Got 1,000 units of multifamily assets and an interest in leveraging revenue management technologies without a sizeable allocation of financial and personnel resources? Try calling on Laramar Group—the Greenwood Village, Colo.-based property management firm has recently begun running its LRO yield management software for smaller companies looking to test-drive the technologies before making a full-blown commitment and commensurate investment.
“We have two clients so far for a total of about 1,500 units,” says Laramar president and CEO Dave Woodward. “We pay what we would normally pay LRO based on our volume of some 35,000 apartments and then resell it to the clients on a marked-up basis so we can make a little bit of margin. The client gets access to revenue management, Rainmaker gets exposure to a new business opportunity, and there is the potential side benefit that Laramar might be able to forge some relationships that turn into fee-management assignments.”
The Alpharetta, Ga.-based Rainmaker Group has, for some time, been fielding calls from smaller multifamily owner-operators looking for an introductory path to automated pricing, according to company principal Tammy Farley. “Often times, that can be cost-prohibitive, not just on the software side, but on hiring the personnel who will be focused on pricing,” Farley says.
Under the Laramar program, clients have individual yield management systems that are effectively siloed from the larger Laramar portfolio so pricing structures and histories are not colluded. Likewise, Laramar has been careful to offer the program only in non-competitive submarkets. “It has not come up yet where there are competitive submarket issues in play,” Woodward says, “but I would imagine we would not want to be running LRO for the property across the street from ours.”
Carrollton, Texas-based RealPage has likewise been attempting to create a larger revenue management market in the multifamily industry by providing internal advisory services to smaller firms with constraints and by encouraging owners to seek out and leverage the systems expertise of their fee management companies. “It’s a great idea for owners to avail themselves to fee managers to test drive revenue management, and we have been doing that for two years,” says Janine Steiner Jovanovic, president of RealPage’s YieldStar unit. “There are also a lot of institutional investors that don’t just want to not be responsible for revenue management, they don’t want to be responsible for management at all. They just want to be investors in multifamily have someone else take care of it.”
To that end, RealPage also offers “revenue advisory services” to clients, providing access to an in-house tactical team of asset managers and YieldStar veterans who monitor daily prices, provide education and reinforcement training on an ongoing basis, and report revenue trends to apartment owners on a monthly basis at a minimum. According to Steiner Jovanovic, roughly 20 percent of the YieldStar client base uses the advisory services to manage approximately 10 percent of the properties on the YieldStar system.
“It’s another upfront, low bar for entry,” Steiner Jovanovic says. “You don’t have to hire anyone. We’ll train you, we’ll have oversight, and after a few months, if you want to move forward, we’ll even help you find someone to manage it internally. As the technology becomes more and more widespread, we anticipate that there will be an increase in these types of resources.”