Where Your Local Market Knowledge Really Counts
Do your research
Kimberly Smith, founder of AvenueWest Corporate Housing in Denver and CorporateHousingbyOwner.com, a Web site that connects renters with individuals offering furnished, short-term rental properties, utilizes spreadsheets to research local markets. She makes sections for furnished, unfurnished, apartments, extended stays and hotels in her area and then chooses four or five mediums to monitor, such as newspaper classifieds, online rentals sites and rental magazines.
“I track these sources for a few weeks so I'm better able to understand rates, building trends and know the marketing trends of an area,” she says.
Andrew Singer, a property manager in the DC metro area, suggests market surveys to find out which competitors are succeeding in the area and why. He says to contact other local properties that have been deemed competitors in the market and anonymously inquire about weekly leasing statistics, which marketing sources or mediums are working best and what specials each property is currently offering.
A property manager can also gather intelligence about competitors by posing as a potential renter in search of an apartment or home and examining the sales techniques of the leasing agent. This is also a good way to find out what amenities and specials nearby properties are offering.
Marketing the right way
Once you’ve done your local research, the next step is to incorporate it into an effective marketing plan. Research should be used to understand the best local advertising strategies and renter preferences. Then your company can use these same strategies or preferences, but differentiate a property based on unique features and amenities
According to the results of Smith’s market research, she found out that renters in her area care most about location, parking, security, style and the size of a unit, so she emphasizes these aspects of a property when they are favorable.
Name the price
Not only should amenities most important to renters be featured in marketing efforts, they should be reflected in the rental price as well. For example, “if the property is located in an area with access to a local recreation center, this is very important and should be valued in the rental price,” Smith says. “It’s an extra feature and will save the tenant from paying for a gym membership.” This technique could be used in an area that values fitness, like one with many young professionals. Vicinity to rec centers isn’t important to all renters, but this is where research of what is most important to people in a given market is so crucial. Not understanding what people value being near could result in inaccurately low rental prices and lost opportunities.
For properties in less desirable areas with fewer locally valuable amenities, you may have to lower your price, but marketing access to public transportation is an effective way to make a property stand out, get it sold and possibly retain a higher price. In this case a PM may want to offer a transportation pass with the rental. Smith also sometimes offers other added extras like Internet, expanded cable or a gym pass for properties in these areas.
To some extent, it may seem like the importance of understanding your local market is common sense, but failure to do so or becoming complacent with your research can have dramatic material consequences. Smith recently spoke with a property owner from Pittsburgh who was renting out a fully furnished 2-bedroom apartment and wanted to know how much above the standard $900 unfurnished rate he might be able to get for rent.
“Based on market research he should be charging $1,800 a month,” she says. “However, he didn't take the time to research the market and was only charging $1,100 a month—he was leaving $700 a month on the table.”