Multifamily Operators Detail Top 20 Ways to Boost NOI
ATLANTA — It’s something that everybody wants: Increased cash flow.
Multifamily operators gave a tutorial on the 20 best ways in which their firms are boosting net operating income (NOI) during France Media’s 10th annual InterFace Multifamily Southeast conference. The event took place on Tuesday, Dec. 3 at The Whitley hotel in Atlanta’s Buckhead district. The full-day conference attracted nearly 400 multifamily professionals from across the Southeast.
Ed Wolff, chief revenue officer for multifamily lease insurance firm LeaseLock Inc., moderated the operations discussion. The panelists included Sharon Hatfield, chief operating officer of CF Real Estate Services LLC; Lisa Taylor, senior managing director of client services at Greystar; and Marcie Williams, president of RKW Residential.
The discussion was bifurcated between how these operators are driving NOI by increasing/creating revenue and minimizing expenses. Hatfield said that operators can experience the most immediate results by focusing on the revenue stream at the property level.
“In today’s challenging environment, it’s better to try to approach the revenue side than it is expenses,” said Hatfield. “Revenue can impact the value of the asset so much.”
The panelists’ best revenue-boosting methods ranged from the practical to the futuristic. Greystar’s Taylor said that her firm has partnered with Hello Alfred, a tech-based concierge service that she said residents are willing to pay a little extra for.
“Hello Alfred tidies up the apartment, gets groceries and puts them away, handles packages and ships returns,” said Taylor. “There’s a list of items that renters can elect.”
Taylor also detailed her company’s partnership with tour24, a service that allows prospective renters to go on high-tech, self-guided property tours outside of normal business hours.
“The demographic for our renters prefers the automated process — you can close your offices at 6 p.m. and then prospects can come in and tour any time,” said Taylor. “Renters can go onto the pool deck and they’ll hear water splashing or wine glasses dinging.”
Other tech partners that were mentioned during the panel included digital security firm ButterflyMX, deposit alternatives like LeaseLock that help eliminate security deposits and damage claims, and PetScreening, a service that provides a background check of sorts for pets that renters claim to be service animals.
The panelists agreed that sometimes the simple solutions net the best results. Williams said that RKW’s property management software is programmed to have all leases end on a Sunday, which she said helps minimize the vacant days between move-out of one tenant and move-in of another.
“We have the lease close on Sunday and then on Monday, Tuesday and Wednesday we turn the unit, and someone can move in on Friday or Saturday,” said Williams. “We don’t lose any vacancy days from the turn.”
Similarly Williams described how the software helps gain the “invisible dollars” for their ownership clients by rounding all the ancillary fees up to the closest nine. For example, if RKW Residential would normally charge $75 for an application fee, it now charges $79.
“It’s probably the least technical approach, but it definitely helps the bottom line,” said Williams.
Hatfield said CF Real Estate has explored re-bundling the various amenity fees into one flat fee and also bringing in outside vendors to activate a property’s dead space or vacant retail space, at no charge to the owner.
“They don’t have to be restaurants. They could be flea markets, music festival operators or coworking concepts,” said Hatfield. “Get creative in those empty spaces and try to figure out how to use unused retail.”
On the other side of the ledger, the apartment managers advised the crowd at the InterFace event on how their firms are saving on operating costs. For Greystar’s Taylor, the elite property management firms are the ones that can reduce expenses.
“Most of the opportunity for higher NOI is in your revenue, but some of my clients have told me that revenue is market-driven and the smart operators are the ones that can save on expenses,” she said. “The best-of-the-best operators do that. A penny saved is a penny earned.”
The panel emphasized the importance of hiring and retaining productive maintenance professionals. Beyond that, property managers are using technology such as mobile devices and even artificial intelligence to track and improve preventative maintenance at their apartment communities.
“Staying ahead of maintenance requests makes a huge difference,” said Hatfield. “It helps us track and respond to our residents quickly. We are not at the point where we can reduce staff, but we are optimizing their time.”
Williams said that preventative maintenance is such a cost-saving tool that RKW is incentivizing its janitorial staff by working their performance in that arena into the company’s bonus structure in 2020. She also explained how her firm is bringing maintenance and even concierge services into their in-house operation, which provides the professional oftentimes with a better salary and eliminates the premium that property managers pay third-party contractors.
Additionally, the panelists agreed that property managers need to be well-versed in renegotiating all annual contracts, including with third-party telecomm firms, outside vendors, utility companies and insurance providers. Even contesting the annual property tax rate can help shore up capital for owners.
“You can contest the tax bill every single year, by a good chunk,” said Hatfield. “It’s a no-brainer, but it’s amazing how few people do this.”
— John Nelson