Increasing Property Value through Strategic Management
Investors’ interest in multifamily properties seems to be at an all-time high. However, a good location, nice unit condition, and the right amenities are no longer enough to keep occupancy rates up and a property’s value high.
To increase a property’s value, owners must have two main goals:
Meet or exceed budgeted rental income
Meet or exceed budgeted net operating cash flow
Before this process can begin, owners and investors need to set goals and guidelines for their buildings. This starts with a basic understanding of apartment management dynamics.
The owner’s management skills directly impacts the bottom line.
In the vast majority of markets around the country, the appreciation of a specific property’s value depends on the experience and expertise of the owner responsible for the property’s day-to-day operations.
There are three major areas of operations that directly affect a property’s value:
Occupancy and rental maximization
Expense management
Vendor comparison and selection
To meet each property’s challenges, the owner must integrate these disciplines into daily operations.
Although controlling expenses is crucial today, many markets have now absorbed their excess supply, and some owners and managers are focusing on obtaining the maximum rent. However this strategy will initially increase resident turnover and operating expenses.
Keeping a lid on expenses such as lowering the water cost is very important. Subject to local rent control laws, owners can implement the RUBS program and pass the cost of the water to the tenants.
Reducing operating expenses and increasing rents are crucial to maximizing an apartment building’s value. To enhance the value of their properties, owners should raise rents once a year in rent controlled buildings.
By applying strategic management techniques, implementing efficient operations procedures, and raising rents in a timely manner, owners can effectively maximize the value of their apartment buildings.
