Discovering Hidden Treasure in Your Unit Amenities – Negative Amenities

December 2, 2024 by Donald Davidoff

This is the fourth in a 9-part series of “quick hit” blogs on the quickest way to uncover hidden revenue from leasing based on the presentation Bryan Pierce, Carol Enoch and Donald Davidoff gave at NAA’s 2024 Apartmentalize conference.

Our turn to “fail” #6 is perhaps the most pernicious of all the ones we see because this one is usually at best a complete misunderstanding of how amenity pricing should work; and, at worst, it’s intentional, dare I say malicious, behavior from a community or regional manager.

Fail #6: Negative Amenities

I speak of the arbitrary negative amenity. Often listed as “special” or “loss leader” or my (read this dripping with sarcasm) favorite “Neg Val Adj,” this is at best, charitably viewed as an attempt to run a special price to attract more leases. The challenge with this is 1) removing it after the lease is often forgotten thus rendering it a near-permanent discount and 2) in lease audit reports, it looks like the lease was at the price set by the revenue management system. This is because those reports only audit the base rent as they assume amenity pricing is correct.

That latter reason is why I’ve often found them to be the result of intentional, even malicious behavior. An enterprising community or regional manager wants to lower the rent but doesn’t want to make their case to their pricing/revenue manager. They simply add an arbitrary negative, and they know it will show up as compliant on their Lease Audit Report. At least they didn’t remove a valid amenity to reduce the price (a topic we covered in our first blog of this series); but the effect is still the same. Poor process, intentionally bypassing governance mechanisms in place and missing the opportunity for either the revenue manager or the operator (or both) to learn something from the conversation.

That’s not to say there aren’t legitimate reasons for negative amenities. If the unit is “by the dumpster,” in a noisy area, by construction or some such legitimate reason, then by all means put in a negative amenity. That’s capturing the real value of the home. It’s the purely arbitrary negative amenities that are a pricing “fail!”

Stay tuned for the next “quick hit” in this series