Multifamily Revenue: The Ten Percent Rule

Multifamily Revenue: The Ten Percent Rule

Competitive properties have many similarities.   Granted, they may not have the same look or facade, but rent rates are similar (revenue per square foot of occupied space, for example) amenities are similar, they are the same distance from job centers or shopping etc.  A deeper look will often expose that tenants are coming from the same pool; tenants have similar job titles, educational levels and credit scores.  Same, same and more of the same. 

The ten percent rule proposed here is not an exercise to keep management busy or to assuage any particular interest group.  The objective is to increase occupancy, and not just through the continued use of concessions. The ten percent rule states that you will consider any single change from the norm in up to ten percent of the units in a development.  

The following examples assumes 100 units or more and that not more that 10 units in total are "in play" to unconventional offers. The objective is to fill vacancy, not change the character or viability of the property.

Demographics: For starters- expand your demographic. Again, not by lowering screening standards, but through identifying additional people who fit your tenant profile.  This may mean expanding advertising into channels that were previously ignored.  A simple example is posting brochures in senior citizen and community centers. .  Many are looking to downsize without leaving their long-time neighborhood. 

Short-Term Leases: Most operators’ have no interest in short-term leases due to the increased turnover costs.  However, when vacancy is persistent, consider offering a few units with short-term leases at a "ten percent" premium to asking rents.

Utilities Paid: A quick review of utilities  history will tell you the average cost per month for utilities (electric, gas) on a specific unit size.  Offer a single unit with "utilities paid" and adjust the rental asking price accordingly.  Do not in any way lower your screening processes to fill this unit.

Free Cable and Internet: On a per unit basis.  Offer one or two units with "free cable and internet".   For many properties this is standard already but for many others it is not.  For many properties either the entire property is wired or it is not.  Similar to other utilities, the cost for providing this service for one unit is very easy to determine. 

Consider it a loss leader that may assist in filling one or two additional units. Our objective is, on a continuous basis, to increase rents and revenue while providing the highest quality competitive product we can to our customer base.  On that note, be prepared to step outside of your comfort level.    

About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel.  For more information, visit:

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