What Multifamily Gets Wrong About Renovation Pricing

(This is the third blog in our current series on amenity pricing)
It’s a classic conversation that will be familiar to every revenue manager who has ever had rehab units in their portfolio:
Property Manager: “I need to lower my one-bedroom prices”
Revenue Manager: “Ok. What, exactly, makes you feel that way?
Property Manager: “I’ve got a few units that have been sitting vacant too long”
Revenue Manager: “Anything those units share in common?
Property Manager: “Yeah, they’re the units we’re doing the rehab on.
Revenue Manager: “Ok. Then we really need to reduce the upcharge for the renovation on those units, not reduce the price on all 1-bedroom units”
Property Manager: “I can’t do that!” “Then I won’t get the ROI I need on those rehabs!!”
We have told that story many times, and every time we tell it to a revenue manager (or group of revenue managers), we get that immediate, knowing smile.  Yet despite this familiarity, this script keeps repeating itself. Why? And what can we do about it?
The Multifamily Renovations Mindset
Let’s tackle the first question before moving on to the second. Renovations are obviously an important part of our industry and its ability to deliver returns.  And what community manager doesn’t feel good about renovations happening at their community? 
That is what introduces a bias into the process – we naturally want to find ways to justify renovations. Add to that the fact that the company invested a lot in deciding to do the renovations, and it’s equally likely there are other st……