In the past decade, and particularly in recent years, the leasing and marketing processes in the rental housing industry have undergone significant transformations. In this article, which is the first of a series, I describe these changes, based on my experience as a senior vice president of real estate operations at DEELS Properties, an owner and operator of multifamily communities in Los Angeles. I believe the current leasing and marketing processes have made an effective online marketing strategy a crucial component for retaining a competitive edge among owners and operators of rental properties.
Before 2005, many prospective tenants relied on newspaper listings to search for rentals. In my experience, the marketing goal of the early 2000s was to increase prospects’ awareness of and interest in the property so they would schedule an on-site tour. Most of the information about the property would have been obtained by phone or on-site, and often the only points of contact between property owners and potential tenants were leasing agents.
Online marketing services were relatively nonexistent and were provided through minimal classified-ad platforms, such as Craigslist. It wasn’t until the mid-2000s that rental marketplaces such as Zillow emerged. There were few, and at first, they were limited in the information they offered. In my experience, the only way to make a leasing decision was to visit the property. Properties relied heavily on the skill sets of on-site leasing agents, and the marketing and sales of properties typically occurred on-site.
Today’s leasing and marketing processes shifted from primarily occurring on-site to mostly online. According to a study by Apartments.com and Google, in 2015, 72% of people searching for rentals used the internet when starting a search for an apartment, and 67% rented an apartment they found online. Half of all who were surveyed expected their use of the internet to search for apartments to increase.
My company’s internal analysis indicates that 98% of our leads in the past year originated from an online source. More indications of this trend are Zillow’s data showing that in June 2011, the platform had around 20 million unique monthly visitors; in July of 2018, this number was at 195 million.
I believe there are two reasons for this change: First, there have been advancements, developments and improvements in online technology, rental marketplace platforms, search engines and online review sites. Second, generations that have grown up in the digital age, such as millennials, are becoming the dominant group in the rental housing market.
According to Pew Research Center, “More U.S. households are headed by renters than at any point since at least 1965.” When looking specifically at the millennial-age demographic, 65% of adults younger than 35 were renting in 2016, which is an increase of almost 10% since 2006. I believe this information shows it is a necessity for rental property owners and operators to divert significant resources into implementing an effective online marketing strategy to thrive in the industry. Furthermore, because millennials represent a large portion of customers, owners must make an effort to study this demographic’s search and renting behaviors, as well as the group’s characteristics and values. This way, they can put forward efforts that effectively reach millennials by speaking their language and crafting messages that potential renters will appreciate.
I believe knowledge of online search behaviors of renters is key to developing a robust online marketing strategy. In the same study by Apartments.com and Google, 32% of renters started their online search with apartment listing sites, and 29% began with search engines. Based on my experience and these trends in online property search behaviors and decisions, the following elements are key pieces in an effective online strategy: First, monitor and control the property’s appearance on the most impactful sites by posting information such as updated availability dates. Second, include details and interactive features important to potential tenants, such as unit prices, floor plans, square footage, professional pictures, interactive maps, real-time availabilities, online applications, etc.
A website for properties designed with renters’ needs in mind is not an option, but a requirement for owners and operators of properties. Rental websites should use a multiplatform strategy, be SEO-friendly and register as a business on search engines or in local directories.
Another significant factor involves an online reputation element using review websites and apps. According to J Turner Research, 62% of those surveyed rely on online ratings and reviews to initiate their apartment research, and 70% chose to visit a property with a strong online reputation. The research also found that reviews are more important than personal recommendations; the likelihood of someone renting a property with poor reviews that has been recommended by a friend is only around a 5, with 10 being “very likely.”
I believe these important search decision factors call for an online reputation management strategy as part of an effective online marketing strategy, including being proactive in asking tenants for reviews and having managers responding to positive and negative reviews in a thoughtful, positive and timely manner.
Nowadays in the digital era of rental housing, a strong online marketing strategy is a necessity for reaching tenants and having low-turnover times. Property owners and operators must implement effective online marketing strategies to reach their potential customers and tailor these strategies to the needs and decision factors of their customers. In my next article, I will discuss what I believe are the important elements of an effective online marketing strategy.