Apartment vacancy is arguably the single biggest problem in the multifamily industry.
When vacancy is high, no one is happy.
But what if the way that many people in the industry think about vacancy is wrong?
Too often, the multifamily industry operates in an extremely compartmentalized way. Marketing is in one compartment. Leasing is in another. Revenue is in another. Property management is in still another. They’re all separate and aren’t helping each other or reinforcing the work the other is doing.
We think that’s a problem.
In fact, we think that communities will never be able to actually control their vacancy until they learn to treat each of those four areas as distinct parts of a single job—running a successful multifamily community.
How Leasing Staff Impacts Vacancy
One of the most obvious sources of vacancy can be a poor leasing team, of course. The leasing staff will communicate with prospects more than anyone else in your community so if they aren’t well-trained or aren’t doing their job well, then you will have trouble.
That said, the trouble can pop up at several different points:
Your staff may not be good on the phones and don’t know how to get callers to come in for a tour.
Your staff may not be good at giving in-person tours.
Your staff may not know how to close deals once the tour has been given.
In other words, there are a few different places where your staff could be struggling. So you’ll want to listen to some calls, perhaps offer some additional training, or look at other possible strategies for assisting the leasing staff and helping them improve.
How Individual Floorplans Impact Vacancy
This is one point that many marketing directors and property managers don’t always consider. It’s common to analyze vacancy on a community-wide basis, but it can also be helpful to look at it on a floorplan-by-floorplan basis.
For example, it’s possible that half of your vacancies are from a single floorplan. If that’s the case, then you don’t necessarily have a community-wide vacancy problem; you have a problem with one floorplan. So your solution doesn’t need to be a large, ambitious project. Rather, it simply needs to target the specific problem with that one floorplan.
If you’re a Rentping client, the easiest solution may be to simply promote that floorplan to the feature floorplan place on the home page. We could also look at some paid search strategies to promote that specific floorplan.
For non-clients, you can look at doing something similar to give that floorplan more prominent placement on your home page or attempting to send more traffic to the floorplan via paid search. You can also talk to leasing staff about trying to direct people toward that floorplan when they are talking with them on the phone or giving tours.
The key idea, however, is to make sure you don’t over-correct. If you have a floorplan problem, don’t change things on a community level.
How Property Management Impact Vacancy
Property management has a more indirect impact on vacancy, but can still be quite significant. Property management will cover a number of factors:
How quickly can units be turned so that a new resident is able to move in?
Is the property well maintained?
Are maintenance calls answered quickly?
Are issues fixed after the first call?
All of these issues affect vacancy because they affect whether or not a prospect will renew their lease. The best way to maintain high occupancy is to avoid having units become vacant in the first place. It is much cheaper to simply renew a lease than it is to turn a unit, after all. Happy residents are more likely to stay. And much of the work required to keep residents happy is down to property management.
How Marketing Impacts Vacancy
The other potential source of vacancy problems is a community’s marketing strategy. The chief problem, in this case, is that your marketing is not generating enough leads for your leasing staff to work. So you might have great apartments, a crack leasing team, and a fantastic property manager. If you don’t have leads, then it doesn’t really matter.
If this is your problem, then there are a few things you should immediately look at fixing:
Do you have a Google My Business listing correctly set up?
Is the name, address, and phone number on the Google My Business listing consistently across all your online listings and your website?
Google your community’s name and see what comes up.
Log out of Craigslist and search for your community to make sure your posts are going live.
Log in to Google Analytics and review how your website visitors are using your site–what is the average time on site? How about pages per session? If time on site is under 45 seconds or pages per session is under 1.5 you probably have some web design issues to address.
Review your call tracking data to see what marketing sources are performing and what aren’t.
Obviously, each of those specific, discrete tasks may lead to a much larger number of tasks to correct whatever problems you might come across.
But the key is to start out with specific, one-time tasks that tell you “is this a problem, yes or no?” That’s what the above questions are meant to do. Ultimately, many of the marketing problems your community faces are not that hard to identify.
You either have a Google My Business account or you don’t.
You either are showing up at the top of the organic results or you aren’t.
You either have strong user engagement on your website or you don’t.
You’re either advertising on Google Ads or you aren’t.
The goal at this point is to simply identify specific problems. Once you’ve done that we can get into how to fix them by updating your Google My Business listing, improving on-site SEO, or getting un-ghosted on Craigslist.
How Revenue Management Impacts Vacancy
Finally, we need to talk about revenue as it relates to leasing. We’ve saved this one for last because this is where things can get a bit more complex. There are a couple reasons for this.
First, ultimately what you care about the most is not necessarily vacancy, but revenue. So you could have really strong occupancy numbers, but if it is because your rent rates are too low, you’re still losing money relative to what you could be making.
Second, making decisive, strategic adjustments to rent can help control how long units are vacant. For this reason, you also need to think proactively about when you are going to have vacancy problems and make revenue adjustments accordingly.
The first point to understand is that decisions about rent rates must factor in marketing data for your property.
Because if your primary referent for rent rates is other properties, you’re letting data that has nothing to do with your community determine your community’s rent rates. That other property is going to be older or newer than your community. It has its own management and leasing issues. It isn’t doing the same things with marketing. When you let their rent rates influence yours, you’re letting their problems set your rent.
Instead of this, you should look at your own marketing data. From that, you can get a sense of seasonal demand and adjust rent accordingly. With better rent rates, you’ll not only keep vacancy under control, but you also maximize revenue, which is what you’re really wanting.
The other factor to keep in mind here is that you can predict future supply at your community. Many communities react to vacancy after a unit has vacated rather than anticipating the problem and planning ahead.
In order to be more pro-active, the key is to begin developing a marketing strategy when you receive notice on a unit.
Put it this way: Community A and B have the same number of units, same occupancy rate, and same revenue. The only difference is Community A has received notice on 10 units that are vacating in the next month and Community B has received notice on two.
A lot of the numbers communities look at when making marketing decisions are going to look the same for these two properties, but the situations they’re about to enter are wildly different.
If Community A factors in notices when making marketing decisions, they’re going to be in a much better position. So when calculating your community’s occupancy rate, which is going to influence your marketing decisions, factor in both units that are currently vacant and units that are about to be vacant.
By thinking about vacancy in this way, you’re going to be much more successful as a community and will see your revenue respond accordingly.
Multifamily success requires that you keep your vacancy rate down without compromising on reasonable rental rates. That’s a hard task, however, as the above makes plain.
There are so many things that influence vacancy and, consequently, so many things that may need correct to resolve problems. That said, the vast majority of vacancy problems come from one (or more) of the problems described above.
If you have any questions about your specific situation, please free to request a free consultation so one of our apartment marketing experts can help you solve your vacancy problem.
Read more: american-apartment-owners-association.org