Your rent prices may be the cause behind your apartment community's struggling occupancy rate…but it's likely not for the reasons you think.
Your community's occupancy isn't low just because of expensive rents. There are several other contributing pricing factors aside from affordability that prevent prospective residents from choosing to rent your apartments. Your rent could be hurting your occupancy rate because:
1. You don't use revenue management software for apartments.
A revenue management software system removes you from the task of manually setting rent by doing it automatically—and with precision. This means every one of your floorplans are optimally and comparably priced for your immediate market, which prospective residents will be able to verify as much during their search. Simply put, utilizing revenue management software will help you turnaround your occupancy woes because your rent is priced accurately and, therefore, makes your apartments more competitive.
2. You're not showing rent prices on your apartment website.
Forcing prospective residents to call your leasing staff for rent details is a significant turn-off that'll cause them to look for another apartment community to rent from. They're looking at your website to determine if your apartments fit both their personal and financial needs, so you must show rent prices on your website to make them feel more comfortable about actually living in them. You'll never improve your occupancy rate otherwise.
3. Your rent prices are shown as a wide range rather than one number.
If a prospective resident comes to your website and they see that the rent of the floorplan they're most interested in is listed as anywhere between '$950—$1,750', they won't know what exactly they'll be paying for rent. Most in the multifamily industry recognize that these ranges represent the difference in rental rates for varying lease terms, but prospects don't. We'd recommend only showing the rent price for the standard 12-month lease to avoid unnecessary confusion.
4. You're not running any specials on the floorplans with the most vacancy.
A special is one of the three components of rent, and they're incredibly effective in helping you improve your occupancy rate when used correctly. We recommend running a rent special on fewer units more often. Instead of running a community-wide rent special when you have extra vacancy, you should only run a special on units in the floorplan with the most vacancy. However, if your occupancy has been struggling for some time, then you may have no other choice than to run a special on every new lease for the time being.
Video: A Smarter Approach To Implementing Rent Specials
5. Your rent prices aren't transparent.
Prospective residents will feel more comfortable about your rent prices when you offer more transparency into how they were set. One idea could be to give them the option to compare price changes dependent on the length of the lease they're looking for (i.e. $950 = 12-month lease price, $1,750 = month-to-month lease price). Or, if you've applied unit amenities to your rent prices, you could show a breakdown as to why one unit in a particular floorplan is more expensive than another (i.e. a unit with a view of the pool is $20 more than a unit with a view of the parking lot).
6. Your rent changes way too often.
Constantly changing your rent prices—which is unfortunately a common practice of some revenue management softwares—has some drawbacks. For one, it makes it hard for leasing agents to remember what each floorplan's price is at any given moment and that could eventually hurt them while trying to close a lease with a potential new resident. Secondly, if someone comes to your website on a Wednesday and sees that rent for your studio floorplan is $800/month, and comes back on Friday and sees that the rent has changed to $840/month, then the chances they sign a lease with you will drop dramatically.
7. You raise rent too much in renewals.
While rent trends can frequently change during the course of a current tenant's lease, you need to be careful with the prices you offer in renewals. Say rent increased 20% over the previous year. Is it right for you to ask someone who's been paying $950/month to suddenly pay $1,140/month? The answer is clearly no, as it's important to incentivize current residents who are looking to stay longer in your community. Their intent to stay minimizes your vacancy and turnover, so you can show your gratitude by placing a cap on the percentage you'll increase rent in your renewal offer.
Click here to download our free whitepaper
Renewal Strategies For Apartment Communities.
Conclusion
It's important to look at each of the factors listed above to see if rent is the cause of your apartment community's low occupancy. This is because price is the only other trigger, outside of availability, that makes a prospective resident either want to pursue a lease with you or not. You need to make sure your prices are accurate and marketed correctly, or else they could be unintentionally hurting your chances to improve your occupancy.
This concludes our blog series focusing on the culprits behind low occupancy rates. We previously wrote about why your apartment marketing plan is causing low occupancy, and why your apartment leasing strategy may be hurting you.