DALLAS, TX - Access to real-time rent and comp data afforded by revenue management systems is providing additional pop to multifamily real estate renovators and dealmakers. According to top REITs, fee-management firms and value-add operators in multifamily, revenue management has emerged as a go-to tool used for asset valuation, operational management, and rent and occupancy control at point of sale. In fact, revenue management is adding to either the efficiency or profitability of due diligence, development, and arbitrage among progressive operators leveraging the technology in tandem with their asset management strategies.
“We look to have our revenue management system up and running as soon as possible,” says Barney Pullam, Vice President of Business Process for Chicago-based Waterton Residential, a national value-add multifamily owner operator. “We are looking to turn it on in that first week of ownership. We want to stay right on top of rents and revenues from day one. As a value-add operator our hold period is generally five years therefore property performance from the outset is consequently important.”
In fact, whether or not a property has a prior revenue management system in place (and how well that system has been managed) can provide acquiring companies who leverage a disciplined revenue management platform with access to immediate rent, occupancy, and revenue lift on newly purchased properties.
“While training remains a big component, we are constantly looking for opportunities to enhance settings from previous owners.” says Alaina Emley, Director of Revenue Management for Greystar Management Services. “Use of the system varies and using our expertise, we can map competitors differently, split out floor plans, or add amenities. We are always looking for opportunities to make system improvements.”
When it comes to arbitrage, investors and operators are availing themselves to the rent fundamental controls of multifamily revenue systems. In particular, the ability to better push occupancy and/or rental rates relative to market can have serious impact to cap rate as asset valuators examine current and past 60 day rent rolls. Generally, operators want to contain communities for sale around a 95 percent occupancy rate, plus or minus 50 basis points. Clearly sellers want keep the rents as high as possible, as it adds value to the property, but revenue management also provides great visibility into whether or not velocity does slow down if you’re artificially holding rents and rates high.
Interested in learning more about leveraging revenue management as a strategic and tactical tool for acquisitions, renovations, and dispositions? Don’t miss the Pricing & Pop panel featuring Pullam, Emley, and Equity Residential vice president of pricing & revenue management Dave Romano at the Apartment Revenue Management Conference, October 15-17 at the Omni Hotel Dallas. Click here for registration and full agenda information.