CLASS is very honored to have guest blogger and Student Housing Consultant Michael Coakley join us to weigh in on the amenity arms race that we are experiencing in Student Housing.  We would like to thank Michael for his great insight into the features and amenities that truly ad value for Student Housing developers.

THINK BEYOND THE WALLS OF AN APARTMENT:  BY MICHAEL COAKLEY

At the recent BISNOW conference in Philadelphia, several of the panelists, including me, expressed concern that some college and university markets are being overbuilt with properties that offer high levels of amenities.  Granite countertops, stainless appliances, resort style pools, and extensive fitness areas are norm in many new off-campus properties catering to the college student population.  While these premier properties are appealing, there is a finite percentage of the student population that can afford to choose to stay in such a property.  There is even a larger percentage of the student population that is looking for more affordable accommodations within close proximity to campus or with mass transit close by.

As the 21^st Century Project determined students are driven by the following: privacy, technology, community, and sustainability.  2/2s and 4/4s will continue to appeal to the majority of the student population.  Units that provide the greatest degree on technological integration with their multiple devices will be valued.  A property that encourages and promotes the development of community will stand above the rest of the competition.  A property that promotes sustainability via energy efficient heating and cooling; easy to access recycling;  ease of bicycle parking/storage; and the use of sustainable products in all aspects of the operation will have a market advantage with the generation of students who are now attending institutions of higher education.

At the same time, students and their parents are becoming much more astute customers.  What makes your offering stand out above the competition?  Instead of offering a free month’s rent, or a chance to win the latest and greatest techno toy, or the opportunity to have a unit that faces the pool, consider what adds value to both the student and their parents.  Instead of requiring it, why not offer renter’s insurance as part of your rent?  In addition to providing washers and dryers in units or in close proximity, why not offer a weekly laundry service pick-up and drop-off with one of the local businesses?   Depending on your location, why not provide free shuttle service to and from the local airport during holiday season?  The opportunities are endless on how you can make your property stand above the rest of the market at a relatively low cost but will be viewed by students and parents as being invaluable.  Students and their parents are seeking more than just an apartment, they want an experience and value.

Michael J. Coakley

Coakley and Colleagues, INC

You can reach Michael at michael@coakleyandcolleagues.com

Coakley and Colleagues, INC, is a consulting firm focusing on higher education, with a particular focus on student housing both on and off campus.

www.coakleyandcolleagues.com

    Marketing drives sales; it’s as simple as that. And as a company that specializes in apartment lease-ups, we know that when marketing is done consistently and correctly it will increase traffic and therefore increase leases. But that shouldn’t be news to you. What should be news to you is that you’re probably doing it wrong.

In the apartment industry we see a lot of the “let’s throw it out there and see what sticks” mentality. No one is really sitting down to think their marketing plan through. This can result in a waste of money and a leasing and marketing team that feels defeated and unmotivated when they don’t see results.

This can all be avoided by target marketing and market segmentation. Target marketing refers to who will be using your product. Sit down and decide what group, or groups, of people are going to be attracted to your community. If you’re running a student property or senior property this part will be easy for you. If you’re a conventional property, your answer will more than likely be anyone and everyone.  Now that we know who we’re targeting let’s get marketing, right?! Wrong.

The most crucial part of a marketing plan is market segmentation. Market segmentation refers to taking the target market you identified and breaking it up into different groups, or segments, and approaching them each in different ways. When you think about it, it makes sense. You wouldn’t advertise a car to a baby boomer the same way you would advertise it to a 20-year-old so why would it be different with apartments? We need to discard the ‘what works for one works for all’ way of thinking.

Types of market segments:

                1) Baby boomers: Although they’re becoming more comfortable with social media and navigating the internet, they certainly aren’t as comfortable as their younger counterparts. Keep your ILS sites because they will in fact attract baby boomers, but you can’t depend solely on them to drive traffic. Implement a guerilla marketing campaign using flyers to target places baby boomers frequent: isolate restaurants, shopping centers, doctor’s offices, etc. The natural progression is that they’ll see your flyer, do some research online and contact you through one of your ILS listings.

                2) Generation X: With a general age range of about 33-48, this group is busy. They’ve got careers and families and apartment hunting may not be their first priority because they simply don’t have time. So if they aren’t coming to you, you need to go to them. Implement a direct mail campaign and send literature to their homes. Also, beef up your preferred employer program and reach Generation X at work. Make sure you visit these companies in person– and bring more than just flyers. Gift baskets, pizza, candy, etc. can go a long way in making sure your community is remembered.

                3) 20-somethings, also known as Gen. Y: You’ve got to get creative here. This group is inundated with ad campaigns daily so you need to make sure you’re standing out– and social media is a fantastic tool to utilize. LeaseStar Social (formerly known as RentMineOnline) lets residents advertise your community to their friends using various social networks.  It’s essentially the same as the referral program you may currently have in place, but you have the potential to reach hundreds of people. Another out of the box idea for Generation Y was The Irvine Company’s use of Instagram and Twitter to promote one of their communities. They cleverly hosted three sisters (with a combined following in the tens of thousands) for one week and had them tweet their experiences. It created a huge buzz for the property and you can read more about blogger Jonathan Saar’s thoughts on the project here: http://jonathansaar.com/2013/05/03/apartment-marketing-with-the-veturis-sisters/.

To learn more about LeaseStar Social visit: http://www.rentmineonline.com/learn/benefits/

For today’s consumer, there is purpose behind a purchase.

If you watched The Masters last month, you may have noticed ExxonMobil’s campaign for their National Math and Science Initiative.  Rather than promoting their product, ExxonMobil utilized a marketing technique known as Cause Marketing.  Coke also just released a very cool video campaign based on cause marketing that you can see here.

Be prepared to see more cause marketing as consumer buying behavior is trending towards purpose purchasing.  In other words, people are starting to support brands that actively support a charity or cause.

Here is an amazing stat from the CauseMarketingForum.com:  purchases from brands that utilize cause marketing are up 47% since 2010. Over the years, consumers have taken increased action on behalf of brands with purpose.  When product and price point is equal (as is usually the case within multifamily submarkets), consumers tend to choose organizations that partner with and promote a charitable initiative.  Marketing Directors are seeing the ROI on these efforts and cause marketing expenditures are expected to reach nearly $2 billion in 2013, up 5% from 2012.

It may be time to leverage this trend into your marketing plan.  Here are a few ideas.

1. Establish a charitable donation referral program.  When a resident or local business refers a move-in, make a donation to a charitable organization.   Send a notice to that business or individual to let them know that the donation was made in their name.
2. Develop resident events that raise money for organizations like The Wounded Warrior Project.  This can include drawings, rummage sales etc.
3. Partner with local food bank and schedule a day where your residents can help donate their time.  Provide a shuttle service, food and drinks and build a sense of community for your residents while assisting at the food bank.

Make sure to take plenty of pictures of these events to document on your Facebook page.  This will act as great exposure for your community while also providing much needed funding and assistance to a good cause.

This is a great app for your smart phone that can really be of assistance for not only leasing agents, but also for prospects.

The app is called RoomScan and was created by Locometric.  RoomScan allows you to measure the dimensions of a room by simply holding your phone up to each of the walls in the room.  The app is also incredibly accurate with only a small margin of error of plus or minus 2%.

Seeing the app in action is quite impressive, as it is a very user friendly system and fun to use.

As a prospective apartment shopper, RoomScan would allow you to have an exact idea of what can and cannot fit in a potential apartment.  You will never have to wonder if your bed was going to be too large for the room, or if that sofa was going to extend past the end of the wall with the exact dimensions RoomScan can provide.

From a leasing agent perspective, utilizing RoomScan would enable you to to provide extremely accurate dimensions to your prospects for every single room of their new home.  In doing this, you would not only be educating the prospects on the apartment, but you would also be getting them involved with the tour.   This will also allow a leasing agent to prepare ways to overcome objections if a room is small.  Most importantly, using RoomScan will make your tour even more memorable, which in turn would make you standout from your competitors.

I cannot tell you how many communities I have shopped where the leasing agent does not know the dimensions for each room.  It is unhelpful and it makes it appear as if the agent doesn’t know the community.  By using RoomScan, you will look knowledgable and impress your prospects with the exact specifics of the apartment.

Take the time to download the app and give it a try.  If you are a leasing agent, I think you will find this app to be very helpful to your presentation of the apartment and could absolutely lead to more leases.  Plus, the app is free!

In case you haven’t  heard,  JCPenney’s “fair and square” pricing strategy that rolled out in January has been a complete disaster. The plan was to rid all stores of coupons and sales by offering products at the lowest price without gimmicks and discounts. Yet the strategy backfired and within 4 months sales had dropped 20%.

But why? This approach seemed to be one that most consumers would understand and appreciate. However, by not studying the customer, JCPenney  failed to recognize key components of buying behavior.  And however unrelated retail and leasing may seem to be, consumer buying behavior is a universal language and something the leasing community desperately needs to focus on.

• Importance of price framing

Prospects are nowhere near as educated about your product as you are and, because of this, it is imperative that you convey the value of your community. One way this can be accomplished is  by “price framing.” Price framing in leasing can refer to only giving prospects your market rents–known as anchor prices. By telling prospects right off the bat that a 2 bedroom apartment rents for $1,300 a month, they automatically begin to perceive a high value in your product.  Then when you close them with a concession and the rent drops a couple hundred dollars, they reference the anchor price (market rent) and believe that they’re receiving a highly valued product at a discount.

• Need for urgency

Another flaw in JCPenney’s marketing scheme was the lack of urgency. Three-day sales and other promotions run by department stores are much more effective at pushing urgency than an open-ended “lowest price always” campaign. Consumers are far more likely to rush out on a Saturday for a bargain they think will only last the weekend. The same can be said for leasing. If you’re attempting to close a prospect, but say that the rent and concession will stay the same for an indefinite amount of time, nothing is compelling them to lease same day– or even same week for that matter. On the other hand, telling prospects the rental rate and concession are only good for 24-48 hours almost forces them into a type of impulse buy because they fear losing the apartment.

• Prospects love to “win”

The biggest mistake made by JCPenney was forgetting that consumers have a need to win. Consumers love bringing coupons up to the register and watching as the price drops because it gives them a sense of accomplishment. Your prospects are no different. They want to feel as though they are negotiating for a lower price and ultimately coming out on top. Your prospect doesn’t need to know that everyone coming through the door is getting the lower rent.

Now that you are beginning to lease-up your new community, it will basically sell itself since it’s new…right?

Wrong.

Gone are the days when a community leased-up on its’ own simply because it was the newest kid on the block.  The main reason for this is whereas there used to maybe be only one new kid on the block at a time, now there may be five or six new communities that could all potentially be pre-leasing at the same time.  The newness of your community can still be sold, but when there is new product surrounding you that your prospects will surely be visiting, it’s time to figure out how you can stand out from the pack.

It’s a fact that, as a leasing agent, you cannot control how your community was built and what amenities were or were not included in the development of the community.  You are required to sell whatever the make-up of your community may be.  If your community has very nice features, but the newer community just down the road has even nicer features, there is nothing you can do about that.  You cannot change the dynamic of your property.  Therefore, since you cannot alter your apartment’s features, you have to concentrate on controlling something you can do better than your competitors, no matter what their product is like, and that is customer service.

There are many ways to “out” customer service a competitor and it’s the little things that go into this that can make you and your community memorable to a prospect:

-Always go out of your way to properly greet a prospect.  Properly greeting a prospect is accomplished by meeting the prospect as they walk into your community’s doors, welcoming them to your community by name, introducing yourself and then asking them if they are looking for a new apartment home today.  If it is an appointment that is walking through the front doors, assume the person walking in is your appointment and greet them by their first name.

-Ask questions about what a prospect is specifically looking for in their new home and show true genuine interest in determining which apartment home you have available will be perfect based on their needs.

-Cater your tour to exactly what the prospect is looking for based upon the questions that you ask.  This will show the prospect that you truly listened to what was important to them.  If the prospect says that they enjoy to cook and you know you have tons of amenities in your kitchens, then spend the extra time to point out each amenity, as the prospect that is interested in these features will truly see the value in them.

-After the tour is over, take the prospect to a quiet place in your office to discuss the application process.  If they are still on the fence on whether they want the apartment or not, figure out exactly what may be holding them back to ensure that there is nothing you missed they may be looking for.

-Regardless of whether or not the prospect fills out an application, treat them as if they did and thank them for stopping by.  To go the extra mile, stand up when the prospect is ready to leave, walk them out the front doors of your community to their car and shake their hand and thank them once again for coming by.  This may be the most important customer service act, because prospects will always remember the last thing that occurred on their tour.

Going above and beyond of what is asked of you from a customer service aspect is the most inexpensive way to make your community stand out…it’s free!  It is on the leasing staff to ensure they are always prepared to wow each and every prospect that walks through the front doors.  I promise you if you are able to implement these basic customer service pointers, you will have a buzz generated by people talking about the service they received at your community, as well as more leases!

Prior to picking up the phone, a prospect has most likely researched your community online and has determined it is a viable option for their next apartment home.  So why do some leasing agents struggle to convert over 50% of their phone calls into walk-ins?   A decade ago, people drove past your property and called the number on the sign in order to learn some important details about the community.  But when the phone rings today, 90% of your prospects are simply confirming a rental rate, availability and making sure that you are open.  If you are not convincing these prospects to walk-in the door, you are doing something wrong.   Here are 5 keys to converting a phone call into a walk-in.

1. Bring the enthusiasm:  In sales, there is NOTHING more important than being excited about your product.  Smile, be enthusiastic and let the tone of your voice convey the pride you have in your community.  Act as if your property is the PERFECT place for your prospect to live and that they will NOT find a better value anywhere else in town.
2. Listen:  Most salespeople are known for having the gift of gab.  But you should only be speaking 25% of the time.  The rest of the time, you should be asking questions about your prospect’s lifestyle and listening to their answers.  People buy from someone they like, and people like someone who listens.
3. Get their information:  This is more than just a phone number and move-in date.  Get their pet’s name, what they do at their job, their favorite football team and where their spouse works.  There is a direct correlation with the amount of information written on a guest card and the number of leases you can secure.  The more you know about your prospect, the better chance you have of leasing to them
4. Sell the property:  Have you ever described your favorite restaurant to someone?  Have you ever told them about an awesome vacation you took?  The detail and enthusiasm in which you described these places should match the way you describe your property to a prospect.  Don’t just list the amenities, but tell them how they are going to feel lounging around the pool and meeting their neighbors on a sunny Saturday afternoon.
5. Build Rapport:  The number one reason why someone moved in 2012 was not price, job transfer or the economy.  It was because they were not satisfied with management or maintenance at their former community.  Find a way to establish rapport with your prospect and they will associate their connection with you to the way they will be treated if they become a resident of your community.  Find a connection, a similar hobby, a favorite band or just a way to make them laugh.  If you connect with your prospect on the phone, they WILL come see your community before choosing to lease somewhere else.

CLASS has spent the past month leasing a by-the-bed student property at Texas A&M University.  In a saturated market it is extremely important to quickly identify emerging trends in order to capitalize on market share. By gauging these trends and tweaking our sales process, the property is almost ten percent ahead of last year’s pre-leasing numbers.

Here are three trends we’re seeing this year:

• Enhanced focus on cost-effectiveness

Having leased-up the same property last year we have noticed an unmistakable uptick in the number of students paying rent on their own, whether through part-time jobs or student loans and grants. This results in a consumer far more involved in the buying process than we’re used to seeing. Whereas last year’s student, with parents footing the bill, didn’t care about price tags, this year’s student wants to ensure they’re getting the most bang for their buck. It is imperative that value is conveyed to this year’s student. Whether that means calculating how much money your community will save them on utilities each month or charting out the bus route to show how much closer they’ll be to campus, you must be communicating value at all stages of the sales process. In order for the price-conscious student to lease at your community, they need to perceive some sort of value in your product. Resident events and parties are no longer cutting it for a lot of students.

• Short-term leases

Reading that may have you cringing, but it’s true. The reality is that many students don’t want to lease an apartment over the summer if they aren’t planning on staying in town. However, students want short term leases so badly that they’re willing to pay almost anything for them– and Mom and Dad are too.

At my current property, the only alternative to a 12 month lease is one beginning in August and ending in May. With our current rent concessions taken into consideration, the 12 month lease actually ends up being the cheaper option when compared to the 10 month lease. Naturally, you would think that students would agree with the math and choose the longer lease. However, that is not the trend. Students are choosing the 10 month lease at almost every opportunity and sighting their “summer freedom” as reasoning. Our competitors have also taken notice of this tendency and one property in particular is charging a premium fee of $100 a month for 9 month leases.

• Applying and leasing online

There is nothing this generation loves more than the ease of technology. While some of you would never personally apply for an apartment online, this year’s students are doing that and more. Recently my property expanded upon the typical process for applying online. Instead of filling out the standard contact form and having a leasing agent get in touch with the prospective resident, our new website allows for the entire lease to be signed via our property website  without ever stepping foot on the property. While this approach certainly won’t appeal to every student, it definitely has caught the attention of some. In almost a month’s time we have received an average of about 20-25 online leases. While this number may pale in comparison to the number of leases signed in the leasing office, it is significant nonetheless. It’s very likely that the property may have lost out on these leases had we not had the online process in place.

CLASS is pleased to have guest blogger Michael Shadeed of Franklin Street Insurance Services provide us with an insurance marketplace update.

“As apartment owners, you are part of one of the most volatile insurance marketplaces in the country, with coverage options and pricing continuously in flux.  I understand that most owners view the insurance premium as just another line item, but due to recent industry-wide changes to coverage, make sure you read exactly what it is you are paying for.  Outside of the premium page, the following are some coverage options you need to review on your next proposal.

The most widespread change to the coverage options for most carriers are the way they are handling the wind and hail coverage options, and the valuation of your roofs within the policy.  Recent tornado and hail claims over the last seven years have hit carriers hard, so in areas deemed high exposure coverage restrictions and deductible variances have recently hit the marketplace.  These changes are separate from your traditional fire coverage, and the deductible will be designated as the separate “wind/hail deductible” outside of the “AOP” (all other perils) deductible.

Owners need to pay attention to the roof valuations on all assets age ten years and higher.  Carriers are no longer rewarding full replacement cost claims to roofs they deem outdated.  Now most carriers will begin to devalue a roof five years after installation, changing the valuation to actual cash value, which is replacement cost of the roof minus depreciation.  Once the roof is eighteen years from the last replacement, it is deemed to have no actual cash value.  Some carriers will actually try to remove roof coverage all together regardless of the age, so review your quote.

The older your asset, the more building upgrades are needed to satisfy current code in the event of a rebuild.  The payment for these expenses is under the “Law and Ordinance” coverage section of your policy.  Make sure the limits are adequate to pay for increased rebuild expenses that involve consulting an architect and engineer to meet all current code specifications.

Obviously all of the mentioned coverage options come at a price, so how do you find the carrier willing to put forth the most competitive rates?  Consult an insurance broker who specializes in apartments and works with multiple apartment product types, as the age, construction type, and geographic location are all major contributors to the number of carriers willing to be aggressive on their pricing options.”  – Click here to contact Michael Shadeed

PROPERTY OVERVIEW:

The subject was a distressed property located outside of Cincinnati, Ohio.  The property had a terrible reputation for crime and gang activity and was poorly managed.  The asset was acquired by a local company that invested a significant amount of capital for both an interior and exterior renovation.  The property underwent a name change and built a new leasing office.

The first building came online in October 2012 and during the next 90 days the property captured 21 leases; however 16 were rejected due to credit or criminal backgrounds.  After receiving only 1 additional approved lease during the first 3 weeks of January, the owners decided to enlist the help of CLASS.

STRATEGY:

CLASS recognized that the property was suffering from a reputation issue that was resulting in under qualified traffic.  Additionally, a strong closer was needed to overcome the property’s reputation and other objections such as the lack of washer and dryer connections in the units.

CLASS needed to get the word out about the changes to the property and drive more qualified renters in the door.  CLASS also needed to find a solution to the washer and dryer objection, particularly since the onsite laundry rooms were still under construction and the few existing residents were required to drive offsite to a local Laundromat.

IMPLEMENTATION:

CLASS implemented the following changes to the leasing and marketing platform:

1.  CLASS set up a program with a local dry cleaner and Laundromat where residents could drop off their laundry every week at the office and it would be returned there in the afternoon.   This service was provided free of charge for all residents until the laundry rooms were operational and served as a great selling feature to help overcome any objections.

2.  Increased social media platforms: CLASS knows that today’s renters rely heavily on their peers when it comes to purchasing decisions. They are more likely than any other group to research social media platforms of a community and search for resident reviews.  CLASS consistently updated Facebook and Twitter pages which advertise the specials, communicate with residents and prospects, and reach out to local businesses.

3.  CLASS implemented an outreach marketing plan in the form of tear-off flyers, ¼ page flyers, and full page floor plan sheets. CLASS also ordered post-it note flyers which were quickly distributed to target areas. CLASS made sure to put in several hours of outreach each week and made the effort to speak to as many employees as possible to give short pitches about the property.

4.  CLASS established a preferred employer program.  This helped target local students and local businesses.  CLASS also set up a resident referral program.

5.  CLASS ensured that the property was properly listed on search engines like Google and Bing and deleted all information prior to the rehab.  CLASS also generated numerous positive reviews from both residents and prospects to improve the online reputation of the community.

6.  CLASS created a direct mailer which targeted local qualified residents and informed them of the positive changes to the community.

RESULTS:

By implementing these strategies CLASS was able to significantly increase traffic and leases. After only receiving an average of 2 applications per week over a four month period, CLASS was able to secure the following numbers:

RENT REVENUE PER MONTH

WITH VS. WITHOUT CLASS

*assuming property continued the current unit absorption rate

Click to enlarge

COST OF CLASS VS. INCREASE IN ANNUAL RENT REVENUE

*The increase in leasing activity resulted in an estimated 30 more leases than the property would have obtained without CLASS.

*Annual rent revenue generated by these additional move-ins = $261,000.00

*Total cost of CLASS Service = $36,000.00

Click to enlarge