Investing with Origin

How Managing Online Reviews Gives Multifamily Investors 5-Star Returns


Online reviews are now so commonplace that it’s hard to even order lunch without first taking a quick glance at Google or Yelp reviews. Multifamily investors should keep in mind that online ratings play just as prominent a role for prospective residents searching for apartments.

Landlords often fail to consider how resident comments shape the online reputation of their properties, and how this “digital curb appeal” translates to multifamily investing success. In fact, reviews can make or break an investment’s success, say Pew Research Center findings.

There’s evidence that online reputation plays as much a role in deciding where to call home for the next 12 months or more as it does in the choice of restaurants, hotels or repair services. A 2019 study by SatisFacts found online reviews to be – for the first time – the most credible source of information during an apartment search (even more so than the recommendations of family and friends). Renters are consulting online reviews during their apartment search, and most won’t so much as tour a model unit if the building’s ratings aren’t up to par.

As with many other facets of technology, the real estate industry was slow to spot this change in consumer behavior. Many owners and managers to this day operate without a comprehensive strategy for managing online reputation. At Origin, we’ve developed a thorough playbook for effective reputation management and put it into practice. It involves three critical steps that help an asset’s online reviews shine. Ultimately, following this strategy translates into superior returns for multifamily property managers, owners and investors.

The Path to Success with Online Reputation Management

1. Give residents a good reason to post positive reviews. The most important step to generating positive online reviews is the most obvious: provide top-notch customer service. Key touchpoints in the resident lifecycle — move-in, lease renewal, resident social events and maintenance calls — provide the opportunity for property managers to show their attentiveness, skill and quick response. Solving problems quickly and effectively, from repairing faulty appliances to mitigating service issues, engenders goodwill. With a little encouragement, residents will show their appreciation with a five-star review while the memory of their interaction is still fresh. At Origin, we also use these touchpoints as an opportunity to survey our residents to identify opportunities for improvement. All of this is done with a focus on enhancing the resident experience.

2. Be proactive. Once your customer service is top-of-the-line, it’s time to sit back and watch the delighted reviews pour in – right? Not so fast. Great customer service is like a great offensive line in football; it doesn’t get nearly the attention it deserves. A proactive on-site staff – one that seeks out opportunities to provide exceptional service and motivates residents to leave a review with a call to action – is one of the most critical elements to a successful reputation management strategy.

The good news from SatisFacts’ 2019 Renter Survey of 60,000 residents at 159 U.S. properties is that 61% of residents said they would leave a positive review for their community if asked to do so by property management. The better news is that only 20% of renters indicated that they ever had been asked – which means that this is low-hanging fruit to get ahead of competitors. At Origin communities, we take proactivity a step further by not just asking for a review, but also facilitating the process for our residents with an effective online reputation management service. We partner with BirdEye to make the process of leaving a review as easy as responding to a text message.

3. Be genuine. When developing a reputation management campaign, it can be tempting to think outside the box to dream up ways to generate five-star reviews, such as rewarding reviewers with a small gift card or entering them into raffles for larger prizes. However, this is a dangerous game to play; there’s no quicker way to generate negative reviews than to be seen as “paying” for positive ones. All reviews must be earned – even a whiff of impropriety must be avoided.

Most significantly, it’s crucial to respond to all reviews individually, both online and offline.  While it’s easy to thank a resident publicly for leaving a positive review, the response to critical feedback is even more important: be humble, admit fault and apologize when appropriate, empathize, and find a solution to the resident’s problem. The response to a negative review is the single most effective way to demonstrate to potential residents that you will listen to their concerns and find ways to solve their problems. In such a scenario, the optimal outcome is that the resident logs back in and updates their review to highlight your team’s ultimate resolution of their issue. At Origin, we view a negative review as our property management teams’ time to shine.

Turn Reputation into Returns

The guiding principle that informs Origin’s strategy across all our asset management initiatives is strategic and pays heed to our ultimate mission: How does this translate to superior investor returns?

Effective reputation management can improve net operating income (NOI), resulting in greater investor returns, in two ways: first by increasing top-line revenue and second by decreasing expenses related to turnover and vacancy.

To prove the connection between online reviews and NOI, let’s examine one of our assets – Iroquois Club Apartments. Below are several statistics taken at Iroquois Club over the first six months of 2018 and the first six months of 2019, after a dedicated reputation management strategy had been put into place:

  Jan – Jun 2018 Jan – Jun 2019
Number of Reviews 6 38
Average Star Rating 3.7 4.7
New Lease Rent Growth 0.7% 4.0%
Renewal Lease Rent Growth 3.1% 4.4%
Vacancy & Turnover
Related Costs
$232,965 $145,370

Not only have we been able to improve our lease-over-lease rent growth for both new leases and renewals, we’ve managed to do so while our competitors’ rent growth has slowed, and while maintaining 60% renewal retention – which is well above industry standard. Residents of Iroquois Club have shown their appreciation for top-class customer service and it’s begun to show on the income statement; through June 2019, Iroquois Club achieved a 10.5% year-over-year increase in NOI.

As the world becomes increasingly mobile, apartment ratings will likely take an even more significant role in multifamily investing. Though reputation management efforts are only one factor in attracting and keeping residents, there is no denying the correlation between increased volume and quality of reviews, heightened renter demand, and superior investor returns. A strategic approach to online reviews can gather the “wisdom of the masses” to profitable effect.

This article is intended for informational and educational purposes only and is not intended to provide, and should not be relied on, for investment, tax, legal or accounting advice. The information is provided as of the date indicated and is subject to change without notice. Origin Investments does not have any obligation to update the information contained herein. Certain information presented or relied upon in this article may come from third-party sources. We do not guarantee the accuracy or completeness of the information and may receive incorrect information from third-party providers.