You’re all leased up and your bottom line looks great, do you really need to spend your valuable, fleeting time investing in online reputation management in 2020?
The answer is yes.
However, what will motivate you to increase investment in online reputation management this year is the “why” — a recession might be coming.
Stepping into the new year, your lease numbers might be high, but what about in six months? A year? Two years?
Can you ensure that a 2020 recession won’t negatively impact your occupancy level?
By being proactive in your efforts through investing in online reputation management strategies and tools, you can ensure your property stays above the negative impacts of an economic downturn.
In the words of Alan Laiken, “Planning is bringing the future into the present so you can do something about it now.”
The Reality of a 2020 Recession for the Multifamily Market
Over the last few years, the multifamily real estate market has been in a continuous state of growth and your property has likely experienced the positive effects of this trend — specifically in regards to high lease rates and occupancy levels.
However, throughout 2019, economic professionals firmly predicted an approaching and impending recession. In fact, in a survey conducted by the National Association for Business Economics, three out of four economists stated they expected a recession by 2021 at the latest. While experts debate the exact timeline, the general consensus across the board is that it’s imminent. As with all past significant nationwide recessions, the multifamily real estate market will not escape unscathed. Experts predict that the real estate industry will be one of the main markets to experience negative effects.
More specifically, CBRE’s 2020 Real Estate Market Outlook predicts that multifamily vacancy rates will rise by 20 basis points to 4.5% and rent growth will decrease by 2.4%. Additionally, as a result of slower economic growth, renter demand in 2020 is projected at 240,000 units, 20% less than in 2019.
In response to the fear of a recession, the real estate market experienced widespread rent control over the past year. While multifamily experts believe that important steps taken such as this have abated a major recession, the loom of a decline in the market is still present.
During the last major recession in 2008, professionally managed apartments reported rent declines of 4.5% and occupancies fell to their lowest point in the decade.
Online Reputation Management to Help You Overcome the Multifamily 2020 Recession
Although the impact of the upcoming recession on the multifamily market is likely to be more moderate than originally expected, it’s still extremely important for multifamily property owners, property managers, and landlords to plan for the eventuality of a period of slower rent growth and lower occupancies for the next two to three years.
Another point to keep in mind is that future recession aside, property developers are expected to remain extremely active in 2020. CBRE research predicts that multifamily completions in 2020 will total 280,000 units, which is on par with the 281,000 units in 2019. Clearly, there won’t be a lack of new properties, and therefore, competition.
An upcoming recession coupled with a zero decrease in new supply means multifamily property managers and landlords cannot afford to take a back seat — they must take the driver's seat, lay on the gas pedal, and drive their multifamily business to success.
While property managers and landlords know that customer satisfaction is important, especially for long-term success, it often goes unchecked when occupancy is high — such is the average trend right now. Today, property managers are running the risk of losing money and leases when resident satisfaction dips due to a lack of focus on satisfaction and when a recession hits.
This is where upping your game and increasing your investment in online reputation management becomes critical.
With the dominance of the internet/social media and their collective control over renter decisions, most multifamily property management teams are already engaging in online reputation management. But are you and your team maximizing your efforts? Are you organizing and utilizing what you see online to your benefit? Are you converting online reviews into onsite action?
Here are three reasons why property managers should increase investment in online reputation management and how it will help minimize the impacts of a recession on their multifamily business:
1. Increased Renter Satisfaction Leads to Increased Renter Retention
According to research completed by Frederick Reichheld of Bain & Company, one of the top ways to increase profits, or at least keep your bottom line consistent during a downturn, is to increase your customer retention rate. Acquiring a new resident can cost a company 5 to 25 times more than retaining an existing one.
Residents are often willing to re-sign their lease and possibly pay a little more if trust and value are continually established throughout the resident cycle.
With online reputation management strategies and tools, property managers and property management teams can build value and ensure satisfaction month after month. In reality, ORM is one of the only tools in your arsenal that can successfully accomplish this for all residents. So, why not up your ORM game?
Here are some key components of good ORM that will build your property a good foundation for creating lasting resident satisfaction:
- Live chat box in resident portal
- Easily accessible and comprehensive online content
- FAQ page
- Helpful and relevant blogs covering concerns residents may have and solutions to common renter problems
- Regular emails containing community event information and property updates
- Consistent social media activity and posts that engage with residents
- Quick response times to both emails and live chat
- Prompt responses to online resident complaints
The most important benefit of building this foundation through proactive online reputation management strategies is that it establishes a direct line of communication with renters, and landlords can gain unfiltered insight into the opinions of renters.
With this information, property managers and landlords can implement changes that renters request, provide added value to resident experience, and show renters that their happiness is a priority. This is what will help extend your property’s retention rates and keep you leased up even in an economic downturn.
2. An Organized Ratings Strategy Will Keep Your Property Favorable in a Downturn
Recession or not, apartment ratings have tremendous power over renter decisions.
According to Highly Recommended: The Influence and Impact of Online Ratings and Reviews on Apartment Searchers, 7 out of 10, or 70%, of people looking for a new apartment, use apartment ratings and reviews. Additionally, 87.6% say that apartment ratings and reviews are one of the most important factors when deciding where to rent.
As demand decreases, as is normal in a recession, but supply continues at a normal rate, there will be more multifamily properties around you competing for the same small pool of renters.
This is where your online apartment ratings strategy will help your property stand out and drive new leads to your virtual doorstep.
In a recession, renters will become more thorough and picky in their search. If your property shows that it cares about renter satisfaction and a desire to solve problems through personal responses to negative reviews, it can catch renters’ attention. The way you achieve this is by implementing a system that ensures your team promptly responds to all apartment ratings and reviews, takes action to resolve issues, and notifies the reviewer.
Another piece of an enhanced ORM strategy that will help your property stand out is additional apartment ratings that other properties may not have, such as automatic ratings. This can help prospective residents trust leasing with your property, and thus help drive renters to your property over the upcoming years, rain or shine.
3. Proper Utilization of Feedback Can Convert Online Apartment Reviews Into Onsite Action
While most management teams are prioritizing responding to reviews, many properties are currently falling short in the proper application of what is learned.
As a property manager, when you increase what you invest in ORM you can have the time and resources to not only respond but also analyze and act on what renters are saying online about you. This is the niche where you can overcome the negative impacts of a recession.
Collect all of your apartment reviews and see if there is a trend in the comments made. From here, you can assess what the problem is, how it can be fixed, and take actionable steps to do so.
To take it a step further, you can also efficiently utilize online reviews you come across through ORM for word-of-mouth advertising. Credible word-of-mouth advertising is a top source for revenue generation and it can potentially help keep your lease rates up during a decline.
Property managers can take what they learn from reviews and showcase that online as well as actively positive reviews on social media and website pages. Not only does it showcase real renters talking about your property to your audience, but it provides fresh content for your pages and improves SEO.
This transparency can help spread the word about your property and bring in new residents.
Online Reputation Management Solves Multifamily Recession Worries
As a property manager or landlord, don’t let celebrating your current success stop you from preparing for your property’s future success.
Any level of economic downturn, or simply the end of resident lifecycles, can negatively impact the lease rate and bottom line of your property.
By focusing on preparing for the uncertain future of the multifamily market right now, property managers and landlords can ensure the stability of their multifamily business. By employing enhanced online reputation management strategies and tools, apartments and multifamily properties can stay leased up for the long-term.