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ROI: Does Mystery Shopping support your investment in BTR?

How does mystery shopping support the owner’s ROI in BTR developments, exploring its influence on capital expenditures (capex), operational expenditures (OPEX) and cultivating a customer-centric culture?

The Build-to-Rent (BTR) sector has emerged as a compelling and lucrative investment option in the dynamic real estate landscape. Property managers increasingly turn to mystery shopping as a strategic tool to maximise returns on these developments. Mystery shopping, traditionally associated with retail, has found a new purpose in the BTR sector, contributing significantly to return on investment (ROI).

ROI

Understanding Mystery Shopping in BTR Developments

Mystery shopping involves hiring individuals, known as mystery shoppers, to evaluate and assess various aspects of a business or service. In BTR developments, mystery shopping is used to gain insights into the tenant experience, property management effectiveness, and overall satisfaction levels. By simulating real-life scenarios, mystery shoppers provide valuable feedback that property managers can leverage to enhance the quality of their offerings.

1. Capital Expenditures (Capex)

Capex plays a crucial role in the development and maintenance of BTR properties and ultimately in the financial ROI. Mystery shopping aids in optimising capital expenditures by identifying areas where investments can have the most significant impact on tenant satisfaction. For instance, mystery shoppers can evaluate the condition of communal spaces, amenities, and other shared facilities, helping property managers prioritise upgrades and renovations that directly enhance the living experience.

Furthermore, mystery shopping provides a real-world perspective on the functionality and aesthetic appeal of different design elements within BTR developments. Property developers can use this information to decide where to allocate resources for optimal returns. By aligning capex investments with tenant expectations, BTR developments can distinguish themselves in the market and attract a premium tenant base.

2. Operational Expenditures (Opex)

Operational efficiency is critical for the sustained success of BTR developments. Mystery shopping optimises operational expenditures by identifying areas where streamlined processes can improve tenant satisfaction and reduce costs. For example, mystery shoppers can assess the responsiveness and effectiveness of property management teams, highlighting any potential gaps in communication or service delivery.

Moreover, by evaluating the efficiency of maintenance and repair services through mystery shopping, property managers can proactively address issues before they escalate, minimising operational disruptions and associated costs. This contributes to cost savings and enhances the overall reputation of the BTR development, attracting and retaining tenants in the long run. The UKAA had a very interesting 3-part webinar series that included the consideration of CAPEX/OPEX and changing behaviour.

3. Influence on Customer-Centric Culture (social ROI)

In the BTR sector, fostering a customer-centric culture is paramount to success. Mystery shopping is a powerful tool for instilling a customer-first mentality within property management teams. Through simulated interactions and evaluations, mystery shoppers provide valuable feedback on on-site staff’s responsiveness, friendliness, and professionalism.

Property managers can use this feedback to implement targeted training programs that address specific areas for improvement. By aligning the training with the identified pain points, property management teams can enhance their customer service skills, creating a positive and memorable experience for tenants. This, in turn, contributes to tenant retention and positive word-of-mouth, ultimately boosting the ROI of BTR developments.

Why measure ROI?

In the context of built-to-rent real estate, Return on Investment (ROI) is a crucial metric that assesses the profitability of an investment property. It measures the financial gains or losses relative to the initial investment, providing valuable insights for developers and investors in the rapidly growing built-to-rent sector.

The cost of apartment viewings that do not culminate in successful closures encompasses various expenses incurred throughout the marketing and leasing process. These costs typically involve marketing materials, staff time, and resources dedicated to showcasing the property to potential tenants. Expenses may include property listing fees, promotional materials, transportation for property tours, and staff wages. Evaluating and minimizing these costs is essential for optimizing the overall efficiency and profitability of the property leasing process.

Conclusion

Mystery shopping is a strategic and multifaceted tool that significantly contributes to the ROI of BTR developments. By providing actionable insights into capex and opex optimisation, as well as influencing the development of a customer-centric culture, mystery shopping empowers property managers to make informed decisions that enhance the overall tenant experience. As the BTR sector continues to evolve, incorporating mystery shopping into the development and management process will be instrumental in staying ahead of the competition and maximising returns on investment.

Company Information:  MORICON Consultants Limited

Registered Office: Kemp House, 124 City Road, London,  EC1V 2NX, UK

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