1 5/8/2012 Source: Axiometrics Agenda See, Feel, Touch & Why - - PDF document

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Understanding Market Cycles

The main characteristics driving market cycles Vacancy rates New construction Employment growth Rental rate growth

Apartment Market Cycle

Recovery Expansion Hyper- supply Recession

2007/2008 2010/2011/2012 2012/2013

1.

Decreasing Vacancy Rates

2.

Low New Construction

3.

Moderate Absorption

4.

Low/Moderate Employment Growth

5.

Negative /Low Rental Rate Growth

Recovery/Bottoming

1.

Decreasing Vacancy Rates

2.

Moderate/High New Construction

3.

High Absorption

4.

Moderate/High Employment Growth

5.

Med/High Rental Rate Growth

Expansion

1.

Increasing Vacancy Rates

2.

Moderate/High New Construction

3.

Low/Negative Absorption

4.

Moderate/Low Employment Growth

5.

Med/Low Rental Rate Growth

Hypersupply

1.

Increasing Vacancy Rates

2.

Moderate/Low New Construction

3.

Low Absorption

4.

Low/Negative Employment Growth

5.

Low/Neg Rental Rate Growth & Concessions

Recession

There have been as many as 47 recessions in the United States since 1790

Multifamily starts grew 21.1% in February Construction is up 85.4% from a year ago

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Source: Axiometrics Agenda

Representing & Defining Value Rent Increases & Concessions Resident Experience Cycle See, Feel, Touch & Lease Retention Through Recovery Compare & Lease on Value Overcoming Objections Why We Raise Rents

When others are cutting theirs. When NOI is declining How do you know when it’s time raise rents & eliminate concessions? When

• ccupancy by

apartment type is less than 10%.

“How can I possibly compete if we raise rents when the competition is lowering theirs?” “If NOI is down, how am I supposed to get it back up again without giving away the moon?” “Tami, if you think raising rents when

• ccupancy is high isn’t going to result in a

mass exodus to the cheaper place down the street, you’re crazier than I thought.” 1.THE PRICING PARADOX: RAISING RENTS WHEN OTHERS ARE CUTTING THEIRS

THE PRICING PARADOX: RAISING RENTS WHEN OTHERS ARE CUTTING THEIRS

Going-Out-Of-Business price increase?

Going Out Of Business Every Apartment Must Lease

We QUIT!!!!! Every Apartment Must Lease

“Why is the home office insisting on such a high rent increase!?!” “Why is that software system pushing those rents so hard?” "How can we possibly hold onto the

• ccupancy we have worked so hard to

achieve!?!”

Your Community Can Do That, Too!

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“How can our competitors lease apartments for so much less than ours?” “We have to compete and offer the same rents or concessions if we want to renew and lease!” “We have to lower our security deposit and/or application fee to keep up with theirs, or we might as well kiss our leases goodbye!”

Monkey-See… Monkey-Do

Obtain increased rents in the initial lease without concessions Sell a rent increase at renewal

2.RAISING RENTS WHEN NOI IS GOING DOWN Think like An Investor

Income MINUS Operating Costs Income minus outflow

Net Operating Income (NOI)

1.

Rental rates are cut

2.

Concessions are offered

3.

Fails to increase rents when operating costs rise

4.

Fails to obtain economic occupancy to cover operating costs

NOI Decreases When

Rental rates are simply too low relative to

• perational costs

Myth 100% OCCUPANCY = SUCCESS The Land Of Legends Communities that have financial issues often do when their

• ccupancy is high

“What’s the fastest way to create income?” How to do we lease more apartments quickly? Experiencing occupancy problems, means a cash-flow problem & income is needed

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Myth

“Competitive” concessions & rental rate cuts work

Myth

Residents lease because the rent rate is the lowest they’ve found

Most rental rate objections raised by residents stem from the fact that they don’t understand or haven’t learned the value of your apartments and community. Representing & Defining Value

What This Means to a Leasing Professional

Value Based Leasing

Commodity

• r

Unique Experience ?

Defining Value

Trump Price, Every Time

big-research.com

• 1. What someone gives up
• 2. What someone receives in return

Two Primary Factors Determine Value “Is this particular community, apartment and the service I’ll receive a fair exchange for the asking rental rate?”

Strategies that will really knock the socks off of our residents

1-10

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Present the rental & renewal rate “Thank you so much for being patient while I talked about the value of living in this apartment and in

• ur community, for letting me know what you’re

looking for and what’s important to you so we know exactly how to make you happy here! This apartment leases for $xxx per month and that includes all the special conveniences and services we’ve talked about.” “Mr. Resident, we appreciate the trust you’ve placed in us by being a resident in our community over the past two years. The renewal rate for your home this year is only $xxx per month; and that includes our continued dedication to make your life here better every chance we get.”

Views Situations Expectations Experiences

PERCEPTION AND PERFORMANCE

“When you make a buying decision, how much of that decision is weighted on the product, the company that supplies the product, and the salesperson with whom you deal?”

Resident-Focused Value 25% salesperson 57% product 17% company

Knowledgeable Professional Thorough Result Oriented Relationship Oriented Customer Focused Problem Solver Responsive Reliable Good Communicator “In a word how would you describe your ideal salesperson.”

Price 7.2 Salespeople 8.3 Importance of Price The greater the perceived value the Leasing Professional brings to the lease, the fewer rental rate objections they will encounter.

• 1. Apartment
• 2. Community
• 3. Company
• 4. Leasing

Professional

Four Dimensions of Value

Resident Service Rights

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Shopping Leasing Moving in Living Renewing

Model For Creating Value At Your Service

LET THEM KNOW YOU’RE THERE! DO YOU DO WINDOWS?

1.

When they pay their rent... every time

2.

When they compliment you, your company, or community

3.

When they offer comments or suggestions

4.

When they refer a friend or associate

5.

When they complain

6.

When they turn in a service request

THANK YOUR RESIDENTS PREPARE YOUR TEAM fOR RENT INCREASES

The Most DANGEROUS RESIDENT...

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“ONE LITTLE THING” PROGRAM

Trend: “Resident satisfaction is more important than company policy.”

Demonstrate Value as a Service

“Thanks! See you next month!” Or Hi, Jim how are you enjoying the patio you raved about on your first visit? Is there anything in your home you would like taken care of?

Thanks for the Memories

“Is there anything else I can help you with?” OR “Is there anything—anything at all—you’ve been meaning to ask that could make your apartment more comfortable?” Close Every Conversation With Value & Service

Persuasion: Ongoing effort and not an event Positioning: Shaping an image in the residents mind Differentiating: Standing out from the competition Presenting: Delivering a compelling argument for why they should lease or renew

The Value Leasing Strategy

Think the way a resident

• r prospective resident thinks

Lease to the resident’s value expectations and not to your own value pre- suppositions

Your community doesn’t have to be a revolving door of residents entering and exiting. You can go beyond resident service, increase resident retention and enhance your marketing and leasing efforts all at the same time. In fact, your resident-retention policies double as excellent marketing and leasing approaches for your community. One

• f the easiest ways to do this is to make resident testimonials visible

to the residents and prospective residents of your community, by preparing a testimonial album or better yet printing and posting them

• n the walls of your Leasing Center or Clubhouse for all to see.

Testimonials pack a powerful punch in that they give residents and prospective residents the opportunity to hear great things about your community from people just like themselves.

Retention through Resident Service Marketing & Leasing

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Package Delivery Fax Delivery Plant Sitting While You Are Away Dry Cleaning Drop Off Quarterly Photo and Finger Print Night In The Clubhouse “Coffee Club Every Friday Coffee And A Variety Of Fresh Donuts or Pastries. “Rent Weekend” Brunch In The Community Center Gift Wrapping Services Christmas) – Limit 5 Gifts Back To School Gifts for all Students Free Use Of Office Copier Free Use Of Outgoing Fax

Complimentary “SERVICES” Menu

Trip Return” Home Prep: We Will Turn On Your Heat or A/C, Lights Prior To Your Return Home Emergency Airport Shuttle Service – Once Per Lease Term Free Local Sunday Newspaper Quarterly Starbucks Coupon For Coffee On Us! Additional Services Available For A Nominal Fee Apartment Home Cleaning Reserved “Peak Time” Work Out Time In Our Fitness Center Postage Stamps Available: Individually or By The Book Notary Available at no charge

nationalnotary.org

THIS PARKING SPACE IS TEMPORARILY RESERVED FOR YOUR NEW NEIGHBOR.

Thank You For Your Cooperation! DON’T GIVE A ONE-TIME SPECIAL … …MAKE THEM FEEL SPECIAL ALL OF THE TIME Representing Value Attitude is the engine that drives persuasive abilities

People don’t value things as much as they value understanding and attention Listening actively Undivided attention Pulling out all the stops on info Cared for

“Specials” vs. Making People Feel Special

“While other communities may offer monetary or material rewards in order to convince people to lease, you understand that their most valuable reward is the peace of knowing that they’ll be understood, listened to, and cared for throughout the term of their lease and not just offered a shiny prize at the beginning to get them in the door.”

Create Warm Welcomes

Fine-Tuning the Level of Value You Project

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Ask Yourself the Big Question

Powerhouse of knowledge Competitors thought that we were crazy Improved skills Ask for something in return Sign a concession agreement Increase rents The dollar amount is more powerful than one- month A one bedroom can lease for more than a two bedroom and so on.

What Did I Learn?

Water filtration system Ornate ceiling fan with light kit Paint colors for accent walls Floor length mirror Kitchen faucet with an extended spray arm Dimmer switches Custom built closet organizers

Offer Upgrades Instead It’s Green fastmac.com $60.00 Improvement

Estimated Yearly Energy Cost: $0.96 40 watt Estimated Yearly Energy Cost: $1.57 60 watt Uses 80% less energy compared to a standard incandescent light bulb

• 1. Salesmanship
• 2. Quality
• 3. Service
• 4. Delivery
• 5. The Rental Rate

Factors That Support Value

Leasing From a Value Perspective

Quality doesn’t mean having the best stuff — it means having the right stuff!

Make the service shop a stop on your tour!

Service and Delivery

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The Rental Rate can be one of your competitive advantages

Factors That Support Value

Leasing From a Value Perspective

Sending the Right Signals

80% of all the

impressions we form when communicating with other people are nonverbal. Breaking the Concession Habit

Awareness Consideration

Lease Move-In Renewal

• 1. Setting: Sight, smell, taste, hearing &

touch

• 2. Rules of Engagement: Policies & processes

such as hours of operation, support hours, service procedures & credit terms

• 3. Etiquette: Words & behaviors

The Cycle Has Seven Key Opportunities

• 4. Competency: “Technical" skills
• 5. Preparation: People, apts. & property, so

they consistently meet or exceed customer expectations.

• 6. Delivery: The customer experience
• 7. Ongoing Relationship: How we serve

customers after an interaction

Team Action Assignment

Awareness Consideration

Lease Move-In Renewal

Method or technique that has consistently shown superior results A standard way of doing things that multiple communities can use

Best Practice

Best Practice: When do you have the lease signed?

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Controlling Time

1.5 minutes is accurate 90 seconds is exaggerated

1.

Location

2.

Market conditions

3.

Condition of the apartment

4.

Presentation of the apartment and community

Four basic facts that affect the lease or renewal of an apartment

Building Momentum

How many times have you planned one thing only to fall in love with something else? What is apartment searching? How does one go about the apartment search as an activity?

People Shop with All of Their Senses

In each apt your service team goes into during the day what do they leave behind? What sent does a resident come home to? Painting the apts with a paint additive to make it smell great? Protection

On With The Show

Senses in the Leasing Experience

The Point Of Ownership

Why Does Everyone Want to Lease the Model?

Dana Graziano Pate

5/8/2012 12

Color Lighting Space Design Size

The First 30 Seconds

Staged homes are usually on the market for about half the time of their un-staged counterparts. Staged homes can sell for at least 10 % (as high as 50%) Staging promotes faster and higher-priced sales

Mini- Models Closet space Small kitchens Dark Street sound 120 day living inspection Living Challenges Move-In Versus Renewal Create a list of ways to create the “Look at that,” “Wow,” “That’s cool,” “They’re so nice there!”

• r similar reaction, without having to

point it out? Team Action Assignment

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Studies have shown that brands that incorporate sound onto the home pages of their websites are 76 percent more likely to obtain repeat Internet traffic

Team Action Assignment

48-Hour Service Guarantee Survey of 85,000 residents Quality customer service is the most important feature people consider when searching for a community.

Source: SatisFacts

Comparing the Elements

• f Value

The first step, of course, is to determine who your competitors actually are. Though the concept of identifying other apartment communities in our area is an easy one to grasp, many of us are surprised to find out who our true competitors really are. The pin map was one of the first marketing tools that I learned to create, back when it required putting a map on a wall or bulletin board and sticking actual map pins into it. These days, you can prepare one online via sites like www.pinmaps.net. They’re still one of the most important tools to have at your disposal when it comes to determining your community’s value comparison, and they’re relatively easy to create and maintain.

Identifying the Competition The Value Comparison Audit Team Action Assignment

When was the last time these apartments were shown? Are you making the effort to show them to future residents? Type and level of traffic the marketing is delivering or isn’t delivering

Become an Availability Expert Create Added Value Team Action Assignment

Service

5/8/2012 14

Increase Your Odds

38% less likely to renew 7 out of 10 apartments had service items

Renew Your Renewal Efforts Replace the standard lease renewal letter with a Apartment “Tune-up” program An objection is defined as any

• bstacle, however slight, that stands

in the way of and prevents a signed lease or renewal. Objections Are Necessary

How important is it that you know your apartment is going to be well maintained? How important is it to you that the community is managed professionally? How important is it to you that you have a move-in satisfaction guarantee? How long do you plan to live in the next apartments you lease? Are you looking for an apartment and community that is well maintained and provides solid resident service?

Objections Are Emotional

“What concerns you most about making the decision to lease (or renew)?” “What is your greatest fear about entering into this relationship (or continuing this relationship)?” “What do you want to avoid in moving forward?” “What is stopping you from making this decision?” “What do you dislike about this apartment or community?” “Tell me about your decision process.” “What are the key factors in your leasing decision?” “What are you looking for in an apartment and community?” “What are the three most important things you want in an apartment?” “What are the three most important things you want in a community?”

“What budget range are you working with?”

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Ground Rule: Never apologize for your rental rate Rental Rate Objections

• 1. Lack of Information
• 2. Comparative

Where do Rental Rate Objections come from?

Rental Rate Objections Based on Lack of Information

Renew versus Expire How do we respond to a rent increase complaint?

It’s What We Say and How We Say It

.

The Best Offense Is A Good Defense!

Convert the Rental rate-based decision to a Value-based decision

“Ms. Prospective resident, before we start, can I have a few seconds to tell you something really important and unique about the way we serve our visitors here?” (Pause to allow them to answer.) “I want you to know that we have a specialized approach to the leasing process here that sets us apart. We

• ffer very reasonable rental rates that

come with a huge array of services, features, benefits, amenities, and conveniences, along with the dedication of our very professional and experienced staff. I’m going to respect your time while I tell you all about all of those great things so you can see how wonderful your life here can be. The rental rate that I quote on each apartment we’ll view includes all of those special extras, and it’s going to already be our very best price available on that apartment. We see this as your time to think about the apartment home that will work best for you, so I want you to know that my time and expertise are all yours today. Are you ready?”

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• 1. Why this apartment? Benefits of the

apartment.

• 2. Why this community? Benefits of the

community.

• 3. Why our management company? The

value represented by your brand.

• 4. Why me? Review your commitment to

serve.

Answer these four questions in your presentation

Four Dimensions of Value Tried and True Tips for Overcoming Price Objections Comparative Rental Rate Objections

Never apologize “We made a decision a long time ago that it is easier for us to justify our rental rate one time than to repeatedly apologize for a lack of quality

• r service.”

“We’ve made a choice to compete on the basis of all that we provide, and not just the rental rate.” Shift the focus off rental rate and

• nto everything you do.

Pride & Passion Confidence & Enthusiasm Are Contagious Boomerang

Do you know why they are cheaper? If they say they are cheaper, I certainly can’t argue their case for them. They are in a much better position than I am to set the value on what they’re

• ffering and I can only explain the value

we bring. If they say they are worth less, I would take their word for it.” “We are not defensive about

• ur rental rate,

but I would be concerned why the competition is charging so little.”

“Sure, there is a difference in our rental rate … I’d be shocked if there wasn’t. The reason there is a small difference is there is a huge difference in what we provide you. Let’s take another look at all the things that make us different!”

Focus On the Difference & Not the Savings

5/8/2012 17

What is unique about your apartments? What is unique about your community? What is unique about your company? What is unique about you as a leasing professional? What is unique about your service team?

Ten Things to Consider

Team Action Assignment “Mr. Resident, many of our residents initially asked why they should pay more to live here. Would you like to read what they’ve had to say since then?”

Band Wagon

“What Residents Are Saying About Us”

Changing the conversation from rental rate to value means changing the way you present your apts., community & company Team Action Assignment

“The apartments down the street

• ffered me one month’s free rent”

“I am glad you mentioned the free rent” “Specials are usually given to attract you to a community. Once your lease expires, it only makes sense that they need to recover their loss. In

• ther words, they’ll probably need to pass along a rental
• increase. We feel that specials are only a temporary benefit.

We prefer to offer the long-term benefit of a high quality apartment and a quality community where residents don’t move in and out looking for the next special. We prefer long- term quality and stability. Don’t you agree that’s more important?”

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“What’s your special?”

LP: “I’m glad you brought that up. Let me ask you a quick question: Why do you think they are giving away______________ ?” R/FR: “I don’t know, why?” LP: “I’m not permitted to talk about our competition, but…I can tell you that we don’t have to offer specials nor do we have the type of residents who move in and out because of specials.” 10% of our leases expire during the entire period of November, December, January, & February 20 to 30% expire in October & March 60% expire in May & September

Lease Management for Renewals PUT AN END TO PROCRASTINATION

20 % off the increase

RENEWAL INCENTIVE PERCENTAGE Early Bird Discount Renewal Program

3% discount 120 days 2% discount 90 days 1% discount 60 days

MW

• No. 123456789

Date: January 1, 2002 Check Expires: February 1, 2002 PAY TO THE ORDER OF: Seventy Five and 00/100 Dollars

$75.00

• Ms. Sally Magic

1234 Sunnyside St., #4 Anytown, US 00000 AUTHORIZED SIGNATURE Mary W. Manager

12345678900000000000000000000 0000000000

Cash in on us when you sign a new lease at Magic Woods!

January 1, 1995

• Ms. Sally Magic

1234 Sunnyside St., #4 Anytown, US 00000 Dear Ms. Magic: WE’VE GOT GREAT NEWS FOR YOU! TAKE ADVANTAGE OF OUR OFFER AND EARN $75! NOW IS THE TIME TO SIGN A NEW LEASE, AND MAGIC WOODS IS THE RIGHT CHOICE!! We have valued you as a resident of our community, and invite you to sign a new lease with us. Your current lease expires on ____________. To show our gratitude to you for choosing Magic Woods as your home again, we are offering you $75.00 CASH TO SPEND AS YOU WISH! Your current lease amount is _____. Upon signing your new lease, your rent will be _____ for the next ____ months. CASH AND CONVENIENCE: YOUR CHECK IS VALID FOR ONLY 30 DAYS, SO HURRY AND TAKE ADVANTAGE OF THIS VERY SPECIAL OFFER!! BY ENDORSING THIS CHECK, YOU AUTHORIZE THE RENEWAL OF YOUR EXISTING LEASE AT ITS EXPIRATION FOR AN ADDITIONAL ____ MONTHS AT THE RATE INDICATED ABOVE. NO VISIT TO THE OFFICE IS REQUIRED. ENDORSEMENT OF THIS CHECK AUTOMATICALLY AND IMMEDIATELY RENEWS YOUR LEASE! Thank you for making Magic Woods your home again! I look forward to seeing you again at our community! Sincerely, Mary Manager MARY MANAGER Business Manager CONTRIBUTED BY: LINCOLN PROPERTY COMPANY LAS VEGAS, NV

“Get Your Security Deposit Back with Rapid Refund!

5/8/2012 19

“Replace Yourself” Referral Program!