Increasing Revenue & Asset Value through Proven Pricing Theories & Strategies. Jennifer A. Nevitt

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1 Increasing Revenue & Asset Value through Proven Pricing Theories & Strategies Jennifer A. Nevitt

2 Increasing Revenue & Asset Value Proven Pricing Theories & Strategies Are you craving more confidence and clarity in your pricing models to ensure that you are maximizing every dollar available to you right now? Learn precise takeaway strategies from the original inventor of YieldStar in more effectively positioning and increasing the value of a real estate asset, one apartment at a time. This program provides tools that will enable each team member to think and respond strategically to marketing, leasing, and pricing opportunities in real time. 2

3 Key Takeaways & Follow Up 3

4 FIDUCIARY Real Estate Definition Fiduciary responsibility is when someone has entrusted his or her assets to another s care. In real estate, it is doing activities that are in the best interest of the real estate asset or owner. Doing activities in your own best interest instead of your employer s in the business world is unethical. Maintain Integrity!

5 Real Estate Economics Building Confidence on the Front Line The Impact of Human Prejudice on Property Value in US Training Needed - Finding the Dollar Rent Versus Occupancy 5

6 Real Estate Economics Valuation Techniques 6

7 Real Estate Investment Theory Basic Terms and Calculations Net Operating Income [NOI] is the total income less operating expenses Expenses are all operating expenses above the NOI line 7

8 Real Estate Investment Theory Basic Terms and Calculations Proforma Cap Rate = (Gross Income Expenses) Sale Price - or - Proforma Cap Rate = Net Operating Income [NOI] Sale Price VALUE = Net Operating Income [NOI] Cap Rate 8

9 Real Estate Investment Theory Rental Income Basic Terms and Calculations Rental Income can be confusing Street Rent is the apartment rent s possibility rental rate of a vacant, not leased, apartment or a notice to vacate an available apartment in any given moment of time. Street Rents should be tested to see if the rental rate can be validated by the consumer by procuring an actual lease at that Street Rent price. * Street Rent is not Actual Leased Rent Net of Concessions, nor Renewal Rate Rent, Market Rent or Validated Market 9 Rent.

10 Financial Profit & Loss Consequences- Rental Income Which bucket do you want to affect? Gross Potential Rent Concessions Loss to Lease Raise Rent 10

11 Orchestrate Sound Money Management 11

12 Contrarian One that Believes in Doing Things Differently Marketing Plan Lorem Ipsum is simply

13 Price Save it for Later, Pricing is Last Change the order and create the solution. Price should be the last change to be considered. 13

14 Performance Is it a Marketing or Sales Challenge? Many focus on pricing as the problem. Pricing is the consequence, not the challenge. Discipline and Diagnostics first. Frozen market after 1999 & August 2017 Diagnostic Research; Look at Demand 14

15 Process of Elimination 15

16 Inventory Management The supply of an item at a particular price, at a particular time, and in a particular place, indicates the item s relative scarcity, which is a basic factor of value. 16 Source: The Appraisal of Real Estate - Eleventh Edition Appraisal Institute

17 All Units Report Floor Plan by Type 1. Code by Type 2. Tails Anomalies 3. Descending Order of Priority Relative to Value 4. Memorize Unit Mix and Most Popular Plans 17

18 All Units Report It All Starts Here 18

19 Unit Mix Know Where Your Risk is High & Low 19

20 Amenity Adjustment Difference Between Type and Adjustment 20

21 Performance Adjustment Analyze Before Changing Prices 21

22 Take a Chance Perfection Means 80% Correct 22

23 Rare This is the Driver in Rental Income 23

24 Floor Plan Analysis Side by Side Competition Review 24

25 Screaming MIMI Floor Plan Type Losing the Most Money On 25

26 Lease Expiration Management Artificially Control Demand 26

27 Lease Expiration Find the Screaming MIMI Jen s Favorite Report 27

28 Income Producing Assets Continuum of Chronological Time (24 months) 28

29 Lease Expiration Management Find Solution & Lock the Term 1. Priority of Focus 2. Proactive Service for Screaming MIMI s - Pull Service Tickets 3. Reposition Your Screaming MIMI s - Inbound / Outbound Marketing Resources 29

30 Time Value of Money Compressing Time 30

31 Focus Renewal Screaming MIMI Negotiate the Rate Identify Pull Service Tickets Pull Conversations Pull Reviews Action NOW to Generate Renewal Secure Long-Term 31

32 Rent Growth Strategy Notice to Vacate (NTV) 32

33 Show Undesirable Designs Analyze Times Shown Before Changing Price 33

34 Pick Your Horse Use Deductive Reasoning 34

35 Profile Pricing by Building Building Value, One Building at a Time Achieving the highest rents within the BUILDING, thus, capitalizing on the Value, is a lot like a Rubik s cube with all of the same colored sides up! 35

36 Profile Pricing by Apartment Price Up / Price Down (1 Address 2X Per Day) Pricing a SPECIFIC ADDRESS is like playing a game of checkers. You move the STREET price around the board until someone takes it! This is called price validation or market pricing acceptance. 36

37 Forfeit Strategy Price it UP! Price it Down 37

38 Generating Demand Time Erodes Value- Walk In Traffic Counts 1. ILS Pricing Accuracy 2. Craigslist Postings 3. Referral Residents 4. Apartment Ratings 38

39 Performance Waving Our Hearts Out 39

40 Performance Target Seasonal Occupancy 40

41 Flowers Are Your Friend! Performance 41

42 Value Add Construction - Acquisition Case Study Since November 15, 2016, using a conservative 7 Cap Rate, management has increased the value approximately $5.2M on ABC Apartments through 231 transactions investing in minimal CAPX as of August 31, Ownership believes this strategy will be replicable at its newly acquired asset. Market Parameters: November began low seasonality in this particular apartment market. Additionally, the asset experienced traditional holidays of Thanksgiving, Christmas and New Year s. The weather had an excess of seasonally high rain showers; however, the management team achieved these results taking into consideration all of these conditions. Total Monthly Revenue Change: $30,529 Capitalization Rate: 7.0% Total Value Added: $5,233,543

43 Best Practices Leasing Velocity 43

44 Product Is it a Marketing or Sales Challenge? Without the right product AND super clean product, no amount of investment in marketing, traffic generation or positioning will penetrate a market! 44

45 Price Confidence Be Fearless 45

46 Inventory Management Defined Create a Model of Equilibrium 60 Day Notice Monitor Secret of Demand- Key Metric - 5% of Total Units on a Waiting List 46

47 Fair Housing Managing Automation 47

48 Scarcity Priority Wait List 48

49 Pricing Turn Apartments in 5 Days or Less 49

50 The Front Line Equals The Bottom Line Jennifer A. Nevitt

51 Speaker Contact Information Jennifer A. Nevitt Chief Executive Officer Forty-Two, LLC 6 E Germantown Pike Suite 42 Plymouth Meeting, PA Jennifer@Think-Yield.com. 51