Revenue management systems and bundled fees are among the many ways to improve net operating income.
As the industry acclimates to its new normal and multifamily housing companies ease the reins on operating budgets, management companies are looking for new avenues to increase net operating income (NOI). The 2021 Apartmentalize session, “Top 20 NOI Strategies to Implement Today,” discussed various strategies for improving NOI—from revenue management to bundled convenience fees.
While revenue management isn’t new to multifamily, more operators are beginning to tweak their revenue management systems on a more regular basis for optimal performance.
“I think those of us who have revenue management are now doing it daily, because that’s part of your NOI strategy,” said Ian Bingham, Senior Vice President of Client Services for Roscoe Property Management. “We’re factoring unit velocity – what was rented that day, by floor plan. If you’re not looking at pricing daily, you’re leaving money on the table.”
Many companies have taken over their own pricing, rather than relying on third-party specialists.
“They’re bringing pricing in-house, rather than using pricing advisory services, because they want to look at it on a daily basis,” said Ed Wolff, Chief Revenue Officer at LeaseLock. “They’re also keeping renewals at a minimal amount – $100 or $150 – because they don’t want to incur the turn costs. Just keep that resident intact.”
While experts are predicting another 24 months of record rent growth, pricing strategies need to remain market specific.
“Each market lives and breathes a bit differently, and everyone has a different strategy,” Bingham said. “In your major markets, our foot is on the gas because everyone in the market is doing exactly that.”
Bingham cautioned against doing away with the contactless leasing technology rolled out during the pandemic.
“I think the human touch is still something people want as part of the leasing process, but not everybody,” he said. “People still resonate, so I think self-guided is a better follow-up tool. But you can expand that self-guided touring window – 7 a.m. to 9 p.m., etc. – to capture a wider audience.”
Due to the surge in e-commerce, companies are turning to offsite package management solutions and repurposing package rooms and locker spaces.
“It’s given us back 200 to 500 square feet of amenity space per building,” Bingham said. “In the amenities arms race, it has given us more space.”
Operators are also revisiting security deposits to simplify the leasing process and make move-in more feasible for renters.
“I believe the day of security deposits is coming to an end,” Wolff said. “You can pay a security deposit, you can pay a provider for an alternative or you cannot do security deposits at all, and the resident can pay a monthly fee. But there is ancillary income by charging the resident that monthly amount.”
In today’s fee-based society, management companies have even started bundling fees for convenience services like concierge, trash, cable, Wi-Fi and package delivery to avoid the perception that they are nickel and diming residents for every service.
Doug Pike is a Content Manager at LinnellTaylor Marketing.