There are four basic concepts in property management that have historically been known to predict and determine the success of any given community. While widely known and revered in our industry, mastering these four concepts is frequently the elusive key to success at a property. These four approaches are commonly known as the 4 P’s of property management: People, Price, Promotion, and Product.
The most important component of a property that can’t be found on the balance sheet is the people running the property. I always refer to a property manager as the “Captain of the Ship”; it is their job to see the ship through both storms and fair weather with the assistance of the on-site and corporate staff.
In essence, the manager of a property is the manager of a small multi-million-dollar business, so we find success when we enable and empower our property managers with this in mind. Teaching, training, and motivating our people based on their ability to manage their multi-million-dollar asset well helps drive energy into the real priorities on-site while simultaneously growing and investing into their capabilities as members of our team. If that manager can save you $10,000, which is a very real possibility, they have created value of $200,000 utilizing a 5% capitalization rate.
In my thirty years in this business, having good people has always been of paramount importance and it always will be. You can take that to the bank!
Price is a fair-weather friend and can be difficult to manage well. Assessing and adjusting the price of apartments often seems counterintuitive: when you’re trying to increase occupancy, increasing the price sounds like a bad idea. But following the pricing of the market and adjusting your price accordingly, increasing price when you can, tends to be the best strategy. I frequently challenge the managers of our properties to find opportunities to make frequent, small pricing increases.
Offering discounts frequently feels counterintuitive too. Lowering the monthly rate or offering an upfront discount drops your price (and therefore income, it would seem) but it pays off tenfold if it allows you to acquire a reliable, long-term, rent-paying resident. A word to the wise, though: concessions are like Lay’s Potato Chips, you can’t eat just one. Concessions are meant to deal with a short-term lull in the market and should not be utilized as long-term solutions – otherwise you’ll find it difficult to stop offering them.
A case may even be made for utilizing revenue management systems, but the human element of monitoring price is always a vital part of managing assets well.
To sell any product, you must be able to promote to the audience you are trying to reach. If prospective residents don’t know where we are, what we have to offer, or even know that we’re here- we won’t be able to get them in the door.
My strategy for marketing is the same strategy I use for fishing: keep changing the bait until you get a bite, and when you stop getting bites- you change it again. Our prospects are part of the collective pool of consumers, each of whom frequents different stores, websites, social media platforms, etc. One week, we may get 10 strong leads from a Facebook campaign, but the next week we may get nothing from that same campaign and 5 leads from Apartments.com instead. Our job is to monitor the changing tides to determine what type of bait will work best in our given conditions, and to cast that bait out wisely based on the information we’ve gathered.
When making adjustments to promotions, it’s important to make small changes as you monitor what is working and what is not. Making wide sweeping changes to your marketing strategy makes it difficult to figure out which piece is or is not working, so it’s best to make adjustments carefully and with great consideration to how the success of each piece can be determined and tracked independently.
Mastering promotion by learning the tides and adjusting your approach accordingly helps get the right customers in the door, which is a crucial part of success on-site.
For any product to sell, you want to be sure it looks its best. When we talk about a great product, people often envision stainless steel appliances, granite countertops, and hardwood floors. But it has always been my belief that there is a renter for every type of apartment: old, new, small, large, timeless, modern.
The key to offering a great product is often as simple as going back to the basics: is it clean? Does it smell good? Is it well-kept? Does the paint look fresh and tidy? As long as you have a great product, you can sell any type of apartment, because there is a renter looking for each one.
I have always emphasized to my staff that the quality we’re looking to offer is the same quality you’d be looking for in a home. If you would be ready and eager to move your family into the apartment, then the apartment is ready. We want to offer our renter’s nothing but the best when it comes to a quality apartment.
The next time you find yourself looking to resolve an issue at your community, take a look at the 4 P’s of property management. Chances are the key to your success lies in mastering each one!