“How much should I budget for my go-to-market strategy?”
Grab a coffee, pull up a chair, and let’s discuss. Because it’s not a quick two-sentence answer. If you know, you know!
Before we get into budgeting thoughts, let’s quickly cover the status quo of go-to-market “strategies” for most of the multifamily industry.
We often see projects haphazardly selecting a brand partner, a website template tied to a PMS, an ILS listing or two, an entirely different paid ads partner, and sometimes a temp leasing team.
The “spray and pray” mentality.
For incredibly designed and positioned buildings, this can work OK. But as I’ve mentioned in past articles, most buildings aren’t on Main Street, with thousands of people walking by every day.
Spray and pray doesn’t work. It’s unreliable.
And at that point, it doesn’t matter what the budget is because there is no strategy.
This is why the industry has a cost comparison issue.
Some believe a full GTM campaign should be $500/unit, while others plan on $2000 or more per unit.
For this article, we’re thinking about the full GTM strategy in terms of three main building blocks:
These areas bleed into one another and, when done well, directly reflect the successes or failures from one building block to the next.
What often happens is that a value engineering mindset enters the GTM strategy phase and begins cutting costs before the deal is done.
Like one Marvin window to the next, someone decides they don’t need a thoughtful brand developed. They can go with the quick and dirty option.
Like one backsplash to the next, another decides to work with a local ads agency instead of a real estate-specific partner for their demand gen.
Skipping nurturing will be no problem.
And the list goes on.
Suddenly, a $200,000 marketing budget is stripped down to $50,000 to cut costs as quickly as possible.
Considering different finishes, windows and doors, construction partners, and even professional service partners like legal makes sense.
You still get the same level of service and the same product, with a little engineered savings.
A tweak to that Marvin window – to a slightly less sexy or efficient glass – could save tens of thousands across the building. Switching to a different law firm may net similar savings. You still get the same service but at a slightly lesser cost.
But marketing is different.
Marketing, when done well with a strategy, produces a positive ROI.
When done poorly or piecemeal, it often produces a negative ROI.
Here’s a napkin-math example:
What is the monthly return you get out of the gate when the building is pre-leased, 50% at the opening?
$150,000. And it only accelerates from there!
For that lease-up and stabilization period, it’s not unlikely that the group could be positive over that time up to, say, close to $1M in revenue as it’s closing the leasing gap month-over-month.
That means investing a few hundred thousand dollars for a strong, strategic, and focused brand and marketing strategy is a 3-4x return on investment (or more).
The opposite approach, value engineering, often leads to developers and project owners dramatically under-investing in marketing, thus greatly suffering through low NOI once the building opens and beyond.
In these scenarios, which we see often, the group actually loses money on their marketing investment (what little was initially invested) because there was a misguided belief that they couldn’t pull value from a worthwhile marketing game plan.
Imagine the gains if a GTM strategy is approached by investing the appropriate amount in marketing. One could:
Yes, there are other factors (location, demographics, etc.), but this general approach to GTM consistently proves itself.
It needs to be said that building a marketing team from experienced partners is paramount to project lease-up success.
It’s not enough to work with a friend, a local business, or someone who generally provides a service.
Stick with strong, tenured, and experienced teams to bring in for your real estate and multifamily development projects.
You want a partner who can build the brand, bring the demand, and effectively turn interested prospects into happy renters.
That’s the gold standard.
Where should you begin when building your own budget?
What should you account for, and when?
We recommend you build the full GTM budget into the proforma from day zero.
Think about all costs early and often:
These costs will change from a 50-unit to a 500-unit building, as they should.
But when you are realistic about building a budget around strong teams, great work, and confident outcomes, the investment starts to feel different.
The conversation with investors is less about increased costs and more about investing in accelerated leasing, happier renters, and stronger returns.
We’ve seen budgets span from $750/unit to over $2000/unit over the last 12 months.
Appetites for spend vary drastically.
But that’s a small sample size and, as noted above, varies drastically based on a host of factors that we’ve only scratched the surface on.
So, when building your budget, work with a team that understands the value of a strong GTM game plan.
Build in real costs before shovels hit the ground.
Most of all, fight for the best renter experience possible, which starts with a highly intentional branding and nurturing process and builds from there.
In the end, and compared to status quo communities, we’ve seen that the residents are more inspired to take action, and the investors are more appreciative of their returns.
While this approach is only beginning to take hold, it will soon be a staple in producing projects that look better on the front end and flow nicer on the back end.
For once, marketing and math join hands!
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Smart real estate developers in the multifamily industry understand the importance of a highly sophisticated and achievable go-to-market strategy and its impact on the market from planning to implementation.
If passed through congress, owners with 50 or more units would lose certain tax breaks if they raise rent by more than 5% per year.
This week, we're digging into the better-than-best practices for effectively nurturing leads to convert today's modern renters.
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