“ASK KARI”: Renting Challenges

“ASK KARI”: Renting Challenges

By Kari Negri, Chief Executive Officer, SKY Properties, Inc., and McKenzie Ehrhart

Dear Kari,

I’m having trouble renting my vacant unit. What am I doing wrong? Should I lower the asking rent? What should I do?

The Vital Importance of the Market Survey

Whether you have a brand-new building with a complete lease up, or an existing building with a new vacancy, conducting regular market surveys are vital for maximizing your “ROI” (return on investment). A market survey will help you to answer some of the following important questions: What are our competitors doing? Are the rents you are charging too low? Can a small feature or amenity be added to increase rent? Market surveys can answer these and many more important questions. 

To begin your market survey, you need to know the details of your property in exactness such as square footage of every “nook and cranny,” each amenity offered, types of appliances, unique details that make your property stand out, etc. It will be difficult to find an equivalent comparison if you do not know your building’s specificities. Checking the surrounding area is crucial when deciding what your competition is. If your building is in an area with specialty shops, a famous theatre, etc., you want to find your competition placed in a similar neighborhood location.

Many people merely just check postings online to see what apartments are being listed for in the general vicinity. That would be WRONG approach. To truly know for sure if your rental units are priced comparatively, you must shop in person by visiting the competition! Pictures are not sufficient to decide if your buildings is similar. If you have ever been on a blind date and the person who shows up looks nothing like their picture...you know what I am talking about here. It is important to pay close attention to how fast people respond to your requests to tour a vacant unit and their attitude. That could be the reason someone chooses your building over one that is similar, not to mention its cleanliness! These are all factors that necessitate in person touring by you.

To maximize your ROI, you always want to “price up.” It would also not be a bad idea to shop for an apartment that might be priced a bit higher to see if it might make sense for you to modify your units and/or make upgrades to your property. Cost analyses are helpful in deciding whether to do this. For example, if you want to upgrade the carpet in the bedrooms to laminate flooring, you need to factor in that cost and compare that to the increase you may receive in rent and how quickly your investment might be earned back. Not only will you want to make your money back, but hopefully you are able to estimate how much additional profit might be accumulated in a year due to the rent increase. This applies to upgraded appliances, new fixtures, or even adding a murphy bed to a studio!

Lastly, you will want to keep track of every market survey according to building location and characteristics, and unit type. When you update each market survey, you can look back at the previous ones for reference. You should also try to use the same market survey template every time. If you are going to use the same building competitors for comparison, make sure they still qualify as good comparable. It never hurts to double check to see if you had missed a better comparable building previously to avoid the possibility of inaccuracies in your market survey and potentially leaving “money on the table.” Conducting market surveys are vital to achieving improved ROI.

Is Your Advertising Lacking Luster?

According to researchers, people form 11 impressions in the first 7 seconds of meeting you - this is what’s called the “7/11 Rule.” What does this mean? Will Rogers said, “You never get a second chance to make a first impression,” so you always want to leave a positive one. When it comes to property management, advertising equates to that first impression!

Picking the theme of your advertising might reflect your buildings’ color scheme or just overall professionalism. It would be a great idea to look up colors that evoke the mood you are trying to convey. This is where creativity can come into play but should remain cohesive. Look up examples of advertising that catches your eye or that you find memorable and investigate the “why.” Is it the structure? Content? Colors? Keep these in mind when creating your advertising’s theme.

First, make sure the content of the advertising is up to date and accurate. Being up to date and accurate helps build trust. Advertising should always be clear and concise and it should not be filled with too many words or pictures. Let your property do the talking. After all, that is what the potential tenant is interested in! Highlight the beautiful, unique features like a podcast room or wine refrigerator already installed in the kitchen. This could even include distinctive geographical features nearby such as a famous theatre or specialty shops. The key word here is “highlight.” It is unnecessary to include pictures of a smaller closet or an up-close and personal picture of the oven.

Kari Negri is the Chief Executive Officer of Sky Property Management and is a member of the Board of Directors of the Apartment Association of Greater Los Angeles.  Do you have a question for me?  Please send your questions and comments to me at Kari@SKYprop.LA. McKenzie Ehrhart works with Kari.