Multifamily housing veteran Steve Lefkovits just launched MultifamilyRevenue.com, a website designed to provide multifamily housing operators “with objective, trustworthy information on how to increase revenue and optimize and stabilize lease/rent pricing through the adoption of multifamily revenue management technology.”
Lefkovits is a principal at Joshua Tree Consulting, an Emeryville, CA firm that provides advice and analysis to multifamily housing operators. He’s also a former vice president of the National Multi Housing Council, where he created its technology forum conferences, and former senior vice president for BRE Properties, a San Francisco-based REIT.
Lefkovits says he created MultifamilyRevenue.com to fill a need. “We’re in a recession. Owners need to know that revenue management systems drive incremental revenue and also take the emotional biases out of pricing rents.”
“But until now,” he continues, “it’s been hard to find credible, objective evidence that’s more persuasive than our industry’s rumor mill.” The site features case studies, video presentations and third-party commentary on multifamily revenue management implementations.
The site also documents the revenue increases from 2.5% to 4.5% by revenue management software users and lists 30 apartment companies that use revenue management systems, including three of the top ten largest multifamily owner and management companies. GlobeSt.com asked Lefkovits to explain his objectives and the ways he expects them to benefit multifamily housing operators.
GlobeSt.com: Why did you create MulifamilyRevenue.com?
Lefkovits: We launched it to help our clients and friends in tough times. Revenue management is a technology that both improves operating workflow, and clearly delivers extra money in the cash drawer. It pays for itself 10 times over. Companies that have adopted it would be hard-pressed to find a reason to go back to doing things the old way. Our hope is to broaden those benefits across the industry and help speed the adoption of technology. And unlike consulting, we can make this offering free to our users.
The other reason we created the site is that most firms don’t have any internal champions for revenue management because it’s not currently part of anyone’s job description. Asset managers, marketing executives and operations managers can all take the lead on enhancing their careers by learning about and testing revenue management and yield optimization techniques. The availability of information makes it easy.
GlobeSt.com: Can you define revenue management and explain the ways it specifically affects apartment owners and managers?
Lefkovits: Revenue management is the science and art of delivering the right product at the right price to the right person in a way that maximizes revenue under a given set of constraints. For apartment owners and managers, revenue management means systematically evaluating demand, unit type availability, net rental price, lease term, days vacant, seasonal trends and other factors to generate pricing options that maximize revenue, given the things that you can’t change–like the number of units in a property or the local job market.
Revenue management provides an entire organization with transparent rents and a universal method for replicating the strengths of the best pricing talent in the company. Pilot tests show that revenue management systems outperform human-powered pricing about 70% of the time.
GlobeSt.com: Why should multifamily housing operators use revenue management software?
Lefkovits: The bottom line is simple: money. Revenue management software users increase their revenue and NOI as a result. There’s more money in it than operating without it. Put more delicately, revenue management software maximizes yield for an entire property, it doesn’t just set price per unit. A statistically driven system can automate the calculations of supply, demand and total rent over the rental period for maximum yield. In other words, a revenue management system can help users trade occupancy for yield–to the point of highest NOI.
GlobeSt.com: You say, until now, that there’s been a lack of information in the multifamily industry about how revenue management software is used, how it benefits operators and the scope of its adoption. Can you explain how your site addresses that issue?
Lefkovits: We put everything in one place that a typical executive needs to know in order to justify the time required to contact The Rainmaker Group or MPF