Prior to getting into the Multifamily business full time, I spent nearly 15 years in the advertising and product development space, where my job involved leading the strategic direction of an ad campaign of upcoming product. Much of that work involved conducting market research. That type of work provided me with an incredible opportunity to travel the globe executing research on almost every continent. We did a lot of in home ethnography studies, focus groups, and online surveys.
I bring a lot of that background and experience in creative agencies to our multifamily business–which I think is only natural. You always rely on what you know, and I know how to listen to customers and respond to their feedback.
I think that’s part of the reason we’re so focused on staying in tune with our residents on site, we make it a priority to survey them once we acquire and take over a property. Yes, it’s familiar to me–but it’s also proven to be very helpful in allowing us to execute our value add business plan. In this article, we’ll focus on why we believe this is so important, and highlight a few examples of how this has worked to our advantage.
First, let’s start with the primary reasons we believe in surveying residents:
It builds rapport and sets the tone once we take over
We aim to buy B-Class deals in B- or better areas. We’re not looking for massive turnaround projects with a complete flipping of the demographic. So when buy a deal, it’s important to let the current residents know that we want their feedback. We’re here to make improvements to the property and we want them engaged in the process, hearing from them about what’s missing or what changes they’d like to see.
Even if there are things we know we’re going to implement, it’s smart strategy to include those in an initial survey so residents feel like they are given a choice–and as a worst case heads up.
Our underwriting assumptions are guidelines, not gospel
When we buy a new asset, we have planned to make improvements to execute our business plan. But we also understand underwriting is different than operations. As well as we know our markets, and as detailed as we are in our underwriting, things are always going to change once you get onsite and start to execute the plan.
Surveying residents early on is a great way to validate your underwriting assumptions, and if necessary make some tweaks. At the end of the day, our goal as operators is to increase the value of the asset by boosting the NOI. We are not wedded to any specific tactics to do that. If we get feedback that one of our planned strategies is going to cause a revolt, we might rethink it. On the flip side, we might learn that something else has much more value than we anticipated and we could charge more for a specific service.
It’s smart business
Perhaps this was just drilled into me as a young strategic planner, but understanding your audience is business 101. Whether you’re creating an ad, a new product, or a living environment you need to know what your constituents value. Yes, it can help you value certain things quantitatively, but by understanding what is important to our residents they can tell we care about them. That’s going to help keep our retention high, our new services adopted and our business plan running smoothly.
In looking back over our last 8 deals, we can point to some major wins that came out of surveying our residents, that point to all three of the above factors.
- At one asset, we had a clear direction to take the property. We knew we needed to update the leasing center and the gym, and had an idea that this demographic would respond well to what we had called a “technology package” on our underwriting. But, we really didn’t know what said technology package would entail. So we surveyed the residents to see what they valued. We included things like Nest Thermostats, Keyless Door Hardware they could activate with their phones, Video Doorbells, and High Speed Wifi throughout the property. We didn’t have the budget to add all of these elements, and didn’t think the residents would want to pay for, or afford, all of them. But the results came back very clear–residents wanted High Speed Wifi throughout the property. Later this spring, we’ll be rolling out an Internet only package across the property that will provide incredible bandwidth to our residents at a price lower than they can get themselves–and create a new revenue stream for the asset. We call that a win-win.
- Sometimes surveying residents helps us understand the total scope of a renovation. At one of our more recent acquisitions we came in with the plan to execute private yards on the first floor. It’s one of our favorite value-add strategies and residents always respond well to them. With the property layout and topography at this specific asset, there were going to be 3 different types of yards, each with different materials and sizes. Before we started out on a programmatic execution, we surveyed the residents where we thought yards would work to get feedback on interest level–and to understand how much they would be willing to pay. What we heard back was that one of the three yard types there was zero interest, and no one liked the material we were proposing. So, we called an audible and decided against putting yards on that unit type for now. Those residents are happy, the other two yard types will move forward and again we’ve created a positive feeling onsite with our residents, while still adding to the NOI.
- In our most recent example of this call for feedback creating value to residents, we bought a property where really and truly, we didn’t know what to do with the clubhouse. It is a huge room that has a full kitchen, very little furniture and little direction. As such, it wasn’t getting much use. During our acquisition and due diligence process, we threw out a ton of potential ideas for this space, and directions we could take it. But we also knew the demographics here were a little older and more professional, and weren’t totally sure what to do with it. So what did we do? We waited until after we closed, and surveyed the residents as our team got to know them. Now, we’re in the midst of renovating that room and will be creating a game room, complete with massive TV, shuffleboard and lounge type furniture residents can enjoy (and rent out) for games and gatherings.
Tenant surveys are an important step in the Wildhorn Team’s playbook. Yes it’s in my blood and I believe in it’s potential impact, knowing it’s adding value to our business and ultimately to our investors.