What My 10,000 Tenants Reveal About The Economy

Summary

The video discusses economic trends based on data from over 10,000 tenants across multiple states, highlighting a shift back to in-office work and rising credit card debt. It emphasizes the importance of tenant retention and affordability in property management, with strategies like the 'flex' payment program and the Sharing the Good Life Foundation to support residents. The discussion also touches on the impact of high interest rates on the housing market and the need for landlords to prioritize occupancy over rent maximization.

Takeaways

• 😀 The company has collected data from over 10,000 tenants across several states, providing valuable insights into economic trends.
• 🏢 Shannon Wilcox, the director of property operations, manages a team of 300 and ensures tenant satisfaction and retention.
• 🔄 There's a noticeable shift as many residents return to in-office work, signaling the end of the remote work trend for some.
• 📉 Personal savings are at an all-time low, while credit card debt is rising, leading tenants to finance necessities like groceries and rent.
• 🏡 The company has implemented support programs like 'Flex' to help residents manage rent payments during financial challenges.
• 💡 The 'Flex' program allows tenants to make multiple payments to cover their rent, with a flat fee of $15 per month, helping those facing temporary financial difficulties.
• 🏢 The company prioritizes occupancy rates over maximizing rent, aiming to keep apartments filled and residents satisfied.
• 📉 Rental rates are decreasing in many markets, which benefits renters and aligns with the company's strategy to maintain high occupancy.
• 🏘️ There's a growing trend of new renters entering the market, including those who would typically buy a home but are now renting due to high mortgage rates.
• 🔮 The company predicts that the rental market will see rent growth in the long term due to a lack of new housing inventory and an influx of people from single-family homes to rentals.

Q & A

What is the significance of the data collected from over 10,000 tenants?

The data collected from over 10,000 tenants provides valuable 'boots on the ground' intelligence about the economy and tenant behaviors, which is considered to be some of the best and most current information available.

What is Shannon Wilcox's role in the property management company?

Shannon Wilcox serves as the director of property operations, responsible for managing approximately 300 people at the property management company and ensuring that tenants' needs are met.

What recent trend has been observed regarding tenants and remote work?

The trend observed is that many tenants are returning to in-office or site job services, signaling an end to the remote work era for the residents. There is a shift towards employers bringing people back into the office.

How has the stimulus money impacted tenant savings and credit card debt?

The stimulus money initially increased personal savings to an all-time high, but now those savings have decreased to an all-time low. Concurrently, there has been a rise in credit card debt as tenants start financing necessities like groceries and rent.

What is the Flex program and how does it benefit the tenants?

The Flex program allows tenants to make multiple payments towards their rent. It has seen an adoption rate increase of about 12%. Tenants can apply online, and if approved, Flex pays the full rent upfront, and the tenant makes payments back to Flex over time at a flat rate of $15 a month.

Why is the company focusing on occupancy rates rather than maximizing rent?

The company prioritizes occupancy rates to ensure that apartments are filled and tenants can afford to live in them. This approach helps maintain a high occupancy rate and avoids the costs associated with turnovers, which can be more detrimental than a slightly lower rent.

What is the impact of high interest rates and housing market conditions on new renters?

High interest rates and housing market conditions are leading to an increase in new renters. People who would typically consider buying a home are now renting as they wait for interest rates to decrease, leading to a potential rise in homelessness and evictions if rents are not kept affordable.

How does the company approach tenant retention and satisfaction?

The company engages tenants through regular surveys, events, and gatherings to understand their needs. They focus on providing services within 24 hours for maintenance requests to ensure tenant satisfaction and retention.

What is the Sharing the Good Life Foundation and how does it assist tenants?

The Sharing the Good Life Foundation is a nonprofit funded by the company's owners and employees. It helps tenants by waiving late fees and providing support within the lease agreement, aiming to alleviate some of the financial burdens on residents.

How does the company's approach to rent concessions differ from industry standards?

The company offers a more stable and predictable rent structure rather than large upfront concessions like free months of rent. This provides certainty to tenants who are more concerned about consistent monthly expenses than upfront savings.

What challenges does the rental market face with the influx of new units and changing economic conditions?

The rental market is challenged by the influx of new units hitting the market, which were initiated before the rise in interest rates. This, combined with higher construction costs and rents, and the need to offer more concessions, creates a complex environment where the company must balance occupancy and rent affordability.

Outlines

00:00

📊 Economic Insights from Tenants' Data

The video discusses the economic trends observed from the data of over 10,000 tenants across several states, providing valuable on-the-ground intelligence. Shannon Wilcox, the director of property operations, explains her role in managing a team of 300 and ensuring tenant satisfaction. The video highlights a shift in work patterns with residents returning to offices and job sites, signaling the end of the remote work trend. It also addresses the decline in personal savings and the rise in credit card debt, leading to tenants financing necessities like groceries and rent. The company has introduced a 'flex' program to assist tenants with rent payments, with an adoption rate increase of 12%. The program allows tenants to make multiple payments to 'flex' after it pays the full rent upfront. The discussion emphasizes the importance of maintaining high occupancy rates and reasonable rents to support tenants during economic challenges.

05:03

🏡 Prioritizing Tenant Retention and Occupancy

This segment focuses on the business strategy of prioritizing tenant retention and occupancy over maximizing rent prices. The discussion points out the high costs associated with vacancies, including the time units are unoccupied and the expenses of turnover such as cleaning, painting, and marketing. The importance of viewing current renters as valuable customers is emphasized, with the suggestion that property managers should focus on resident retention. The company's efforts to engage tenants through surveys and events are highlighted, with a key performance indicator (KPI) being the swift response to maintenance requests. The conversation also touches on the changing preferences of tenants, who now prefer lower, consistent rent over large upfront concessions due to economic uncertainties.

10:04

💼 Market Shifts and Tenant Support

The discussion continues with insights into the current market dynamics, noting the influx of new renters and the impact of high interest rates on the housing market. The video suggests that many potential homebuyers are opting to rent due to high mortgage rates and home prices, leading to an increase in demand for rental properties. The company's approach to managing occupancy and cash flow is explored, with a focus on supporting tenants during financial hardships. Initiatives like the 'Sharing the Good Life Foundation' are mentioned, which helps waive late fees and provide support within lease agreements. The video concludes with a warning to landlords about the potential risks of pushing rent prices too high, suggesting that the current market favors tenants and that maintaining good relationships and reasonable rents is crucial.

15:05

🎓 Comprehensive Lessons from 35 Years in Business

In the final paragraph, the speaker shares a personal note, highlighting a comprehensive video they've created that encapsulates the most critical lessons learned from their 35-year career in business. The video is presented as a valuable resource for anyone interested in gaining insights from extensive professional experience.

Keywords

💡Tenants

Tenants are individuals or entities that occupy a property, typically a rental, under a lease agreement. In the context of the video, the discussion revolves around the experiences and trends observed among over 10,000 tenants across several states, highlighting their behaviors and financial situations as indicators of the broader economy. The script mentions tenants' return to offices and their financial struggles, such as increasing credit card debt and reliance on programs like 'flex' for rent payments.

💡Property Management

Property management refers to the operation, control, and oversight of real estate as used in its natural life cycle, including leasing, tenant relations, and day-to-day maintenance. The video emphasizes the role of the director of property operations in managing a team of 300 people and ensuring tenant satisfaction, which is crucial for maintaining occupancy rates and the health of the rental properties.

💡Economy

The economy encompasses all economic activities and the relationships between production, distribution, and consumption of goods and services in an area. The video script uses tenant data to discuss economic trends, such as the shift from remote work to returning to offices and the impact of stimulus money on personal savings and credit card debt, which are indicative of broader economic health.

💡Remote Work

Remote work is the practice of working from a remote location, typically one's home, facilitated by digital tools and technologies. The script notes a trend where residents are moving away from remote work setups and returning to in-office or on-site job roles, indicating a shift in work culture and its implications for the rental market.

💡Stimulus Money

Stimulus money refers to funds provided by governments to stimulate economic activity, often during economic downturns. The video discusses how the influx of stimulus money temporarily increased personal savings but is now leading to a decrease as tenants struggle with financial management, exemplified by the rise in credit card debt.

💡Credit Card Debt

Credit card debt is the money owed on credit cards that must be repaid with interest. The video highlights an increase in credit card debt among tenants, suggesting financial strain and the need for alternative payment methods for essentials like rent and groceries.

💡Flex Program

The Flex Program mentioned in the script is a financial arrangement offered to tenants to help manage rent payments. It allows tenants to make multiple payments to the program, which then pays the full rent to the property management company. This program is an example of how property managers are adapting to support tenants facing financial challenges.

💡Occupancy

Occupancy in the context of property management refers to the percentage of a building's units that are currently rented. The video emphasizes the company's focus on maintaining high occupancy rates, even at the cost of lower rents, to ensure stability and reduce turnover costs associated with vacancy.

💡Rent Growth

Rent growth refers to the increase in rental rates over time. The script discusses a current trend of declining rent rates, which benefits renters but contrasts with the company's historical experience. It also forecasts future rent growth due to a lack of new housing inventory and increased demand for rental properties.

💡Turnover Costs

Turnover costs are the expenses associated with preparing a rental unit for a new tenant, including cleaning, repairs, and marketing. The video mentions these costs as a factor in the decision to maintain lower rents and avoid vacancies, as the costs of turnover can outweigh the benefits of higher rent prices.

💡Resident Retention

Resident retention is the practice of maintaining existing tenants to reduce vacancies and turnover costs. The video script underscores the importance of resident retention by emphasizing the company's efforts to understand and meet tenant needs, provide services promptly, and offer support programs like the 'Sharing the Good Life Foundation' to assist tenants in financial hardship.

Highlights

Collected data from over 10,000 tenants across several states to understand economic trends.

Tenants are returning to offices and job sites, signaling an end to the remote work trend.

Stimulus money effects are fading as personal savings hit an all-time low.

Credit card debt is increasing as tenants finance necessities like groceries and rent.

Implemented 'flex program' with a 12% adoption rate to help tenants manage rent payments.

Focus on resident retention and satisfaction over maximizing rent.

Rental rates are coming down, which benefits renters and maintains higher occupancy rates.

Emphasized the importance of not maximizing rents during economic hardships to avoid vacancies and turnover costs.

Highlighted the cost of vacancies, including cleaning, painting, and marketing expenses.

Discussed the shift in tenant behavior towards preferring lower monthly rents over large upfront concessions.

Mentioned the influx of new renters due to high home prices and interest rates, leading to a renter nation phenomenon.

Predicted that the current housing shortage and high construction costs will lead to increased rents in the long term.

Introduced the 'Sharing the Good Life Foundation' to support tenants in need through late fee forgiveness and financial assistance.

Stressed the importance of property managers viewing current renters as customers and prioritizing their retention.

Outlined the company's commitment to quick maintenance response times to enhance resident satisfaction.

Noted the upcoming market influx of 1 million rental units and its potential impact on the rental landscape.

Warned landlords about the potential risks of pushing rents too high, suggesting a focus on maintaining tenant relationships.

Transcripts

What our 10,000 tenants are telling us about the economy.

So we've collected the data of over 10,000 tenants in several states.

This is some of the best boots on the ground Intel

that you're going to find anywhere.

You won't believe some of the trends.

And of course, you guys all know Shannon Wilcox, our director of property

operations. Hello. Welcome back.

So Shannon's direct job is to manage all the people

at our property management company, which is about 300 people,

and also make sure that the tenants are getting what they need.

Right? Yes. Most definitely.

So our job as a management company obviously is to collect, grant,

make sure we're working with our tenants, but more importantly,

making sure that they're staying in their homes,

that they're comfortable and they're happy so that her that's her main job.

But what we did for this video is

she went out to all of our employees and said, what's happening now?

Right? Yes. So let's go. Yeah.

So, currently we are seeing that

a lot of our, residents are going back into the office.

they are heading back to either an office or as their site job service jobs.

We're seeing the remote, worker kind of coming to an end, for our residents.

And they're getting back to work.

Yeah, that was different, with our last video that we did.

Was that there was a lot of work from home at that time.

Yes. Yeah.

We've definitely seen a shift of people going back into work.

We are still seeing some hybrid.

but for the most part, employers are getting people back

into the office, back onto the job sites, back out into the field.

One of the things we have seen is that a lot of the stimulus money.

The stimulus money.

Yeah, well, it's when the savings went up and you could see this on the Fred report

with the Saint Louis Fed.

Just go take a look. You'll see.

Personal savings was at an all time high at one point.

And now it's at an all time low, which is horrible.

But at the same time, credit card debt is going like this, right?

Yes it is.

And so unfortunately, we're starting to see tenants

finance things like groceries, finance, things like rent.

That's not good. Right.

But they coming back a little bit.

It's coming back a little bit.

And we obviously put in as many programs as we can to help support our residents,

keep them in place, work with them.

When it comes to paying their rent.

You want to read that this was the flex program,

the flex program we have seen as a company.

overall our adoption rate has increased by about 12%.

That's a lot.

I know there was a lot of feedback about flex and what that looks like,

and it does allow our residents to make multiple payments.

Yeah. Let's walk how that works.

The flex pays us and then they pay multiple payments back the flex.

Right. Correct.

So, one of our if our residents want to apply for it,

they go online, apply with flex, and they do have to get approved

to be qualified to work with flex.

And then flex pays us their full rent and they're able to make either, you know,

four payments or biweekly payments back to flex for their rental rate.

Yet either way, that's not necessarily a good thing.

We do another wrong with flex, but the point is,

whenever a tenant has to finance or rent, that's not good.

Well, that's true, but the great thing about the the company

we've partnered with, it's only $15 a month for the residents.

Oh, so it's not like an interest rate that fluctuates.

It's a flat rate.

And every resident who qualifies for it can can utilize it.

And it's a $15 charge.

And how do they qualify? They have to apply.

but most of our residents who applied with us will qualify for flex.

So it's the same kind of process that we put the residents through.

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You know, we've been seeing people with challenges

because rent growth and expenses, not just for cat food,

gas, all the other things that people pay for, utilities have gone up.

And so we as a company said, how do we maintain a high occupancy

but not necessarily drive

the rent forward as expensive as maybe some of the other places, right.

Right.

So our business focus is occupancy first and making sure

that we're filling our apartments and getting people in

and that they can afford to live in our assets

and they can enjoy their time, while they're living with us.

So we are definitely more occupancy focused,

where we have seen in our markets across all of the markets, we are in,

we're seeing all of the rental rates kind of coming down,

which is good for the renter, which is great for the renter.

And in turn,

we've been able to keep our occupancy higher than most of our submarkets.

For all of you landlords out there, like like we are.

But the reality is, is this is the time to take care

of your tenant and keep occupancy as high.

Do not try to maximize your rent.

You're not trying to maximize the market.

This is about, you know, rents are passing

people's wages and they're getting squeezed.

And so this is what's going to happen

is you're going to see a rise in homelessness.

You're going to see a rise in evictions, you know, and just for a few dollars

here and there, it's it's not a good time to be doing that right.

And we've seen overall in our financials and our successes

that if your occupancy is higher and your residents stay

and you're not turning units and you don't have turnover costs

of flipping an apartment, but you keep people in place

overall long term, your assets are going to be much more successful, right?

And you're going to have a happier resident.

So for those of you

trying to push rents 50 or $100, maybe you should think about this.

If the rent is $1,500 a month,

that's 50 bucks a day, let's say, and you're vacant one month.

Well, you're never going to make that up for that extra 50 or 100.

You're better off just working with the existing residents or

keeping your rents a little bit lower and affordable for people, right?

Because vacancies also have a lot of costs, right?

Yes. There's a lot of costs that correlate with vacancy.

Not only the time the vacant the vacant units is down

and we're not collecting rent, but also the turnover cost of that,

carpet cleaning, painting, marketing, marketing.

and then, of course, you know, the staff to re rent the leasing commission.

Leasing. Not if you're managing yourself.

There's a bunch of costs that that landlords don't think about.

One of the things that drives me nuts with property managers in general, is

they don't look at their current renters as customers.

They're always looking at new ones.

You know, I always try to be nuts, like the people

that are actually paying your rent today are the ones paying your salary,

your mortgage, your insurance, your property taxes.

So you need to take care of them first.

And it's just like, oh, people do this often in business.

They're always chasing new business

instead of taking care of current business. Right.

And so one of the big things that you could be doing right now

is resident retention.

Find out what's going on with your tenants and work with them

the best you can, right? Most definitely.

we engage our tenants on a regular basis with surveys, with resident events,

with, gatherings and get togethers and just overall

getting the feeling and understanding of what our residents need and what we,

one of our KPIs is focused directly on,

our turnover time for maintenance work orders.

How long is it taking us to service

the items that our residents bring to our attention and our focus

and dedication is less than 24 hours, so that's a huge piece.

Service builds your, customer retention.

And if they're happy. Yep.

And they have more interaction with your service team

most of the time than they do with your leasing team.

And that's because they're in their homes giving them that service.

So, elevating those team members as best as you can and giving them

the tools to be successful

and give the residents a great experience is top priority.

So why don't you explain kind of who our renters are,

because everyone's kind of deal with the same thing.

We're seeing high credit card debt and they're starting to back away

from like Uber Eats and things like that, right?

Yeah, we're seeing a lot of people

really looking at where they're spending their money and really focusing in on what

their monthly expenses are and doing their very best to have a budget.

And, we're one of those big pieces to that.

So looking at our rents

and looking at utilities, that's a really important piece, for them

to know what it's going to be every single month and having that stability

in those big bills with certainty, like, yeah, that's the thing.

Like these tenants need certainty.

Yeah. Right.

Because we have a couple lease up, which means brand new projects

that are 100% vacant the minute we open them.

And so we're seeing tenant behavior.

It's kind of odd, right.

Like we could give them a month free or even two months free for a 12 month

lease, let's say.

But they're opting for actually just less rent, right.

So economically it's not as good for them.

Right?

The math doesn't work as well, but they're actually trying to budget for

whatever they're making as opposed to just getting it upfront free. Yes.

one of the

one of the biggest standards in our industry is Lisa.

Properties are on a different kind of a loan and have a different budget

than you do when you're stabilized.

And most of those budgets are written

with the really big upfront concessions, like you see the banners everywhere, one

two month free new new product, new construction, all of that.

But we are seeing a major shift in the consumer's idea

of what they consider a concession and a good deal.

They would give up that two months free to have that lower

rent every single month managed by us instead of by them.

and it's, it's had a huge impact on how we do business.

It's certainty again going to certainty just just like anything

you want to know what your payments going to be next month, the month after.

Right. Yeah. Easier to solve for. Yeah. Right.

Had a really great conversation with one of my regional managers down in Tucson.

And I loved what he said.

he said, you know, we were really having a challenge going up

against some of these other assets that were still offering

the big two months free at move in without doing the reduced rent.

And a couple residents, a couple of their consumers came in and talked to us

and they idea of not knowing what next year looks like was a big concern to that.

Correct.

And so knowing that they're the rates that we're offering may change next year,

but may not.

And it's not as big of a variance when you get that kind of a big concession

up front.

Well, again, we're managing to occupancy and to and to actual cash

as opposed to just maximizing rent rate.

Correct.

Because what used to happen for a lot of syndicators

or a lot of people trying to time the market or,

you know, call it flippers is, you know, they rinse and repeat.

They they buy, they renovate, they maximize, and they do it again.

Well, those days are over because interest rates are so high, the economy soft.

And this next couple of years is the time for the tenant, right?

Definitely. Yeah.

And when you speak to interest rates, a lot of the feedback we've also got

is we're seeing a lot of new people in the market.

So a lot of new renters, you know, coming into their first job looking

instead of looking to buy a home, they're still looking to rent.

We're seeing a lot of people coming in

from out of state instead of buying a home.

They're renting,

figuring out the area and waiting for those home interest rates to come down.

That's it. Right?

I know we've been talking

about renter nation for a long time, and we're starting to see it right now

with boots on the ground, because typically we would

you know, the properties that we have at this point are higher ed, like obviously

the brand new projects have higher rents.

And those people were typically fighting with homebuilders, right?

I mean, that person, it's kind of a renter by choice in a lot of cases, right?

Yeah.

But now that's off the table because whole new home prices are so high.

Mortgage price, mortgage new home prices are so high, mortgage rates are so high.

And so now that exact same person is now looking at a rental instead of a purchase.

Exactly what they're doing and they're waiting.

You know, we and some of those folks may move out when those rates

come down or homes become more, all right.

but, right now we're, you know, we're, we're working on it

and we're, we're helping

those people find nice places to live, and we're taking really good care of them.

Yeah. And I think it's important

to understand that the next 18 months, right now, we have 1 million,

you know, units hitting the market right now.

Those are that's how many apartments are hitting the market this year.

What y'all need to know is that those started 2 or 3 years ago.

These are projects where they were under construction a year, year and a half ago

before the interest rates started to go like this.

And of course, once you break ground on something, you got to finish it.

We also have a number of those.

And so we're hitting this market right now where our interest rates

when they were five, now they're nine or above.

Also the cost to build are higher but also rents are higher. Yes.

Also there's more concessions in the market,

which means that the more choices a consumer has, the better off

they're going to be. Exactly.

That's the bottom line here.

What you guys are going to start to see is these politicians

are going to start coming out after the landlords,

when really what the landlords need and what the consumer needs

is actually more inventory, because what's happening is people

are falling out of single family homes into rentals.

It's going to push rental prices up over a long period.

In the short term, the rents are going to be fine,

but over a long period at the end of 2026 into 27 and 28,

you're going to see rent growth again, because there's not a lot of new product

hitting the market.

And what always helps a consumer is product.

Just like anything else, if there's more of something, the price is less.

And right now there is a housing shortage.

But there's a window right now of everything.

They get started a couple of years ago,

so obviously everybody's kind of wondering we collect rent on 10,000

people a month. So what's happening there?

Well, we are definitely seeing and working with every single one of our residents

that needs our support or help with collections.

when it comes to rent,

I already spoke a little bit about flex as an option, but we also have

our Sharing the Good Life Foundation, and we utilize that as best as we can to

to waive late fees and to help work with people.

But we are definitely

our teams are reaching out to our residents

that are seeing hardship or seeing hard times falling on hard times.

And we're

working diligently within the laws and within the restrictions of our lease,

to support them as best as we can

to keep them in our asset and to have them continue to call us home.

Oh, one of the things that I forgot to mention is that we created a foundation.

It's been almost ten years now called Sharing the Good Life,

and we actually fund it with our own money, Ross and I

and the employees and it's collective nonprofit,

and we use that money to actually help our tenants.

We do. Yeah.

One of the sharing the good life promises is when someone moves in,

if they ever need a late fee forgiveness or support from us,

within the lease agreement.

And a number of times is permitted and we we work with them.

And that's a part of our problem and a big piece.

So, the professional management companies are doing things like this.

And so you landlords that are pushing rent, be careful

moving forward because the tenants are going to have the upper hand,

although it might just be a short period of time,

but this is the time to maximize your income,

keep your tenants in place, keep everyone happy and just keep the peace.

So, Shannon, before we wrap up, quickly on a couple months and and then

if anybody has any questions of you, you can answer them live.

Yeah. I love that idea.

I don't know about live, but

I've been in business for over 35 years, and I've just made

the most comprehensive video that I've ever made

on the most critical lessons that I have learned in my career.

I highly recommend you check that out here.