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Growing Revenue in Multifamily – The Ten Percent Rule  | International Residential Real Estate Investors Association
Tuesday January 23rd 2018

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Growing Revenue in Multifamily – The Ten Percent Rule

I’ve included an article by John Wilhoit in my post today.  Before jumping into John’s article, I’ll add I’ve had great success with this  process to increase occupancy and to increase revenue.

A couple quick examples stand out for me.  John presents the idea of furnished units.  We took advantage of this with minimal furnished units offered on a short term 100% payback.  We achieved higher margins and improved occupancy.  Secondly, considering other  advertising venues is a smart approach as often you can add renter pools that you are currently missing.  The senior center is a great idea as are churches, synagogues, etc.


Often in a given marketplace 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 your 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 vacants, not change the character or viability of the property. Here are some examples on how to apply the ten percent rule:

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. This demographic is more transitional than ever before- and they have income. Some sell homes and move to apartments close to where they have lived for many years. Many are looking to downsize but not leave their long-time neighborhood. Not everyone over the age of fifty going straight to assisted living. Baby Boomers are active in their community and they have income!

Short-term leases. Most operator’s 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. Likely, over one year, the cost will be similar to one month free rent- but note the concession is granted over the term of the lease.

Furnished Units. Get quotes in advance from Aaron’s Rent’s or similar vendors for the cost to furnish a two bed with Living room, Dining room and bedroom furniture only. Corporate rental would require full kitchen and linens (full kitchen is too extensive for a one-off rental). Just stick to offering the furnishings only and perhaps a television. Buy the offered insurance and factor this in your pricing.

Subsidized rents. Most individuals and family’s that have vouchers are good people. Even if you have not previously considered accepting HUD vouchers consider doing so. There are thousand’s of family’s and people of retirement age looking for housing that have a voucher that cannot find a property to accept their money. This in no way implies changing your screening standards. It will require having an inspection and filling out more paperwork than usual for a single lease but accomplishes a public good concurrent with decreasing your vacancy. A win/win.

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. In these economic times, with occupancy below historic levels, management’s best efforts to garner increases in occupancy may not manufacture positive results. As noted earlier, as everyone is continuing to target the same pool of tenants you need to be willing to step outside of the usual box.

For more information on professional investing in real estate please see our blog at: http://multifamilyinsight.wordpress.com

Article Source: http://EzineArticles.com/?expert=John_Wilhoit_Jr

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  1. Real Estate News Growing Revenue in Multifamily – The Ten Percent Rule …: “The IRREIA – Making residential real … http://bit.ly/9nbl9A

  2. Greff Abb says:

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