Month: April 2019

The Next Big Thing in Multifamily Revenue Management

Pricing and Revenue Management (PRM) in multifamily turned 18 years old this year. For those interested, the first-ever deployment of a PRM system took place in February 2001 at the Hunters Run apartment complex in Austin, TX. When we sat down recently with 20 multifamily executives to discuss the industry outlook towards 2020 and beyond, we invited them to provide their perspectives on the current state of PRM.

We discuss the results of our research in greater detail in our 20 for ’20 white paper. Below we have summarized the feedback that we received on possible future PRM advancements and areas of opportunity. We found that PRM system-specific feedback fell into two broad categories: how to improve the current models; and more radical improvements and future direction.

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Redfin: This is how much an open house can boost your home sale

Homes with open houses sell faster and for more money.

Technology has transformed the housing market by digitizing almost every aspect of the home buying process.

In 2019, Americans are able to sell, purchase and finance a property all from the comfort of their own home.

However, despite these technological advancements, data suggests that traditional selling methods might still have the upper hand.

According to a recent analysis by Redfin, American home sellers are now making $9,046 more on average just by hosting open houses.

“Holding an open house is an efficient way for sellers to get more eyes on a home, and a bigger pool of potential buyers can help lead to a higher ultimate sale price,” Redfin Chief Economist Daryl Fairweather said. “In many areas, homes that are already primed for competition tend to be the ones with open houses because the listing agent knows it will attract a lot of attention and wants to set up a convenient way for multiple potential buyers to pop in at once instead of making several appointments for private tours.”

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Trump’s Housing Agency Cracks Down on No-Money-Down Home Loans

The administration is concerned about the risk to the government’s portfolio of federally-insured mortgages.

(Bloomberg)—The Trump Administration is cracking down on national affordable housing programs because of concern over growing risk to the government’s almost $1.3 trillion portfolio of federally insured mortgages.

The effort targets providers of money for borrowers who can’t afford the 3.5 percent down payment typically required on Federal Housing Administration loans. Such help — from government agencies and families — enables 4 in 10 FHA loans. Borrowers in government down-payment assistance programs become delinquent at about twice the rate of those who put up their own money.

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The Importance of a Move-In and Move-Out Checklist

A landlord/property manager is required to document any expenses that are taken out of a tenant’s security deposit; therefore, good documentation is vital. A move-in/move-out inspection with a checklist, pictures and/or a video is essential.

These Checklists can be Beneficial to the Property Owner and Tenant

The Move-In/Move-Out Checklist is a convenient, all-inclusive and reliable way to document the property’s condition. Tenants can benefit from a Move-In Checklist because any existing conditions will be predated to his/her occupancy. This checklist helps the landlord/property manager by reducing liability risks due to disagreements related to security deposit reimbursement; thus, protecting the value of the property.

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Industrial Property Owners Increasingly Go After Value-Add Projects

With prices for stabilized properties rising, industrial REITs and other industrial owners invest in value-add and redevelopment.

As REITs and other landlords continue to reap the rewards of the red-hot industrial sector, they’re going beyond ground-up development to satisfy the growing appetite for space.

Several industrial REITs, for instance, are coupling traditional development activity with value-add projects. Meanwhile, a new report from the real estate and construction services practice at professional services firm BDO envisions a rise in the expansion of existing warehouses.

“Developing properties from the ground up is one thing. Redeveloping properties that are in place to make them work better and handle more goods is also part of the thought process,” says Stuart Eisenberg, national co-leader of the real estate and construction services practice at BDO.

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What Features Do Apartment Renters Value Most?

A survey from Greystar looks at the most popular apartment building amenities.

To attract residents, apartment managers are mixing amenities like swimming pools with activities like fitness classes.

“It isn’t enough to have the fitness center, clubhouse, pool mix… Instead, provide these as services that busy millennials and active boomers want,” says Tara Jeffcoat, senior research analyst for research firm Yardi Matrix, based in Scottsdale, Ariz.

To get the right combination of apartment amenities, services and features, developers and property managers need to look at research on what their residents want, so that they can tailor the properties to their local apartment markets.

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When a Resident Starts Shopping Around, You Lose Control Of The Renewal

When it comes to a renewing resident, nobody would want that person out shopping the competition, learning about all the great bells and whistles that they offer and putting them in the hands of our competitor’s trained sales force. So in that sense, although it may sound callous, your biggest advantage in renewing that resident is their ignorance of what else is out there! Unfortunately, in our business, we often increase rents, which ends up driving our residents to do just that. And once they start shopping around, they enter the dreaded Buying Cycle.

What is the Buying Cycle? I’m sure many of you have gone through the phenomenon where you never really notice car commercials, billboards, etc until you finally decide you are ready to buy a car, and then suddenly they are everywhere! Of course, that’s a silly thought – it’s not as if a billboard was suddenly thrown up because you decided you wanted a car – the reality is that they were always there, but you just didn’t notice because you were not in the Buying Cycle.

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Waterfront Properties Earn Extra Rent

Apartment buildings on the waterfront command rent premiums for their views and extra amenities.

Apartment buildings located near rivers, lakes and ocean shores earn extra money in rents.

“Renters pay an overall premium for waterfront apartments,” says Bob Thallander, president of Florida development for Bainbridge Companies, a multifamily developer headquartered in Wellington, Fla.

To build these properties, developers like Bainbridge fight off competitors and pay extra for land. Once they have the control of a waterfront site, they try to build units that give residents both views and access to the water and surrounding amenities—from walking paths to beaches and kayaking. “They want to see it and get out on it,” says Thallander.

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This is how America’s housing affordability is impacting credit quality

Affordability has returned to average historical levels, and it’s having a ripple effect.

It’s official: The era of unusually affordable housing has ended. Well, according to a recent Moody’s Investors Services analysis.

The organization claims that America’s housing affordability has returned to average historical levels, therefore impacting credit quality across numerous housing-related sectors.

“Homes are no longer relatively cheap on a national basis, and certain market segments are in worse shape, reflecting supply-and-demand imbalances stemming from the 2007 through 2012 housing slump, as well as demographic changes and the long U.S. economic expansion and its unevenly spread benefits,” Moody writes. “Reduced affordability is also a lingering issue in the rental market, where the effects are in some ways more severe.”

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The Cities with the Most Multifamily Rent Growth

Arizona cities dominate the list of the cities that posted the biggest apartment rent jumps in the past year.

National average apartment rents continued to go up in March, rising by 3.2 percent to $1,430, according to research firm Yardi Matrix. As always, however, some markets experienced rent growth that was far above the national average. Using data provided by Yardi Matrix, we take a look at the 24 cities that saw apartment rents spike the most in March 2019 compared to the period a year earlier.

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