Multifamily property owners are caught in a tidal wave: Not only are expense costs rising, but rent growth is decelerating, making it challenging to drive revenue and keep residents happy. According to Yardi Matrix, multifamily costs have risen in almost every key category—from insurance and payroll to total operating expenses and administrative tasks—with insurance making the biggest dent at an 18.8 percent increase compared to the same 12-month period from 2021 to 2022.
Multifamily property owners must find a way to ride the wave and come out on top, but they find themselves at a crossroads. The timing of these expenses is particularly challenging as rent growth slows and market conditions worsen. Plus, not only are operative expenses straining budgets and profitability, but debt-service costs are also increasing significantly for those seeking new mortgages. It’s a complex environment to navigate, to say the least.
Luckily, hope is not lost. In this article, we’ll explore important factors behind the rising costs, as well as three ways properties can continue to remain profitable despite these challenges. Let’s dive in.
Key Factors behind Rising Expenses
Many of the causes behind rising multifamily costs have been out of property owners’ control. The weather, labor demographics, disruptions to the supply chain, and global economic conditions have all contributed to higher costs.
These influences may also continue to contribute to how long expenses will rise looking ahead. For example, inflation caused by supply-chain disruptions may begin to improve while these challenges ease. On the other hand, inflation from global economic trends like soaring labor costs and shortages in working-age populations are not so easily overcome.
Whether or not higher expenses are here to stay, they show property owners just how important it is to remain agile and implement strategies that improve resident retention, help them save money, and drive new revenue streams.
Invest in Great Resident Experiences
Despite mounting rent costs, according to RealPage, two-thirds (66 percent) of multifamily renters are happy with their renting situation, as they prefer the financial freedom and flexibility that comes along with it. Along those lines, 44 percent of American renters also think renting is a smarter financial move than buying a house.
With residents preferring to rent, the scale is tipped in favor of multifamily properties. However, each property must be able to compete with its competitors to offer the best experiences for every renter every time. And renters have high expectations—79 percent of American renters think they should be able to get everything they need from their property manager through DM, text, or chat.
These expectations make keeping up with requests, offering great customer service, and staying up to date with the latest technology imperative for every property. One way that property owners can deliver these valuable experiences is by investing in scalable connectivity solutions, like internet, to support current and future value-add proptech initiatives. For example, mobile apps managing security access, smart locks, on-demand services, and smart home devices can all take a satisfied resident to a thrilled one who isn’t inclined to look for better amenities elsewhere.
Best of all, not only are residents more likely to continue renting with you, but they are also more likely to pay more for a home with smart technology. In fact, over half of renters are likely to pay for smart doorbells and cameras at their current rental property. Along those lines, high-speed internet is more important to Gen Z renters than any other amenity, including pools, gyms, and parking lots. Sixty-two percent of young renters say apartment technology is very important to them while searching for a new home. Don’t forget about these expectations—take every opportunity to invest in your residents.
Improve Your Staff’s Lives by Offloading Responsibilities
When your staff is well-supported and has what it needs to thrive, it can offer better experiences that keep your residents coming back for more. However, many property managers are bogged down by an onslaught of resident calls and messages that keep them from focusing on revenue-generating tasks like managing technology.
First, a strong platform that streamlines all communication across your properties can offer transparency and empower your team to work more efficiently. From move-in to move-out, residents can use a platform to find information and receive services, making it easier for your management team to provide support than ever before. A unified system can also provide information about total cost, future amenity value, and long-term impact to ensure you’re not only investing in the right things but also optimizing your use of them.
Along those lines, a dedicated team of tech experts can offer the expertise needed to provide great solutions without burdening your managers who have no tech experience. For example, an external support team can offer both proptech services and amenity programs that boost your staff’s efficiency and experience, removing the guesswork. This empowers you to avoid inconsistent plans, project delays, and poor management that can affect your profitability downstream.
Rely on Simplified Bulk Tech Amenities from Onboard
Implementing cutting-edge technology into daily property operations is key to increasing NOI by enhancing your operational efficiency. Similarly, it can empower you to remain profitable despite high multifamily costs and achieve your goals. However, simply investing in technology to check it off the list isn’t going to drive the results you want—especially if you don’t provide the care and attention it needs to succeed. You need someone to guide you past the guesswork and into the tangible results.
With Onboard, you can rely on tailor-made tech at exclusive rates, making bulk program management a breeze. Our support and software handle 95 percent of interactions with residents and providers, freeing you and your team from laboring over vendor tech and resident oversight—all while empowering you to provide value for your entire portfolio, generate income, and save your residents money.
Reach out to us at letsonboard.com/contact to get started today.