This is the third part of a blog series written by RentVision Founder & CEO, David Watson, about gaining control over your future vacancy. You can read Part I, "How RentVision Occupancy (RVO) Predicts Future Vacancy", here. Part II, "Why Target RentVision Occupancy (Target RVO) Should Be Your Future Occupancy Goal", is available here.
In my last two posts in this blog series, I introduced our new occupancy metrics:
RentVision Occupancy (RVO): Your future occupancy now.
Target RentVision Occupancy (Target RVO): Your future occupancy goal.
RVO is predictive in that it accounts for both move-ins and move-outs, helping you know weeks in advance when a change in vacancy will occur. Target RVO then uses your community's unique seasonality to set a realistic goal to measure your RVO against.
If your RVO falls below your Target RVO, you know you have a problem. Fortunately, you're in good shape when this occurs because you are seeing a future problem rather than reacting to it. But how do you fix it?
In this blog, I'll review the importance of automated solutions and how you should use them as a shortcut to quickly get your RVO back to your Target RVO goal.
Why "Automated" Solutions?
In most instances, your vacancy issue is uncontrollable. For example, the market you're in can fluctuate from month-to-month through no fault of your own, causing your RVO to fall below your Target RVO.
Or, we've also seen instances where a community has too many leases expiring at the same time of year, which is another reason why RVO is falling short. Changing your lease terms is a way you can resolve that issue for the next year, but you can't fix a problem like that if it's coming up in the next few weeks.
Properly diagnosing and solving a future vacancy problem can take a long time depending on the severity of the issue (more on that later). But if your RVO drops 1% percent or more below your Target RVO, you can have these plans in place to address the issue automatically.
Automated Solution No. 1: Concessions and Specials
When your RVO drops 1% or more below your Target RVO, you should enable your managers to offer a special or discount on monthly rent for floorplans that may be struggling. This should enhance leasing velocity and quickly get you back to an acceptable occupancy level. Once you've met that threshold, you can remove the special.
Automated Solution No. 2: Predictive Advertising
The beauty of digital advertising is that you don't need to have a fixed 12-month budget. You can manually increase or decrease your digital ad spend on how you see fit.
RentVision offers Predictive Advertising as a solution to our clients. Predictive advertising is designed to automatically deliver the right amount of traffic to your community's website at the right time. We can set two budgets: a high budget and a low budget. When your RVO falls, predictive advertising will automatically increase your ad budget. When your RVO is aligned (or even higher) than your Target RVO, we can reduce the amount of money you're spending on digital ads.
We encourage clients to deploy these two automated solutions when their RVO takes a slight dip below their Target RVO. If these two solutions are deployed well, you'll generally see relief to your problems 80% of the time.
But what if your problems persist? What if your RVO takes a severe drop of 2% or 3% below your Target RVO? That's when you'll need more than just a shortcut to solve your issue. The root cause of your vacancy crisis goes much deeper than you thought. In my last and final blog of this series, I'll show you how to discover those issues and properly address them.