More than ever, lenders and brokers rely on hard data in the multi-family home market – from analytics to unusual metrics – to maximize returns and minimize risk, wrote Tim Blackwell. President of Ballpark Impressions, in a Blog for RealPage. "Operators, developers, and investors began watching the data closely as the current cycle took off this spring, ”he wrote.
Blackwell pointed out that BH Management and Simpson Housing are among the companies that are more focused on transaction-driven research in this current environment.
Bryan Hilton, Senior Vice President of Revenue Management for BH Management Services, listed as the ninth largest real estate management company in the United States, focused on occupancy, rental, revenue, concessions and other metrics within the markets to help optimize his company's next steps.
"We're looking at how the market is doing around us," Hilton told Blackwell. "We don't know what's next, so we're kind of comfortable. And it was really helpful that the industry let us know what they saw so we could develop our strategies."
BH Management has one eye on employment rates and rent payments and another on the impact of concessions on occupancy, according to Sierra Zielke Garza, the company's senior revenue manager.
"Like everyone else, the immense job loss has caught our attention and these crime-related challenges are things we are currently facing alongside the rest of the country," Garza said on the same blog. "However, taking into account the occupancy and concessions in our markets, as well as the overall impact on sales, has helped us take the next step in our action plan."
Collections are another aspect of property management that has also shifted between developers and investors, and why it has become critical to make the link between changing prime prices and rents on stable assets, Blackwell wrote.
"Now they are investigating external data showing how competing properties are managing rent payments at a time when some residents are on temporary leave or have lost jobs," he wrote. "These companies are turning to NMHC, RealPage, and other multi-family data providers to get as much information as possible on what's happening to collections by market, class level, or city or suburb each month."
Blackwell noted that Simpson Housing – a national real estate development and portfolio management firm primarily focused on the multi-family market – used real-time market data on lower rents, concessions and shaky occupancy to determine the company's best course of action to advance the needle rents.
According to Blackwell, trade-out information can help paint a fuller picture of the rental potential of a given area and shed light on market conditions using metrics such as rental income per available square foot, as renewals make up a high percentage of leases currently signed.
This allows for demographic information to be rented that shows the average income of tenants signed in an area and helps illustrate the cushion between the average rent and what people can afford and whether that cushion is expanding or contracting, according to the Blog.
“We can help our teams create a more realistic budget. This leads to better performance and an even better buy-in from our on-site teams, ”said Garza from BH Management.
But colleague Hilton said the volatile times require constant adjustments.
"We'll definitely see each other out of budget," said Hilton. “But in the longer term [with] the three- and five-year forecasts, we look at these [data] for rehabs, new acquisitions and developments because we have seen the forecast over the long term and it looks like it will come back within these time frames. "