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By Aaron Rudenstine, Chief Executive Officer of ButterflyMX
Maximizing a multifamily property’s Net Operating Income (NOI) is challenging in
today’s market. Property managers and owners face expensive problems related to the
job market, operation costs, resident turnover, and more. As a result, real estate
professionals are always looking for new and unique ways to turn a profit.
If your goal is to maximize NOI, you should be looking for opportunities to:
1.Reduce operating costs
2.Increase current revenue streams
3.Find new revenue streams
Implementing more than one of these strategies is best, but how exactly do you execute
them? Below are some actionable methods that multifamily owners can use to
maximize NOI.
Reduce turnover
Employee and tenant turnover are both detrimental to a property’s NOI. Fortunately,
there are ways to mitigate turnover in both areas.
When it comes to employees, they often leave because of low pay, burnout, or
monotonous working conditions. You can solve these issues by providing a motivating
environment that makes employees feel appreciated.
Give employees evaluations for raises and always prioritize promoting individuals from
within rather than hiring from outside. In addition, invest in your employees through
professional development courses when possible. Above all, ensure the work is
engaging. Automate or streamline tedious tasks so employees can focus on more
impactful work.
To address tenant turnover, you’ll need to understand why tenants at your building
move out. So, offer a move-out survey to learn what about the property makes them
unhappy. Then, address those issues through upgrades, changes, or overhauls of how
the property operates.
For example, offering a longer lease term with lower fees may help prevent turnover.
While you will earn less short-term, you won’t have to deal with the greater long-term
loss a turnover presents.
Implement the right upgrades
Upgrading your property with new amenities and features can significantly improve the
resident experience, boost interest in your property, and retain residents longer. But
don’t waste your budget on upgrades that tenants don’t want. Instead, hone in on the
amenities that will actually pique their interest.
One worthwhile, NOI-boosting upgrade is a building-wide access control system. You’d
be surprised what an automated and simplified property access experience can do for
your bottom line.
With a smart access control solution — consisting of a video intercom for the front
entrance, smartphone-powered access readers within the building, and smart locks on
unit doors — you can avoid the unnecessary costs of rekeying locks and replacing
traditional keys. Instead, residents can use their smartphones or PIN codes to access
the property. Best of all, residents are empowered to seamlessly navigate the building
and manage access for their guests without assistance from staff. And when tenants
have more control over access management, you can reallocate the staff resources
spent on tedious tasks like monitoring visitors during the third shift and managing
deliveries.
Delivery management in particular is a time-consuming chore for property staff —
especially now that the onslaught of packages is no longer contained to the holiday
months — which is why a package management solution is another worthwhile
upgrade. Consider an automated package room that pairs with your smart access
control system. With a package room, each courier has their own unique PIN code to
access the building and safely deliver packages. That way, residents won’t have to
worry about missed or stolen packages. Most importantly, your staff doesn’t have to
manage the package room, which frees up their time to handle more meaningful tasks
for the property.
Find ancillary revenue
Rent shouldn’t be a multifamily building’s only source of revenue. Instead, find ways to
support your main revenue stream. Monetizing amenities and charging fees for
premium services can significantly bolster a building’s bottom line.
Here are some effective ways to generate ancillary revenue:
● Switch to a residential utility billing system (RUBS)
● Offer reserved or covered parking at an added charge
● Install vending machines in common spaces
● Provide on-site laundry facilities
● Implement valet trash services
● Offer on-site storage for a fee
● Rent out amenity spaces for events
Finding new sources of revenue is vital for increasing NOI at multifamily properties.
Overall, NOI is an essential metric for evaluating a multifamily property’s success. When
looking to increase your revenue, be sure to consider the ways you can boost your
primary revenue stream. Then, consider how you can cut your operating costs, whether
that involves streamlining processes or upgrading the property. Finally, develop creative
ways to generate alternative revenue streams that will supplement your rental income.
Aaron Rudenstine is Chief Executive Officer of ButterflyMX, the leading provider of
access control technology for multifamily, commercial, gated communities, and student
housing properties.
Aaron specializes in building high-performing teams to launch and grow new technology
products. He was a co-founder of Citymaps, which was acquired by TripAdvisor in 2016,
and is an investor in Reddit, Button, Omaze, Henry The Dentist, Parallel Wireless, Clear
Ballot, Pinata, and FilmRise.
He is an angel investor, board member, advisor, author, and a results-oriented
technology executive with extensive experience at startups, growth-stage, and publicly
traded companies. Aaron holds an MBA from Harvard.
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