Episode 18: Leasing for longevity
Matt Easton is a master when it comes to leasing apartments. The face and founder of Leasing University, Matt advocates an approach that’s all about respecting residents and understanding their needs first—in short, incorporating their voice into your leasing process. We wanted to ask Matt what property managers can do right now to meet residents’ evolving needs so that, even once they can move elsewhere, they’ll want to renew their leases instead. He answers that, and much more, on Episode 18 of The Property Manager Podcast. Listen to all of the episodes from The Property Manager Podcast. The below transcript has been edited for clarity and brevity. Why doesn’t the ‘old way of doing things’ work in leasing? Matt Easton: The industry has really changed and it’s completely different than it was before, and for two reasons. Number one is today’s renter has access to more information than ever before. Literally, just in the last 24 months, there’s a hundred times more information available to a renter online; available to them right on their phones, right on their tablets—wherever they need it, whenever they need it. The second thing that’s really changed is today’s renter has more choices. Now, I may be dating myself here, but, in the past, when people like me were going out and needing a lease, the situation was very limited. We would go to the little kiosk and newspaper stands (I’m really dating myself now). Remember the old for rent guides and magazines? You’d pull those out, right? Or you’d go to the classified section of the newspaper and you were just hoping that there was an apartment that fit your budget that was available because there wasn’t much information. And, secondly, there just weren’t many options. Our culture has shifted. Today, more people are deciding to rent where they live than own a home, right? And investors, owners, operators, builders, are smart. They’ve been building the product pretty consistently and it’s led us to a great place in the industry. Never has it been more exciting to be in multifamily, but what’s lagging is that the old training is still designed for a property manager to be more of a gatekeeper than an information provider. More of a librarian than a true sales consultant, and you can hear that by calling just about any apartment community in the country. They’re going to be asking you all kinds of questions about your budget. You’ll hear them typing away on their keyboard, checking pricing and availability. And they’re never really learning about you and the what’s behind why you’re moving. And it’s not a sales process that’s working when you have a customer base that has choices and information. The concept of being tied down to a home has totally changed. Therefore, we need to pivot as an industry and realize that we’re not just providing temporary housing for somebody that’s in an apartment because they’re a student or because they can’t afford a house. This is the lifestyle for many, many Americans and those numbers are continuing to grow. How would you explain what’s going on with the rental and housing markets? Matt Easton: From where I sit, I think we’re at a precipice where we have been building product for close to a decade, but for the latter half of this decade new construction has been gangbusters. Don’t believe it? Go try and buy an apartment community. There’s been very little product, forcing people to build, but we’re now hitting this point (especially with the little dips we’ve had in the economy lately) that the industry is going to have to make a choice of whether or not they want to go one way or the other. And the two choices they have are: “Hey, we can start to really focus in on our sales process and our resident experience or we can buy into this race to the bottom.” And, unfortunately, a lot of folks and a lot of markets have been doing this race to the bottom and operating under the thought process, “I just need to get my lease occupied. I just need to get this building occupied. Let’s come up with a rent special, let’s come up with a discount. Let’s come up with something just to fill the building.” What we’re seeing happen is although you may get some short-term occupancy, you haven’t really solved the problem, and you’re then creating this tsunami of potential non-lease renewals when all of those leases come due. Because if you don’t make a connection with that renter, discovering what’s going on in their life, what’s important to them, what’s valuable to them, all you’re doing then is selling them on a promotion. And when it becomes renewal time, you better double down on that promotion or else they’re going to continue to move. So there’s going to be one class of operator that’s going to really make a connection with their residents. They’re going to keep that connection and they’re going to hold that resident. And then there’s going to be a whole bunch of people that are basically going to be racing to the bottom, fighting over these transient renters that are going to just move from place to place, to place taking the best deal on each lease they sign. Tony: I think that, you are seeing a lot of property managers try to figure out how to balance that equation with renters. Here’s a stat for you from our 2021 State of the Property Management Industry Report. In 2019, just 16% of property managers said that attracting and retaining great residents was one of their top three priorities. Well guess what? Over the past year, that whole number jumped by an unprecedented 29 points. So 45% of property managers are now saying residents are in their top three priorities! That’s a huge shift. And I think that’s a direct indicator of what’s going on right now in the rental market. And again, the importance of focusing on residents and really getting to know them, really making sure that your prescreening is strong and automated, yet still human. Again, not an easy thing to do, but a huge focus. What are the changes you think property managers should be making to their leasing process? Matt Easton: A lot of people listening to the podcast may be saying to themselves, “Oh yeah, yeah, we have a process.” But when boards of real estate investment trusts (REITs) call me in and I ask, “Hey, do you guys have a process?” They also say, “Yep.” And I say, “Okay, what exactly? Tell me the exact words that your people say when they answer the phone?” They then say, “I’m not sure.” “What exactly do they say to close the lease?” “Do you want the apartment, right?” When it comes to real estate, there’s an objection, and there’s a complaint. There’s no perfect apartment for anybody. So how do your people know what’s really an objection that needs to be addressed or handled and what’s simply a complaint? When I talk to boards of REITs, they typically can’t answer those questions. If you don’t know exactly what your people should say, when they should say it, and why they’re doing the things that they do, well, then you don’t have a sales process. What you have are good intentions, but you can’t manage good intentions. That’s where when we have terrific technology—and I know Buildium is world-class in providing that technology— we can truly get the most out of our technology when we also have a people process behind everything. How would you break down the most important steps of the leasing process? Matt Easton: There’s five steps to a leasing process, okay? It’s really simple, but then you get into the intricacies of how these things flow. First, you’ve got to greet the prospect. A lot of property management companies out there still don’t even answer the phone. Step two is where the wheels completely fall off in the industry. I have to determine your wants and needs. Most property managers out there, most leasing agents, have no clue how to determine a prospect’s wants and needs beyond, “Hey, what’s your budget?” Worst question you could ever ask. Third, I can then select an apartment and build value in that apartment. Leaving me with the last two: I’m going to make a proposal and then I’m going to close the lease. So greet the prospect, determine their wants and needs, select a home and build value and then make a proposal and close. Those are the five steps. Once you understand those, and you understand the flow of how to move through those and what makes it easy and what makes your job more difficult, then leasing becomes a streamlined process that’s fun, enjoyable, and anybody can do it. What are the right questions that property managers should be asking during pre-screening? This is something where my philosophy really tends to differ from a lot of folks in the industry because the industry is typically still attached to that old-world sales skill. Even the term “pre-screening”…I’m not personally a huge fan of that and I’ll tell you why. There are so many terrific technology companies out there. There are so many terrific marketing opportunities out there. Today’s renter has more access to information than ever before. Our data shows that on average, 80% of the people calling your property are qualified to live there. By nature of going to apartments.com or what have you. There’s a million choices out there, but wherever they come to you from, that technology is pretty sophisticated, right? It’s going to serve them up an apartment that already works Here’s another thing. Whether your renters tell you or not, most of them already know the price, right? It’s readily available online. Unfortunately, most people try and pre-screen in terms of, “I need to make sure that this person is qualified to live here.” Now, if you have an pandemic where most of the people that you’re talking to are not qualified to live there, that’s not something that you change your sales process with. That’s a discussion that you have with your marketing provider or your marketing team, right? That’s a totally separate discussion. That’s saying, “Hey, we’re attracting the wrong leads.” But for the most part, what our data shows is most communities are getting the right leads. And if they’re working with a solid marketing company, they’re getting enough of them. Where they’re not focusing on their pre-screening is simple things like the big four. What’s most important to you? Why is that important to you? Here’s a big one that nobody asks: What do you want to see first when you get here? Why do you want to see that first? Right? Especially when you get somebody who’s price, price, price. Well, why is that important to you? If you really get a smart alec they might say, “Because I’m broke and money’s important.” Fantastic. When you ask them, “What do you want to see first when you get home?” They might say,”I’d like to see the dog park. I just got this pug named baby Yoda. There’s nothing that’s too good for baby Yoda.” When you ask them what they want to see first, and most importantly why, they take their armor off and start to share with you what’s really important. Imagine if you went to a doctor because your heart was pounding out of your chest. And the first thing the doctor said to you was, “Heart hurts? Got it. So what’s your budget?” I realize we’re not going to drop dead, but it’s still Maslow’s hierarchy of needs, right? Oxygen, water, food, shelter. We’re number four on the list here. We need to start treating our prospects with the dignity and respect that this decision deserves, rather than just trying to prescreen them and put them into a box that we’re not even sure is the right box for them. Could you share a story of how you’ve seen these types of tweaks make a difference? One that pops into my head was a property in the place called Alton, Illinois. Very large community. I think they were under 400 units. I was brought in for a live event and the team there was working their tail off. I knew the instant that I saw these people that the problem was not that they were the wrong people. The problem was not the property itself. It was more of affordable type property. It was a good product, right? It’s not the people, it’s not the product. They were at 67% occupancy. 67%, right?! That’s a scary situation to be in. When you get down that low it affects everybody, right? Everybody is now wondering, will this be my last day at work today? Is somebody else going to come in and take over this community? It’s not a good, happy place to be. All we simply did was helped give them a process. I had them writing their goals down every day. Most importantly, I had them running to answer every call. Huge, right? They knew the right things to say when they answered. They found out what was most important to that resident. When they showed them the property, they focused on what was most important to that resident. They had a sheet so they could say, “Hey, do you mind before I show you the apartment, can I recap my understanding of what’s going on here?” We gave them a system to where they’re now treating a prospect so special and literally going through checklists with them. They went by changing nothing, same marketing campaign, same property. Didn’t put any vinyl plank in there. Didn’t change the countertops. Didn’t do anything to the property. Didn’t fire any of those wonderful people that were working there because they were rock stars. They just needed a process. In 30 days, they went from 67% occupancy to 89% occupancy. When you have the right sales process, you don’t have to be pushy or manipulative. You don’t have to be high pressure because your prospects are going to let you know, “Wow, this is a great fit for me. I’m in.” Or not. And if it’s not a fit, now you can trust your process and think, “No problem. It’s not a fit for them, but I’m sure somebody else is going to be calling me in five minutes. I’m going to take the next person through the exact same process.” It makes things easy for us. It makes things easy for the residents. It makes things easy for the prospects. Everybody has an easy time.