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How You Can Build a Strategic Budget in a Competitive 2024 Rental Market

Elizabeth Francisco
August 15, 2023

As seasoned property managers, you are no stranger to the complexities of budgeting for your apartment communities. The 2024 budgeting cycle presents unique challenges in a competitive market, demanding a strategic and data-driven approach to optimize performance. This comprehensive guide is designed to equip experienced property managers with valuable insights and best practices for crafting a robust and forward-thinking budget. By leveraging your expertise and embracing accurate end-of-year projections, you can confidently steer your properties toward success for 2024.

Set the Stage with Data-Driven Insights

In the budgeting process, forecasting performance for the end of the current year holds the utmost importance. Though predicting the back half of the year this early may be challenging, it forms the base assumption for next year’s budget. Regularly updating the forecast with actual performance numbers through the end of 2023 becomes critical before finalizing the 2024 budget for leadership and owners.  

Start by thoroughly assessing historical data, market trends, and performance metrics. Analyze your lease renewals, move-outs, and associated costs to prepare for unit turnovers. Pay particular attention to your renewal capture rate, as increasing it even 1-2% can have a significant positive impact on performance. Property managers can gain valuable insights into the factors influencing the overall renewal capture rate by analyzing the number and nature of resident interactions.  

Understanding which interactions positively impact resident satisfaction and renewal decisions allows for strategic resource allocation in the budgeting process for 2024. Allocating funds towards improving personalized communications, resident engagement initiatives, and efficient issue resolutions can lead to higher renewal rates and reduced turnover costs. Additionally, budgeting for training programs to enhance staff communication skills and customer service can further bolster resident satisfaction, resulting in a more stable resident base and increased revenue from lease renewals in the coming year.

You should also utilize in-depth market research to project rental rates for new renters and identify opportunities for additional income from rentable amenities. Look beyond traditional rental income to diversify revenue streams. Explore your options for additional services, such as co-working spaces, short-term rentals, or on-site amenities that will attract more renters and generate supplementary income.

Embrace data-driven insights, stay proactive, and adapt to changing conditions to craft a winning budget strategy that ensures your properties stand out from the rest in a fiercely competitive market.

Evaluating Operational Expenses with Precision

Operational expenses play a pivotal role in maintaining financial stability. As experienced property managers, you understand the significance of cost-efficient unit turnovers and proactive maintenance practices. Implement preventive maintenance programs to reduce unforeseen expenses and enhance the overall living experience for residents. Align your operational expenses with your property’s long-term goals to optimize resources and reduce unnecessary costs.  

Centralization can be an effective way to find operation efficiencies and cost savings. Leveraging some of the many property management tech options to centralize prospective and current resident engagement can unlock a plethora of benefits for your regionally located apartment communities.  

In addition to resident engagement, centralizing maintenance operations in regionally located apartment communities brings numerous advantages, reducing costs and improving operational efficiencies. By leveraging economies of scale, a centralized approach allows for better deals and discounts with vendors, lowering procurement costs. Specialized teams of skilled technicians lead to increased expertise, minimizing downtime and unnecessary expenses.  

Centralized maintenance and optimizing staffing avoids the risk of overstaffing and will also reduce overall labor costs. Streamlined training and preventive maintenance programs contribute to efficient issue resolution and prolonged equipment lifespan. Shared knowledge, standardized processes, and enhanced reporting facilitate better decision-making, therein enhancing the overall resident experience and increasing the likelihood of renewals.

Refining Marketing Strategies for Maximum Impact

In a competitive market, effective marketing is crucial to fill vacancies promptly. Take a look at your 2023 marketing campaigns. In order to effectively budget for the 2024 season, analyze past campaign performance and focus in on high-impact strategies so you can drive occupancy rates even better.  

You should rely on your extensive experience to craft focused marketing campaigns tailored to your target demographic. For example, if you’re a pet-friendly community, prioritize some campaigns toward pet owners. By focusing on these segments, you can maximize conversion rates while optimizing marketing spend and ensuring compliance with Fair Housing Laws. Embrace digital marketing platforms like social media, search engine marketing, and email campaigns to better track ROI and make adjustments as needed.  

Another idea in your budget planning is to consider implementing a motivating referral program for residents and local business owners. This will help you leverage word-of-mouth marketing, one of the highest converting sources, in a cost-efficient manner.

When it comes to your ILS investments, begin by conducting a thorough performance analysis of your spend. Budgeting for ILS expenses is not just a numbers game! The quality and conversion rate of those leads matter most, so be sure to look at those numbers carefully. Work through each individual ILS listing, taking note of qualified leads that converted into leases. Once you do that, focus your budget on the most effective ILS platforms aligning with your leasing goals and KPIs. Be sure to account for each community’s applicant conversion rate needed to fill projected vacancies.  

Elevating Employee Retention in a Dynamic Industry

Employee retention is a constant challenge in the apartment industry. The majority of turnover can be attributed to burnout, lack of benefits and incentives, and overall work dissatisfaction. As a seasoned property manager, you know the value of a cohesive and skilled team. Evaluating staffing needs and streamlining roles are essential to optimizing efficiency and reducing costs. Luckily, there are a number of things you can evaluate for inclusion in your 2024 budget to retain employees. Consider:

  • Increasing performance-based incentives. This will align the team with financial goals and can help boost motivation and productivity on-site.
  • Evaluating your core software used by on-site staff. Does it take weeks for your new staff to learn how to use the core platform? Is your software difficult to use once they do learn it? As crazy as it sounds, having the right software can significantly boost morale, improve performance and reduce turnover by enabling site teams to improve efficiencies in day to day operations so they can work smarter and not harder.  
  • Outsourcing non-core functions during a downturn. This can be cost-effective, allowing the in-house team to, again, focus on critical operations.  
  • Investing in training and development programs that upskill the existing workforce. Doing so can lead to improved performance and reduced expenses. For example, even small investments in sales training may increase conversion rates, ultimately lowering the required marketing spend for your properties.
  • Prioritizing employee development and implementing recognition programs. This will help foster loyalty and reduce turnover. Striking the right balance between competitive payroll and budget constraints will enable you to retain top talent and elevate your property’s overall performance.

The Power of Local Market Knowledge: Navigating Nuances for Success

As an experienced property manager, you understand that industry reports and regional averages only provide part of the story. In the competitive landscape of 2024, knowing the nuances of the local market is paramount for property managers seeking budgeting success.  

While industry reports and regional averages offer essential data, your expertise as a property manager is your greatest asset. That expertise allows you to make informed, strategic decisions that align with the unique challenges and opportunities your property faces. By leveraging your local knowledge, proactively managing lease expirations, and staying ahead of economic shifts, you can confidently navigate the complexities of budgeting and set your properties on a path to thrive in the dynamic year ahead.

Interested in how to become a budgeting pro? Watch this on-demand webinar where some of our expert speakers can help you maximize success in your 2024 budgeting!

If you’re interested in ResMan as a software provider for your daily operations, book a demo to see the product up close. 

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