentVision client, you can likely still use some level of customization on the “floorplans” pages of your community website in order to highlight units that are experiencing vacancy problems.
The multifamily industry has a marketing problem. Our marketing systems and methods are far too often rigid, fixed, and static. Our biggest problem is that vacancy is constantly changing.
This creates a frustrating situation in which the problem that shapes the day-to-day lives of so many people in our industry doesn’t have a clear and reliable solution. We believe that well-designed websites, digital advertising strategies, and strategic revenue management can help you control vacancy and ultimately, grow your revenue, all while making renting apartments easy. If you’re interested in learning more you can use the form below to sign up for a short 15-minute consultation with a RentVision Business Advisor who will learn about your particular vacancy challenges and build a dynamic marketing strategy to help you succeed.