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What’s in your Rent Roll?
Economic Occupancy and Revenue Management
If there were ever an era that presented historic pricing upheaval, it would be 2020. While the pandemic and its economic effects continue to wreak havoc in some markets, others have so far come through the downturn relatively unscathed.
Delinquency and evictions have been a constant concern, although legal methodologies can vary between states and multiple municipalities. Within the same multifamily portfolio, some assets may face a possible vacancy crisis due to lifting eviction moratoriums, while others may experience minimal vacancy.
At this point, it is uncertain when evictions will be adjudicated and how long the actual executions will require considering the huge backlog for many metropolitan courts. The Mortgage Bankers Association’s think tank, Research Institute for Housing America, reported a loss to multifamily property owners as $9.1 billion for the second quarter alone for unpaid rent.
New York State is in the process of passing the Emergency Eviction and Foreclosure Prevention Act of 2020, whereby some properties will be limited on evictions and foreclosures until May 1. Other such jurisdictions may follow. London metro rents have fallen as much as 25% as renters migrate to the suburbs into lower density, safer locations. Americans are forming households less than before the Great Recession.
While the news on vaccines has been overwhelmingly positive, the speed of the roll-out remains patchy, and new COVID-19 variants continue to emerge. As we move through 2021, we have much reason to be optimistic. We must also prepare ourselves and our businesses for a year that promises to be full of uncertainty. And when the economic outlook is uncertain, smart operators redouble their efforts on revenue management.
Spring is around the corner, and revenue managers should already be working on their strategies for the year. Here are a few considerations that should be in the 2021 plan:
1. Identify income streams from units that are under partial pay agreements and determine if the monthly totals could deflate exposure when being calculated as fully occupied units.
2. Project forthcoming eviction vacancies through close communication with Operations to determine realistic move-out dates, thereby making sure the pricing system is working with the best possible data. Note: some management companies are paying delinquent residents to move.
3. Pay attention to regional and middle managers who are still working from home and have not been on location for some time. The sense of isolation that this can cause can compromise performance and ultimately results.
4. Stay close to market changes with engaged, frequent research and manage system settings accordingly: expect the unexpected.
5. Work with existing vendors for solutions to expand functionality that accommodates change management.
If 2020 has taught our industry anything, it has been the necessity for non-contact leasing. Prospects must be able to shop individual units along with special features, tour availability via video, virtually or self-guided, receive firm pricing quotes, validate identity, complete a residency application, pass qualification screening, and finalize document execution—all with a great user experience.
Such initiatives require streamlined technology, including business intelligence, seamless integrations with high-performance websites, CRM, revenue management, excellent digital collateral and document management tools.
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