As the economy shifts, property owners, investors, and managers are looking for creative ways to increase and maintain cash flow. The search for alternative solutions comes as many realize they won’t be able to achieve the desired metrics on rent increases alone.
Increasing Net Operating Income (NOI) is still achievable without rent increases, even during periods of uncertainty. Here are a few ideas to retain and even increase NOI as we navigate this unpredictable economy.
Decrease Management Costs with Centralization
Today’s property manager tends to be more of a generalist — doing everything from leasing tours and collections to answering resident questions. But this is not, in my opinion, the most efficient or cost effective way to handle these tasks.
Instead of having managers take on even more outside the scope of their position, owners should be looking to create specialized roles. That may entail creating an internal collections department or outsourcing leasing efforts and general maintenance to avoid heavy payroll burdens and unwanted down time.
Opting to work smarter and not necessarily harder has the time and money saving potential that can make a significant impact on your bottom line.
Today’s technology has the ability to take tasks off your management team’s plate by automating repeatable and monotonous work. For example, prompted or triggered actions such as renewal notifications, late rent messages, etc., can be real-time savers. Many management companies have yet to go paperless, too, - still requiring manually signed and scanned leases. It’s time to make the switch!
Using today’s technology will allow operators the ability to automate business and workflow functions such as lease processing and month-end reports. The ability to streamline these tasks will eliminate a time-consuming and tedious workload.
Lightening the repetitive workload gives employees the opportunity to use their skills to identify or explore other cost-saving or efficiency measures that could be implemented, build strong relationships with residents and improve retention.
Explore Common Industry Fees
From application to pet to move-in, fees are becoming more and more common in the multifamily industry because they are a way to immediately realize revenue.
The traditional security deposit is going out of style and being replaced with move-in and move-out fees. Fees also decrease the potential legal liabilities frequently related to the handling of security deposits, which varies market by market.
Pet fees have been around for a while, but tenants have found creative ways to elude the charges. Almost every manager knows that there are unregistered pets in buildings, and one way to uncover them is to add a "pets" section to work orders. By requiring a maintenance team to report pets in the unit for every work order, there will absolutely be a few unregistered pets uncovered, and that means the administration of a pet fee.
A Ratio Utility Billing System (RUBS) has the ability to increase profits by calculating monthly utility bills based on a variety of factors — such as unit size or number of residents — to determine that unit’s portion of the overall monthly utility bill for the building. Since not every building is equipped with meters for each individual unit, managers can avoid the exorbitant cost of such a large installation project by instead opting for a RUBS.
If RUBS is legal in your area and tenants agree to the change, it can help reduce utility costs and more evenly disperse the expense among tenants. Taking time to thoroughly investigate the potential cost savings of RUBS can prove well worth the effort and reduce the strain utilities have on profits.
Embrace Apps & Technology On The Market
On the resident side, there’s probably an app for that. Instead of building your own solutions or doing business as usual, look into new offerings on the market. From apps that allow secure access into buildings for a person-less leasing experience to flexible rent payment options allowing a renter to pay weekly or when they can versus once per month, there are so many offerings on the market that can help reduce leasing, management, maintenance, and collection expenses.
On the management side, explore holistic solutions that can consolidate numerous single-service offerings you’re already using or integrate with them to improve efficiency and business intelligence. Property management software is more robust than it has ever been, and I encourage operators to explore new offerings in the market - like Fortress.
To increase NOI in these times of uncertainty, don’t be afraid to try new things. While leaning into technology and new approaches may be intimidating, the time and money-saving results will have you questioning why you didn’t take the leap sooner.