Every business experiences ups and downs. The regular rhythms of an industry are simply a part of the game.
Whether we like it or not, it seems like everyone becomes accustomed to the change in traffic associated with the year’s slow seasons. Not only is it a dependable gauge to work with, but it also represents a logical downturn of business. While it’s certain that no CRE professional is happy about the seasonal drop in demand, it’s not a sink-or-swim situation.
But, what happens when this schedule is thrown out of whack?
As a result of the pandemic, net operating income (NOI) has reached a considerable low for the apartment sector. This sluggish period for multifamily was largely unexpected as it largely deviated from the apartment sector’s seasonal trajectory.
In a period when the ban on evictions plummeted rent collections to astonishing lows at the same time that CRE’s operational costs increased, NOI took a serious hit – and even worse, it all happened in the blink of an eye.
Today’s case is an extreme example of a slow-growing NOI market, and by learning strategies to combat this decline, the multifamily sector can boost their resilience and find victory amid difficulties.
Here are 5 strategies to increase NOI in multifamily properties during moments of slow growth:
Get Serious About Filling Occupancies
Regardless of the market outlook, gaps in occupancy are preventing multifamily assets from generating their maximum returns. In times of slow growth, multifamily operators should get serious about their building’s vacancy rates as a first-response tactic.
Invest in Leasing
Once you’ve zoomed in on occupancy, it’s time to invest in leasing and marketing. Funneling leads towards your active apartment listings is key when NOI starts to dip, and a great way to do this is by personalizing the prospect experience.
Engaging at a one-on-one level provides leasing agent’s the chance to find the perfect vacancy in the building that fulfills the tenant requirements by encouraging them to tour multiple units.
Don’t Be Shy to Bolster Rent
While it’s not always wise to dramatically adjust rent margins, don’t be shy to make necessary changes. When the apartment community is seeing a significant dip in NOI, there’s no reason not to increase returns wherever possible.
Since rent is the primary factor driving NOI for multifamily, that’s the first place to look when considering profit-boosting strategies.
Screen Tenants Wisely
When so much of your asset’s success relies on timely and full rent collections, tenant screening is more important during periods of lagging NOI than usual. Reports indicate that tenant fraud has increased during the pandemic, making it even more important to maintain a diligent and astute tenant screening process that leverages technology.
Cut Down Costs
Being economic isn’t impossible – it merely requires a close look at any areas where your apartment complex may be unnecessarily cutting into profits. Double-check the books to see where you’re wasting, overspending, or employing detractive operations.
Consider these 5 strategies to assist in supporting apartment NOI both now and in the future.