Written by Rachel Farrow
Are you experiencing inconsistent rent growth, underperformance in your market, persistent vacancy issues, or lack of turnover at your property? These are signals that your property may need to implement a revenue management program. In this post, we’ll explore how addressing these challenges through revenue management can optimize your property’s performance, and debunk some common myths along the way.
Myth: Revenue Management is Simply Automated Pricing.
Let’s start by defining revenue management in the multifamily space.
While pricing is fundamental, revenue management models go beyond automated pricing. They leverage historical data, real-time supply and demand, market insights, and more to forecast potential shortfalls or advantages. Revenue Managers act as conductors, establishing and maintaining parameters tailored to your property’s unique goals and needs. This customization ensures that the platform optimizes rates and lease terms effectively.
Property management companies that manually set prices often struggle to keep up with market or seasonal changes, fearing they may miss out on maximizing revenue. Revenue management platforms can stabilize pricing by predicting and reacting to unforeseen changes in supply or demand more quickly. This strategic approach not only helps measure performance based on comprehensive data but also prevents overreactions, ensuring adjustments are precise and strategic.
Myth: Revenue Management Platforms are Useless When Your Property Rarely Has Vacancy.
Consistently high or low vacancy rates are clear signs that your property would benefit from revenue management. Limited turnover can mean missed opportunities to increase rents. A revenue management program can adjust renewal rates strategically to capitalize on these opportunities, bringing units closer to market or stimulating turnover to higher-paying new lessees. Conversely, if you're finding it challenging to keep your units occupied, it's likely that your pricing strategy isn’t aligning with market demand. Revenue management platforms analyze market conditions, competitor pricing, and other factors to set optimal rates.
Myth: Revenue Management is a Set-and-Forget Tool.
While revenue management offers convenience, it's not a set-and-forget solution. It’s crucial to have a dedicated team monitoring and managing the platform to ensure that it aligns with current goals and exchanges accurate data with your property management system (PMS.) If you're using a revenue management platform and still facing challenges with rent growth, availability, or market volatility, you may benefit from the services Revenue Edge provides. Not only do our Revenue Managers continuously monitor and modify platform settings to align with current priorities and goals, but we also place a great emphasis on incorporating data that is shared by your on-site teams and corporate executives.
Revenue management is more than just setting prices; it’s about leveraging data and insights to optimize performance in multifamily properties. If you’re encountering rent inconsistencies, market underperformance, or vacancy issues, consider revenue management as a strategic tool to address these challenges and enhance your property's profitability. Need help evaluating the revenue management platforms available in the industry? We’d be happy to help.
