Fresh off of its June 30 release of one of the first multifamily apartment search applications for the iPad, Highlands Ranch, Colo.-based REIT UDR is rolling out an electronic renewal system that has been in development for the past 20 months.
Powered in part by UDR’s revenue management software, the renewal system offer residents a range of renewal terms and options; provides UDR with greater visibility into expiration management and apartment demand; and provides an opportunity to turn the renewal process into a broader customer service and sales opportunity for the national REIT.
UDR senior vice president of property operations Jerry Davis sat down with Multifamily Executive senior editor Chris Wood this week for an exclusive preview of the electronic renewal system and his take on how the technology could revolutionize the resident renewal process.
MFE: Jerry, what can you tell us about UDR’s electronic renewal system and where the company is in terms of a roll out of the technology?
DAVIS: After successfully piloting three properties in California and Texas, we began the roll out in April, and since then, we have rolled out electronic renewals to about half the company, most of that in June, and we expect the remaining half will be rolled out by the end of July. So far, we’ve not really had any significant glitches.
MFE: And how does the technology work?
DAVIS: Basically, 75 days before the expiration of your lease, we send you an email invitation to go to your resident portal and view your lease renewal options, typically showing terms between four and 14 months with prices directly generated from YieldStar. Historically, we would send a letter with limited choices and the requirement to come into the office to negotiate other options.
This way, it is self-service. The system automatically populates the lease with terms, price, incentives, and provides a lease for review. Depending on how detail-oriented the resident wants to get on lease review, you can apply your electronic signature and can get immediate notification of a consummated lease. If you want, you can fly through this thing in 5 minutes. You don’t have to come in after work or on the weekend, and the leasing agent can likewise focus on new rental prospects.
MFE: How have you encouraged participation among residents?
DAVIS: We’ve added a couple features already. If you respond and commit within 15 days, we offer incentives from a carpet clean to an accent wall or, at a high-end property, it might even be an iPad. What we are trying to do is get the quicker commitment, which does two things: First, it keeps the resident from going to look for an apartment. Second, when we know that a large number of residents are making the decision to stay with us, it allows us to push the rents on vacant units because we know our exposure is going to be less.
MFE: How quickly does the renewal data get back into YieldStar?
DAVIS: The customer chooses options, and the info is populated directly back into the system. YieldStar pushes out the pricing info and collects the leasing data back in real-time based on what the customer orders.
MFE: So how have residents responded so far?
DAVIS: It’s still very early in terms of the number of residents we’ve been able to cycle through with the 75-day advance notice, but after adding the 15-day incentive, we are seeing some good adoption. For September, we had 622 expirations on the system, and in the first 15 days, 10 percent of residents committed. I think that will improve as we promote the program more.
MFE: What might those promotions look like?
DAVIS: It’s not a direct promotion of the program, and our success on this is unknown at this point, but we are also using the renewal product to sell residents additional items: new California Closets, TVs, and kitchen and bath upgrades. If we can do that, we might see a rent premium of $30 to $50 depending on the market. A month before the renewal letter goes out, we might invite all of those people to a wine and cheese party where they can see the TV, see the closets and kitchen and bath upgrades, so when renewal time comes around, they know exactly what they are getting with their options.
MFE: Did you have any challenges or concerns in rolling out the system?
DAVIS: We did question whether residents would trust doing this kind of transaction over the Internet, but in the month of June, at the three pilot properties, 88 percent of all renewals were done electronically. Only 12 percent of people who renewed were not comfortable doing it electronically.
MFE: What are the long-term benefits of electronic renewal to UDR?
DAVIS: We’re still early in the game. And you have to change the culture of your sales force to move it forward. You need to develop good marketing collateral to get your resident base to understand and accept it, and then you have to work within your property management software to make sure the prices get pushed out and pulled back at lease consummations.
But so far, the system creates efficiency in lease administration, simply in terms of tracking people down and following up. Now we can track you and remind you electronically. No one has to type up a lease. Waiting just gives the renewal resident more time to go look for a new apartment. We think the ease of the system itself will drive a higher renewal rate.