The great “amenity decision” is on the minds of most of today’s multifamily owners. Which amenities will attract residents? Which will provide the best return on investment?
While these questions are important, it’s also important to first determine a property’s current and target renter demographic. This means understanding which amenities renters are expecting, which services to provide and prioritize and how to best secure ROI through them.
Western National Property Management specializes in attracting and retaining renters to boost the bottom line for multifamily owners—with 179 communities and 24,801 units, catering to new and long-time renters is a must-have quality and a fine-tuned capability. Below are strategies our firm uses to achieve strong results.
Multifamily property managers are aware all renters have expectations for their prospective living situation. Whether this includes laundry services or security systems depends heavily on the generation or community to which a renter belongs.
For example, millennial first-time renters will anticipate common areas, in-house laundry systems, easy food delivery and online rent payments. Baby boomers are more likely to expect high-tech security and smart appliances in their individual units. Generationally, millennials represent nearly half of all new renters, and apartment communities are increasingly implementing online options to meet the demands of this demographic.
Successful and efficient managers see the opportunity in installing renter-specific amenities.
Investors are talking a good game as they negotiate to buy self-storage properties—but on average, they are still paying high prices and accepting low investment yields.
“I have seen some re-trading… maybe 1.5 percent of the purchase price,” says R. Christian Sonne, director of specialty practices for the national self-storage valuation group at real estate services firm CBRE. “Property assessment reports are being reviewed a lot more closely than a few years ago.
But deals are still getting done at nearly record low cap rates, with multiple potential buyers bidding for most properties, says Sonne.
Self-storage properties remain extremely desirable to investors. Investors are paying high prices despite rising interest rates and reports of overbuilding. Their enthusiasm to buy may be because the percentage of occupied space in the sector is at an all-time-high. Self-storage also earned a reputation for being resistant to recessions during the last economic downturn, giving even more comfort to potential investors.
“There is a great deal of capital pursuing deals and, in some cases, we’re seeing aggressive pricing—especially in high-density urban markets,” says Wayne Johnson, chief investment officer with SmartStop Asset Management, a diversified real estate company focusing on self-storage, student housing and seniors housing.
New data from RentCafe shows that more than 25 percent of apartment buildings in some U.S. cities are now high-end units.
Visit any urban center in a major U.S. city and you’ll see a similar view: cranes dotting the landscape and billboards advertising units in the latest luxury apartment projects. Has the focus on high-end units gotten out of hand?
New research from RentCafe found that luxury rental properties had accounted for 79 percent of all apartment construction in the U.S. And in the 2018 that number has grown to a whopping 87 percent. In many cities, a full 100 percent of projects completed in the first half of the year were upscale units.
Yardi Matrix tracks the data, with a database of more than 80,000 large-scale apartment developments with at least 50 units across more than 130 markets in the United States. The firm considers units class B+ or above as high-end or luxury projects.
(Bloomberg)—As Sears Holdings Corp. goes through bankruptcy, retail landlords wondering how they could be impacted might want to look at a 2015 deal.
Mall owner Macerich Co. struck a agreement that year with the struggling department-store operator to redevelop a 300,000 square-foot store at Kings Plaza Shopping Center, a high-traffic mall in Brooklyn, New York. Three years and $100 million later, Macerich finished work on the space, which has been subdivided and leased to Burlington, J.C. Penney, Primark and Zara.
After Sears filed for Chapter 11 protection early Monday, Macerich’s lengthy — and expensive — process is worth keeping in mind. Other mall owners, who have been grappling with the retailer’s store closings and diminished ability to attract shoppers for years, must now contend with the possibility of a full liquidation, which would mean a glut of retail real estate in an already oversupplied market. For now, a majority of stores will continue to operate.
Apartment rentals have been luring residents away from other kinds of housing since the housing crash—and that is not likely to change in the foreseeable future.
“Apartments should continue to play a role in the total housing market that goes beyond the historical norm,” says Greg Willett, chief economist for Real Page Inc., a property management software and services provider based in Richardson, Texas.
In the years after the Great Recession, millions of people lost homes to foreclosure and had to move, often into apartments. The extra demand for units was not expected to last more than a few years. However, today—more than a decade after the collapse of Lehman Brothers—the percentage of American households that own their own home is still near its low point. New households are still much more likely to chose to live in rental housing than in the years before the crash.
(Bloomberg)—Pretium Partners LLC, the third-largest owner of U.S. single-family rentals, is working with Morgan Stanley and Ardea Partners to explore options that could include a sale of most of the company’s homes, according to people with knowledge of the matter.
Pretium, founded by former Goldman Sachs Group Inc. partner Donald Mullen, is considering ways to provide liquidity to early investors, said some of the people, who asked not be identified because the discussions are private. Pretium could sell as many as 20,000 homes valued at as much as $5 billion, and is open to transactions in which it either does or doesn’t maintain management rights, one of the people said.
Apartments rents are on the rise again.
“The apartment market’s performance during the third quarter slightly surpassed expectations,” according to Greg Willett, chief economist for RealPage Inc., a provider of property management software and services.
Demand for apartment units softened slightly in recent years, as developers built thousands of new apartments. Now, demand is growing quickly once again, as the number of new households rises quickly and helps fill new units. This improved outlook comes after years of already strong rent growth and low vacancy rates.
“We are living in a very dull bliss,” says John Sebree, first vice president and national director with the national multi housing group at brokerage firm Marcus & Millichap. “The fundamentals are very strong. They continue to be very strong.”
Apartment rents in the U.S. grew by an average of 2.9 percent over the 12 months that ended in the third quarter, according to RealPage. That’s up from 2.5 percent in the second quarter. The faster increase at least briefly reversed a pattern of slowing rent increases recorded since late 2015, according to Willett.
Rents have grown more slowly as developers have been opening new luxury apartments at a rate of 300,000 to 325,000 a year since late 2016. Developers are on track to keep opening new units at that frantic pace at least through the end of 2019, according to RealPage.
Home ownership rates have fallen in recent years due to rising home values and stricter underwriting standards. As a result of this and the increase in the number of people 34 and under—the prime rental age—more U.S. households are renting than at any point in 50 years, according to a study done by the Pew Research Center.
The signs all point to an excellent opportunity for investment in multifamily rental properties. But while the overall outlook may be favorable, it’s important to dig a bit deeper to find the most profitable properties for long-term investment. Here are five things to consider before you make a decision:
While critically important to any multifamily property company’s success, the two words “budget planning” evoke almost as much anxiety as Tax Day or root canal.
It’s often difficult to convince key decision-makers to invest in a digital marketing strategy when there are so many innovative online tools available to attract leads and increase leases, and so much data to consider. As with most business budgets, multifamily property managers know any money left untouched or marketing dollars spent unwisely this year means less money in the department’s available budget next year.
Digital marketing budget planning requires analyzing the property management company’s current strategy and pitching new ways to increase lead conversions based on quality leads and qualifiable metrics. Maximize the money allocated to your department by using data to prove return on investment and deliver solid projections for the coming fiscal year.
Here are some ideas to consider as you map out a budget proposal for your company’s executives to justify an increase in digital marketing spending.
Having been in the residential real estate business for almost 15 years now, I have been surprised to see the change in many brokers’ approaches to leasing and sales. Numerous brokers today often sell themselves and the properties in an overly aggressive fashion rather than just being congenial and friendly in the hopes of developing client relationships that way. Many newer agents don’t realize that it’s typically more effective to let the residence sell itself than to be pushy about closing the deal.
It’s important to recognize that if people don’t have the need for what you’re offering, then there is no way to make them have that need. Thus, brokers should never employ begging as a strategy. When hiring potential agents, I always ask them whether they have the ability to make people rent or buy a listing. If they believe themselves capable of such a feat, then I know they are probably much more aggressive than I prefer my agents to be.