Net Operating Income : 10 Ways to Improve NOI in Multifamily
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
Ratio Utility Billing System (RUBS) is a means in which a landlord can charge the cost of utilities back to tenants using a system based upon number of individuals living within a living space, square footage of the living space, or actual usage of that particular utility.
By charging this landlord expense back to the tenant, this decreases expenses and improves overall appraised value of the property itself.
4. Bid out Insurance to make sure coverage and premium are satisfactory
There are so many sources for bidding out insurance in the age of internet. I have found that the biggest issue this creates is a lack of coverage for the cheapest premium available or more coverage than what might be necessary.
My recommendation is to take your property to three insurance brokers to confirm appropriate coverage amounts. Take the average coverage amounts and shop for the cheapest premium for that coverage from a A+ rated insurance carrier.
Perform this task every three years to control insurance premiums and make sure that coverages are appropriate.
3. Take Property Tax bill to Township Assessor for Review
In Illinois, appealing your property tax bill requires a first stop to the township assessor. This will assist the homeowner/landlord with understanding how the township came to a specific value.
If this value continues to be disputed after a visit to the township assessor, a call to the County Board of Appeals is in order or a formal appeal in front of the Board.
2. Switch to High Efficiency Electrical Lighting
Although a few years in the making, converting to high efficiency electrical products for common areas are an easy way to save money.
While ComEd has programs available for large scale properties, you can evaluate qualifying programs here :
1. Snow Removal is costly! Bid out aggressively or use Task Rabbit
Whether to pay by the snow removal job or a seasonal packaged cost is always a tough call when it comes to snow removal. Having a properly insured vendor, who is reliable, and well staffed are all priorities when bidding out your seasonal snow removal.
Task Rabbit is a handy app that can be used on a smartphone to handle this task as an individual task:
Otherwise, receive a least five quotes when bidding out snow removal projects and request a per push price and a seasonal price. Request quotes for with/without salt or sand for ice removal. Make sure you obtain insurance declarations adding your company as an additional insured on the policy and providing at least $2M liability insurance.
Do you have great idea we should add to this post? Please share in the comments box below!