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Renewal Policies & Practicesby Donald Davidoff
Jan 4, 2016
How Do Yours Stack Up?
IntroductionThe multi-family industry spends a tremendous amount of time and money to acquire new
residents, yet typically 50-60% (or more) of a rent roll consists of residents on renewal leases
(i.e. not their first lease at that community). Despite representing more than half of the revenue
of almost all communities, renewal practices are not nearly as transparent as marketing and
other new lease activities. Thus the need for deep research into renewal policies and practices
to help operators determine how their approach stacks up against industry norms.
Methodology During October 2015, we used an online survey to determine various policies and practices with
respect to how multi-family housing implements renewals. The survey was promoted via On-Site.
com, a variety of social media channels, and through D2 Demand Solutions’ blog. This resulted in
348 responses which were then analyzed for this report.
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Executive SummaryHighlights of the study include (details follow in the “Analysis” section):
and two-thirds of respondents claiming renewal rates 55% or higher1. Fewer than 10% of
respondents report renewal rates below 33%
• 45%ofrespondentsuseanautomatedpricingsystem2 although 23% of that group does not
use their automated pricing system for pricing renewals
with portfolios 20,000 to 30,000 units
renewal offers with 15% reporting 120 minutes or more
and discussing renewal offers with residents with 20% reporting 240 minutes (4 hours) or
more and 4% reporting 20 hours or more
saying they do so frequently and 40.0% doing so sometimes
getting any formal training on negotiation techniques
1 Editor’snote:Self-reportedrenewalnumbersaretypicallyhigherthanactualsothatshouldbetakenintoaccountwheninterpretingtheseresults. 2 Thisratevariesdramaticallybysizeofportfolio.SeeAnalysissectionfordetails.3 This rate may be high due to sample bias as the com-munication method for getting the survey out involved more On-Site customers than other users.
and more than 3 months. This is slightly more balanced than
arecentsurveyreportfromMulti-familyInsiders4 which showed
40% sent 1-2 months ahead.
the rest of the responses are split fairly equally between faster than
that (same week) and slower (one month or more).
The range of residents renewing is quite large with a plurality at 50%
higher than reality as associates may have a gilded view of their own
at one of the author’s former places of employment has tended to
indicate that typically 20-35% of residents will renew no matter what
(due to hassles of moving, etc.) while another 20-35% will not renew
no matter what (due to life changes, etc.), so these self-reported
results are a bit better than that prior research.
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Renewals Sent Ahead of Expiration
Greater Than 2 Months
Less Than 1 Month
Time for Resident Response
Same Month 56% Same Week
A Month or More 23%
Same Day 1%
Slightly more than half of the industry5 is still not using
automated pricing. However, when you consider that only
specific technology, this suggests that we’re almost two-
These results are almost certainly skewed higher than a
random sampling of the industry given that the survey was
parties like On-Site offering multiple alternatives for online
leasing, any property manager who wants to can offer
that service to prospects and residents.
5 By “industry,” we refer to the roughly 10 million “professionally managed” multi-family housing units in the United States.
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Student housing faces complexities not encountered by market-rate multi-family housing companies. With “by the bed leasing” and a very tech-savvy resident base, it’s not surprising that student housing companies are on the forefront of the transition to online renewal processing and leasing. As part of our study, we spoke with two operators who have recently made the transition.
Jennifer Stanton, Director of Marketing for Birmingham Alabama-based Capstone Real Estate Investments and Dawn Duckhorn, Property Support Manager for Memphis-based EDR shared their thoughts and experiences with us. Both have moved to online renewal processing and lease execution in the past year.
Q: How does your current process compare to the past?
JS: Our previous process involved placing flyers on doors, emailing residents and their guarantors, as well as calling, and mailing notices to home addresses. Now we have a “one stop” shop to create and transmit letters electronically. While we still use some of the other tactics, we’ve found that students have embraced the electronic process and are much quicker to respond.
DD: Once we’re done with August move-ins, we start offering renewals for the next year. Using On-Site’s bulk renewal pricing, we can price and create and send the renewal letter in minutes. Before, we had to create and manage Excel files, run mail merges, and then send through email, flyers and letters.
(Continued on next page.)
New and Renewal
New Only 10%
Use of Online Leasing
Use of Automated Pricing
New and Renewal
New Only 18%
No Online Leasing
to set renewal rates while an equal number put their central
pricing management team in charge of renewal pricing.
Given that 35% of all respondents said they use their
automated pricing system for renewal rents as well as
new rents, the reality is that many of the prices “set”
by community or regional managers are probably first
calculated by the pricing system and then reviewed
While a minority of respondents have systems that allow
them to spend very little time on the mechanics of renewals,
the reality is that too much time is spent on activities that
are mechanical in nature. With pricing systems and online
no time on creating and delivering renewal offers freeing
that time up for higher value customer service activities
—and following up and discussing renewal offers when
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Q: What were the key benefits?
JS: The upfront time savings and added efficiency are key benefits. Reaching everyone at the same time is critical especially when our first tier of renewal offers is limited to say 1 5 people. Some of our properties are 500 or more beds. Because everyone is notified using the bulk function, there are no unfair advantages. The reporting dashboard makes follow up easy saving us hours we can use to focus on events and service instead of administrative duties.
DD: We saved at least one week (40 man hours) per property in the initial administrative work to send the offers. When we include follow up with residents regarding their renewal, it’s probably double that.
Q: What other benefits did you see?
JS: There were several. We now offer a 1-page online renewal rather than requiring a physical signature on a new multiple-page lease. We can continue to work leases over the 4- to 6-week winter break periods at many of our schools whereas we used to be limited by our inability to physically meet with students and collect signatures. We’ve also found that the online dashboard has saved us time in tracking. At the corporate level, we’re able to see a live view of what’s going on and can monitor that and work with the team a lot easier than manual systems.
DD: Now there’s a lot less room for human error. Also, we save time and hassle for ourselves and our residents since they can still review and execute renewals after hours.
(Continued on next page.)
Renewal Pricing Authority
Pricing & RM
Corporate Owner Other0%
to encourage renewals while 40% use them sometimes. Only 14% use
them frequently. This could be an interesting area for future research
—i.e. running a controlled test on incentives to see if the gains from
offering them more than make up for any cost of the incentive.
less than 20% of the offers result in negotiations. Only 13%
of respondents report negotiation rates over 40%.
Not surprisingly, when negotiations occur, it’s mostly related
to the amount of the increase or the fact that current rent
is close to, or higher than, market price. However, a material
percentage of respondents are willing to negotiate with their
“best” residents—i.e. those who are long tenured, have paid
on time, caused no issues, etc. Not surprisingly, other key
Q: Lastly, were there any surprises you’d like to share?
JS: Renewal transfers (for example when a student wants to move from 2 bedroom to 4 bedroom) couldn’t be completed through the renewal offer letter. But we knew that and had a work-around plan in place.
DD: The biggest thing the first year was that residents would accept an offer but then not realize they still had to sign the lease. So we had to follow up to get them to sign the lease…telling them they had accepted but not actually executed the lease.
This year, we really marketed heavily about the need to execute the lease online, and now most residents are doing that. n
Use of Incentives
% of Offers Negotiated
Despite the large number of communities who engage in at least some
negotiation, a surprisingly few have ever been given negotiation
training. This is clearly an area of opportunity for most operators.
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typically come in the same month as when renewal offers are sent, this gives operators more
more frequently than they are.
of an online leasing system.
outweigh the costs.
Acknowledgments The authors would like to specifically thank the sponsors of this white paper, On-Site, for their
support. We would also like to thank all the hard-working site and corporate associates who
invested time in responding to our survey.
industry working in both market rate housing and senior independent living.
15+ years has been to bring data analysis and data-driven decision making
in sales, marketing, customer engagement and associate workflow.
About D2 Demand Solutions, Inc. D2 Demand Solutions finds its niche where technology and people meet. We have decades of
or associates (or all three). We’ve implemented game-changing programs in pricing and revenue
management, eCommerce and internal workflow. We know how to design and build systems that
are more intuitive, how to manage cultural change and how to train a modern, adult workforce.
About On-Site Foundedin1999withtechnologyandservice100%basedintheU.S.,On-Siteisbringingthe
modern technology and a focus on usability. On-Site’s end-to-end platform covers everything from
community marketing and renter qualification to lease contract generation with e-signatures and
directly to the positive side of the balance sheet. For more information about On Site’s leasing
About the Author
© 2016 D2 Demand Solutions, Inc. All rights reserved. This paper may not be reprinted or redistributed without the expressed written permission of D2 Demand Solutions, Inc.
Contact InformationDonald [email protected]
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