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Predictive Analysis is Now Leading the Evolution of Apartment Pricing | Property Management Insider

“When someone’s lease becomes month to month, they are no longer on a long term lease contract like other residents,” he said. “Their lease term has become undefined, therefore it’s hard to measure when that lease is going to end to help you manage expirations, to help you decide how to price a new lease.”

Predictive analysis through the study of resident behavior factors in duration of month-to-month leases and original lease terms to make a price recommendation. The metrics also help to identify if there is any risk in occupancy associated with having residents on month-to-month leases.

“If you have a building with 300 units and one or two residents are on a month-to-month lease, that doesn’t really influence your pricing that much,” Danish said. “But if 10-15 or more are on a month-to-month lease, you need to acknowledge that they could provide notice at any given moment. That rent needs to be accounted for.”

Right revenue management solution as easy as a game of catch
Hughes said the right solution for revenue management will more effectively predict supply and demand. On the supply side, a good solution should predict whether people will actually renew or break the lease. On the demand side, traffic originations, what guests are saying and other information help create inputs for setting more accurate pricing. Kortney Balas, Director of Revenue Management and Business Systems at JVM Realty Corp., says using data science in determining pricing has been a highly effective tool for the multifamily real estate investment and property management company headquartered in Oak Brook, Ill.

“What the model will do is it looks at your demand,” she said. “If you’re in a down market or not doing quite as well, it’s going to reduce that price a little bit when you have demand forecasted, which allows you to get a couple of apartment homes off your shelf, and ride the revenue wave back up. When it’s in a high market and you have demand forecasted, what will happen is the pricing will continue to push, and it will push to limits you would never do manually.”

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Predictive Analysis is Now Leading the Evolution of Apartment Pricing | Property Management Insider.

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