The multifamily industry was put on high alert when the DOJ launched a price-fixing probe against several large industry players earlier this year. While the inquiry is ongoing, owners and operators are not willing to risk their reputational and financial health by using algorithmic price optimization tools.

Your company is your brand. Protecting it means upholding its values and preserving trust among your renters, investors, and the public. There's an urgency for better alignment on data aggregation processes that maximize ROI and mitigate legal risk for long-term sustainability.

The type of data used comes into focus. Leveraging data can help achieve performance and financial goals while remaining compliant. However, it requires implementing some best practices in your operational functions to turn data into a strategic advantage.

Best Practice #1: Verify data sources to emphasize reliability

Good data is essential for successful revenue management. The quality of your data can determine whether you get reliable and accurate insights, or inconsistent and outdated information.

Your revenue teams need high-quality data to analyze market trends, occupancy rates, and concession deployment in order to make the best decisions on rent pricing for your properties. To achieve this, a well-established data verification process is needed to maximize rental income in an ethical and sustainable manner for the business. Key actions include:

• Communicate rationale behind operative processes for pricing decisions. This includes breaking down and documenting the approved methodology to team members for alignment across markets.
• Use standardized templates and formatting to eliminate redundancies and biases, minimize errors for improved data integrity.
• Regularly reviewing and implementing a feedback loop to address challenges and improve effectiveness.

Best Practice #2: Sharpen competitor analysis with full market visibility

The use of private and semi-private data not only triggered the investigation, but it's also limited in market visibility. Relying on manually entered user data leaves significant market gaps, hindering accurate comprehension of market trends. While operations teams can fill these gaps through manual research, this time-consuming process is error-prone and reduces the reliability and efficacy of data.

Obtaining a comprehensive view of your markets requires automation, which can enhance your return and reduce risk by directly collecting insights from the source and expanding reach without sacrificing time. Key actions include:

• Implementing AI capabilities to expand your reach to compete effectively, gain insights into similar properties, and benchmark against competitors targeting the same demographics.
• Surfacing insights enable you to evaluate potential risks associated with the locations you want to expand into and comprehend the vacancy rates in different areas. This empowers you to make well-informed decisions about resource allocation.

Best Practice #3: Demand depth, including unit-level detail, concessions, and fees

Data depth can help you maintain compliance and transparency with your residents and the law. Comprehensive market data allows revenue teams to see down to the unit level and make strategic, data-driven decisions that optimize revenue but ensure pricing and fee structures adhere to local, state, and federal legislation.

These datasets provide daily comp insights from unit-level base rent, concessions offered, and move-in costs renters want to see. By capturing this information, teams can mitigate risk, maximize ROI through forecasting, and adjust rents based on anticipated demand. Key actions include:

• Document all concessions offered, such as rent discounts, move-in specials, and free amenities or services. Track the cost and duration of these concessions.
• Itemize all additional fees charged to tenants, including pet fees, parking fees, and late payment penalties. Ensure these are transparently communicated and compliant with housing laws.

Your local teams are out there collecting and combing through market data in order to set optimal rents that accelerate leasing velocity and renewals. A traditional approach to market survey research is cumbersome–monthly or quarterly comp calls and manually entered data won't hold pace to the fast, detailed, and accurate reporting stakeholders expect.

Automation can deliver. Leveraging AI in your market surveys can enhance the frequency of data aggregation, increasing efficiency among teams and returning fresh, accurate data for your entire company. Key actions include:

• Assess a centralized approach to comp insights that provides a single source of truth for all team members to have access to the latest data.
• Pilot automated comp analytics tools to generate data within a smaller portfolio subset to serve as a proof of concept, gauge ease of transition for team members, and evaluate scalability before rolling out the software to the entire company.

Best Practice #5: Use historical data to track relative improvement vs. the competition

Tracking property improvements using historical data enables portfolio progression and staying competitive. Teams can visualize progress, detect anomalies, and deduce seasonal trends with comprehensive data that goes back years. This detailed data can be used to forecast optimal pricing decisions and leasing velocity based on demand.

Every property has a story to tell. Reliable data elucidates market trends and reveals actionable opportunities that drive growth for your portfolio. Key actions include:

• Gather and evaluate revenue and operational metrics, such as occupancy, exposure, and net effective rents, to speak on the properties' percentile rankings and financial health.
• Compare segment properties and competing properties based on relative categories such as location, similar unit sizing, amenities, and services for accurate comparisons.
• Communicate market position through intuitive and visually engaging chart formats.
• Compare current performance with the same period in previous years.

Best Practice #6: Be proactive in vendor due diligence

Thoroughly vetting prop-tech vendors allows companies to ensure they're partnering with reliable and compliant partners who have their best interests in mind. Due diligence identifies potential risks that could put the company in a financial bind, negatively impacting reputation and revenue streams.

By proactively addressing these risks, companies can avoid costly legal disputes, enhance operational efficiency, and ensure their investments yield the highest possible returns for sustainable long-term growth. Key actions include:

• Evaluate vendors to ensure they adhere to legal and ethical data aggregation standards.
• Keep stakeholders involved in the vendor selection process, assessing vendor compliance policies to ensure commitment to local and federal regulations.

It's a tough scene for those relying on rent optimization tools to make decisions. You require high-quality data to support your business, but compliance and reliability concerns of private and semi-private data stand in the way of goal progress.

Prioritizing public data for your market surveys can protect your business from legal risk and maximize revenue simultaneously. Several leading industry players have already transitioned to this approach, leveraging automated and precise market data for better alignment on trends and making more informed decisions. Will you?