There’s been an onslaught of multifamily apartment construction in recent years, particularly in major metropolitan areas. This has left some investors searching for ways to compete with new construction—especially given how amenity-rich these new properties tend to be.
Not every market can handle a rapid influx of new apartments. Tech-driven cities like San Francisco and Boston are projected to fair well given pent-up demand. In these markets, even older properties are fetching sky-high rents.
However, in cities like Tulsa and Charlotte, new construction is at risk of outpacing demand. In these second-tier markets, it could become especially challenging for apartment investors to compete for top-quality tenants. So what’s a landlord to do?
“Differentiate or die” – it’s a term often used by urban planners to help communities rethink their downtown development strategy, but the same line of thinking should be used by landlords and property managers who want their older buildings to compete with the glitz and glamour of new construction. How? Here are a few suggestions:
Play up your property’s best features. This is a no-brainer. Does your complex have incredible skyline views? Do units have high ceilings, floor-to-ceiling windows or are they chock full of historical charm? Whatever the case may be, don’t take these assets for granted. It’s easy to forget all the beautiful features a property contains; don’t be afraid to ask a trustworthy friend to walk through a unit with you and ask them what stands out the most. Be sure to describe these features in your listing ads thoroughly--but remember, whenever possible, SHOW, DON’T TELL! Include well-lit pictures in your listing ads to let apartment hunters see just how great these features are.
Remember that not everyone wants the same type of lifestyle. Sure, the new apartment tower downtown might have a rooftop pool – but you know who else uses that pool? Dozens of residents, guests and….children. For some, this is not a big deal. Others might be looking to spend their weekends in a more laid back, tranquil setting. Show people how your property offers a different type of lifestyle: maybe there’s a private backyard that’s perfect for entertaining or raised garden beds that are just begging for someone to plant seedlings. These are the types of features that stand out to those looking for a simpler, quieter lifestyle.
Make small gestures to show residents you appreciate them. People moving into one of the thousands of newly constructed apartments often feel like a cog in the wheel; their apartment is nothing special, and they’re just one of many renters in that building. Use this to your advantage by creating an emotional connection with existing tenants. Bring them freshly-baked cookies during the holidays. Offer to bring in professional cleaning service for them once a year. Please get to know their names, their families, and their personal stories. These simple gestures help renters feel more connected to you—and the property. It costs far less to retain a current tenant than it does to try to find a new one. Focus on keeping the ones you have.
Don’t be afraid of incentives and renter concessions. While it’s always best to try and keep stable tenants in place, sometimes landlords and property managers have no choice but to search for new ones. If you’re in this situation, don’t overlook the value of incentives and renter concessions. Investigate what other properties in your area are offering. Perhaps a building is offering two months of free rent to anyone who signs a year-long lease, or maybe they’ve reduced the standard one-month security deposit requirement. These concessions can swiftly sway renters who would otherwise have trouble coming up with the equivalent of three months’ rent (first, last and security deposit) all at once. Consider a similar approach. Alternatively, get creative! Offer tenants a $500 gift card to a local grocery store, or offer to pay their cable and internet bill for the first year of their lease. These small costs can make a big difference in terms of landing a quality tenant at the rate you’re seeking.
Consider investing in the pricy remodel you’ve been putting off. The strength of the rental market in recent years has made it easy for landlords and property managers to kick the can down the road instead of making investments in their properties. Interest rates are still low, and property values are up; consider pulling out some of the equity in your portfolio to make big-ticket improvements. Nowadays, renters consider granite countertops, stainless steel appliances, everything name-brand, and energy efficient, to be standard. Some communities install charging outlets with USB ports along with Smart Controls for heating and cooling. Larger complexes might even consider transforming underutilized spaces into amenities that have become common in newly-constructed multifamily properties, like fitness rooms, entertainment centers and clubhouses that can be used for complex-wide events (wine tasting, anyone?!) or rented out by tenants.
Upgrade your amenity package. With Amazon’s “brown box” revolution, many communities have added onsite storage centers. To foster more connecting and better resident communication, some communities have apps that they use internally for a variety of purposes. Often recycling mandates are in place. Cities like San Francisco, have Zero Waste initiatives around composting, recycling, paper, and cardboard. NationalDoorstep.com provides turnkey options to remove bagged and tied trash and recycling from apartment doorsteps. The benefits are enormous as communities are left as the developer intended and local mandates are met.
At the end of the day – DON’T STRESS OUT. Remember that there will always be competition for renters and embrace the challenge! Housing is something people will always need. Now it’s up to you to position yours as the housing they want.