Major Mistakes Purpose Built Student Accommodation (PBSA) Operators Make
8 Minute Read
Given the scale of PBSA block developments, it's paramount that operators are on their A-Game.
Poor management can cost owner(s) 1,000's of pounds a month in lost rental income or the extra expense of having to forcibly outsource lead/ bookings generation that can be as high as 10% of the rental contract per bed, equating to hundreds of pounds per tenant
I've been involved in and let to 1,000's of students for our own properties as well as previously for those of clients and operators of PBSA.
Here are some of the errors I consistently see
1. Absence of tenant referrals – I learnt very early on that outside of the core factors like location of property and it's condition, the most effective selling of student accommodation is done by the student tenants.
Undoubtedly, the most powerful sales tool we use when conducting viewings is getting the potential tenants to speak to the current tenants about their experience with us as a company and the property. I cannot stress how well this has worked and continues to work for us.
Student tenants selling our property is far more powerful than us doing so
In addition to getting current tenants to talk about (sell) their experiences (if it's been a good one!) to prospective tenants, there should be a network of referrals that expands yearly.
If this doesn't happen, it may mean that, 1) existing students aren’t entirely confident enough to refer the property or 2) incentive schemes encouraging referrals are not in place.
2. Poor systems – Some simply lack an effective system for aspects like maintenance requests, managing viewing requests & most importantly, following up with potential tenants post viewing which has a direct impact on the profitability of the site.
3. Inconsistent or poor maintenance work – Staying on top of regular maintenance repairs clearly maintains the property value and notably, keeps tenants happy. Creating and sticking to an annual maintenance check-list usually done during the summer months when occupancy levels are low is a smart way to triumph. Maintenance work must be done to a great standard by quality tradespeople to prevent reoccurring issues and further aggravating tenants.
4. High turnover – This relates not only to tenants, but also to the property management staff on-site. A consistent trend of frequent turnover raises questions on the business management practices.
Students who aren't in their final year of study and employees are increasingly likely to stick around if their experience and environment is a great one. Providers can do more to provide a great experience to tenants to ensure they rebook, examples are rebooking discounts, cash back and competition entry for re-bookers.
However, all this can sometimes come across 'gimmicky' so the most effective way, I've found, is to have a conversation with the tenant as to why they're not rebooking to overcome their reasons.
Sometimes it's the smallest things that can easily be resolved in-house, we once had a tenant that simply wanted a bigger bed but hadn't communicated that with us. We supplied the bigger bed immediately and they rebooked.
Getting tenants to rebook for another year is the most cost effective way to let the property as there's savings in time and marketing costs in getting each unit let.
5. No Social media activity – There are still operators that have no or very little social media presence online (almost the same thing) when they really should be. The statistics surrounding internet & social media usage are staggering. Over 90% of students are using social media weekly and they can be specifically marketed to by their interests and associations with a specific educational institution. Social media to some extent is in it's infancy and it's relative cost to market is comparably low. This means there's a huge opportunity, particularly in this sector, where the value of each sale/ booking is worth thousands.
6. Slow response time – Unfortunately, some providers do not make a point of getting back to enquiries and viewing requests as well as tenant communications within a 24-hour period.
We try to get back to viewing requests within 15 minutes as we've learnt from many instances where by the time we did get in touch with the prospective tenant, they'd already booked in a number of viewings and wanted to view those first before even viewing ours! The likelihood of them booking a viewing with us at a later date was extremely low.
Quick communication with tenants also improves the student experience and could aid the number of referrals they make and the likelihood of them rebooking their accommodation (See 1 & 4). Delayed communication can lead to deserters that begin searching for new accommodation, with new management!
7. Lack of goals – Having goals helps ensure business stays on track, two main goals should revolve around 1) The letting of the property and how many units need to be let by a certain date and 2) Improving the student experience and satisfaction levels.
As some providers don't prioritise this, they create more work ongoing and associated problems.
8. Negative online reviews - It does't take much for a tenant to leave a negative review in frustration, they're almost unavoidable however the number of PBSA operators failing to actively combat these negative reviews in order to protect the online image of a specific block or provider is mind-blowing. Many PBSA providers don't publicly respond to the negative reviews left online about them which is damaging.
Beyond this, providers can try to talk to those tenants that have left negative reviews to resolve their woes and if fortunate enough, it could result in the removal of the negative review. In the past, there were instances where I personally got involved in a bad review left and turned them from a 1 into a 5 star review. This can be tackled by any competent colleague.
Better yet? Act on the negative feedback received and use that as a starting point to improve the accommodation & student experience.
Any questions about PBSA or Build to Rent Apartment Block schemes? Comment below and I'll answer as best I can or even write an article on it.
