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Every Friday, join us as we dive into the latest in real estate multifamily with David Moghavem, Head of East Coast Acquisitions at Trion Properties. David invites top experts who know the ins, outs, and trends shaping the real estate multifamily market across the nation!
Whether you’re a seasoned investor or just curious about where the next big opportunity might be, Deal Flow Friday brings you the weekly inside scoop on what’s hot, what’s not, and what to watch for in today’s ever-evolving real estate scene.
David Moghavem (00:17)
All right, welcome to another episode of DealFlow Friday. I'm your host, David Mogavum. Today we have Will Stark, the director of revenue and asset strategy at the NRP Group. NRP, if you don't know, is the largest multifamily developer in the country, building both affordable and market rate at scale. Founded in 1994, 69,000 units plus developed roughly.
32,000 under management and 13 billion of real estate. Will's team runs pricing. And with pricing, we want to also give a shout out to Apartment IQ, who is sponsoring this episode and is the multifamily data platform that AI cleanses over 40 million of live listing data nightly. So thank you, Apartment IQ, for connecting Will and I and Will.
Good to have you on the pod.
Will Stark (01:12)
Yeah, no, thanks for having me. I'm excited.
David Moghavem (01:15)
So let's get into it. well, you know, revenue management, very important part of the business right now, especially with how pricing has been volatile and moving with some of the supply waves we've been seeing. First, let's start walk me through what the director of revenue and asset strategy actually does day to day.
Will Stark (01:39)
Yeah, no, absolutely. And I I know it's a unique title too, so it's fair question. but I'll even start you a little bit before that too. look, I kind of fell into this role just out of happenstance of of really needing this role at NRP. I started as a general analyst, reporting to our president of property management. and really we we kind of realized pretty quickly the need for revenue management. I was working in the area and trying to make little changes to the deals to
be able to make an impact and and we realized, you know, look, this is something we really need. So it was kind of off to the races from there and we kept kind of building up the team. But today we're a little bit more developed and and a lot of what I'm focusing my time on is really the upfront lease up strategy process. So I work with a lot of different teams in NRP. We have a really cohesive and I'd say involved process where we tag in really every department.
That's you know, development, asset management, marketing, property management. and we really try to put the strategy to paper and make sure everyone's on the same page, involving our equity partner in that too. and then really after that, one of the big pieces I kind of play into is we do something called milestone reviews where we're pulling through actually, and during the leaseups we operate, we're giving kind of a little bit of an insight on what's the market itself.
And then how are properties performing against it? So that's just a little bit of kind of my day to day for sure oversight over, you know, the portfolio itself and trying to stay up to with the trends as well. So
David Moghavem (03:20)
Yeah. And, you know, in this time of the cycle when there's been so much supply delivered, the lease up risk is even more apparent than it was when we were ripping on rent growth and these units would lease themselves. I mean, lease up risk when you're buying a property is very real and demands even a higher premium on yield from when you're underrating deals and act and acquiring them, a deal that has
Maybe their certificate of occupancy and you have to actually perform the lease up versus a deal that's stabilized, like demands a real premium yield for taking on that risk. Where when the market was hot, those things would trade at the same stabilized yield versus in-place yield because you knew and you had the confidence that it would get leased up. So given that and that the market's pricing it, how are you tailoring your lease up strategies accordingly?
Will Stark (04:14)
Yeah, I mean, look, it it's a different it's a different world than maybe pre-COVID S times, right? where things were a little bit different. but really, I mean, look, every one of these deals still has its own, you know, thesis to it. You know, we built the performa to it, we still had a business plan. So we are starting there as far as you know what we thought we could accomplish when we close the deal financially. and really from there, then we're kind of looking out to the market and saying, hey, what's actually possible? has it shifted? Has it not?
and we're kind of coming back to the table to start to build that strategy again. but a lot of where we're going with this is looking at the data, right? There's not there's not a perfect answer to it all. and every deal is a little bit different, right? Some of them we might be holding, some of them we might try to trade pretty quick. So
David Moghavem (05:04)
maybe let's walk through some of the levers that you use when you're kind of putting together these lease up strategies of, hey, do we go higher rent and then maybe give more concessions? Do we kind of undercut the market with lower rents? Like when do you know when to tailor what different strategies based on what type of profile of the deal?
Will Stark (05:25)
Yeah. So I the main next piece to that is really kind of how it plays into the submarket, right? So I the first thing I'm gonna go do, kind of when I see the deal as well is I'm gonna try to understand the health of the submarket. I think a lot of people they'll they'll start at the very large macro markets, you know, and come away with their own conclusions. But I think you gotta get really, really minute to understand kind of the health of that market to start.
Once we kind of have that piece, then we could kind of go back to our performance understand, you know, how's this going to fit or not? But in a market, you know, that's really supply heavy, we might have to come out and be a little bit more aggressive on rate because that's where we're actually seeing the leasing occur too. a big piece that when we're trying to position these deals, we dig into quite a bit is what are the deals that we're competing with? What are they actually leasing at? Right.
A lot of a lot of count.
David Moghavem (06:21)
Like concessions aside,
you're like what the what the face value rent is leasing at.
Will Stark (06:27)
Yeah, exactly. So I mean, concessions are, I mean, you can tailor them down quite a bit. but normally we'll see that tactic, you know, if you're just trying to move a couple units and you're a stabilized property, but for some of the other leaseups we'd be competing with as well, we really do try to maneuver, I guess, on the asking rent as far as what's competitive in the market and then playing our concessions accordingly to what what other properties are
offering as well.
David Moghavem (06:59)
Yeah. So it sounds like, you know, one of the strategies you were just mentioning, if the health of the market is questionable, there's a lot of supply. I think you're seeing that in maybe some of these Sunbelt markets or oversupplied markets. you come out the gates, lower rates, heavy concessions. The hope is you try to taper some of that off as you've got through 50 or 70% occupied. What we've been seeing though is maybe that.
Lease up can take over a year. And so if you've signed 12 month leases, the original leases you have, they're coming up for renewal. How do you balance that act of trying to taper off concessions for the, you know, people coming in later in the lease up cycle and then still trying to retain the tenants that have come in in the earlier part of the cycle?
Will Stark (07:52)
Yeah, no, I mean it's totally fair question. And I guess I will say just to give a little bit more detail on that last point, really when we're looking at the local supply even, and you're getting even more granular than the submarket, we are watching what is how the availability is trending for these other comps as well, and when we expect them to finish as far as how aggressive or not we want to be on the rate side of things. So that's usually our lever. I mean, that we kind of work out to the maybe the larger forecast
For what you'd see typically, you know, saying like when the real recovery we think could play out. But as far as when we're actually trying to play into the renewal side of things, it really it it it it does depend on how aggressive the market is and how much it's shifted from when you started. So if we're playing to, you know, we've got leases that were signed that were much higher than what we're at now.
a typical strategy we'd put out would be, you know, early bird offers to be able to remove some of the actual uncertainty from the market. I do think.
David Moghavem (08:56)
So early
bird meaning like on a renewal, if you sign this renewal, you know, before thirty days or thir sixty days, you you'll get a concession.
Will Stark (09:08)
you know, so we're we're trying to put our offers out where, you know, getting notices by sixty days, but we might come out more of a standard seventy-five days, give a couple weeks for a decision, but we might come out at 90 days and even offer a slightly aggressive rate. we might offer a slightly better concession if the market warrants it on renewals. but being able to remove some of that uncertainty helps you with at least a larger batch to be able to understand how aggressive or not we have to get in the market.
David Moghavem (09:37)
Yeah. You know, it's it's interesting through this supply wave, we've also seen almost a cultural shift with concessions in twofold. One is just the typical concession hopping renter. I don't think that's something new. but you're seeing that being more prevalent on class A product where they're just looking for the next deal. And for them, they've even tailored their own living situations to where.
moving can be efficient and the retention value is they're they're putting themselves in a less and less position so they have more leverage to get that next concession. And then the other trend we're starting to see is just a general culture of wanting to see a concession. So even on new construction, yeah after you're done with lease up, a lot of these tenants want to still see a deal, even if it's not as give
good of a deal as the deal in leaseup, they want to see a concession. It's just nature. So how do you battle with that when you're kind of looking at even your stabilized product that you're done with leaseups?
Will Stark (10:50)
Yeah, no, I I think that's it's a really tricky question now. And I know many people have heard it through plenty of the economists putting out information. but yeah, I think everyone's really seasoned now to this idea that concessions are normal, where really they were a lever used during lease up or if you maybe had different four Ps issues, right? but trying to burn them off is a lot more challenging than they've ever
Really been to some degree you do have to follow your local market. You have to understand you know, if we're in a great position of strength, we might be able to peel off faster. So if we're ninety-five percent and some of our comps more eighty-eight, we might be able to push the push the lever a little bit more. But as we've started to really stabilize a good amount of the lease upset we have in the market, if we're not seeing other people move, we do try to.
push it a little bit as far as reducing
concessions in the market. and kind of what you see a little bit is I I do think there's kind of a little bit of a game theory of when is everyone else gonna come off the concessions as well, which is challenging. since it's a great it's
David Moghavem (12:00)
Yeah, the game
Will Stark (12:01)
a great tool, right?
David Moghavem (12:02)
game theory is the best way to describe it, right? Because you also want to trade data with your competitors or your peers. And it is very much a relationship type interaction with the n the manager next door and saying, Where are you pricing? Where are we pricing? But you don't want to get into a price war either, because that's a price war will be a downward spiral for both of you guys. So
it's a true
Will Stark (12:29)
Exactly.
David Moghavem (12:30)
game theory. I think one of the ways and the answers to a lot of your question is looking at your comps, collecting data with apartment IQ, it's definitely a game changer to do that. And I'm not just saying that because they're sponsoring. I really do believe that. let's first take a step back before apartment IQ. How did you go through these comps? And then what has apartment IQ brought in having that visibility?
Of having that data t to make these decisions.
Will Stark (13:03)
Yeah, no, and so we started using apartment IQ in in twenty twenty three and and honestly, huge apartment IQ user as well, not just saying it for the podcast, but we I it's hard to even remember before twenty twenty three. it w it was tough. I mean, we were digging into, you know, we had other tools, but often the data was stale. You know, you'd be like, it's a month old. And for leaseups, we always found that that is a huge issue because we gotta maneuver fast.
David Moghavem (13:32)
Mm-hmm.
Will Stark (13:32)
to be able
to stay competitive in the market. But a lot of what we were doing was going out to the actual websites themselves and pulling it back into spreadsheets or, you know, having our phone surveys, relying on the teams to be able to gather some of this information. and I think the other piece that it really unlocked was even trying to understand your comp set. one of the pieces that I use really apartment IQ a lot for is just being able to kind of play around within the map function.
and understand too whether or not we think something's really a comp or not. So when we actually go visit it, we can validate that or not too.
David Moghavem (14:09)
Right. It's not going to replace visiting it or calling. But I what I really like about apartment IQ that was very tough for me to track when we were on live deals is the fork, not the forecasting, but the historical trend of a specific unit or a specific unit type. And not just specific trend of on face value rents, but the net effective rents and calculating that concession during the term of the lease.
And so when you get to see the trends of coming to your comp set and how they're moving the needle on their rents, you have that data at your fingertips to make those decisions, as you said, really quickly.
Will Stark (14:48)
Yeah, and look, we I mean, we use historicals all the time. I think it was probably, I think you're right, it was probably one of the biggest unlocks that you could actually go back and see too, and and we could kind of prove in a way, like, hey, we really think we'll see some of this demand come back, without really like nothing to substantiate that. So we actually have data to be able to show, you know, we really expect three bedrooms will pop at this time or not. but
Super powerful. We use it all the time in our milestone reviews just to paint the picture, right?
David Moghavem (15:22)
Yeah. What's I guess like your favorite part of apartment IQ that you had that maybe you didn't have prior to it?
Will Stark (15:32)
That's tough. I mean, look, one of the probably in the last you know, year or so, at least for NRP, I mean, the explore function's huge. being able to get a little bit bigger than I've I've worked with them a lot as far as you know, the market servers are fantastic. You can cut apart local comp sets, but being able to actually pull it up to a little bit bigger of a view and be able to kind of see things on a more of a trend basis, if you will, for you know, you could see one mile radius, three miles.
to be able to kind of pull that part a apart. I I think that's been a a huge unlock, super helpful.
David Moghavem (16:11)
Really for sure. I think one of the things I love that we've been using it for on our tech stack is the MCP function and being able to actually integrate all this data into AI and into cloud. I mean, I we use cloud for everything at this point, and the power of these data banks that you have, whether it's in your own CRM systems or in your Outlook or
I I also use granola, so it like takes notes, but now connecting actual apartment data from that apartment IQ is doing that. Most of these other software tools, they might have the data, but they're not offering their API access. They're not offering their services. They even have language in your agreement that says you're not allowed to put this into AI. So having that freedom to kind of marry all that data into AI.
I think for me has been a complete game changer that apartment IQ offers and I think they're ahead of the curve there.
Will Stark (17:16)
Yeah, I would I would agree. I I really think that the people who will win in the more multifamily analysis, data analysis space are the ones who are going to be pretty open with the data and and let you maneuver it because the real value, at least for us too, is being able to morph a bunch of different sources and be able to build really creative reports that bring in different components that, you know, not one data source isn't gonna have everything. So I I agree. I it's huge unlock.
David Moghavem (17:46)
Yeah, I was working, so we're we're live on a deal right now. And like every deal, we walk every single Rent Comp, right? And just talk to the manager, get to know the property. I have my notes all integrated into my notes app, and then that's synced up with AI. Then I have the apartment IQ MCP showing the actual data that's spitting out, and now I have anecdotal data.
and
apartment IQ data all in one place with AI getting synthesized together. I mean, that's like the best way to get a true representation of your comp set when you're coming up with pricing, coming up with data, not just looking at the numbers on the screen and not just looking at what you saw when you walked the comps, but marrying the two together.
Will Stark (18:39)
Yeah, no, I I agree. I'll I'll give you a recent example even too. I just used their MCP to be able to pull, you know, every everyone, as you can imagine, we're in budget season, right? so
David Moghavem (18:49)
Yeah.
Will Stark (18:50)
what should we budget, you know, and and that's the major question and and pulling all different variables, right? Co star data, apartment IQ data, URD matrix data, and just the ease to be able to pull it in. and understand, you know, hey, we're pulling the submarket that we're actually operating in. So getting a little granular, right? Versus, hey.
You know, Dallas Fort Worth. We're getting granular, to be able to show a more accurate forecast. just total game changer, but pulling it all into one tool like that too is i i it's amazing. It totally different situation than where I started. So
David Moghavem (19:25)
Yeah. And I think in this age of AI, you know, things just continue to develop more and more. I guess how else are you kind of using your tech stack to come up with your pricing in general and or methodologies with AI to kind of get to where you need to get and and create those reports?
Will Stark (19:49)
Yeah, so I
mean we're really just starting to get into the bulk of this, but I'll I'll give you a little bit of the the
David Moghavem (19:53)
Yeah, we're in the first inning. Yep.
Will Stark (19:55)
early take, right? I I know everyone wants to be racing a million miles to be able to get this stuff done, but we gotta still operate these things too. But we are trying to pull it into our weekly really lease up review process. And for some of our more heavy supply submarkets where you go in even more frequently in daily reviews, but
Kind of what we're doing is we're pulling in what's that comp level data and we're actually trying to shift. really just understanding, you know, if if we're pulling in some of that unit level data, we can see how the comps are actually dropping really quickly. And at the very least, in our kind of entry-level stage to this, is seeing them quickly shift into one aggregated report. And we're pulling that into our process today.
Ideally we'd like to pull a lot of our weekly review process into one kind of combined report. but we're starting with that at least to be able to kind of give a quick summary and download it to us.
David Moghavem (20:57)
Yeah, I mean those so we see we run a similar process on our portfolio where we do like the Monday weekly management meetings and reviews. And those reports putting together used to take a long time and would be a huge bottleneck. Now with AI and then integrating some of this tools with apartment IQ and using their MCP, we've been able to make that process that takes about a day or two into less than an hour.
And have these reports ready so that we can spend more time actually managing rather than having to just create these reports.
Will Stark (21:34)
yeah, that's exactly right. I mean it it it's awesome how it's pulling across all the different areas. Like we pull in Monday dot com, Todoist, apartment IQ. We'll do some data dumps. so yeah, it really is like a complete view once you once you have all those sources in.
David Moghavem (21:49)
So, Will, I wanted to also ask you what's one piece of advice, you know, for operators that are also going through lease up to try to help with pricing or strategy that maybe you've learned through going through all these lease up strategies yourself at NRP.
Will Stark (22:08)
Yeah, I mean, I think the the very first place you have to start, and I it sounds really simple, but you really, really have to understand the thesis of your deal and what you guys are trying to accomplish. that's kind of step one before diving into any of the strategy levers you can apply on kind of the back end of that. But the only other piece that I I think is really important is that I know we had talked about a little bit before, but really know your comp set. And we always like to hone it down to what is like your three.
best comps, right? And then you could have what's kind of the tertiary comps is the way I'll put it outside of that.
David Moghavem (22:44)
Mm-hmm.
Will Stark (22:45)
but at the very least touring your three best comps, really understanding those and putting weight behind what is your real value difference between those comps, right? So like boiling down to a product, you know, your product, your location, your amenities, you know, kind of going to the very
basics of, you know, if we think we're $50 better in amenities, $25 worse in product, and boiling that down and you can kind of back into whether or not you actually think you're priced appropriately. and the other cool piece maybe to offer to is so much of it I think boils down to just really simple supply and demand. So, you know, if your comp has 30, 30 available units and you have three, you know,
Well, we should be pressing a little bit harder on the gas. to have your renewals tether off that.
David Moghavem (23:39)
Yeah, it's it's really the game of art versus science when it comes to this pricing. You're looking at the data, you're seeing where things are pricing, you want to have a science to the approach of pricing accordingly, but then you also want to walk the comps, understand who your team is boots on the ground, who your comp sets team is. Is I mean, for us, one of the things that that I've noticed is beyond the numbers.
Going to your own property, going through to your property manager or your leasing consultant and saying, all right, well, what's the tour path gonna look like? Is everything in place? Is it is everything painted properly? Like, how long is it gonna take? Which direction do you take to get to the unit? Are you going through these amenities sets? Like, is it really showing well? And these are things that are not in your numbers, but they show up in the numbers in other ways.
Will Stark (24:39)
That's correct.
David Moghavem (24:40)
So what I've learned kind of through this process is when you see that maybe the science looks right, you're pricing it right, like, yes, we should be $50 above here because of we have this amenity that they don't, or we should be priced $100 below them because we're older vintage. And you see, like, why, why is this still struggling? To go in, visit your own property, see what is what the actual prospective tenant is seeing, step into their shoes.
And walk through the tour path and really like go down to the details and the nitty-gritty as you mentioned, that's really where you find the execution to really come worthwhile. And then walking the comps as well and seeing how theirs are. So there's no replacing that end of the day. We even with apartment IQ, with with all this data. In fact, these tools are allowing us to have more time to do that.
Will Stark (25:36)
Yeah, no, I I couldn't agree more. And and look, we are constantly going through with the regional levels, the R VPs, all the different support departments. We we actually break it out to the idea of five Ps. I know that's one extra P. but even playing in market, right? So we kind of look at it as place, price, promotion.
David Moghavem (25:52)
What's yeah, so what's the
what's the th fifth P? go on. Sorry, you were you were going for the five Ps? Yeah.
Will Stark (25:57)
Yeah, so we got we
have place. That's kind of maybe our extra one. We call that more, it's like your market, right? So
David Moghavem (26:02)
Mm-hmm.
Will Stark (26:03)
you might know some of these markets are a little crowded, right? You know, Austin was crowded. it's getting a lot better, right? We've seen some of those trends. I know you had put out a post on that recently, but
David Moghavem (26:13)
Yes.
Will Stark (26:14)
yeah, no, they're getting a lot better. But place, price being one of them, promotion, product, people, right? So
we're we're constantly evaluating whether or not we think, hey, one of those Ps is a little out of order, and whether or not we can fix those Ps before we do go to price, because price is the really expensive lever. and it's the really painful one too. So that's usually the last one we want to pull, but it's the easiest one to pull too, right?
David Moghavem (26:43)
Yeah.
Will Stark (26:43)
so we're we're protecting that P, you know, in the equation.
David Moghavem (26:47)
I yeah, I had a really good pod a while ago with a guy named Brendan Vandeventer. I don't know if you if you know him, but he we really
Will Stark (26:55)
Nice yeah.
David Moghavem (26:55)
got deep with the four P's and he mentioned how people is really the the P that you can pull without, as you said, without having to necessarily spend more or less, but just having that personal connection and again going through the tour path and all these things. Like
This is that that's the lever that you need to fix before addressing some of these other ones. Because all these other levers come dollars and cents with price with promotion, but it's with people that it's not just about how much you're paying, but it's like who that person is, what's the effort they're putting, what is the experience as a prospective tenant. And so that's something beyond, beyond the numbers that that really stand out.
Will Stark (27:44)
Yeah, no, and I couldn't agree more. I mean, you think like our our extra P right of place, I mean, that's more of just awareness, but I mean it it really does start with who's coming in the door and the experience that they're having because if it's an i excellent experience, your reviews are for fantastic, you might be able to get that extra little premium with somebody coming through the door and kind of seeing that. So I I couldn't agree more.
David Moghavem (28:10)
Awesome. Well, Will, it was great having you on the pod. Again, thank you to Apartment IQ for connecting Will and I and sponsoring this pod. they have a great system when it comes to rent surveys, the Explore Pro function for those who are also in acquisitions and looking at prospective deals. and they share their data with AI and connecting it and integrating it with the platforms that we use daily. So
Shout out to Apartment IQ and Will, really, really a pleasure having you on the pod.
Will Stark (28:44)
Yeah, no, thanks for having me. It's been a lot of fun.
David Moghavem (28:47)
Awesome. Thanks.