Villas Park Avenue exemplifies the benefits of this technology.
What is best-in-class management? It’s a term we use often to describe our hands-on management approach. At Timberland Partners, it means using all tools and techniques available to maximize the collected revenue at a property while minimizing expenses.
The goal of any real estate investor is to increase the value of a property, which is accomplished primarily by increasing the net operating income – either by increasing revenue, and/or by decreasing expenses. In a traditional value-add real estate investment this is most commonly a capital expense plan at the property to renovate the units, exterior, common areas, etc., in order to command higher rent pricing. Equally important to transforming the property is managing the property to generate its highest potential income. Doing so at Timberland Partners takes many different forms, but one essential tool utilized is our rent optimization software.
This tool aggregates data from throughout our lease management platform to optimize new and renewal leases at each property.
Whereas mom-and-pop operators are often left manually reviewing their in-place rents and applying blanket increase, our software allows for daily optimization of pricing based on current and upcoming vacancy exposure, daily traffic, executed transactions, and a variety of other data points. Ultimately, it ensures residents are not overpaying compared to the market, but that our average in-place rents (a combination of new and renewal leases) are tracking as closely to market as possible. Underpricing would leave revenue on the table, meaning a loss of value to the investor.
Our recent acquisition of Villas at Park Avenue in Savannah, GA illustrates this value.
The property was acquired by Timberland Partners on July 14, 2021, and one week later we began optimizing rental rates using our software system. The prior owner/operator was not using a rent optimization software. In the 12 months preceding the sale of the property, the Savannah market rents climbed 14.6% while the Gross Potential Rent at the property declined 4.54%.
Since acquisition, our Renewal Rents are up 5.94%, New Rents are up 17.71%, and the Average Lease-in-Place rents are up 10.69%. While the property has benefited from the continued growth in the Savannah market during this period, without the utilization of this advanced software rental pricing would inevitably either trail the market with underpricing, or overprice and see a rise in vacancy.
While rent optimization software allows for market pricing accuracy, it still comes down to the quality and hard work of the on-site staff to justify this pricing. Their work to keep each property clean and inviting, while providing the highest level of customer service allows us to attract and retain great residents. Coupling this service with a powerful rent optimization software results in higher returns and total value for our investment partners.