Net Operating Income : 10 Ways to Improve NOI in 2020 in Multifamily
Net Operating Income Ideas to Improve :
Let’s Start with Revenue…
As many readers are aware, there are two ways to impact net operating income. Increase revenue or decrease expenses. Let’s dig into the former.
10. Increase Laundry Income by 25%
Many laundry machines we find are between $1.00-$1.50 per load. This doesn’t even cover the cost of water per load in many instances. By increasing laundry per load fees by $0.25 to $0.50 per load, you can drastically increase your revenue and, in turn, impact your bottom line.
9. Add Vending Machines for Laundry and Snacks
In turn, adding supplemental vending items to a laundry room or common area can also impact your net operating income. This can include laundry soaps, dryer sheets, fabric softener, candy, soda, etc. Making sure these items are secure and free from theft is a primary concern that should be considered first. Also, regular stocking of machines should also be budgeted for in the week to week property management process.
8. Add an ATM Machine
While this revenue stream really only makes sense in 100+ unit multifamily properties, depending on the location and foot traffic, an ATM machine can be a money maker. Using an ATM machine to supplement a vending or laundry area can drive revenue.
7. Charge a Move In/Move Out Fee
Many property managers are supplementing their income by charging move in or move out fees of $100-$200 on top of the security deposit collected this fee is non refundable and can be used for potential damages but can be considered additional revenue.
6. Speak to a Utility Solutions provider and contract Cable Provider and charge back to Resident +5%
Depending upon the contract provider for cable or internet, setting up a building contract and adding a surcharge to the cost of the cable/internet is indeed possible. More importantly in the age of streaming TV, high speed internet is paramount and can be considered an additional service fee to residents. Furthermore, given the bulk discount a cable contract provider makes with the building owner, the cable/internet monthly fee should be less than if the tenant were to order cable/internet on their own.
Expenses to Tackle…
5. Establish a RUBS system for Water Usage
Yep…you guessed it. Control the water bill for which you pay. For our buildings, that starts with making sure there are 1.6 gallon toilets, low-flow showerheads, and faucets. Yet, if you were to push the water bill to the tenant by establishing a Ratio Utility Billing System (RUBS) – even better. One of the favorite ways to accomplish a RUBS system, is to use Truesubmeter. In essence, this is putting a water gauge on each entry point into a building that has wifi enabled activity to determine usage. Truesubmeter bills back the tenant and tenant reimburses landlord for paid water expenses. Good stuff!
4. Bid out Insurance to make sure coverage and premium are satisfactory
Every year or so, get the insurance bid out on your apartment buildings. Naturally, make sure the liability, rent reimbursement, and property insurance meet coverages that assume a “worst case” scenario. I have found that going through an insurance broker focused on multifamily coverage is very important. You want a broker with experience in bidding out multifamily as well is well connected to several different insurance agencies.
3. Take Property Tax bill to Township Assessor for Review
It never hurts to pay legal counsel to appeal your property value assessment with the County as legal counsel is typically compensated as a percentage of the value saved. However, it all starts with speaking with your Township Assessor. Ask the assessor to review your value and bring comparables of buildings, sold in past 24 months, to justify your position.
2. Switch to High Efficiency Electrical Lighting and Material in Building
Another easy way to save a buck is making sure your lighting is optimized to LED. Properly insulated attic, using light colors to reflect sunlight from siding and roof, and switching to hot water heater overflow tanks for central hot water systems are a few other ideas to make your building a bit more energy efficient.
1. Switch to Digital Locks
While the upfront cost can still be a bit daunting, digital locks can save big bucks on the use of locksmiths in the long run. There are also tools available if a property manager is open to having tenants show themselves vacancies through Rently.com. This can assist in saving dollars in leasing fees, paid to Realtors, to fill vacancies and save on expense.