By: IvyLee Rosario, Multi-Housing News
Whether you’re rebranding an older property or looking to lease up a new development, emphasizing your marketing and property management effort is a successful way to get the most out of your investment.
There are, however, differences between the two. Although you can’t have one without the other, there might be instances where you’d want to invest more in one vs. the other to bump up your chances of achieving the highest NOI. Here are a few points to consider along the way.
“It really comes down to what asset class you’re in to really break even in terms of how much you’re spending,” Joshua Young, vice president of market rate operations for Clinton Management, the property management affiliate of Douglaston Development, told Multi-Housing News. “If there is money spent on marketing and it creates a positive effect on income, there is a delicate balance on how it effects NOI.”
As an operator, you need to have a well-thought-out strategy for maintaining high renewal rates and attracting new residents. Sure, elaborate marketing tactics can bring in new people, but that can’t take precedence over retaining the ones you already have.
It is critical for companies to be revenue-focused and consistently look to identify unique strategies to increase asset value, said Gina Fortune-Harmon, vice president of Property Management for The Habitat Co. But the goal is also to manage costs without sacrificing anything around the resident experience.
In order to figure out where to invest your money the most in order to grow your NOI, it’s important to take a look at what asset class you have and what stage your property is in: Is it a new development, a value-add project or a rebranded property? These are examples of communities that will have different strategies and will require a larger focus on either marketing or operations.
If you already have a relatively successful property with a positive retention rate and leasing percentage, then property management is where you might want to invest more of your money and time—and investing in your team is key to ensuring a smooth operation. Hiring a diverse group of individuals with a variety of backgrounds will help cater to the ongoing needs of your current residents and potential ones.
“At the end of the day, your on-site team is closest to the prospect and the resident; they are the face and voice of your property,” Chris Coleman, vice president of development for Wingspan Development Group, told MHN. “A strong property manager can overcome weak marketing, but strong marketing will be wasted with a weak property management team.”
In addition to your staff, engaging residents in your operational efforts will make them feel included and also help boost morale across the community. Allocating some of your budget toward resident programming is a great way to cater to their wants and needs at the property.
“I believe that marketing to our current residents is where the most efficient marketing spend lies,” said Tim Kramer, vice president & director of operations and management services at Draper and Kramer. “It takes quite a bit of effort to get the attention of someone out looking at the entire marketplace,” he noted, “but it’s relatively easy to do right by the folks that are already living at your property.”
UPPING YOUR MARKETING TACTICS
If you are rebranding, taking on a community that needs a lot of work, or are building from the ground up, then shifting your focus to marketing the property will make the most sense.
“We have noticed from experience that our initial investment in creating a brand and a sense of community is money well spent, and we get the best return that way,” Young said.
Specializing in ground-up developments, Young noted that it’s important to build a brand but not to overdo it. “You can spend money creating this illusion but you can’t lose sight of what’s happening on the ground,” he added.
When rebranding or implementing a value-add strategy, marketing can help you identify your target demographic and how to reach those people. It also strengthens your position in the marketplace and helps create content that drives interest to increase occupancy and NOI.
“Marketing and customer service are in lockstep… marketing adds value by creating the connection between people and the product,” Fortune-Harmon noted.
In order to get the most out of your marketing strategy, look for multifaceted investment opportunities in partnerships or social media that will allow your property to stand out amongst the competition. You can also include current residents in your marketing efforts, by gathering feedback through surveys and allowing them to review the property and share the word.
“This is a much more efficient spend than broadcasting a ‘live here’ message out into the blind, hoping for a response,” Kramer said. “Plus, there’s an added benefit when your residents like living at your community—they become marketers and ambassadors.”
Reinforcing certain staples across both your marketing and operations strategies will promote NOI growth no matter what type of community you are working on.
“Effective marketing is the spotlight that shines on your property so the world takes notice and decides to pay rent,” added Coleman.
Marketing is critical for getting the word out about what your new community has to offer to prospective renters and the neighborhood as a whole. But property management is vital for keeping your asset running from the ground up, with a focus on retaining current residents. The key factor in the marketing vs. operations showdown comes down to spend efficiency.
It’s important that your staff understands the cost of marketing compared to resident turnover, how many new leads are generated, and the possibility of new leases signed. Both the marketing and operations teams need to apprehend and track all of these pieces in order to yield results on your NOI.
If you feel you aren’t getting your money’s worth, it’s okay to switch directions and experiment with new strategies. But keep in mind that spending more doesn’t necessarily mean you’ll achieve more—so start small and cater to one idea at a time to see what works best for your community and operational goals.
“You can’t overpromise and underdeliver. You need to balance and back up what you’re putting out there,” Young said. “The consumer is very educated, the market is transparent and people can’t be pushed into making decisions. It’s important to be smart about your messaging and how it’s delivered.”
Chris Coleman, VP of Development at Wingspan, periodically shares his thoughts and observations on property development news.