In the 40-minute conversation, David and Mike discuss the background of RentVision, the state of digital multifamily marketing, AI, centralization, staffing, and how predictive marketing is repeatable and successful in driving portfolio revenue.
You can listen to the episode below or on Apple Podcasts. Read on for a synopsis of their conversation (comments are edited for clarification):
On the comparisons between e-commerce and digital multifamily marketing:
"(RentVision's) mission is to make renting apartments easy, and sometimes apartment marketing is hard to understand for people who aren't in marketing. But the easiest lens to look at it through is, 'How easy are you making it to rent your apartments for a prospective resident?'
"If you were buying a home, and you couldn't see photos inside of the home—you could only see photos of the outside and the neighborhood—that'd make it a lot harder to buy the home. You've got to show floorplan-specific content.
"If you couldn't see the price of the home, that would be difficult. Same thing: you need to show price.
"If you couldn't see that that home wasn't available to purchase for six months, you'd probably want to know that, but (multifamily marketers) don't show availability dates online.
"You just ask yourself, 'How do you make it easy to rent an apartment?' Make sure your marketing takes care of that as a base level, and then you can worry about driving more traffic, views, and other things from there."
On AI for multifamily:
"(There's) a few things the industry should look at that would be helpful.
"One is I cannot stand chatbots. When I go to websites, they pop up and block real estate; they're not accessible, and slow download time, and hurt SEO. And then, they don't provide anything useful that a website doesn't already provide.
"I haven't done a lot of competitor research, I only see the (chatbots) our clients have put on websites we run, and it seems like—from what I've seen, I'm sure it's out there—there's not a good chatbot. It could actually be really helpful if you used some really good AI and provided very individualized information rather than some generic information that's clunky to find and generally hurts website performance. So, somebody should do something with that.
"I was playing around with ChatGPT a little bit, just loading in spreadsheets of data. And one of the challenges we have in our business is providing the context for customers to understand the data. We're looking holistically at their data, not just marketing data, leasing data, revenue data, and trying to understand what do they need to do to improve performance. We know, but it usually takes a human to explain it and that adds cost and time. It's really interesting to get AI to read large amounts of data and provide context to people on how good or bad they're doing in certain areas. That is something I've been looking at, and we'll probably do something along those lines with AI.
"I saw somebody do this where they took a bunch of pictures and created a walkthrough video off of photos, and it was really well done. The problem is it was probably just as or more expensive to produce than an actual walkthrough video. But if somebody could figure out how to make walkthrough videos through photos that looked pretty good and weren't expensive to produce, there's a lot of potentials there with some AI."
On centralization and staffing issues in multifamily:
"It's interesting to hear companies just now starting to talk about centralized leasing, and centralization in general. At my property management company, we're pretty familiar with centralization—and I think we're pretty good at it—because we've had to do it with so many scattered units.
"I've been shocked my whole career...I don't understand what all these people are doing (working) at these 200-plus unit apartment communities. We will staff a 200-unit community with one person in the clubhouse, and then have maintenance. I don't know why they'll have two, three, or four people sometimes (working) in these clubhouses. I can't figure out what everybody is doing and why it's so inefficient.
"There's a couple of things that go into that that helps (my property management company) be so efficient. One is marketing. If we provide a walkthrough video and photos of every unique floorplan, and all the information somebody needs online, you're going to get fewer unqualified leads and more qualified leads. That just saves everybody time.
"(The other is RentVision's) revenue management software that automates pricing and there is no price review. It gets the price right because we don't follow incorrect market data, we follow web data and your data to understand what's happening.
"We centralize all the accounting. Everybody's paying rent online and applying online. The credit checks are all centralized, too. And, for the communities we have, we have a floater person that can cover vacations or sick time for the one manager on staff.
"We've been doing (centralization) for a long time. It's been many, many years that we've only had one person at a 200-unit community, so it's really interesting for me to see people talking about centralization now and it's been kind of an 'A-ha!' moment with how much waste there is in staffing expenses at these apartment communities."
On the importance of making apartment marketing predictive and repeatable...
"Sometimes, there's not a marketing problem; there's a leasing problem. We measure calls and how many are answered because we've found we can do all the marketing in the world, but if the leasing agent isn't answering the phone or doing a good job, it doesn't matter. We're actually wasting your money.
"The same is true if you have a pricing problem. The quickest way to fix occupancy is just to lower your price. That fixes all of your occupancy issues. You can have terrible marketing. Investing in our marketing is not even a good choice if your prices are so low that you don't need it. The alternative is true, too; if your prices are too high, you can have great marketing and it's a huge waste because you're not going to rent anything.
"So, your marketing is dependent on your leasing and your pricing. And it's also dependent on your management; if your property is terrible, and shows poorly, and has a ton of bad reviews, that hurts everything as well.
"What we're seeing is that there's not a lot of data centralized for clients across all of those spectrums (marketing, leasing, pricing, management). So we want to approach a client holistically and see, 'What is the actual problem at your apartment community?' And we measure all these things and stack-rank all of our clients against each other based upon similar criteria and provide grades to people. So we don't tell everybody, 'Hey, your grade's an 'A' because everything is going well.' We say, 'Basically, you have a 'D' in this area because you're way behind your peers in performing here, and this is the issue you need to address.' That's just one area, making sure everything is performing.
"Another area is predictive. Predicting the future is difficult. The vision for (RentVision) I set out many years ago was to deliver a predictive leasing platform that optimizes marketing and revenue management. The first thing is we want to predict the future. What are you going to have available for leases?
"The current metrics in the multifamily industry don't really help you predict future occupancy. You've got your leased metric, which as far as I'm concerned, is completely worthless. If you ask somebody what their occupancy is, and their occupancy is bad, they just tell you how leased they are. It's just a way of fabricating success you don't have because you count all future move-ins and ignore all future move-outs. Occupancy is helpful when you're talking about the past, so if you want to report how you did last month or last year, but it doesn't tell you the future. And trending metrics are broken, too, because you're randomly trying to predict a future date or you're counting all future move-ins or future move-outs. If you're looking 60 days ahead, you're going to have a lot more move-outs. But typically, when people apply to rent an apartment, they might move in within three weeks. You're generally going to paint a pessimistic picture with your trending metrics. The only way to project future occupancy (or future vacancy) is to understand the data at an apartment community and know how far ahead you're projecting move-outs and move-ins. So we use some fancy math to set a Future Occupancy metric for our clients.
"The second part of prediction that I find very, very interesting is that, when you talk to people in the industry, and you ask them what their occupancy goal is, they will say '95 percent.' Let's say it's the month of May, and they're at 93% occupancy and you ask them how they feel, they'll say, 'Not too bad. We'll have plenty of demand and we'll fill those units.' But if you ask them how they feel if they're at 93% in November, they'll say, 'Oh, this is a mess. We're heading into winter and it's going to be really slow.' So you don't have a 95% target—you have a dynamic target based upon the time of the year and what the demand is. And nobody addresses that. So we also set a Future Occupancy Target number for our clients that is unique to their community by leveraging web data. We understand what your demand is going to be, and what it's not going to be.
"So if we know your Future Occupancy, and we know your Future Occupancy Target, then we know you're going to have a problem or not. If you're going to have a problem, we need to make sure we're fixing it. From there, we can adjust digital ad spend or pricing, and make sure your leasing agent is answering the phone...I mean, there's a whole host of things you can do."
On getting multifamily operators to believe in predictive marketing...
"That's the biggest challenge our company has...taking the complex and simplifying it for people. They've never heard of Future Occupancy, so getting people to understand that calculation is challenging. Future Occupancy Target, they usually understand that pretty quickly and easily.
"What takes the most time, then, is people giving up control of digital ad spend budgets and pricing. With digital ad spend pricing, we can cap how much they will spend in a given month, but they're not used to that. They say, 'How much are we going to spend on marketing every month for the next year? I want it to be the same number.' But how much is your vacancy going to be every month for the next year? Is that going to be the same, too? Well, no. If your vacancy is dynamic and your marketing is static, you need to flip those. You want vacancy to be static and your marketing to be dynamic. And once you understand that, it makes complete sense. But it's just a total shift to move to a dynamic marketing budget, but the ROI is astronomically high when you do it because the timing of marketing spending impacts ROI more than anything other, as long as your marketing is effective.
"Giving up control on pricing is also really difficult for people to do because they're so used to controlling that, even if they know if they've done a poor job."
On RentVision's revenue management solution...
"I've been working on (revenue management) for probably seven or eight years. We took it out of the alpha stage to the beta stage about a year ago, and we're getting ready to publicly show it and market it. We're actively selling it to current clients now.
"It's been a lot of fun because everybody seems just to want to follow market data. But if you follow somebody else, and they raise their price, you raise your price as a result. And if they followed you, they'd raise their price, and you would raise your prices again. It would go to infinity. So, somebody has to have the right data to control prices, and I think we have that with web data and floorplan-specific content where we can see exactly what's happening with demand at any given community and any given floorplan. That's just been a ton of fun, seeing revenue rise significantly. We're seeing phenomenal results on the revenue side.
"I've always viewed us as a revenue company, even before we had a revenue product. That's what our job is as a marketing company—to drive revenue."