The Demand Solutions Blog

Multifamily Downturn Q&A - April 20th, 2020

Posted by Dom Beveridge on April 20, 2020

Last week we shared some of the talking points from our weekly "downturn" roundtable discussion for our clients. We are convening this group, which includes some of the most experienced pricing and revenue management practitioners in the industry, every week so this week we summarize insights that were shared during our latest discussion.

The content below is presented below in Q&A format, and all responses are anonymous. If you have different insights, opinions, or questions that you would like us to address in the coming weeks, please leave them in the comments or contact us through the site.

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Topics: Revenue Management, COVID-19

The "Downturn" Playbook - Your Questions Answered

Posted by Dom Beveridge on April 06, 2020

Last week we ran a webinar where three of our experts shared their first-hand experiences of managing multifamily pricing through previous recessions. The session (a recording of which is available on our website) was well-attended and generated some great discussion. We answered some, but not all of the questions during the session.

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Topics: Revenue Management, COVID-19

Why This Downturn is Different for Multifamily

Posted by Donald Davidoff on March 26, 2020

I often think of the economy as a metaphorical set of pipes with money (the "water") flowing through them. Recessions typically happen when the pipes "clog," causing the water to flow well below its normal pressure. Governments have to respond, taking actions to "unclog" those pipes to get the "water" flowing again.

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Topics: Revenue Management, COVID-19

What Multifamily Gets Wrong About Renovation Pricing

Posted by Donald Davidoff on February 20, 2020

(This is the third blog in our current series on amenity pricing)

It’s a classic conversation that will be familiar to every revenue manager who has ever had rehab units in their portfolio:

Property Manager: “I need to lower my one-bedroom prices”

Revenue Manager: “Ok. What, exactly, makes you feel that way?

Property Manager: “I’ve got a few units that have been sitting vacant too long”

Revenue Manager: “Anything those units share in common?

Property Manager: “Yeah, they’re the units we’re doing the rehab on.

Revenue Manager: “Ok. Then we really need to reduce the upcharge for the renovation on those units, not reduce the price on all 1-bedroom units”

Property Manager: “I can’t do that!” “Then I won’t get the ROI I need on those rehabs!!”

We have told that story many times, and every time we tell it to a revenue manager (or group of revenue managers), we get that immediate, knowing smile.  Yet despite this familiarity, this script keeps repeating itself. Why? And what can we do about it?

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Topics: Revenue Management

Five Reasons Why Unit Amenities May Be Harder Than You Think

Posted by Donald Davidoff on January 14, 2020

Last week, we talked about how unit amenity pricing is the most common place to uncover hidden NOI in multifamily rental operations, and we covered the various reasons why amenity opportunities present themselves.

Unit amenities are a simple concept, at least in theory.  However, experience shows that the practice is a lot more challenging. So, let’s explore a few of the reasons that finding missing amenities is more difficult in practice than in theory.

1. It takes a concerted effort. Finding missing amenities is not like finding trash along the tour path. Associates must make must review and understand the configuration of the PMS and purposefully evaluate that against what they see in the property. It takes a combination of looking at site maps, Google maps and physically visiting buildings and units. It’s rare that one just stumbles upon the obvious.

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Topics: Revenue Management

The Lowest-Hanging Fruit in Multifamily Revenue Management

Posted by Donald Davidoff on January 08, 2020

I toyed with a “New year’s resolution” post, to welcome the new year, but as 2020 gets underway there’s something that we at D2 are really excited about. As multifamily housing operations specialists, we’re constantly looking for ways to eke out just a little more net operating income (NOI) for our clients. Can we get a few dollars more rent or reduce expenses by a few bucks? It’s a never-ending challenge, and anyone who’s been doing this for a few years knows how hard it is to keep finding those dollars.

But rather than the few bucks in expense savings, right now we’re preoccupied with the few hundred dollars a month that - for almost all multifamily communities - are just sitting there waiting to be plucked. Sounds too good to be true, doesn’t it? There simply can’t be a simple way to generate better NOI or we would have already done it, right?

After more than 20 years in the industry working with operators who manage more than 1.3 million units, we can tell you that if you are running multifamily properties you are probably sitting on at least a couple of hundred dollars a month (and maybe thousands) in incremental revenue.

The culprit? Drum roll, please…incomplete and/or inaccurate unit amenity configurations!

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Topics: Revenue Management

How To Beat The Multifamily Holiday Blues

Posted by Donald Davidoff on December 19, 2019

As we head into the holidays, I hope everyone has some time planned for family, fun and just winding down a bit. Taking a lesson from Stephen Covey’s “7 Habits,” we at D2 Demand really believe in life-work balance to “sharpen the saw.” This balance was on our minds this week as the growing D2 team followed its end-of-year meeting with our now-annual holiday party with our friends at Linnell-Taylor and Après Creative, this year held at Unser Kart Racing. 

Amid the holiday festivities, it’s easy to forget some of the pitfalls of year-end in multifamily. One of the most obvious is the traditionally-sluggish demand for apartments that tends to accompany buoyant demand for socks, items from the Williams-Sonoma catalog and the like.  

November and December always carry the risk of panic pricing reactions and concessions, and more broadly of the self-fulfilling prophecy that “we don’t sign leases at this time of year.” With marketing budgets having dried up months ago (like *enter the name of the child’s gift you can’t find anywhere*) year-end can be a leasing funk.

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Topics: Revenue Management

Hitting the Slopes: Why Lease Expirations Matter at Year-End

Posted by Donald Davidoff on December 03, 2019

As we head into the winter months, it’s normal to think about slopes - especially if you live in Denver, as I do.  Denver is famous, amongst other things, for both skiing and multifamily leadership, and the “slopes” that we find ourselves discussing with multifamily leaders at this time of year are the profiles that describe a property’s lease expirations.

Lease expiration management (LEM) is particularly timely now as we lease December/January move-ins, soon moving on to February (which many are already sending renewal offers for) and then March. Now is the time where we get to move expirations out of undesirable expiration months into more desirable months. 

Miss your targets in the next few months, and you’ll have to wait another year to try to fix that pain. It should be simple enough, right? We know there’s seasonality, so we know what good and bad months for expirations are. All we need to do is stop signing leases with bad expirations and only sign leases with good expirations. As my good friend and former colleague now at RealPage, Rich Hughes would say, “Done and done,” right?

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Topics: Revenue Management

The Statistic that Predicted the Last Recession

Posted by Donald Davidoff on November 20, 2019

There's been a lot of talk of downturns lately in Pricing and Revenue Management (PRM) circles. It was a major theme of the recent NAA Maximize conference and was also covered at NMHC OPTECH last week. While no one knows when the downturn is coming, everyone seems to agree that it's a good idea to plan for it. While occupancy and rent growth are still strong, the sheer length of the recovery since the last recession has everyone wondering how much longer this bull run can last.

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Topics: Revenue Management, BI & Analytics

NMHC OPTECH 2019: We Need To Talk About Pricing

Posted by Dom Beveridge on November 04, 2019

Can it really be time for NMHC OPTECH already? It appears so, and I’m looking forward to joining industry leaders and technology luminaries next week for what is usually one of the highlights of the fall, as we make our way to Dallas to learn about what’s new and what’s working in multifamily technology.

There are many reasons to be excited. It looks like there will be a record crowd for this year’s show, and it’s probably the proliferation of exciting new proptech that’s drawing the audience. But alongside the new and shiny, we will be taking some time to celebrate 18 years of multifamily Pricing and Revenue Management (PRM). This year I’m delighted to be leading the first PRM panel that’s taken place at OPTECH for years.

The fact that PRM has been strangely neglected for a few years at this leading technology show is at the heart of what this panel is all about. February of this year marked the 18th anniversary of the first-ever system implementation. However, the last ten of those years have coincided with unprecedented industry growth. There is good reason to think that it may be time to re-sharpen our focus on this critical capability and the technology that supports it.

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Topics: Revenue Management, Multifamily Technology, Industry Events