After exploring more distinct methods of revenue growth for multifamily communities, today we will delve into a lesser known area also known as passive income. Marketing toward revenue growth is all too often focused on the lease/rent. As a property manager, you know your property better than anyone else. If you were to take a few minutes of each day and think carefully about your property’s amenities, systems, and processes, you could quickly come up with sources of revenue from the tenants you already have, without looking for new leases. This type of passive income is all FREE money! Garnering revenue growth from already established residents, processes, and amenities is one of the quickest ways to realize revenue growth.
Residual Income Through Assessments
Standardized assessments should be regularly occurring, on multiple levels inside the multifamily industry. From owners’ evaluations of market value to maintenance’s daily checks, performing regular assessments assures that quick changes are being implemented to maximize revenue growth and reducing loss.
Resident Surveys: The surest way to find what you are doing wrong (or right) is to ASK your residents. A good, old-fashioned “Q&A Survey” will help property manager to keep their fingers on the pulse of the community. You will be able to identify trends as well as deficits. The surveys can create a list of action items that can be improved toward the goal of revenue growth. Moreover, the studies will help you identify your clientele entirely, which allows you to tailor your services to meet demand.
Vendor Comparisons: Schedule regular evaluations of vendor and service providers’ contracted prices. These are generally assessed yearly. Upon the renewal of your contract, be sure to compare pricing and service offerings. Keep your vendors informed as you navigate through the process. Vendors are there to generate revenue at a maximum rate. The maximum rate is relative only to their keeping your business. Most vendors are willing to offer a price reduction to maintain the relationship.
Lease Expiration / Turnover Evaluations: In close second behind renewals,(link) turnover time for vacant units most closely affects revenues in multifamily communities. A vacant unit is not producing revenue. By assessing the expiring leases on a monthly basis, you can begin to streamline the process of making a unit contract ready. During preparation periods, you can start to implement “Pre-Leasing” strategies to fill the unit before it is even empty. Creating an evaluation of the unit’s upcoming needs for both maintenance, efficiency, and upgrades will standardize your workload for unit lease preparation.
Lease Policies Determinations: When observing downturned lease renewals, make efforts to associate a cause. This could be linked to a market turn, poor reviews of the community or other factors. Any drastic shift in trending is a good time to evaluate your leasing rates and policies. Proper communication to upper management about trends will encourage ownership to make timely changes to lease rates and fees. This, in turn, can encourage revenue growth in maximum capacity.
Fees Appraisals: A regular evaluation of your fee structure can increase revenue with frequency. For example, Late Fees. If your late fee is a one-time, $10 fee, per payment missed, leading to a large percentage of your residents are being late, then consider raising the fee to a daily amount for each day the payment is late. Steeper fees will lead to better compliance with due dates. When assessing non-refundable deposits, take your clientele into consideration. If you are dealing with a populous who have lower credit scores, your deposit fee schedule may be able to tolerate an increase. In general people with lower credit scores expect to pay more money up front. Evaluate your pet fees. Instead of a single large pet deposit upon move-in, consider going to a lower dollar amount, per month, that equals a larger sum in the end. The larger amount may be preferable to your residents as it is a more manageable fee per month rather than a large lump sum up front. Make this payable inside the rent so that it is captured with frequency.
Residual Income Through Amenities
Amenities are the largest untapped market, for revenue growth, in the multifamily housing industry. Everyone has standard fees like late payment and NSF. Growing income through amenities may take a bit of imagination, but if properly explored, amenities can offer a new horizon of revenue.
Important areas to evaluate are:
Parking (Covered vs. Uncovered, Premium, On Site or Off Site)
Storage (Storage Units, Garages, or even extra closets in common spaces)
Community or Whole Unit WIFI (vs. pay per unit internet)
Recycling Programs (can turn ins, city recycling savings)
Bike Storage (or other outdoor equipment)
Pet Rent (doggie daycare, pet sitting, or pet park)
Vending Machines (RedBox, Candy/Soda, or Convenience Vending)
Leasing Common Areas (Rent your clubhouse or rooftop for events, meetings or civic groups)
Land Lease for Utility companies
Laundry Facilities (laundry delivery or dry cleaning)
Cleaning Services (on-site car washing or home cleaning)
Residual Income Through Energy-Efficiency Cost-Savings
As Scott Rawley, national account manager at Multifamily Ancillary Group explained to Multihousing News, “a successful program is not one that just gathers the most dollars. A part of a truly good ancillary services program should also be cost reduction.” Efforts to maximize systems efficiency will have a realized revenue growth value only measurable by cost savings yielded in approaching years. They may require up-front investment, but if properly planned, efficiency savings can snowball into large revenue gains.
Property managers have the opportunity to maximize efficiency during times of turnover. Turnover, in any multifamily apartment housing, is inevitable. It does not have to be a negative thing. When a tenant vacates, be prepared, through assessments, to accomplish tasks preparing the vacated unit for the next resident. Desirable units, in highly rated communities, garner maximum revenue. When creating turnover assessments for units, include consideration of energy-efficiency. Investigate windows, doors, insulation, and appliances. You can also take the opportunity to install energy efficient lighting (LED bulbs) in each fixture to realize savings in utility costs. If there are many units available in one complex, this is a good time to capitalize. Take the opportunity to upgrade roofing, heating, air conditioning, boiler or other common systems.
No matter the revenue growth plan employed by your multifamily community, the clear concept is this; ALWAYS be looking for cost savings and income growth potential. There are opportunities concealed in every corner of your property. Knowing how to identify and profit from the various ancillary and residual income avenues can lead to large-scale revenue growth.
Leonardo247 can put your multifamily community ahead of your competition by maximizing your team’s efficiency through standardization of your assessment processes and decreasing the workload necessary for growth planning. Let the Leonardo247 team show you, today, how they can revolutionize your multifamily community’s performance. Get in touch today for a free demo.