Top 4 Revenue Management Mistakes To Avoid
The multifamily space is dynamic and complex, changing daily based on a number of factors. When it comes to determining optimal rental rates, it’s crucial to have the most up-to-date information possible for making educated decisions and staying ahead of the competition. But even the most conscientious and talented property managers have a hard time keeping track of all the important data and trends, and could use some help filling in the gaps.
Here are four common mistakes that can be avoided with the help of the right revenue management software solution:
1. Out-Of-Date, Limited Information
Timing is everything, and if a company doesn’t actively adjust rent rates, then the competition can easily take the lead on revenue growth. Some companies tend to offer special deals that actually result in losses on a lease, and don’t evaluate the variables that really matter to support a more strategic move. A property manager can’t rely on their own research for market information and use a punch calculator and spreadsheet to determine rates. A great revenue management solution offers an optimized daily strategy, automatically evaluating the most relevant factors to display the right number for each unit type, move-in-date, lease length and more. This allows property managers to make timely, proactive decisions rather than react to market conditions, demand and a competitor’s actions.
Your company will become more profitable when you adopt a solution focused on factors that include available inventory, leasing velocity, recently achieved rental rates, and market position.
2. Stagnant Rent Rates
When it comes time to renew a lease, make rate adjustments based on current conditions inside the business and out in the market. If you have a great relationship with a tenant who’s been living in their unit for 5 years, you want to keep them- but not if it means losing a considerable amount of upside potential. It’s important to offer residents a fair increase, but if the current resident still isn’t on board when demand is high, a community may consider filling the unit with another great resident.
The right revenue management solution provides the amount a community should charge in rent for both occupied and vacant units based on key factors. This helps the property manager avoid an awkward debate with a resident or prospect hoping to guilt them into charging a lower rent. Most importantly, a great system provides clear, intelligent recommendations derived from the science of revenue management. And if a situation arises where the property manager wants to make a change to the rate, they still have the ability to override the recommendation.
3. Having a Poorly Equipped Team
To see big wins in the industry, it’s important to have the right people behind the company. A property manager should not entrust the success of their community to someone who doesn’t understand the ins and outs of the business. Look for a revenue management solution from a company with a solid track record and large footprint in your industry – and one that places a heavy emphasis on training and change management to support your organization through implementation and beyond.
YieldStar, a revenue management solution from RealPage, Inc., knows multifamily and addresses its unique needs and characteristics. Its data-driven performance results from the over 10 million units the company supports, from which it secures up-to-date and thorough lease transaction data. For long-term industry success, get an experienced team of industry professionals on your side.
4. Missed Opportunities
Property managers need to arm themselves with the solutions that will help them take advantage of new opportunities for revenue growth. YieldStar helps property managers make informed, wise decisions no matter the market condition.
“Nobody works harder for their clients than we do, but using a revenue management system helped us work smarter by identifying opportunities to capture more revenue- even during the challenging market cycles” said Andrew Livingstone, Executive Director of Greystar. “YieldStar has cracked the code to driving revenue performance that consistently outperforms.”
Adopt the right revenue management solution to avoid these mistakes and set rates at the ideal level. Interested in learning more? Attend the YieldStar Revenue Management webinar series.