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In a market that’s growing by the minute, landlords need to make the most of their properties to stand out from the crowd. True property optimization — minimizing costs while improving performance and increasing ROI — is still the name of the game for landlords across the U.S.. As both a landlord and a broker, I’ve learned a great deal about making the most out of what you’ve got, and have found that the best property optimization tactics for landlords require a true understanding of your tenants, properties and the current market.
Optimizing properties is about more than installing new appliances and a fresh coat of paint. Here’s a step-by-step playbook to help landlords target niche demographics and optimize their properties to maximize value:
1. Understand your tenants.
Connecting with tenants begins with an understanding of your own key objectives with the property in question. Naturally, each landlord needs strategies that are unique to each property, rental market and client they’re trying to pursue.
Always be transparent with clients and let them know how the value you present meets their needs, with an emphasis on accommodating their budget. Trustworthy landlords not only empower tenants to confidently buy or rent from them, but may ultimately improve their own bottom line with higher sales. When both you and the tenant understand the meaning behind what you’re charging, both sides can feel confident that they’re getting the most out of the transaction.
2. Understand your property.
Just like people, buildings age and require maintenance. Understanding the values and faults of your property helps fix problems as they happen, not as they spiral out of control. The last thing you want to sell is a flawed piece of property. Some things to consider include:
Location: Connect with the property’s neighborhood to understand of what you’re presenting to clients. Knowing about amenities, transportation and demographics only scratches the surface — if you’re serious about investing in a particular neighborhood, consider opening local offices to show future tenants that you’re serious about the area they’re considering living in. Other important factors include major attractions, how easy it is to get around and the quality of local schools.
Renovations: Regular property inspections allow landlords to find problems with the unit’s structure right away. Renovations and updated finishes can increase your asking price. Based on property type, consider what kind of renovations will pop up in the future. As always, use your best judgment when fixing up these properties. You’ll want to be careful not to over-improve a unit above market rate, as this can do serious damage to your ROI. At one property, we optimized the layouts and upgraded amenities of each apartment, adding an extra bathroom, installing central air and washer/dryers and renovating outdoor space. This increased the price per square foot we were able to achieve by 50% over a similar product on the same block.
Floor plans: Manhattan’s steep price per square foot means landlords need to put their best foot forward, starting with a floor plan that will show luxury tenants that they’re getting what they pay for. Floor plans and layouts of the space are getting more efficient by the day. They help you understand a property’s character and allow you to market it to the right renters.
3. Develop a unique strategy based on that understanding.
Powerful and unique marketing strategies separate the best landlords from the rest. Strategies materialize from a deep understanding of your properties and the tenants you want to attract. A solid leasing strategy — the goal to achieve the best rental rates across multiple tenants — will be the second crucial component of your game plan. Throughout the process, presenting your strengths will remain your goal. Here’s how:
Brand story: Each building has one. With the insights you gain during inspections and renovations, assess the history and design that makes your property stand out. Partnering with a real estate firm can help you determine the market, historical data and analytics, ideal pricing, proper building unit mix, renovation analysis and ideas for future development so you can brand, promote and market to the right people who want to live in your properties. Recently at one Manhattan lease-up, we specifically targeted prospective tenants currently living in Brooklyn who appreciated a similar “lifestyle” neighborhood, but didn’t want to deal with the issues of the future L train closing. This allowed us to get more interest from the right kind of client, instead of a bigger network of potential disinterest.
Data-driven leasing: Over the years, I’ve seen the more renters have lease terms that appeal to them, they are more likely to stay at a property. Today’s best leasing solutions use data and predictive analytics to assess patterns in consumer behavior so that landlords can attract and generate more qualified leads. Data allows landlords and brokers to work together to reach the right audience.
Once tenants move in, landlords can use data to improve their properties’ retention rates. Zillow reports that customer service and satisfaction are decisive factors in a tenant’s decision to leave a building. Retention will save landlords time and money — and nothing is better than when a building is at full capacity.
Timing: Consider the timing and execution of your construction schedule. Marketing units during peak seasons can attract the highest rents and keep leases in the right cycle. These concerns demand collaboration between landlords, brokers and contractors to deliver high-quality luxury units when the market needs them most.
Real estate isn’t easy, and success requires more than drive. It calls for a deep understanding of the fundamental appeal of a great property, and without a solid underpinning, you’re selling facades rather than strong foundations. You’ve got to meet expectations before you can exceed them. Once you do that, clients will know who to turn to when they need a new place.