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How Realtors Can Best Work With Investors in a Small Market

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Learn to Speak the Investor Language by Scott Russell As a real estate professional, I have years of experience working with investors for both residential and commercial investment properties in Asheville, in particular. With moving patterns shifting due to the pandemic, investment properties are becoming more relevant, especially when it comes to apartment buildings and single-family residences. Therefore, if you’re a realtor working in a small market, you need to be strategic about how you market your services to investors if you want to guarantee the success of your real estate business. Since competition can be tough in a small market, investors have plenty of options to choose from. Here is some helpful information on how you can best work with investors in a small market so you can conduct worthy business in a professional and financially-sound manner. Speak Their Language The best way to work with investors and provide valuable service is to get into the investor’s mind. Do not equate real estate investors to first-time homebuyers or traditional buyers and sellers because they speak a different language. They don’t want to talk about how great the countertops look and why the color palette is great. The good news is that you don’t need to be a professional investor yourself to work with real estate investors successfully. All you need to do is familiarize yourself with the investor’s niche and strategy. For instance, what types of investment properties is the investor targeting? What’s their strategy when investing in these homes? Some investors prefer to fix and flip, while others buy, hold, and then sell when the market becomes favorable. Once you figure out the type of investor you’re dealing with, you will be in a better position to spot great deals that suit their needs. It’s important to understand that investors look at properties differently, and as a realtor, it’s your job to see things from their perspective. Investors like to hear about what their return on investment (ROI) is going to be and other concepts like net present value and cash-on-cash exchanges. These financial terms are key in the investment world. Net present value (NPV) is defined as an investment measure that tells an investor whether the investment is achieving a target yield at a given initial investment. The net present value is simply the present value of all future cash flows, discounted back to the present time at the appropriate discount rate, less the cost to acquire those cash flows. In other words, NPV is simply value minus cost. Cash-on-cash return is a quick real estate financial calculation used to measure the percentage of cash received in a given month or year compared to total cash invested. Cash on cash is expressed as a percentage while actual cash flow is expressed as a dollar amount. Streamline Your Communication Once you spot a great deal that your investor client may be interested in, it’s important to pass it along quickly before another investor snatches the offer. That means you need to streamline your communications process to inform the investor of any new properties. Investors are used to acting quickly, and they will appreciate you bringing bargains to their table, as this increases their ROI. However, the only way they can benefit is if you provide the information as quickly as possible. One thing that can help you respond quickly to your investor’s needs is to incorporate technology into the process. If your investor has no problem working on multiple deals, it means you may have a ton of paperwork to go through. However, you can cut out some of the work by going paperless and perhaps taking advantage of a real estate transaction platform to facilitate transactions quickly and nail more deals for your client. Add Extra Value to the Business Relationship If you want to become the go-to realtor for your investor clients, you need to find additional ways to make your services valuable. As mentioned, you can start by learning to speak the language of your investor and finding out what their investment strategy and goals involve. You can take things a step further by helping the investor pre-screen real estate investment properties. This can be achieved by finding out which formula investors use to evaluate and select their purchases. You also need to do your market homework and provide your investor with helpful information about the current hot markets and potential ones. You can connect your investors with tradespeople, contractors, tax advisors, and other referrals they may be looking for. Finally, you can add more value to your services by joining a real investor group to spruce up your knowledge of the real estate investment market. This can help you learn more about what real investors in your area are interested in and which properties have the potential to excite them. How Investors Can Help On the flip side, investors can make life easier for realtors by providing as much information as possible. For instance, they should be clear about their criteria when assessing a property and what qualities they look for in an investment home. They should also be clear about what role they expect the realtor to play and the kind of relationship they need. These tips can help set the tone for a successful relationship between realtors and investors in a small market. By banding together, a realtor and an investor can both be prosperous. Suppose you’re an investor with a reputable and capable realtor. In that case, your bottom line can be improved by working with an expert with skills that complement yours and that allow your operations to become more efficient.

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CONDO PRICES RISE AT LEAST 20 PERCENT

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Condo Prices in Oceanfront Counties Commonly Surge 10 to 40 percent in Second Quarter of 2021 ATTOM, curator of the nation’s premier property database, released a special report looking at condominium sales and prices in oceanfront counties around the U.S. The report, following up on the June 2021 collapse of the beachfront Champlain Towers South condominiums in Florida, shows that median condo values and price increases in oceanfront counties in the second quarter of 2021 closely tracked national trends. The report found that median condo prices in 50 percent of those oceanfront counties surpassed the typical $305,000 condo price nationwide, while 50 percent fell below. It also revealed that median condominium prices increased during the second quarter of 2021 by at least 20 percent, measured year over year, in slightly more than half of the oceanfront counties analyzed. Less-expensive oceanfront condo markets, concentrated in the South, generally showed bigger year-over-year gains, while the most expensive counties, located mainly in the West, showed the smallest. The second-quarter-of-2021 condo price gains in oceanfront counties came at a time when the national housing market boom was roaring into its 10th year, with median single-family home and condo prices rising annually by more than 15 percent across a majority of the U.S. Condo values have continued to rise in oceanfront areas amid a combination of historically low mortgage rates and the ongoing appeal of living along or near oceanside communities. “Condos in oceanfront areas appear to be right in the middle of the pack when it comes to the ongoing market boom. Broadly speaking, they are worth close to what condos around the nation are worth and are gaining value at around the same pace as all homes in the U.S.,” said Todd Teta, chief product officer with ATTOM. “We will keep an eye on this trend to see if it changes following the Florida incident.” South Has Most Condo Sales in Oceanfront Counties The Southern region of the U.S. had 69,616, or 67 percent, of the 104,359 condo sales in the 86 counties with sufficient data to analyze during the second quarter of 2021. (The report included condos directly on the waterfront, as well as those inland, in each oceanfront county.) Florida had the most sales in the second quarter (58,404), followed by California (20,042), Hawaii (4,686), South Carolina (4,617) Massachusetts (4,198). Condo Prices Exceed National Median in Half of Oceanfront Counties Median condo prices in 43 of the 86 oceanfront counties with enough data to analyze, or 50 percent, exceeded the national median condo value of $305,000 in the second quarter of 2021. Among the 86 counties analyzed, the highest second-quarter median condo prices were in San Francisco County, CA ($1,175,000); San Mateo County, CA (outside San Francisco) ($915,500); Kings County (Brooklyn), NY ($876,250); Marin County, CA (outside San Francisco) ($723,000) and Santa Cruz County ($693,500). In the South, the highest second-quarter median prices were in Walton County, FL (along the Florida panhandle) ($475,000); Monroe County (Key West), FL ($465,150); Nassau County, FL (north of Jacksonville) ($416,750); Baldwin County, AL (east of Mobile) ($351,563) and St. Johns County (St. Augustine), FL ($329,414). Condo Prices Up More than 20 percent, Rising in Majority of Oceanfront Counties Median condo prices increased by at least 20 percent from the second quarter of 2020 to the second quarter of 2021 in 47 of the 86 oceanfront counties with sufficient data to analyze, or 55 percent. Median values rose by at least 30 percent in 28 of the 86 counties (33 percent). The largest increases in median home prices from the second quarter of 2020 to the second quarter of 2021 were in Pasco County, FL (north of Tampa) (median up 245 percent); Galveston County, TX (up 102 percent); Indian River County (Vero Beach), FL (up 68 percent); St. Lucie County (Port St. Lucie), FL (up 66 percent) and St. Johns County (St. Augustine), FL (up 61 percent).

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Will There Be a Flood of Post-Pandemic REO Volume?

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Plenty of Signs Point to a Healthy Real Estate Market in 2022 by Andrew Oliverson If there is one word that explains the real estate-owned (REO) market over the last eighteen months, it’s “ambiguity.” Since March of 2020, protections have been in place for homeowners impacted by the COVID-19 pandemic. Under the provisions of the CARES Act, borrowers with a pandemic-related financial hardship and a government-backed mortgage were entitled to up to 12 months of forbearance, allowing qualified homeowners to defer their mortgage payments for up to a year. In the following months, the Federal moratorium on single-family foreclosures and evictions was extended numerous times. While the current moratoriums expired as of July 31, 2021, a number of federal entities have either extended or issued new guidance. The latest Federal Housing Finance Agency (FHFA) extension applicable to evictions is set to expire September 30, 2021, with additional protection against foreclosure for post-COVID defaults put in place by the Consumer Financial Protection Bureau (CFPB) through the end of 2021.   What Have Moratoriums Done to the REO Market? Overall, moratoriums have accomplished their goal of protecting homeowners affected economically by the pandemic. They have allowed homeowners who may have been unable to pay their mortgage to stay in their homes, preventing mass foreclosures and a potential housing market crash. In fact, the moratoriums may have even strengthened the real estate market by keeping supply tight. According to the Radian Home Price Index (HPI) provided by Radian’s subsidiary Red Bell Real Estate, LLC, the number of existing homes on the market in the spring of 2021 was more than one-third lower than at the same time last year, driving prices up at an annualized rate of 10.7 percent in the first half of 2021. The Federal Reserve cited forbearance programs as a contributing factor to the unusual strength in home prices, finding that “on average, the availability of forbearance during the pandemic increased house price growth by 0.6 percentage points between April and August 2020.” Prior to the pandemic, foreclosure activity hit a historical low of 0.5 percent—about half the typical foreclosure rate, according to ATTOM Data Solutions. Foreclosures are a natural part of a healthy real estate market, as some folks will overextend, take unnecessary risk or will simply encounter circumstances that won’t allow for payments to continue. Under normal conditions, foreclosures help release supply into the real estate market by way of foreclosure sale or REO listing, which in turn helps regulate prices. However, for more than a year the foreclosure and REO market has been dormant due to the moratoriums. As moratorium deadlines loomed time and again, servicers and REO managers continued to brace for the anticipated influx of volume. Yet, as each deadline approached, the government continued to extend protections as the pandemic evolved. The only thing that is certain is that the protections will end at some point. The question is, what will be the outcome when that finally happens?  Expectations for Post-Pandemic REO According to the Mortgage Bankers Association, an estimated 1.74 million homeowners were in forbearance plans as of July 18, 2021. The Washington Post reported that “although the percentage of homeowners surveyed [in the Census’s Household Pulse Survey] who were behind on their mortgage has declined from 7.8 percent at its peak in mid-December to 4.7 percent in early July, the share of delinquent homeowners who experienced a loss of income due to unemployment has increased to 14.5 percent.” This is bound to result in some default activity when all protections are fully lifted. However, there are several reasons to believe the foreclosure rate won’t be as high as initially anticipated at the onset of the pandemic.  First, even as the foreclosure moratoriums have been lifted, there are safeguards in place issued by the CFPB. Prior to the end of 2021, guidelines from the CFPB will ensure that only those loans that were in default pre-pandemic or are vacant and abandoned will have the foreclosure processes initiated. The CFPB has made it very clear to servicers that being “unprepared is unacceptable.” It is hard to believe that a servicer would take an aggressive, liberal approach to the guidelines and rush to foreclosure on a loan that doesn’t fit the guideline box exactly. While foreclosure activity can resume as of August 31, it’s unlikely that this resumption will result in a meaningful volume of REO.    As home prices have risen strongly over the past eighteen months, homeowners have gained significant equity. Distressed homeowners will likely be able to sell for a profit when their forbearance period ends, rather than go into foreclosure. And the tremendous market demand from investors and first-time homebuyers will benefit these sellers as well. There are many deep-pocketed investors currently queued up to buy and rehab properties as soon as they hit the market. In addition, the millennial generation’s appetite for homeownership continues to gain momentum.  The National Association of Realtors estimates that there is still a shortage of five million single-family homes, compared to 1.74 million delinquent mortgages. It forecasts that “foreclosed homes coming into the market will not cause a glut and price declines but will help alleviate the tight housing supply and lead to slower price appreciation.” This may be a godsend for many prospective homebuyers who have been edged out of the market over the last year due to low inventory and price appreciation. We are already beginning to see hesitant property sellers coming off the sidelines in anticipation of new inventory coming onto the market as forbearances end. New construction is also ramping up, as supply and labor shortages ease. Housing starts rose 6.3 percent in June to the highest level in three months, according to Commerce Department data.  The bottom line is that it will not be until 2022 or later before we get back to pre-pandemic foreclosure levels, and in the meantime, we should see home price appreciation begin to moderate. As the moratoriums are eased  and new inventory comes on the market, sellers

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Provo, Utah

  A Hot Market Still Heading Skyward   by Carole VanSickle Ellis In Provo, Utah, the city motto is “Welcome Home.” However, homebuyers report, it is becoming increasingly difficult to actually get to the point of putting out the welcome mat in today’s extremely tight housing environment. Of course, for real estate investors, that just means creative thinking is more important than ever in this market. With homes only staying on market for an average of six days in July 2021 (down from just 17 days in May 2020), buyers able to generate leads on properties before they hit the market have the best chance of getting an investment deal done.  According to local realtor and investor Roger Jacobsen, the market in Provo is full of opportunities for fix-and-flippers in particular. Jacobsen, who currently has two flips in his sights (one of which is his own house), said local population and economic growth make Provo a particularly good bet for investments right now. “We expect Utah County [where Provo is located] to grow 157 percent in the next 50 years,” he explained, adding, “It will be amazing.” That population growth will be due, in large part, to people living outside the state moving into the Provo area. In fact, about a half a million Californians were at least browsing the Utah Association of Realtors’ website during 2020—far more potential buyers than the state has available homes. Utah County added 135,000 new residents between 2010 and 2019 according to the U.S. Census Bureau, and the area is burgeoning with pandemic-related population growth as well. With property values skyrocketing upward more than 30 percent year-over-year, buyers from areas of the country with higher costs of living than the cost of living in the Provo area will likely have the best shot at winning a bid and making it to the closing table. In Utah County, the median home price exceeded $450,000 in May of this year. Many local builders say they will be unable to complete construction projects that might alleviate demand because lumber prices are up nearly 400 percent.  “The frenzy of home-buying and renovation activity in Utah and around the country, driven by consumers throwing off the shackles of pandemic-induced home isolation, skewed the market,” observed Utah InDepth journalist Katie McKellar in May. Around the same time, Wells Fargo economists warned that an “affordability migration” will continue to send more buyers into areas like Provo in search of new construction and existing homes.  A Perfectly Positioned Emerging Luxury Market Provo’s geographic location and high quality of life are attracting luxury buyers to the area in droves. In fact, the Wall Street Journal and Realtor.com recently ranked Provo as the leading emerging luxury market in the country based on their jointly produced Emerging Markets Index. Danielle Hale, chief economist for Realtor.com, explained the index is intended to help users identify “good places to buy homes because the housing market is doing well.” However, she went on, “It’s not just about the housing market. It’s about being able to enjoy life there, and that is true for these luxury markets.” Analysts from WSJ and Realtor.com assessed prosperity in 60 markets by evaluating growth in housing supply and demand, median listing prices, unemployment, wages, a cost-of-living measure, small businesses, amenities, and local share of foreign-born residents.  Provo’s emerging technology corridor, dubbed Silicon Slopes and headlined by a 501(c)(3) nonprofit by the same name, adds a powerful incentive for buyers interested in Provo’s already-attractive luxury real estate tier. Thanks to Utah’s four distinct seasons, proximity to the Rocky Mountains and national parklands, and temperate climate, residents can enjoy skiing, hiking, and rock climbing from any location in the Provo area. With the COVID-19 pandemic continuing to affect every aspect of life and causing more and more businesses to postpone employees’ return to physical offices in part or completely, the allure of Provo’s natural wonders and relatively lower cost-of-living is drawing in many affluent buyers planning to relocate permanently. Local agents and investors report multiple offers on multimillion-dollar properties starting last fall, noting properties with proximity to natural amenities and a good view were particularly attractive.  Hale warned that trends in the luxury market tend to be more of a “wild card” for investors than in other tiers of the market because buyers have more discretionary income and make choices based on different priorities than more conventional buyers. Investors acquiring properties in the Provo area should carefully evaluate both how the luxury market is performing since those homeowners will directly affect the local consumer economy and jobs market and how the numbers may be skewing values for less-expensive housing.  “A lot is going to depend on how much those [luxury buyers’] priorities stick with us and how much some of the flexibility people enjoy now becomes the normal way of doing business,” Hale explained. She added that currently markets like Provo that are “a bit more remote and that have a high quality of life” are the most attractive to most homebuyers at all affordability levels. “It is a reflection of how people’s demands have shifted because of the pandemic,” she said.  Edging Out Utah’s 24-Hour Metropolitan Option In keeping with the trend of shifting priorities, it appears that Provo’s rental market is also likely to continue seeing substantial growth—to whatever extent local inventory can accommodate it—as Salt Lake City renters join their West-Coast counterparts in heading for the slightly-more-rural areas of Utah. According to ApartmentList.com, more than one-third of renters in Salt Lake City are currently searching for apartments elsewhere, and about one in five of those renters are investigating their options in Provo. Analysts are calling the movement an “urban shuffle” rather than an “urban exodus” since many households are moving to less expensive, more geographically pleasant locations but still prioritize remaining within a reasonable commute of the city.  Naturally, rising demand for rental properties is driving rental prices up, and some analysts say Provo is rapidly losing whatever relative affordability it

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In the Business of Building Successful Entrepreneurs

Property Management Inc. Takes the Industry Bigger & Better by Carole VanSickle Ellis In 2008, there was not a household brand for property management. Steve Hart, CEO and founder of Property Management Inc. (PMI), and his team have spent the last 13 years changing that. “When we started, there was no national name for property management that could be found in all 50 states, in multiple cities, that could serve the investor with investment properties in multiple markets,” Hart explained. “We started PMI because the property management industry is very fragmented. Most property management services are small and are creating their own systems rather than operating using a global structure and universal training.” Hart and his business partners believed that emerging technology in the mid-2000s could change the face of property management, optimizing performance for both real estate investors and individual property management companies. The result of that vision was PMI, a property management franchise that provides expert property management across four distinct “pillars” in the management industry. “Our pillars provide owners with service options that build value and increase investors’ and property managers’ ability to build value in their portfolios and businesses,” said Randall Henderson, vice president of PMI’s Commercial and Residential Management Programs. Henderson joined PMI in 2014 and played a key role in building and running the two pillars under his supervision. Without the systems PMI has in place to keep property management predictable and reliable in unusual and unforeseen situations, 2020 and 2021 could have looked very different for many PMI franchisees. “Very early in the timeline of the COVID-19 pandemic, we were working with our franchisees to discuss how to work with investors and residents to help them deal with the challenge. As a result, our rent collection through COVID-19 stayed above 95 percent – higher than many other property management groups,” Henderson explained. In fact, the company added more than 80 residential franchise companies and gained more than 4,000 total doors managed during the pandemic. “As of August 2021, our rent collection is nearly back to the 99 percent pre-COVID levels, and that means great returns for our investors,” he concluded. Creating Successful Entrepreneurs & Supporting Investors Although there are a number of companies that bill themselves as “national” property management companies, PMI distinguishes itself from the crowd in large part by its dedication to its franchisees. “We are in the business of building successful entrepreneurs,” said Danessa Itaya, who serves as president at PMI and has a long career of developing and implementing marketing programs for franchisees. “We work with many candidates that come to the United States wanting to open a business and relocate their families to the U.S. for a better way of life. We love hearing their success stories,” she added. Because PMI focuses heavily on its franchisees’ ability to deliver top results to clients, the company does not simply release new franchise owners into the industry once they have “signed on” to run a franchise. In fact, explained Blake Sanford, director of association management at PMI, the key to PMI’s success rate lies in the extensive training every new franchise owner receives before entering the field and in the long-term support they receive while running their franchise. “When it comes to PMI’s franchising, a lot of people join because they do not want to invent something from scratch that has already been invented,” Sanford explained. “We are able to provide them with software, management tools, training, and technology they would never be able to access [and therefore would have to cobble together] on their own.” The ability to scale and ease of scaling become particularly important when franchisees who already have property management companies join PMI and fold their existing businesses into the new business. Many independent or “mom-and-pop” property managers opt to convert their existing companies to PMI franchises as they grow in order to access tools, software, systems, and training they might otherwise be compelled to develop on their own as part of the expansion process. Most importantly, however, no one “goes it alone” whether they have been in the industry for decades or only a few days, and new franchisees must complete the training in their specific “pillar” prior to beginning operations as a PMI franchise (see sidebar). “Every entrepreneur in our brand is assigned a professional franchise business coach who leads them through rigorous training before they can be added into any pillar of the PMI business,” explained Marianne Heder, PMI’s director of short-term rentals. “They become fully operational when the PMiWAY systems and operations have been fully incorporated, and then the exciting part begins.” Heder’s “exciting part” is the growth and expansion of the franchise owners in the brand as the “PMiWAY System” sinks into every aspect of the property manager’s operations. For example, one franchise owner joined PMI with the goal of expanding their current operations by offering a full-service property management for short-term rentals. Their business was thriving, but they were nearing their capacity to grow due to lack of scalable systems and tools. “We call this a ‘property manager stuck in transition,’” Heder said. The company came in under Heder’s pillar in order to expand into the “front-end” portion of short-term rentals: selling services, managing reservations, and maximizing the value and ROI for their clients’ real estate assets. The company’s client base spiraled upward as existing clients enjoyed more value offerings and the franchisee, with PMI’s guidance, began bringing in a high volume of new clients. “They took their experience managing the ‘back end’ of short-term rentals and combined it with the ‘front-end’ systems we use at PMI,” Heder said proudly. “They are now among our top producers because they took our coaching and our systems and incorporated them into their existing model to become extremely successful.” Moving forward, if the franchise elected to bring in another pillar of management they would first need to go through PMI’s “pillar-screening process,” be approved for pillar diversification, complete their training and coaching

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Solving Economic Vacancy by Rewarding Renter Behavior

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Investors Need to Outperform the Market by Rowland Hobbs For every real estate investor, a common challenge is trying to predict the difference between gross potential rent and the actual rent received at the end of the year. At the beginning of the year, in a building with 100 units that average $1,000 in monthly rent, gross potential rent is $1,200,000. However, as the year comes to a close, the actual rent received is only $800,000. The $400,000 difference between gross potential rent and actual rent received is economic vacancy, and being able to both predict and solve for it helps investors improve NOI and property values. Economic vacancy occurs when a resident does not: Move into an apartment as quickly as expected and causes higher marketing costs, concessions, and discounts required to lease the unit as well as longer downtime Pay their rent, causing delinquency, arrears, and bad debt Renew their lease, causing higher make-ready costs and more downtime So how can you take into account and accurately predict renters’ behaviors to avoid vacancy? Change them.  Outperforming the Market A number of highly effective tools are available to help you price units and capture data on the real estate market. However, these tools are designed to help their users perform in-line with the market, not outperform it. To outperform the market, you need a tool that is targeted and will provide a way for you to capture data on your residents to meet their needs, and that optimizes overtime.  This begins with understanding four primary sources of economic vacancy: downtime—the period of time a unit sits vacant; delinquency and bad debt—when a renter does not pay their rent and this money is written off as a loss; make-ready and turn costs—the expense that is associated with leasing an apartment to a new renter; and marketing and concessions—that are either too high, resulting in an unnecessary loss in revenue, or are too low and not producing intended results.  Until real estate owners actively and accurately adopt and deploy tools focused on changing resident behavior through targeted rewards that are personalized to the resident experience, real estate will continue to struggle to reduce economic vacancy. Without reducing economic vacancy, net operating income and property values suffer. Why Current Solutions Do Not Work The current solution to addressing economic vacancy is to give new renters one month free rent, gift cards, or worse, lowering the rent. However, these incentives do not enable rental communities to outperform the market because they are not designed to change renter behavior. These offers are so common that they do not stand out in listings or in ads and often confuse renters when they are presented as “net effective rent.” Additionally, these concessions are often allocated imprecisely and not supported by data. The main reason one-month free rent (8.3% of annual rent) is offered is because the rental community across the street is doing so. And if an asset manager had the data to say a concession equivalent to 7% of annual rent would have the same outcome as 8.3% of annual rent (1-month free) there isn’t a practical way to implement it; “26 days free” does not exactly roll off the tongue. Real estate needs a simple, effective reward for renters that incentivizes specific actions. As with any sophisticated rewards and loyalty program, the reward should be supported and optimized by data, understood by the target market, and be efficient in terms of achieving a desired outcome at a reasonable cost. The primary tool to avoid resident arrears are penalties and eviction. These penalties create a negative relationship between you and your renter. Also, the penalties only truly work once the problem exists; they do little to prevent the problem before it happens. Instead, increase your resident’s propensity to pay before they even move into your apartment. A reward that gives residents something back each month when they pay their rent lowers bad debt.  Such a reward lowers bad debt for two reasons. First, a regular reward gives residents a reason to pay each month because they get something back. Second, as with other loyalty programs, rewards tied to paying rent on-time will enable you to identify the most loyal and profitable residents. If a resident sees a listing with a reward tied to paying rent on-time, they are only going to be interested in the offer if they are confident they will be able to pay their rent. This dynamic then attracts more profitable residents to your rental community. These factors increase a resident’s propensity to pay and reduce economic vacancy from bad debt.  Give a Reason to Stay When it’s time to send a resident a renewal offer—especially with rising rents—it’s challenging to make it enticing, causing high rates of turnover. The resident just spent 12 months living in an apartment, paying rent on time, and they don’t have anything to show for it. Even worse, residents are often “thanked” for their time in the apartment with a rent increase, one that can be quite high if the resident had one month free in their initial lease. All of this creates a negative experience for the resident causing less renewals and increasing make-ready and turnover costs. Give residents a reason to stay and increase renewals, in turn reducing make- ready and turn costs and lowering vacancy.  Economic vacancy is a complex and costly problem in real estate. There has yet to be a comprehensive solution to address it in a way that enables you to outperform the market while improving NOI and property values. Rewards that incentivize your renters and residents to take a specific action to reduce economic vacancy and are optimized with data and technology, achieve better outcomes and reduce economic vacancy.

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