Whether 2012 keeps its mojo or loses its heat, these five tactics will be your key to beating the market.

Demand may dwarf supply; the economy may show signs of life; holders of cash may be falling all over themselves to invest it in new and improved multifamily communities; homeownership may even lose its dominance as the American Dream incarnate. Still, as any smart property manager can tell you, a good year is made, not born.

Like early 2011, this year’s onset has shaped up like gangbusters—fundamentals, sentiment, and economic drivers are kicking in nicely. However, also like last year, property managers are going to have to navigate some tricky, possibly treacherous, waters to bring in the payload owners and stakeholders expect.

Caution? Last year, the pros called for average rent growth of more than 4 percent nationwide. Properties here and there achieved that kind of growth. Most didn’t. Overall effective rents grew by an average of just 2.3 percent last year.
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What’s more, the gremlins that bedeviled 2011 haven’t gone anywhere. Economists still worry about a debt crisis in Europe and conflict in the Middle East. Politicians fight in Washington—and it’s an election year. What if the “recovery” this year turns out to be as mediocre as last year?

Some property managers succeeded in last year’s up-and-down environment, plodding along in the toughest real estate markets and winning strong rent growth in the nation’s growing number of solid markets. Many interviewed for this story saw average rents grow by 4 percent or more throughout their portfolios. Here are five critical tactics that helped the winners overcome market obstacles, and what other managers and owners should do to optimize their property out-performance in 2012.

Power Up Your Rents
The decision to raise rents can be fraught with worry—especially in tough economic times. Residents can always look for other options, resulting in more empty apartments. But computerized revenue management systems  Lease Rent Options are helping to dispel the anxiety. The programs, designed to help property managers set rents, employ industry-standard variables such as vacancy rates to help make the rent decision.

This year, in most markets, low vacancy numbers will lead landlords and their revenue management systems to push rents, despite the cloudy economy, with a promising fourth quarter 2011 revealing that the average apartment vacancy rate nationwide had fallen to 5.2 percent. That’s the lowest it’s been since 2001.

And it’s not just a majority of markets that improved. Every apartment market tracked had fewer vacant apartments and higher average rents over the year ending in the fourth quarter of 2011.
With trends like this, managers can trade slightly higher vacancies for higher rents—and still improve revenue overall.

Go Young
Experts say roughly a million young people graduate from college every year, and these ex-students are doing surprisingly well despite the tough times: The unemployment rate for college-educated people in their mid- to late 20s is now less than 5 percent. It’s become a cliché that walkable urban neighborhoods are more likely than nonurban properties to appeal to these young renters, who are increasingly dominating the rental market. After all, it’s easier to rent an apartment that’s within walking distance of amenities—say, a good cup of coffee.

To attract the Facebook generation, property managers are also focused on social media. TMG maintains a Facebook page in part to create opportunities for residents to make connections. And all the property managers we spoke to monitor any mentions of their communities on websites from Google to Twitter, acting quickly to fix any service problems the sites bring to their attention.

Sell the Service
Property managers succeed, even in the toughest apartment markets, in part by focusing on service.
We try to attract the best tenant we can. That means, in addition to following strict qualifying criteria, maintaining lots of interaction with residents, to continually gauge their needs while building a reputation as a customer-oriented management firm.

Up the Ante
Many landlords are raising rents based on upgrades to their properties—often beginning with highly visible work on the common areas.

The number of new apartments opening will rise in 2012, and rise higher in 2013. Certainly, the number can’t get much lower. Only 37,678 new apartment units came on line nationwide in 2011, the lowest annual figure for new completions in 31 years. Still, new construction is returning, starting with the healthiest apartment markets, and managers of existing apartment communities will have to compete.

Post by Joanne Vanderhoef
Marketing and Media Specialist

The Management Group
Property and HOA Management in Vancouver WA and Portland OR
http://www.TMGnorthwest.com

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