There’s a simple way every property manager can increase income from the property being managed, yet even some of the best managers overlook it: rethinking the way they use their waiting lists.
Here’s what usually happens in the process of a resident vacating an apartment. First of all, the resident gives notice. Next, the time between giving notice and moving out elapses and the resident moves out. The leasing associate or property manager marks the apartment on his or her list of vacancies. The maintenance process then begins that will make the apartment available for leasing again. It can take weeks. The leasing staff concentrates on leasing that empty apartment. In the meantime, several more residents give notice, but because they won’t be out for at least 30 days, leasing associates concentrate on the current vacancies. When potential residents come to see the community, leasing associates sign them into the vacancies, even if the new residents won’t need an apartment for weeks or even months.
Although this process sounds reasonable, it isn’t the way to maximize income and it isn’t the best way to use the staff efficiently.
Concentrating on the waiting list in a new way will do more good. The basic idea is to minimize the number of days an apartment is vacant – the same idea as before. However, the difference is in how it is accomplished and the “secret” is in the waiting list.
A potential resident comes to see the community and needs an apartment six weeks from now. There are three apartments currently vacant, but notice has been given by two of the residents that they will be moving out at the end of the month. Instead of assigning the new resident to a currently vacant apartment, a notice should be assigned to this resident. If the new resident needs an apartment even further out, say 60 days or more, the leasing associate should show him a representative apartment, but sell him on the availability of the waiting list. Accept a small refundable deposit (recommended: $50) and place his name on the list.
Don’t ignore the list while waiting for notices from the current residents. Work the list. Concentrate on it every day, giving it top priority. Be sure that everyone on the waiting list receives newsletters or other mailings. Send birthday cards. Make phone calls. Send the prospective resident information about the area, or whatever items or information known to be pertinent based on the initial interview. Soon, there will be a list of people eager to rent from the community and waiting for an available apartment.
Now, let’s say that notice from a current resident is given that an apartment will be vacant in 30 days. First, take a look at the waiting list. As an example, let’s say that a prospective resident, Mr. Smith, is first on the list and he needs an apartment in 40 days. The leasing associate should call him and tell him that an apartment is available when he needs it. If he needs the apartment in 60 days and it is available in 30, plus your normal 10-day holding period, offer him the apartment, telling him that it can be held for 10 days past the 30-day date of availability. Ask him, “Would you like to rent the apartment or should I call you again when another apartment becomes available?” Either way, it’s a win/win. If he takes it, the property gains 20 days of rent. If he doesn’t, he’s still on the list. Go on to the next name and do this every time a notice is received from a current resident.
If a potential resident comes in who must have an apartment right away and is willing to take the apartment within the usual period (for example, 10 days), sign this resident into a vacancy. If a resident who needs an apartment 30 days or more in the future wants a currently vacant apartment, explain that it can only be held for 10 days. Ask him, “Would you like to take the apartment now or would you rather have me put your name on the waiting list?”
Using this strategy, the property will have new renters for apartments before the apartments are vacated. This means fewer “down” days, more dollars saved, a faster turnaround time and more efficient maintenance staff, and a leasing staff that concentrates their energies on prospective residents.
Other benefits include a sense of urgency and the perception that the community is especially desirable (with an active waiting list) and that the property manager and leasing associates are friendly, eager to please, and “on the ball” because they have taken the time to take care of the new residents.
Monetarily, the biggest benefit is the rent received – rent that would have disappeared into the space between the notification and rental of an apartment.
To be effective, the leasing staff and property manager needs to work the waiting list every day. A minimum goal should be to add one new name every week. To motivate people to sign up, guarantee rent for six months from the date of signup and ask for a small ($50), totally refundable, deposit. The potential resident shows real interest by making the deposit while the property manager shows flexibility and willingness to serve by making it possible to get the refund back if the person changes his mind, doesn’t move, chooses another community, etc.
To motivate property managers to use the new waiting list strategy, send postcards or other direct mail that reminds them that their priory is building the waiting list, mention the list every time communication is made with them, and discuss the new strategy at every marketing training seminar. Show them how to measure their progress by reviewing available apartments that have been assigned and comparing the move-out date to the new move-in date. How many apartments are sitting vacant for a longer that acceptable period? If the per diem rent is $20 a day and an apartment is held for 16 days beyond what is considered acceptable (13 days), the loss is $320 on that one apartment. Add up all the vacancies to demonstrate how much is being lost to vacancy. These figures will show what can be saved by renting an apartment before it is vacated.
Here’s another helpful suggestion. If it is legal in your area, extend the notice period from 30 days to 60 days. This advance notice gives the property manager an extra 30 days to assign an apartment before it is vacated. It is critical that onsite personnel explain to residents who are giving notice that the apartment will be preleased to a future resident. This encourages current residents to choose moving days they can be sure of keeping and it will give the leasing staff time to lease and prepare the apartment for the new resident.
To check on progress, use shoppers. Assign a large number of points on their evaluations on whether the leasing associates offered to put the shoppers on a waiting list or neglected to mention it. Study the market-ready unit audit. The goal is to have 50% of apartments assigned before the end of the month when the current resident will be moving out. For example, if on July 1st ten notices to vacate by the end of the month are received, the goal is to assign deposits to five of them by July 31. If building the waiting list has been successful, most of those deposits should come from the list and not from walk in traffic.
The property manager may have to try this waiting list strategy for at least 90 days to believe the results. It takes that long to see the effect on the waiting list and on rentals. Initially, more vacancies may be seen, but remember that vacancies are not the problem. Rather, having no one but walk in customers to fill those vacancies is. Rethinking and reworking the waiting list strategy will provide people to fill vacancies month after month while bringing in thousands of dollars a year.
Jennifer Nevitt Casey is President of Rohdie Management and a Partner in Rohdie Group LLC, a New York City-based real estate development firm formed by a group of veteran professionals targeting the southeastern United States as its focus point for apartment development.
Ms. Nevitt Casey is also Chief Executive Officer of Bravo Strategic Marketing, Inc., and, since 1993, has developed return-on-investment strategies for multifamily real estate investment portfolios with a capitalized value exceeding $6 billion. She is a highly successful income growth strategist for residential assets and considered one of the nation’s most innovative real estate marketers.
In the real estate development arena, she currently provides consultation on product design, the importance of a development’s timing, correct market positioning and proven successful leasing and for-sale marketing strategies. She is a contributing author of the Urban Land Institute’s book, “Developing Multifamily Housing,” and co-author or the National Association of Home Builder’s book, “How to Excel at Leasing Apartments.”
Ms. Nevitt Casey was also the former Chief Executive Officer, Inventor and Founder of YieldStar Technology, LLC, a yield management, B2B software application that optimized revenue for the multifamily real estate industry whose assets were acquired by RealPage.
Ms. Nevitt Casey has also trained over 20,000 professionals within the multifamily industry. She has also trained sales teams for newly constructed condominiums, including mid-rise and high-rise projects, and single family homes. She is a dynamic speaker and a well-published author about custom software development.