A Preoccupation with Occupancy Might Be Hurting Your Student Housing Profits

A Preoccupation with Occupancy Might Be Hurting Your Student Housing Profits

 

Student properties are in perpetual lease-ups. Maybe that’s why there’s a fixation on maximizing occupancy over every other objective: the pressure to keep beds full as students continually move in and out can seem like all that matters.

Maximize profit in student housing

The trouble is, even 100% occupancy isn’t such a great result if many of those beds were leased for less than they might have been. Perhaps the property could have generated a higher NOI with lower occupancy and higher rents. In short, your bottom-line objective is not to keep properties full; for that matter, it’s not to get the highest rent prices either. Your mission is to generate maximum profit, regardless of where occupancy and rents settle out.

So it’s no surprise that properties scientifically determining rent pricing using revenue management software and market research have begun consistently outperforming even competitors with higher occupancy. Their software is balancing supply, demand and pricing to determine the perfect price to ask for each bed, every day.

Campus Advantage case study

An eye-opening new study has provided cold, hard evidence of their success. Campus Advantage, the nation’s sixth largest owner/operator of student housing, tracked the performance of seven properties in diverse geographic regions, including revenue performance, number of beds, number of market competitors and occupancy rate versus the market rate.

Even with lower occupancy growth, six of the seven properties outperformed their respective markets –including the top two market performers. One property actually beat its market by over 14% while experiencing a drop in occupancy. The lower occupancy was more than offset by the increased revenue from scientific rent pricing.

Consider how the RealPage’s YieldStar Revenue Management solution can help you replace a focus on either occupancy or rent prices with a disciplined pursuit of what really matters: maximum net profit.

Read the full study results here.

 

 


Author and Contributor

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Based in New Orleans, Guy Lyman is a professional writer with over 25 years’ experience writing about multifamily and commercial real estate. Lyman is a frequent contributor and writer for the Property Management Insider blog.

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