NAHB Multifamily Housing Summit Revenue Management Presentation
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Transcript of NAHB Multifamily Housing Summit Revenue Management Presentation
Lease Optimization and Revenue Management2009 Thoughts vs. 2011 Thoughts
Mark Juleen
Vice President of Marketing
J.C. Hart Company, Inc.
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Who is J.C. Hart Company?2
• Developer, Builder, Manager
• 3,200 Units currently
• 1,000 Units under construction or in development
• “We make your Home an enjoyable living experience.”
Indianapolis, Bloomington, Dayton
www.homeisjchart.com
2010 Management Company of the Year
Why Revenue Management?- 2009 Summary
1. Simplify your processes.
2. Flexible lease terms & flexible pricing
3. Trust the algorithm, not a bogus market survey and your gut.
4. Bounce back faster
Quotes from the front line
• “Helps minimize vacancy. You would be surprised how easily people will adjust their move in date or lease term to save a few dollars. Crazy what kind of information you can find out if you just ask questions.”
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Quotes from the front line
• “Gives us more opportunity to follow up – 48 hours? Your quote is expiring. Three days later? Our prices went down/up/stayed the same, etc. Not just the same “checking to see how your apartment search is going” call.”
Quotes from the front line
• “Minimizes the prospects chances of saying no. Your price depends on YOU and YOUR needs – want it for 750? Move in this date and on this lease term…”
Quotes from the front line
• “I get the impression that most prospects are actually impressed that we can give them options. They feel like we are keeping their interest in mind.”
Quotes from the front line
• “Depending on how you set your renewals, your rents on the renewal side could out pace your new leasing. This can be a resident satisfaction issue, especially if the gap between new and renewals becomes significant.”
Quotes from the front line
• “In a down economy you have to make a tough decision on the renewal side to potentially lower rates to be more in line with the new. If you have online availability features this can create issues with current resident's comparing their renewal quote to a new rate.”
2010 Results
• Average Annual Occupancies up 3% across portfolio
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2010 Results
• 7 of 11 properties saw increases in revenue- Non-gainers stats
- 1 flat after 3 years of increases
- 1 had a 2nd phase in lease-up
- 1 went through management change
- 1 was an experiment in overriding recommendations (Oops!)
• 4 of 7 - 4% or higher
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2010 Results
• 7 of 11 properties saw increases in rents- Non-gainers stats
- 1 still increased revenue- 1 had a 2nd phase in lease-up- 1 went through management change- 1 was an experiment in overriding
recommendations (Oops!)
• 4 of 7 - 2% or higher
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Why Revenue Management?- 2010 Summary and Conclusions
• Simplify your processes
• Flexible lease terms & flexible pricing
• Trust the algorithm, not a bogus market survey and your gut
• It doesn’t run itself. You still need an individual that can drive the system.
• The systems are designed to improve revenue. It’s not necessarily about occupancy, and that can be challenging for some companies to get their arms around.
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Why Revenue Management?- 2010 Summary and Conclusions
• Jury is still out on “bouncing back faster”.
– We believe we can attribute much of our rent growth to the system as our competition continued to run various specials throughout the year.
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• The hanging question is where we would be without the system?
– With a few of the successful properties I would definitely say we would not have had the jumps we did in rents and revenue as we would not have pushed renewal rates as aggressively without the system recommendations.
– It makes me nervous to think where we would have been with some of the other properties if we would have gotten into concession games vs. adjusting prices.
– The reduction of vacancy loss by building those days into pricing also adds up.
Bottom Line
• I’m a fan.
• It simplifies so many things.
• There are so many variables in marketing and property management that simplifying pricing decisions makes sense.
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Questions?