10 Ways To Improve The Profitability of Your Multifamily Assets
How can multifamily property investors increase the profitability of their assets?
One of the best advantages of investing in multifamily property is the power that real estate investors have to control the value and performance of their own assets. It is possible in virtually any phase of the property market and economy. It’s why savvy investors love this asset class.
Here are just ten of the ways that you, your partners and asset management team can enhance asset performance to net more income, bolster returns and push up resale value potential.
1. Better Marketing & Positioning
One of the biggest differences between low rent buildings and those which claim the best rents and values is marketing and positioning. This isn’t just about going higher end either. It’s great to own a niche. That may be being pet-friendly, green and sustainable, or targeted to tech workers.
2. Add or Upgrade Amenities
Amenities make a huge difference in the types of tenants you attract and what they are willing to pay. There are some pretty obvious in-demand amenities today. Gyms, pet areas, and private outdoor spaces are some of them. Check the data and do the math on which features will really yield the best improvements on a rent per square foot basis for the rest of your units. In other cases, you may be able to create more leasable square footage on your footprint, repurpose old wasted spaces which are no longer used or update community spaces for today’s demands. For example, turning old lobby and event rooms into video gaming area and co-working office spaces and coffee lounges.
3. Always be Raising the Rent
Landlords who don’t consistently raise the rent every year find themselves in a tough position. They either devalue their buildings by having under market rents and have to sell their building cheaper. Or they end up losing tenants in big numbers when they try to play catch up. Train tenants to expect reasonable increases each year.
4. Get Good at Retaining Long Term Tenants
Long term tenants are cheaper and more profitable. You don’t have vacancies. You don’t have to spend money on marketing, new leasing commissions or renovating units in between tenants.
5. Always be Optimizing Tenant Qualifications & Application Processes
What you can get, and what is attractive to the best prospective renters is always changing and varies by location. You can just set one set of hard rules and use it across the map and expect to get the same occupancy and income results. Not even among the same class of buildings. Be flexible and always be optimizing.
6. Use Better Systems to Track Wastage
Profitability is both about minimize expense and increasing income. Today’s technology can go a long way to toward spotting issues like water leaks early and preventing damage and keeping down utility bills.
7. Keep a Close Eye on Your Contractors
Renovations and repairs can be one of the biggest areas of lost money, overspending and slow performance. Make sure your contractors know you are paying attention and are holding them accountable. Have their work inspected. Get fresh quotes from competitors regularly.
8. Turn Units Around Faster
One of the biggest drags on performance of multifamily investment properties is vacancy. Approached well you can get this down to a few days on average versus months. Do this by reaching out for lease renewals early, marketing for new tenants early, and having teams in the unit on day one to turn them around for new renters.
9. Be Sure Your Team’s Interests are Aligned with Yours
Be sure your managers and leasing professionals’ interests are aligned with yours. That means putting in good tenants, retaining them and keeping them paying on time. Financially reward them for these metrics.
10. Source Renters Who Preserve Your Property
Some landlords prioritize credit scores or on time payers. Yet, placing tenants who protect and preserve your asset versus destroying it has incredible value. It will make a difference of thousands of dollars every time you turn a unit.
There are many ways to increase the profitability of your multifamily assets. It is in these details that performance is really made or lost. Use the advantages you have to control these factors to find value and unlock greater returns.
ABOUT THE AUTHOR
Bill Zahller is the Managing Partner of Park Capital Partners, LLC and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Partners, LLC in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalPartnersLLC.com for more information.