Property managers in the multifamily sector may face considerable challenges as we move into the latter half of 2023. Despite the expectation of a gradual improvement in weak demand, there is a projected increase in vacancy rates, reaching up to 6%. This rise can be attributed to a significant influx of new supply entering the market, occurring alongside lower-than-normal rental rate growth.
These challenges present a notable concern for property managers seeking to enhance their inventory’s net operating income (NOI) through increased occupancy and rental rates. The good news is there are other ways multifamily property managers can boost their bottom line. Rather than focusing solely on generating new income in a taxing market, professionals should redirect their attention inwards and find ways to reduce existing costs within their business.
Whether you include utility costs in your rental rate or your residents cover these expenses, reducing energy bills will massively benefit your business. Lowering energy consumption can streamline operational costs and raise leasing appeal for residents and prospects alike, especially as we remain in an uncertain economic climate.
According to Parks Associates, almost three-quarters of multifamily property managers and operators are very concerned when it comes to residents wasting energy. Installing proptech solutions that work collaboratively through a connected IoT hub, such as HVAC monitoring or smart thermostats, grant you and your residents greater control over a unit’s energy consumption. You receive insightful heating and cooling data, allowing you to better manage and improve operational efficiencies when an issue is noticed. At the same time, residents are upgraded to a connected living experience, where they’re able to remotely adjust the temperature of their home.
These intelligent devices enable residents to optimize temperature settings and monitor energy usage, leading to more efficient heating and cooling practices. Additionally, smart thermostats can learn occupants’ preferences and schedules, adjusting the temperature accordingly to minimize energy waste. As a result, the integration of these technologies in multifamily properties promotes sustainable living and translates into substantial cost savings for both residents and property managers.
Meanwhile, the connected IoT system is constantly monitoring for anomalies and will notify the property manager and maintenance team as soon as an issue arises, enabling efficient operations that address damage before it has the chance to escalate and create costly damage.
The cost associated with a water leak can be significant to a homeowner, with an average estimate of $2,700. In more extreme circumstances, when factoring in additional water use, clean up, and repairs, this setback could total over $7,500. In multifamily properties, that cost can have a cascading effect, affecting not only the unit where the leak originates but also adjacent units and even different floors. The key to minimizing such costs is addressing leaks as soon as they surface.
IoT-powered water sensors have been designed to recognize changes in water consumption and temperature, even when they’re minor, and will notify a property manager of any abnormalities. Acting fast on such maintenance needs stops leaks from wasting water and escalating into larger, more serious problems. In the event of a frozen/burst pipe, that could cause major damage to a unit and residents’ belongings, smart water valves work in collaboration with sensors to shut off the water supply — minimizing costly damage.
Another way to reduce multifamily property outgoings is through maintaining the safety and security of your assets. Access solutions, which use smart locks connected to an all-in-one property management platform, power more secure inventory for property managers. With this intelligent system in place, you’ll gain full oversight of who is in your buildings, preventing unwanted visitors from entering and alerting you to possible break-ins.
Community access combined with smart lock technology can also power leasing solutions, such as self-guided tours, enabling a streamlined touring experience for prospective residents without requiring management from on-site employees — reducing operational expenses even further.
Video intercoms can also be connected to this system, providing even further security for your properties. If something goes wrong, recorded footage can reduce your liability which may help with any insurance claims.
Since the market remains competitive, appealing to prospective and current residents’ preferences could help improve leasing and renewal rates. Our research shows that the installation of smart home technology could increase the value of your multifamily rentals in the eyes of residents, with some suggesting they’d pay an additional premium of up to $20 per month for a smart apartment with a fully customizable living experience.
Tap the true revenue potential of your multifamily business by reducing energy bills, operational costs, and the risk of damage with a connected proptech ecosystem. Connected living is not only beneficial for your company, as you’ll be able to monitor and track the maintenance health and security of your units, but also for your residents, who’ll gain an enhanced living experience.
For more information on how to navigate the inflationary environment and control costs, read our expert article, How To Combat Rising Operational Costs With Proptech.