What Are the Financial Impacts of Multifamily Security?

3 minute read

Multifamily owners and operators know all too well how unwanted behavior – from crime to resident misconduct – can impact their communities and ultimately their bottom line. These factors leave leaders in the industry facing many cost-benefit decisions when it comes to making an investment in a security solution. After all, security impacts several key performance indicators, (KPIs), including brand reputation/survey scores, revenue per square foot, and perhaps most importantly, your net operating income (NOI.)

Here are five ways that security can impact your NOI:

5 Ways Security Impacts NOI

1. Risk Mitigation

Property owners and managers have a duty to implement reasonable measures to help prevent known harms like crime. Providing little or no security measures is not acceptable and will rarely withstand the scrutiny of legal action. Insurance providers have also been known to reduce policy premiums for security investments.

2. Leasing & Retention Management

Security is one of the most important property amenities for renters. Safety and security are paramount for optimal performance in competitive markets and are often the reasons for move-out at many high turnover properties. Not to mention, improper security can leave you with poor reviews, which have a direct correlation to leasing velocity and new lease rates.

3. Ancillary Revenue Growth

Owners and operators are constantly looking to introduce additional revenue streams to augment NOI. Package management, short-term rentals and home sharing, as well as daily public parking rental are excellent examples of how security has become a necessity to mitigate risks.

4. Reputation Management

High-performing multifamily operators keep an eye on reputation scores, online reviews, and survey results as the leading indicators of operational health. Much like robust applicant screening strategies, adequate security measures can provide futureproofing in high-crime markets or areas with incident-prone demographics.

5. Expense Management

When criminal and resident incidents occur at a property, they can impact NOI in multiple ways. Unpaid damages, marketing efforts to repair a tarnished reputation, turn costs, insurance claims, lawsuits, and labor are among the largest and most common of these expenses. Each of these issues can be magnified when there is a lack of preventative security measures.

When evaluating asset performance, multifamily investors should consider security to drive performance metrics. However, because residents and visitors come and go at all hours of the day and night, balancing convenience with security can be a logistical challenge for many traditional security measures. Not to mention a lot of multifamily communities have been unable to sustain the security investments required to provide comprehensive 24/7 coverage.

So, where should operators turn to improve multifamily safety and security? Get your copy of Monetizing Security While Balancing Access, Safety, and Profitability to learn how the right investment can directly impact risk mitigation, retention, ancillary revenue and expenses.

Security expenses don’t have to be a necessary evil. Join the ranks of high-performing investors and operators who have reimagined these investments to maximize valuation.