Amenity Valuation: Are You Getting It Right?

Amenity Valuation - Are You Getting It Right?

As an apartment operator, do you know what residents think amenities are worth? In this amenity crazed market, multifamily housing leaders need to understand what features like hardwood floors, appliances types – even a unit with a view of the swimming pool – mean to property performance and leasing.

Factoring key influences and property amenity valuations can lead to smarter decisions when setting rents for assets, industry professionals said in a recent webinar on the subject.

It’s not always an easy concept to wrap your head around but data science, drawn from a wealth of national lease performance information that reveals what residents are willing to pay for certain amenities, is helping to clear the picture.

Amenities come in three flavors: Rentable items not necessarily associated with an individual unit, building amenities like fitness rooms and pools; and amenities that differentiate units. Their value varies from one community to another and class, and is based on a number of factors that include competitor offerings, amenity quality, location, renter preferences in the market and seasonality.

The only true way to measure amenity valuation is drawing scientific conclusions based on the impact of leases on the rent roll, according to analysis done by RealPage. Ultimately, how quickly units with some or all of the bells and whistles move on the market and at what kind of rent premiums they generate – if any – determine whether operators are getting their bang for the buck.

Establishing how amenity valuations impact apartment leases, occupancy

Most amenities add value to a property but they can come at a price if they’re not the right fit. Their valuation should be assessed from time to time to determine if they effectively drive revenue, says Senior Vice President of RealPage Revenue Management Amy Dreyfuss.

“Generally, the share of total rent is attributed 5 percent of your rent roll, more in high rise at 9 percent,” says Dreyfuss, who has more than  20 years of experience in multifamily operations and revenue management and oversees RealPage’s LRO and YieldStar products. “What does it cost if you get the amenity valuation wrong?”

RealPage’s data science team has spent considerable time mining lease and amenity data from multifamily properties across the country to understand how amenities impact new, existing and rehabilitated assets or those targeted for acquisitions.

To establish a baseline, RealPage’s data science team has parsed thousands of pieces of information available from the company’s vast data warehouse of amenities listed by apartments of all types in various markets and submarkets across the country.

“The aggregation of data took a lot of work, pulling from a lot of property management systems,” said Rich Hughes, head of RealPage’s data science group.

Once amenity categories were determined, the team went about the business of comparing geographic locations, rents, lease-up times and many other factors to establish a baseline within given markets and submarkets.

Isolating an amenity type and determining value

Amenity valuation calculations examined price differences for units with an amenity versus those without, variation in leasing velocity for the differently amenitized units and benchmarked pricing for features at properties in the subject’s competitive community set.

With that analysis, clients can isolate an amenity type and determine its true value.

Hughes notes that an amenity may first appear to be something that a resident is willing to pay more for in rent, but the unit types, location and other dynamics ultimately determine value to the rent roll.

Sometimes outfitting units with a certain feature, like subway tile backsplashes, may be necessary to compete in a specific market. In other instances, it can be a perk that generates additional lease revenue and separates the community from others.

Also, the number of days on the market at a given premium is a key indicator. For example, higher-priced units with fireplaceslanguish compared to those that rent quicker without the amenity reveal the worth to the resident.

Dreyfuss said lease transaction data revealed for one client the impact of wood-style flooring. Over a four month period, units with the flooring leased on average 19 days faster than similar units without the amenity.

“It’s a pretty significant difference,” she said.  “The purpose of amenity pricing is to normalize demand.  This is a clear indication there is opportunity to increase the value of this amenity.”

Hughes notes that the study showed 435 similar leases for wood-style flooring with average price point of $18 dollars that were vacant 25 days before being leased in the same market.

“That can be an associated value of what can be charged for wood floors.”

Preferred unit amenities and achievable premiums vary considerably from one metropolitan area and specific neighborhood to another as well.

Getting a premium for the ability to do laundry in an apartment in Texas, Oklahoma, New Mexico and Colorado is more realistic than other states because data shows that’s what residents there prefer. The same goes for ground-floor units in Nevada, Louisiana and South Carolina, whereas renters are willing to pay more for higher floors in the Michigan, Kentucky, Alabama, Mississippi and New Mexico.

Too much of a good thing can lessen the impact of amenities

The arm’s race for amenities is surely to continue,especially in renovations. They are a great way of telling the story of a unit through listings and other marketing efforts right down to the finish on kitchen appliances. But operators should be cautious not to over-amenitize, Hughes said.

“The data we’ve seen shows there comes a point that too much amenity load on a unit is bad for it,” he said. “That being said, a small bedroom in an urban area with great views on the top floor, I would fully expect that to have a really high amenity package.”

But, too much of a good thing can just add costs that can diminish the return on investment, especially when working determining styles of appliances and other amenities.

“As with most things, being in the middle of a pack in terms of amenity structures seems to be fairly safe,” Hughes said.

He added that trying to be the leader of value-adds comes with its own sets of problems.

“I would encourage having a diverse offering and tell your story because not everything is right for everybody. But not every amenity is for everybody, so preferred amenities can go for a premium. If you find one strongly favored you might want to have an upcharge for that.”

And only the data science of amenity valuation can help determine that.

See how RealPage is helping simplify the lives of property owners and managers by providing the data they need to make smarter investment decisions. Learn more about RealPage Revenue Management here and RealWorld sessions specific to amenities here.


What millennials are willing to compromise on to buy a home


Millennials may be working hard to buy their dream homes, but many find themselves compromising to fulfill their goals of homeownership.

According to a survey from ValueInsured, 85 percent of millennial homeowners compromised when buying their dream house. Survey respondents said they had to give up various features and qualities to stay within their budgets.

Because of prices, ValueInsured found that:

  • 41 percent of millennial homeowners bought homes smaller than they wanted
  • 41 percent gave up features within their home, like kitchen appliances, types of flooring or air conditioning and heating systems
  • 40 percent purchased homes in a different location than desired
  • 39 percent wanted more outdoor space or land then they have
  • 37 percent don’t like the style of their home

Of the millennials who have purchased a home, eight in ten wish they bought a different home and would like to move.

Nearly 80 percent of millennials plan to move into another home in the next five years, while 52 percent plan to move in the next three years.

Compared to other generations, millennials are compromising the most when buying a house. Only 34 percent of baby boomers said they didn’t get their dream house, while 56 percent of homeowners in other age groups reported making compromises.

Currently, the millennial homeownership rate in the United States is 35.3 percent, which is the lowest it’s been since the U.S. Census started tracking homeownership by age groups in 1982.

According to a Toluna Research survey, millennials low homeownership rate stems from debt, lower down payments and increasing mortgage rates. Millennials have more debt then baby boomers. Seventy-eight percent of millennials have credit card debt, 68 percent have car payments and 61 percent have student loans.

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There’s an ‘arms race’ to lure renters, and it now involves pet spas and beer gardens

A spa for your dog. Golf and boxing simulators in the gym. Private bars with wine storage for residents. A 24-hour concierge.

The list of amenities in some new Charlotte apartment buildings sounds more like what you’d expect in a high-end resort than a rental unit where you might live for a year or two. But with a record number of high-end apartments under construction, buildings are turning to their amenities to stand out and try to lure renters.

“It’s been an arms race, especially with the high level of supply and competition,” said Chad Hagler, a developer with Woodfield Investments, who’s opening the 455-unit Links Rea Farms apartments on Providence Road this year. “Everyone is trying to outdo one another.”

The amount of amenities considered necessary in a new, upscale building has increased vastly over the past two decades.

It’s no longer enough to have a pool and a gym with a few treadmills. Now, the bare minimum typically includes a saltwater pool with lounge chairs, a “pet spa” with grooming stations for dogs and cats, some kind of beer garden or community kitchen, high-end gym equipment like a yoga room and a concierge for packages and arranging services.

Some go even beyond that: Continuum 115 in Mooresville has a boat for residents to check out and cruise on Lake Norman.

All that added luxury can add up to increased rents. The average rent for an apartment in Charlotte is up about 6 percent from a year ago, at $1,142 a month. In 2013, the average was $842, meaning rent has jumped by more than a third in the past five years.

It’s tough to pin down how much swankier amenities add to the rent for individual apartments, since development costs can vary dramatically. But developers and property managers interviewed by the Observer said the effect isn’t insignificant.

Hagler said the first apartment building he developed in Charlotte, Elizabeth Square, had about 4,000 square feet of amenity space when it opened in 2007. His most recent, Links Rea Farms, has about 15,000 square feet.

“It’s an incredible amount of space, and those spaces are expensive to build,” said Hagler. But, he said, it’s worth it to draw new residents. “It’s your front door, it’s your marketing window.”

Not only are the added costs for building multimillion-dollar amenities packages rolled into the rent, but upscale amenities cost more to operate in the long term.

For example, a 24-hour concierge service requires hiring several shifts to work around the clock. Maintaining multiple courtyards, swimming pools and gyms full of high-end digital equipment necessitates more staff. And many apartments now contract with third-party vendors who organize social events for residents, such as beer tastings and food truck rallies.

“It’s more expensive from an operational standpoint,” said Marcie Williams, president of apartment management company Rivergate KW Residential, which manages high-end apartments in Charlotte. “The residents expect to be more entertained, and they want the amenities 24/7.”

Some changes have been driven by new technology.

For example, the dominance of Amazon Prime, which recently passed 100 million members, means apartments are now receiving hundreds or even thousands of packages a week. And meal delivery services like Blue Apron mean that apartments have to find a refrigerated space to store dozens of boxes with perishables.

“Every community we have now is doing 24-hour package rooms,” said David Ravin, CEO of developer Northwood Ravin. The company is building luxury apartments in two uptown towers and at Providence and Fairview roads. Its buildings also include private bars — staffed with bartenders — for residents, along with a sauna, steam room, massage room and golf simulator.

Amenities that once would have been considered over-the-top have become expected by many renters, said Phil Brosseau, vice chairman at real estate firm CBRE. Brosseau said the growing number of apartment dwellers includes more “renters by choice” who could probably afford to buy.

“They want the experience,” Brosseau said, and luxury amenities are an essential part.

With more than 50 new residents a day in Charlotte, many are young professionals moving from other cities who may be used to even more expensive urban markets like New York or San Francisco. That means luxury apartments in Charlotte might seem like a steal, said Lawrence Yun, chief economist and senior vice president at the National Association of Realtors.

“New residents (like these) are not hesitating to occupy a luxurious apartment in Charlotte,” Yun said. Charlotte’s vacancy rate bears that out, at less than 7 percent citywide.

Cost vs. Chic

Not all residents want the amenities, however.

“I prefer no amenities. My fiance and I toured probably every apartment complex in South End and South Park, and they upcharge for rent,” said Rob Brooks, a resident of Park Avenue Condos in South End. The couple decided to rent a unit at the condos to avoid the higher price tag of amenity-laden apartments.

While his condo has a swimming pool, Brooks said he doesn’t use it much. His membership at the Y makes a swanky fitness room unnecessary, and his lack of a pet eliminates the need for a dog park or pet spa.

“We didn’t want any of that extra stuff.” Brooks said. “It’s not important to us.”

Other residents consider extensive amenities to be a selling point of apartment life.

“I think that’s the only reason I’m still in an apartment complex,” said Alanea Kriete, of the amenities offered at her apartment in Post South End.

Still, when naming the amenities she uses the most, Kriete stuck to the standbys: the pool, the gym and the gated courtyards, where she likes to spend time with her dog outside. She admitted to rarely using what the apartment’s website describes as the “resident lounge” with an entertaining kitchen, an Xbox gaming station and a movie lounge.

Those looking for fewer frills may be priced out of the market as extensive amenity packages become the norm among city apartments, said Brosseau. But ultimately he believes the trend is a “testament to the durability” of Charlotte’s real estate market.

Yun pointed out that such durability is dependent on other factors.

“It is very aggressive building that is taking place in Charlotte,” Yun said.

As long as the influx of high-earning new Charlotteans continues, so will the aggressive construction of apartments that attempt to meet new residents’ ever-rising expectations, Yun said.

“We’ve just found our clientele expect the full package,” said Ravin, the developer. “They just want everything right there.”



Plan to Split Up California Likely to Make November Ballot

A view of the top of the California Capitol building in Sacramento. (ROBYN BECK/AFP/Getty Images)

An initiative that seeks to split California into three states is projected to qualify for the state’s November ballot.

California Secretary of State Alex Padilla said late Tuesday the initiative needed 365,880 valid petition signatures to qualify and random sampling projects a number of valid signatures greater than 110 percent of the requirement.

Cal 3’s projected map of the three states. (Courtesy of Cal 3)

The latest proposal for splitting up the Golden State is promoted by Silicon Valley venture capitalist Timothy Draper. It would create the states of Northern California, Southern California, which includes much of of the Central Valley and San Diego, and a coastal strip that includes Los Angeles and retains the name California.

Even if voters approve the initiative, an actual split would still require the approval of the state Legislature and Congress. The proposal, called Cal 3, would require the Governor to ask Congress to divide the state into three states and increase the number of U.S. Senate from 100 senators to 104.

Plan to Split Up California Likely to Make November Ballot

A view of the top of the California Capitol building in Sacramento. (ROBYN BECK/AFP/Getty Images)

An initiative that seeks to split California into three states is projected to qualify for the state’s November ballot.

California Secretary of State Alex Padilla said late Tuesday the initiative needed 365,880 valid petition signatures to qualify and random sampling projects a number of valid signatures greater than 110 percent of the requirement.

Cal 3’s projected map of the three states. (Courtesy of Cal 3)

The latest proposal for splitting up the Golden State is promoted by Silicon Valley venture capitalist Timothy Draper. It would create the states of Northern California, Southern California, which includes much of of the Central Valley and San Diego, and a coastal strip that includes Los Angeles and retains the name California.

Even if voters approve the initiative, an actual split would still require the approval of the state Legislature and Congress. The proposal, called Cal 3, would require the Governor to ask Congress to divide the state into three states and increase the number of U.S. Senate from 100 senators to 104.

Long Beach rent control advocates miss deadline for November ballot

A proposed rent control measure for Long Beach won’t appear before voters in the fall, but the measure could still qualify for a later election.

Housing Long Beach missed its June 1 deadline to submit more than the 27,000 signatures required to qualify the initiative for the city’s November 2018 ballot.

Rent control advocates, however, vowed to keep circulating their petition, and if they file the required number of signatures by July 30, the measure could still appear on a later ballot, likely in March 2020.

The Housing Long Beach measure would limit annual rent increases to the rate of inflation and establish “just cause” eviction policies. The measure also would create a rent board and roll back rents to January 2017 levels.

CAA will continue to work with its allies to defeat any rent control attempt in Long Beach and elsewhere in California.

Efforts to place rent control measures before voters this November remain underway in Southern California cities including National City, Santa Ana, Glendale and Inglewood. A signature-gathering effort to place rent control before voters in Pasadena fell short by more than 2,000 votes.

If you are interested in helping prevent rent control in Long Beach and Inglewood, please reach out to Fred Sutton, CAA’s vice president of public affairs for these cities, at

Five Ways to Highlight Every Rental Property’s Most Sellable Features

Five Ways to Highlight Every Rental Property’s Most Sellable Features

Every property is different—and each one has features that make it stand out from the rest of the rental opportunities nearby. Knowing how to bring those to the forefront to attract new tenants, however, is the challenge. Luckily, there are a few simple ways to highlight these features with minimal photography skills and budget.

If you do it right, you can also start building a brand for yourself, thanks to engaging videos, improved Instagram posts and more. Keep these tips in mind as you prepare for spring and summer rental season.

Photograph the right features

The first step in highlighting your property’s most sellable features is to share photos of the right features—a.k.a. the features your potential tenants will care most about. These features can be both design-focused and functional; a mix of the two may appeal to the widest audience. Focus on features like crown molding, new appliances, large outdoor or patio space, and newly renovated areas of the home.

To make sure tenants see the property from every angle, put the images into a collage: “This allows somebody glancing through listings to see interior and exterior shots all at once. Because our homes are so beautifully staged, the split photos get a lot of attention and sets it apart from every other listing,” says Paul Moore, of Smith Mountain Homes.

You can also add multiple images to Facebook Carousel ads or Instagram’s new multi-photo upload feature to create a well-rounded view of the property.

Do virtual home tours

What better way to highlight your property than with a virtual tour? You can do this by taking a phone video and uploading to YouTube, or take live video with your Facebook or Instagram business page. Either way, this is also a great opportunity to engage with potential renters, so while giving the tour, ask questions. You might say:

“We just finished this bathroom, and added the brand new clawfoot tub. Do you like that vintage style? Tell me in the comments!”

“Tenants love using the back yard for grilling and hanging out with friends—the grill over there comes with the property. How often would you use this area?”

If creating all videos on a social platform, be sure to download them and upload to your YouTube channel. You can begin creating different sections for each rental property, so anyone interested in your listings can get walking tours whenever they want.

rental property

Share high-quality images

Photographing the right features is important, and the next step is taking high-quality photos. Luckily, you don’t need an expensive camera or photography experience to do that. The new iPhone 7, for example, has made it even easier for you to get expert-quality photos all on your own, thanks to its new dual lens camera, which features a wide angle and telephoto lens, according to iPhone 7 Rumors Confirmed.

Other new phones like the HTC M8 also have this feature, making it possible for you to take photos with depth of field. This is a feature traditionally found only in expensive SLR and DSLR cameras, providing you with a great opportunity for you to get high-quality photos without spending a lot.

Be a data-head

It’s hard to argue with facts, which is why using data to highlight the most sellable features is a great tactic for attracting new tenants. Here are a few data points to include in your listings and ads:

Walkscore: Use this to attract tenants who care about accessibility to nearby retailers, grocery stores, restaurants and bars. The key is to know when to highlight it and when to leave it out.

Alexa Collins, with Homelight, suggests leaving the walking score out if it’s not high enough: “Buyers who really care about Walkscore are people who want a place with tons of resources nearby, so if you have a score under 70 don’t add it to your listing but anything over 71 is advertising gold.”

Crime stats: If a tenant is moving to your area from another town or city, they’re likely unfamiliar with the local crime rates. If yours are notable or lower than average, be sure to include them. This will especially appeal to families and people looking to live alone.

Check sites MyLocalCrime and CrimeReports to get the information you’re looking  for.

Age of property: If you’re renting a new building or house, make that clear in your listing and ads. “It’s worth repeating that tenants want to avoid the hassle of tiresome repairs. Oftentimes, this means they will look for new properties with newer plumbing, electrical and HVAC systems that are less likely to break down and require repair,” says Andrea Collatz, with Legal Zoom.

Use tenant testimonials

No one knows what features are most appealing more than the people who have lived in your rental property. If you have a good relationship with tenants, ask them to write a small paragraph discussing the features they liked most about the property. Everyone will like different things, so this allows you to provide a wide, all-encompassing perspective for every potential renter.

Feature these on social media, your website, or better yet—right on the listing page. Include first name, last initial and age range (20-25, 25-30). Age range is helpful because everyone appreciate different features at different times in their lives; this allows potential tenants to qualify the information in terms of whether it’s important to them.

Featuring your properties most sellable features isn’t hard to do. With the right strategy and ideas, you can capture the essence of your rental property, attracting more people and building a brand for yourself.

Register for “Unboxing the Listing Widget” and visit the Listing and Syndication page to learn about Propertyware’s newly enhanced, easy-to-use widget. You’ll discover how you can leverage your listing power to attract and convert more prospects into tenants.

Jessica Thiefels has been writing and editing for more than 10 years and is now a professional freelancer and consultant. She’s worked with a variety of real estate clients, and has been featured on Forbes and Market Watch. She’s also an author for Inman, House Hunt Network, and more. Follow her on Twitter @Jlsander07.