Revenue Management

Rent Optimization

Revenue is price * quantity.

In SFR real estate, that translates into rent * days occupied.

Optimizing for these two results in the following formula: R(x) = (F+x) * (365-E(x))

-          R = Revenue

-          X = Price Increase

-          F = Clearance Price, e.g. 100% occupancy

-          E = Price Elasticity Coefficient

This optimization function means it almost never makes sense to push rent growth or to push occupancy. You should always be working to optimize the two in conjunction.

There may be exceptions. You may have unstabilized inventory for which occupancy is more important than achieving rent figures. Or perhaps your strategy is to maximize portfolio value by focusing on in place rents rather than occupancy. But these exceptions should be the exception, explicit, and temporary.

These same principles apply when negotiating renewals with tenants, listing vacant homes for rent, or listing vacant homes for sale.

Asset by Asset Analysis

No home is average.

Asset managers sometimes fall too much in love with their portfolio averages and statistics.

Just because leases in your area grew an average of 5% YoY does not mean the lease on a particular home grew by that much, or that little.

There are infinite reasons why the situation of a particular home and tenant are different from another.

Every home is a special snowflake.

We evaluate each home according to its own unique conditions when making pricing recommendations.