This is the fourth and final installment in a blog series written by RentVision Founder & CEO, David Watson, about gaining control over your future vacancy. You can read:
- Part I: "How to Predict Your Future Vacancy", here.
- Part II: "How to Determine Your Apartments' Future Occupancy Target", here.
- Part III: "Try These Two Shortcuts to Fix Your Vacancy", here.
When your Future Occupancy Projection falls 1% or more below your Future Occupancy Target, there are actions you can take that should solve your vacancy problem automatically.
But what should you do when your Future Occupancy drops multiple percentage points below your Future Target? We've seen too many apartment communities try to remedy their way out of this situation using gut instincts rather than accurately diagnosing the root cause of their vacancy problem in the first place.
The true cause could come from one or more of these four categories:
For example, if you have a poor website or poor Google presence, you won't get as many qualified leads as you need. If your leasing agent isn't answering the phone as much as he or she needs to, you won't be renting apartments any time soon. If the management team doesn't have vacant units or the grounds looking good for in-person showings, leads won't convert to leases. Finally, if your prices are too high or the market is tanking, your occupancy will also decline.
Fully understanding how each of those categories impact your apartment community is the first step in knowing what you need to do to get out of your vacancy crisis. In this blog, we'll study those four areas and explain the steps you can take to bring your community's occupancy back to your target goal.
Step #1: Develop a Flexible Ad Budget
Predictive Advertising is an automated solution we offer to clients that removes the guesswork out of marketing decision-making. We increase or decrease your ad spend depending on demand. When your Future Occupancy Projection is high, we spend less on digital ads. We spend more when your Future Occupancy is falling short of your Future Target. The goal is to get the right amount of traffic to your community's website at the right time.
If you're not a client of ours, you can still practice a similar method with your digital ads—develop a flexible ad budget that can be adjusted when needed.
Step #2: Evaluate Your Ad Sources
Evaluating the effectiveness of your ad sources could help you discover a weakness in your marketing message. It's important to know which marketing sources you're using, how much you're spending towards each source, and how each source is performing.
For example, we've often seen a number of different sources that successfully generate a lot of emails, but very few phone calls. These types of sources usually have a low lead-to-lease conversion rate as email leads are weaker than phone leads. You may want to reconsider how many resources you want to allocate to sources like that moving forward.
A resource you can use to evaluate your ad sources is the RentVision Platform, which is our all-in-one marketing hub. You'll have clearer insight into which sources are converting, and which ones aren't, thus allowing you to make smarter marketing decisions.
Step #3: Set Up Call Tracking
Call tracking is an easy way to evaluate your marketing efforts. When you set it up, whether through RentVision or other vendors, every single unique marketing source will have a unique phone number. That data will help you trace every single new lease to their original point of phone contact.
As stated earlier, phone calls have a better conversion rate than emails. With call tracking established, you'll know which marketing sources are performing the best by the amount of phone calls it generates.
Step #1: Know Your Lead-to-Lease Conversion Rate
If your lead-to-lease conversion ratio has declined recently, it's possible that your vacancy problem may have stemmed from a leasing problem. The lead-to-lease conversion data is featured within the RentVision Platform. We've also built a report for our clients that allows them to compare their lead-to-lease conversion rates to similar properties to get a glimpse of how they're performing.
Step #2: Check the Quality of Your Phone Calls
Discovering an issue within your leasing process can be traced directly to your team's phone call performance. I encourage you to watch our video about best practices for handling a phone call with a prospective resident. Here are some items to be looking for to help you measure the quality of your team's phone calls:
- Are phone calls being answered? We know that leasing managers can have a lot on their plate, but if they've stopped answering or following-up with phone calls, a potentially qualified lead gets eliminated.
- What is the average duration of a call? Usually, longer phone calls are better quality than shorter ones. Perhaps you could even listen in or watch during it.
- How are your agents handling calls? Are they getting the caller's contact information, or asking to schedule a showing? Is their tone of voice upbeat and positive? Each of these play an important role in the call process.
Step #3: Hire a Mystery Shopper
A mystery shopper can lay out in detail their experience from initial point of contact to close. He or she can provide helpful insight into how their tour went, and if their leasing agent showed all the proper amenities and units. You can also learn how your team communicated with this mystery shopper. Did they respond to phone calls or emails in a timely manner? Did they ask the right closing questions? Did they follow-up after the tour? This is a great way to get a full picture of your leasing team's performance.
Step #4: Make Adjustments to Your Hold Policy
Something that may be affecting your occupancy is how long you allow leasing agents to hold a vacant unit. It's important to know the average length of time it takes a resident to move into your community from the day they've turned in their rental application. We've found that some communities have a really long amount of time between those dates. When that's the case, it may be necessary to make adjustments to your hold policy.
For example, if the current hold policy requires residents to move in within 21 days from placing their application and your Future Occupancy is low, you may want to consider increasing this length of time so no lead is missed. Or, if you allow units to be held for 45 or 60 days and your Future Occupancy is high, consider lowering the policy to 30 days or less. Your Future Occupancy Projection helps you determine when it's okay to adjust these times periods, so you can increase your occupancy.
Step #1: Review Your Property and Amenities
Check out the exterior of your property. How does it look? Are your buildings in good shape? Is your pool and other amenities clean? These are important things that may be the cause of your vacancy crisis. Think of expectations versus reality. You may have attractive pictures of your community and its amenities on your website, but if your property doesn't look the same as it does online when a potential resident visits you in person, that could be a decisive turn-off.
Step #2: Review Your Vacant Units
How showable are your vacant units? Make sure your team prioritizes turning them around in a timely fashion, and making sure they are cleaned and ready to be showcased. It's also important to note that if you're using staging furniture, that those objects need to be well-maintained, too.
Step #3: Review Your 12-Month Turnover
Is your trailing 12-month turnover rate substantially higher than 50 percent? If so, maybe you're creating more vacancy through poor management or overall service.
Step #4: Review Maintenance Requests
Is your maintenance team fulfilling requests from residents in a timely fashion? To find out how your team is doing, request feedback from residents who recently had maintenance tickets completed.
Step #5: Review Your Google Rating
Check your comments and reviews on your Google My Business listing. What type of feedback are you getting? Poor ratings or negative comments could be preventing you from getting the amount of leads you desire, because apartment seekers can see them, too. Be sure to always respond to negative Google reviews.
Revenue (Rent Prices, Lease Terms, Market Forces)
Step #1: Check Floorplan Performance
The first thing you need to check in order to determine if revenue is factoring into your vacancy problem is the performance of all of your floorplans. Are all of your floorplans struggling to fill, or is the issue concentrated into one, such as your 1-bedroom plans? Get to know where you're falling short.
Step #2: Examine Your Lease Terms
Did you have too many leases expire recently? That is causing your extra vacancy. A long-term adjustment is to adjust your lease terms on any new leases so that the same problem doesn't occur again next year.
Step #3: Look At Your Rent Prices
It sounds simple, but if you raised your rental prices recently, that could be causing your problem.
Step #4: Compare Competing Properties
Visit the websites of your competitors. Many will show their exact vacancy by displaying the units that you can apply to rent. You can get a gauge on whether or not they're experiencing similar struggles as you. If so, then you have an opportunity to adjust your rent levels and undercut your competitors to capture the limited demand.
The power of the Future Occupancy Projection metric is that you can anticipate upcoming vacancy problems. When you measure it against your Future Occupancy Target, it gives you an idea of just how bad your vacancy problem really is. If your Future Occupancy is 1% or more short, there are solutions that can fix the problem automatically. However, if your Future Occupancy is even lower, you need to diagnose the cause of the problem or else it'll only get worse. Reviewing your marketing, leasing, management, or revenue, can help you discover your shortcomings, so that you can take the proper actions necessary to solve your vacancy issue.