You may have seen or heard the phrase 'Future Occupancy' being used more now by various property management softwares and multifamily marketers when discussing their services. If you haven’t, now is the time to learn because it's a game changer for multifamily companies.
If you can master and use Future Occupancy as a marketing metric, you can:
- Increase marketing in advance of vacancy to keep occupancy high
- Reduce marketing to save money when occupancy is strong
- Stop relying on ill-timed rent price drops to solve vacancy
Future Occupancy is being touted as a metric that reports on how many units you can expect to have occupied in a future date range, and it's rising in popularity because the multifamily industry has learned that knowing about vacancies before they occur is extremely valuable.
The truth is, RentVision has been using this forward-looking metric for years now because we know how painful unexpected vacancy crises are. We spent a long time developing and perfecting our own Future Occupancy metric with the goal of helping our clients prevent vacancy crises before they occurred.
RentVision's Future Occupancy algorithm counts both upcoming move-ins and move-outs—while simultaneously measuring the exact timing of when those move-outs occur—to give an accurate picture of where your community's occupancy will be in the following weeks.
How we calculate that data is noticeably different than others we've seen or heard. Here's why:
We count vacant, leased units as occupied.
If you own a 100-unit community and have 12 vacant units, but 8 of those vacant units are scheduled for move-ins within the next 14 days, then your Future Occupancy would be at 96% because it counts each of these vacant, leased units as occupied.
If you rely solely on your standard occupancy metric in that scenario, you'd calculate that you're only 88% occupied because you'd be counting vacant, leased units as vacant. Then you would likely drop rent prices or increase marketing spend assuming you needed to occupy 12 units when, in reality, you only have 4 units available to rent in the future. That miscalculation would be a pricey mistake.
Occupied units that will be vacant soon are counted as vacant.
Since it counts vacant, leased units as occupied, we've built our Future Occupancy algorithm to also count soon to be vacant units as vacant, even though they're currently occupied.
It's the inverse to the scenario above: If your occupancy is at 96% but you had 8 units on notice that will be vacant in the next two weeks, your Future Occupancy would show you're going to be at 88% capacity shortly if you don't do anything.
How do we know when to start counting an occupied unit on notice, as vacant?
Our algorithm reviews your leasing data and counts the number of days that occurred between when a rental application was received and a resident started their lease for each unit, and then automatically calculates the average number or days that occur between application to move-in.
Say, for example, the total number of days that occured between application to move-in for your last 10 leased units was 140 days. The average would be 14 days—and that number is critical for determining your community's Future Occupancy.
Any unit that is scheduled to move-out in the next 14 days would be counted as vacant in our Future Occupancy metric. However, if any of those occupied, on notice units are scheduled for move-outs after that 14-day time frame, they'd still be counted as occupied.
Unlike common metrics like Occupancy or Leased,
RentVision's Future Occupancy takes into account the timing of when move-outs occur.
This allows you to focus marketing only on units that can be affected by marketing.
Why do we count leased, vacant units as occupied?
Once a unit is leased, you don't need to market or show it anymore (nor can you change its rental price). Regardless of whether that unit's move-in date is scheduled within a 14-day time frame or not, it's counted as occupied in our algorithm.
But the units that are actually vacating in the next 14 days do require your attention. You need to prepare how you're going to market them, what your rental prices will be, and how your leasing process will go so that you can get ahead of those vacancies now.
By counting those occupied units with move-outs occurring within 14 days as vacant, we offset the 14 days of counting leased, vacant units as occupied. Because of this, your Future Occupancy will rarely be the same as your Occupancy metric at any moment in time. But that is why it's so beneficial.
Video: RentVision Founder & CEO David Watson explains more
about how Future Occupancy is calculated.
When your Future Occupancy is low, you know you're going to take a hit. RentVision helps you solve that problem…automatically, before it occurs.
Being able to know your Future Occupancy means you can be proactive instead of reactive, and fix a vacancy problem weeks before it can occur.
And since RentVision's Future Occupancy metric is paired with our dynamic apartment marketing system, the difficult work that goes into reversing vacancy occurs automatically and instantaneously.
Our predictive AI knows when you're going to take a hit and responds by incrementally increasing digital advertising spend within your set budget so that you gain the right amount of qualified website traffic to get back on track.
Plus, it changes the Featured Floorplans section on your community website to give the floorplan with the lowest Future Occupancy the most visibility and traffic.
Bonus: When your Future Occupancy is good, you can save money.
When our predictive AI reads that your Future Occupancy will be above target, it automatically dials back your ad spend so that you can save money and take advantage of your strong occupancy.
Conclusion
Being able to see and react to upcoming vacancies weeks before they occur at your apartment community is extremely valuable, which is why you're hearing more about metrics like Future Occupancy.
RentVision's Future Occupancy metric has been worked on for many years, and it's uniquely calculated to include both future move-ins and move-outs, as well as the timing of those move-outs, to give you the most accurate assessment of your community's future. It's also paired with an apartment marketing system that dynamically responds to every change in your Future Occupancy, so that you're earning more leases when vacancies hit and saving money when occupancy is stable.