How Multifamily Developers Can Stay Ahead of Market Trends 

Real estate development can get expensive really quickly. There are regulations to navigate and market research that needs to be performed. For multifamily developers, this means harnessing the power of data intelligence to make informed decisions, optimize strategies, and maximize returns. But where does one obtain such accurate national data?

Allow me to introduce you to SMART Apartment Data’s multifamily analytics—a game-changer in the realm of real estate data intelligence. This powerful tool is designed specifically for multifamily developers, owners, and property management companies, offering a comprehensive suite of features to track performance, evaluate market strategies, and uncover lucrative investment opportunities. 

How the multifamily market continues to grow

Last year’s Q3, saw the multifamily real estate market emerge as the undisputed leader, recording an impressive $69 billion in investment volume. This is despite the Federal Reserve raising interest rates to a record high, ranging between 3.75% and 4.25%. While such hikes typically deter investors, the multifamily space remains an exception due to the consistent and robust rental demand in the U.S.

Several factors are contributing to the shift toward renting. The escalating cost of capital, coupled with inflation and stagnant wage growth, has made home ownership a distant dream for many. As a result, more and more people are opting to rent, ensuring a steady demand for multifamily units. 

Furthermore, when compared to other sectors like office spaces, retail, or hotels, the multifamily sector stands out as being better equipped to navigate the challenges posed by rate hikes.

In this blog, we’ll delve deep into the multifamily analytics offered by SMART Apartment Data, exploring its myriad of features and understanding how they can be leveraged to stay ahead of market trends. Whether you’re a seasoned developer or just stepping into the multifamily arena, this guide promises insights that can transform your approach to market analysis and strategy formulation.

An Analysis of KPIs Used by the Top Multifamily Developers

It is no secret that the top multifamily developers differentiate themselves from others by their ability to measure, analyze, and act upon specific metrics. These key metrics are determined from property data supplied to them by a property data vendor, and the ones that matter to multifamily developers are referred to as Key Performance Indicators (KPIs). 

They serve as vital signposts, guiding developers and property managers toward informed decisions and strategic actions. Some of these developer KPIs include:

• Internal Rate of Return (IRR): This is a metric used to evaluate the attractiveness of a project. It represents the rate of return at which the net present value of future cash flows from an investment equals zero. A higher IRR indicates a more attractive investment opportunity, helping developers compare the potential returns of different projects and decide which one to pursue.
• Interest Coverage Ratio (ICR): This ratio measures a company’s ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher ratio indicates that the company has a comfortable margin to cover its interest expenses, suggesting lower financial risk. You calculate it using the formula: Interest Coverage = EBIT / Interest Expense​.
• Real Estate Demand Growth: This fundamental KPI assesses the potential demand for a new multifamily project. It can be estimated using various data sources, including mortgage application numbers, population growth trends, and construction permit data. Understanding demand growth helps developers gauge the potential success of a project and decide whether to proceed with it.
• Construction Cost Per Square Foot: This KPI provides insights into the cost of constructing each square foot of a project. It aids in project budgeting and determining unit sale prices. By monitoring this KPI, developers can ensure that the project remains within budget and can set appropriate sale prices for the units.

How SMART Apartment Data gives you an advantage

SMART Apartment Data enables multifamily developers to have the edge in the real estate market by providing them with data that is up-to-date and insights that impact their multifamily developments. We do this by providing a market dashboard that offers a bird’s-eye view of market dynamics, trends, and opportunities.

Some of the insights you can expect to glean include: 

1. Comprehensive state and metropolitan area data: At the heart of this multifamily data software’s interface is a comprehensive dataset covering state and metro areas. This data provides a macro view of the market, helping developers understand broader trends, shifts, and patterns. Whether it’s rental rate fluctuations in a particular state or occupancy trends in a metropolitan area, the dashboard offers a holistic view.
2. Filtering for in-depth analysis: While a macro view is essential, the real value lies in the details. The software’s filter feature allows developers to delve deep into specific regions, properties, and metrics. With more advanced filtering options, developers can extract precise insights tailored to their needs.
3. Historical data for trend analysis: Understanding the past is crucial for predicting the future. This multifamily data software provides access to historical data, allowing developers to analyze past trends, identify patterns, and make informed predictions about future market movements.
4. Customizable, interactive reports for personalized insights: Every developer has unique needs and priorities. Recognizing this, the user interface offers customizable and interactive reports, ensuring that developers see the data most relevant to them. From selecting specific regions to adjusting date ranges, the dashboard can be tailored to individual preferences.

In essence, the market dashboard in the SMART Apartment Data analytics tool is more than just a data visualization tool. It’s a strategic ally for multifamily developers looking to stay up-to-date with the latest in real estate data and trends. 

Reach out to us to unlock the most comprehensive source of multifamily data and elevate your business insights.

How Property Big Data Can Give Multifamily Vendors and Developers a Competitive Advantage

Before we conclude, it is worth mentioning how both multifamily vendors and multifamily developers benefit from accurate and up-to-date property data. Though both have different goals, there is an almost symbiotic relationship, with the best developers being sought after by multifamily vendors while the developers benefit from having access to products and services they may need.

Accurate and timely real estate data is what these two need, and it can benefit both parties in the following ways: 

1. Precise property evaluation: One of the most significant challenges in the real estate sector has been the accurate pricing of properties. While traditional methods relied heavily on manual evaluations, big data has revolutionized this process. By analyzing vast datasets from thousands of properties and current market trends, SMART Apartment Data can provide more precise property evaluations to the top multifamily developers, enabling them to better decide whether to proceed with a project or not.
2. Tailored marketing strategies: Understanding the target audience is crucial for any successful marketing campaign. With big data insights, multifamily suppliers can gain a deeper understanding of prospective buyers’ newest developments or renovations. This allows for the creation of highly targeted advertising campaigns and sales tactics.
3. Strategic property development: Multifamily development is a strategic, costly, and time-consuming affair. A data-driven approach helps developers pinpoint potential areas of interest and understand residents’ preferences, ensuring that their projects are both profitable and in line with market demand.
4. Informed decision-making: The multifamily real estate sector is rife with complexities. SMART Apartment Data’s property database comes to the rescue, providing comprehensive property information. Multifamily developers and vendors can now make faster, more accurate decisions, mitigating risks and ensuring their investments are sound.
5. Streamlined business operations: With the software’s ability to filter and sort vast amounts of data swiftly and accurately, multifamily vendors can now redirect their focus from finding contact and property information toward enhancing customer relationships. 

As big data continues to evolve and make its way into the multifamily space, multifamily developers and vendors who use these technologies stand to enhance their operations and profitability. 

Why Multifamily Developers Choose To Use SMART Apartment Data

Multifamily development—though it does have a lot of potential for profits—is a costly endeavor where a single mistake can cost you hundreds of millions. With SMART Apartment Data, multifamily developers are equipped with a comprehensive suite of tools to meticulously assess every potential venture, be it a value-add proposition, a new acquisition, or a ground-up build. 

Here’s how SMART aids in analyzing an asset’s growth potential and inherent risks:

• Fictional properties: For those moments when you’re pondering the ‘what if’ scenarios, SMART offers the ability to craft fictional properties. Developers can either conjure up a brand-new property profile or replicate an existing one. This feature is invaluable in reporting, allowing developers to gauge how their hypothetical asset compares to real-world counterparts.
• Trend analyzer: Deep dives into market trends are made effortless with the trend analyzer. Developers can layer customizable data sets, enabling them to conduct intricate analyses spanning multiple years. This tool provides a panoramic view of market movements, ensuring developers are always a step ahead of the curve.
• Historical property details: Knowledge of the past can often illuminate the path forward. With Smart, developers can graphically represent any property’s rent and occupancy history. But it’s not just about visual insights; the platform also allows for the export of underlying data. This historical perspective ensures developers have a comprehensive understanding of property trajectories, aiding in future strategy formulation.

In essence, SMART Apartment Data transforms opportunity assessment from a daunting task into a streamlined process. With tools tailored for in-depth analysis, hypothetical scenarios, and historical retrospection, developers are empowered to make decisions that are not only informed but also strategically sound. If you want to stay ahead of trends and make better decisions, use SMART Apartment Data.

Explore the latest trends in multifamily data and analytics by reading our blog, or simply get started with our tailored data solutions for your business.