A couple of months ago I published an article talking about the leasing data that ShowMojo has been putting out for several years. Well, someone has outdone them! RentEngine (a newer competitor in the leasing automation/self-showing space) recently released their Q1 Leasing Trends Report, and it’s a wealth of valuable information. You know how I love me some data, so let’s dig into it.
Days on Market
This was something I found incredibly interesting. You’ll remember that the ShowMojo report was showing average days on market of over 50 days. RentEngine is showing only 24.2 days. This could be due to a number of different things. First, someone’s data could be wrong. I somehow doubt this, though, as I suspect both companies would do their due diligence to make sure they aren’t releasing faulty data and getting egg on their face. Second, it could just be that RentEngine doesn’t have a big enough dataset yet, as they’re obviously newer and have a much smaller slice of market share than the venture capital backed ShowMojo, so maybe this is just a function of their early customers being the best of the best at leasing and producing far better numbers. Again, though, that seems a little unlikely. RentEngine isn’t THAT new, and they do have a solid customer base at this point. I would think that their data would be statistically significant and reliable with a big enough dataset. So that leaves a third option which I think is more likely: RentEngine must be doing something that is drastically reducing the average days on market for their customers. I’ve demoed the system, and I’m impressed, although I haven’t begun using it. Their automated lead follow-up and very conversational AI passed the Turing Test for me. ShowMojo and Tenant Turner can’t come close with their automation, and to the best of my knowledge, they have nothing in the development pipeline to match it. It’s possible that this is leading to vastly shorter time on market. If so, this is a good indication that RentEngine will dominate the leasing automation space in short order. If someone is truly capable of halving DOM, that’s a competitive advantage that PMs simply can’t overlook.
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A new metric that we haven’t seen previously is intriguing. RentEngine added a “Days on Market Since Last Price Change” metric, and I absolutely love this. This is a great way for PMs to be able to show owners how price changes can influence how quickly a property gets rented. While overall DOM was 24.2, DOM Since Last Price Change was only 15.9. You can use this data to show your clients that owners refusing to drop their pricing in response to market data is causing their vacancy time to extend and cost them real money.
The report also breaks things out by property type and showing type. No surprise that condos are taking longer to rent than single-family, as that’s an ongoing trend that we’re all familiar with. But I did love the hard data showing that self-showing listings rented nearly 10% faster than accompanied showings. We’ve long known this intuitively, but having the hard data to support it really shows how antiquated and misguided the idea of sticking to agent showings really is. You’re literally costing yourself and your clients money by being stubborn on this. Any PM still refusing to adopt self-showing is committing malpractice at this point.
Leasing Conversion Rate (LCR)
This isn’t exactly a new metric, as the NAA and others have tracked similar metrics in the past, but I think this is a level of detail we haven’t seen previously, at least in SFR. And I love the lead funnel presentation they’ve used.
More than the raw numbers, though, I love the insights they’ve provided. First, something I wrote about previously, “pricing is the biggest factor of lead volume” they say. You need to beat this into the heads of your owners if you’re still letting them choose their own rent price. And if you and your staff are setting the rent price (as you should be), then you should review this data with the people on your team responsible for it, because this is the top reason that properties don’t rent quickly. Quality of photos also ranked high, so be sure that you’re getting solid professional photos done. Of course, syndication to all websites is also listed as a factor, but if you’re not syndicating to all of the major sites by now, you really shouldn’t still be in business at this point.
I loved this piece of data: “the most common reason for a lead to not request application after the showing is if the property doesn’t match the photos.” Are you using old, outdated photos because you or your owners are too cheap or lazy to get new ones taken? This is the result. Lots of showings, no applications.
Lead & Lease Sources
I don’t find this data all that surprising, but some people who have fought back against listing on Zillow since they started charging people in some markets should probably take a look at this and rethink your strategy, because it’s hurting both you and your owners. The biggest importance here isn’t just that Zillow accounts for almost half of all leads by itself, but that over 60% of actual conversions to leases came from Zillow. The really shocking part of this is that Zillow outperformed the PM’s own website as a lead source. This is unheard of. Organic leads are always considered the most valuable and convertible, but somehow Zillow has managed to become such a rental powerhouse that it drives conversions for you better than your own site does. Another thing I’ll point out here: Facebook Marketplace accounted for only 3.9% of leads, and it represented so few conversions to leases that it didn’t even get listed separately in the graph and was just lumped other “other.” Those of you who are jumping through the ridiculous hoops necessary to list on FB Marketplace by listing through your personal account since Facebook won’t allow companies to list are wasting your time. Your time would be better spent sprucing up your Zillow listings to make them more attractive.
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All in all, when you take out multifamily listings on Apartments.com, over three-quarters of all converted SFR leases are coming from either Zillow or the PM’s own website. I wouldn’t even waste my time thinking about the other sources. Just make sure you’re syndicating everywhere and make sure you have great photos and a solid marketing description. That’s the lesson to be learned here. Wasting time on fringe listing platforms is not a good use of your resources.
Lead Timing Insights
This is where I think RentEngine is excelling and driving that faster DOM than their competitors. Their data shows that 58% of new leads come in after hours. But more importantly, they show that leads are 3x more likely to convert if engaged within 5 minutes. Why is this an advantage for RentEngine? It gets back to what I talked about earlier with that conversational AI that they’ve implemented. When someone requests information from RentEngine at 11:30pm on a Friday, it’s responding conversationally and answering their questions about the property. When someone requests the same from you, what are they getting? Silence. Because you’re asleep, and your software doesn’t carry on conversations with leads automatically for you. And I include myself in that. We’re not using RentEngine (yet), so we’re struggling to maintain our current 23 days on market average. Leads come in, and our current software isn’t responding to them in any way other than to offer them a showing. It’s not answering questions. It’s not engaging in lead conversion tactics. That has to wait until our leasing agent is back at work on Monday. The competitive advantage that RentEngine users are getting is extreme.
We have to meet the customer where they are. And they’re at nights and weekends. Because, duh, they’re at work at the same time we are, so they’re not out looking at rental listings at 3pm on a Tuesday. For the same reason that self-showings drive faster conversions, automatic conversational responses during the night and weekends are driving conversions.
Pre-Showing Questions
RentEngine sampled 15,000 text messages from renter leads to see what they’re always asking about before scheduling a showing. Pretty interesting data. The most common question is about when they’re allowed to move in, followed by amenities and features (not surprising), but then some interesting ones were pretty common: section 8 policy ranked pretty high, as did pet policy. This is useful data, because it tells you first of all that you should be getting ahead of it and putting this data in your listings, but it also tells you that pets are extremely important (as I keep telling everyone). Section 8 is obviously important, also, but due to the governmental hassles involved there, I just can’t advocate for accepting Section 8 unless it’s mandatory in your jurisdiction. The negatives to you and your clients just outweigh the positives. But if you’re in a jurisdiction where you have to allow it anyway, or if you choose to allow it where you’re not required to, this tells you that it’s worthwhile to state in your listing description that Section 8 is welcome. It’s always better to answer questions before they’re asked.
Lead Journey Timeline
Another great graphical representation for this one. The key takeaway here reiterates the prior point that quick responses yield more conversions. Why? The average lead had 6.1 inbound contacts before completing a showing, and 3.5 after that before submitting an application. The speed at which you respond to these is uber important. Even with RentEngine’s lightning fast conversational AI responses, it’s still taking on average 5.3 days from first contact to application submittal, which means it’s roughly a best case scenario of 7 days to lease a property after it’s put on the market (taking into account time to screen the application also). If you aren’t responding to inquiries immediately like RentEngine is because humans are having to do it, then that’s extending this timeline by days. And again, that’s best case scenario of an interested and qualified lead finding your property the very day it gets listed.
Benchmarks
I absolutely love this section of the report, because it is 100% actionable, and it gives some massive data leverage you can use over owners who are refusing to drop prices. The average listing needed 23.2 leads and 5.5 showings before getting rented. Why is this so valuable?
If your listing is not getting many leads, you can literally project out how long it is likely to take to rent. If it takes 23.2 leads to rent on average, and you’re getting only 2 leads a week, you can project that it’s going to take 11.6 weeks, or 81 days, to get that property rented. Think you can get an owner to wise the hell up by telling them that their property isn’t going to rent for three months if they don’t budge on the price? I think it will.
If your property has gotten a bunch of showings but still isn’t rented, it tells you that something is very wrong either with the price or the property itself. If it only takes 5.5 showings on average to rent, and a specific property has had 15 showings with no good applications, then you either need to cut the price or fix whatever is wrong with the property. And if what’s wrong with it isn’t fixable (let’s say there’s a sewage plant across the street), then price is your only lever to pull.
With the exception of the kind of idiots who think we didn’t go to the moon, most people can be convinced that they’re wrong if you have real numbers to show them that demonstrate it. When you’re just coming to an owner and telling them that they need to reduce the price based on your own experience, even if that experience is massive, many of them aren’t going to listen. Why? Because Zillow’s Zestimate tells them that they’re right! With that being the only hard number they have to look at, they’re going to trust it over just your word. But when you can come armed with better numbers, suddenly you have an advantage.
Interesting Numbers
This is sort of an odd collection of data points, but all of them are interesting. First, outside of the west coast, self-showings are now 90% of the market (I’m sure the west coast is different because their politicians seem to fetishize homelessness rather than seeing it as a problem to be solved). The west coast is obviously at a big disadvantage here. With fears of squatters driving them to in-person showings, they are stuck with longer DOM. Be sure to explain this to your owners, especially if they also own properties in other parts of the country and are used to the speed of self-showings.
Of course, frequent readers of this publication probably know what my favorite statistic is: 92.2% of properties are now allowing pets! I don’t know what’s wrong with the other 7.8% of you, but please read this article to cure you of that.
The application fee number surprised me. At only $51.40 for an average, this is much lower than I’m used to in our markets. My PM company is in the Atlanta market, and we previously had offices in Orlando and Daytona Beach also. In all of those markets, this price would be nearly 50% below what is commonly seen. I suspect this average is driven down by the large markets on the west coast that have legislation artificially keeping application fees down below market levels. Of course, such legislation is also why no one wants to be a landlord out there and why they have a severe housing shortage, but I digress…
I was also surprised by the low number of properties with a Resident Benefits Package at only 19.7%. I guess this explains why we still draw a huge crowd whenever we do RBP panels at conferences, despite having been doing them now for nearly a decade. Y’all need Second Nature, stat! The average RBP price seemed about right, though.
But of all the data I found relevant from this section of the report, the data on RTMs was the most interesting. The most successful PM companies, as measured by size (granted, not a perfect measure on its own), were the PM companies using global talent. An astonishing 73% of PM companies with over 1,000 doors are using RTMs in the leasing process. Folks, if you’re not using RTMs, you’re being left behind in this economy. You can’t keep paying people $60k to do work that is valued at $20k. Yes, you need a “boots on the ground” leasing agent of some sort to actually go out to properties, but everything else can be done remotely, and should be. From preparing listing descriptions, to processing applications, to drafting lease agreements, all of this can be done by RTMs around the world for a fraction of the cost, and usually with better performance.
Conclusion
In short, I’m loving this new data that RentEngine is providing the industry. I hope to see it continue to come out on a regular basis. While it’s certainly great for the data nerds like me to pontificate over, it’s also wildly actionable so that we can all drive down DOM and conversion rates to benefit our businesses and our clients. And no, RentEngine hasn’t paid me anything for this. Although I would certainly encourage them to advertise with us. 🙂
Southern States Conference
I may be a little biased as this year’s President of the Atlanta Chapter of NARPM, but I think the regional conference we put on every year is one of the best in the industry. It’s called the Southern States Conference (SSC), and this year we’re going to Birmingham, AL. The conference is next month on June 11th-13th. Check out the speaker lineup and sessions on our website here, and be sure to register! You won’t regret it, and until Mary 23rd, you can get discounted pricing of only $349 as a NARPM member or $399 as a non-member. I look forward to seeing you all there.
Open to Work
Are you an experienced PM industry employee looking for work? Or are you a PM company or vendor seeking the best talent? Send me your info and I’ll feature it here!
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Debate Me
Disagree with my take here? Have a different perspective? There’s nothing I love more than a good debate or even just an intelligent conversation. If you’d like to jump on a podcast recording with me to discuss this topic, please let me know!
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