The last week of February 2020 saw the most market volatility since our last recession in 2008. That shock was a wake up call to reassess current business strategies. We have been in a bull market for nearly 11 years, and during that time, Multifamily companies concentrated on optimizing leasing and other revenue generation technologies and processes. With growing demand and revenues, those strategies made sense and positively impacted Net Operating Income (NOI). Now, as demand starts to soften, it’s time to look at the other components of the equation. It’s time to optimize maintenance and turn processes to create efficiencies that save money and increase resident satisfaction.
Net Operating Income is a combination of revenue and expenses. If there is downward pressure on revenue, then the only way to increase your NOI is to reduce expenses. While reducing expenses is often a painful exercise by reducing headcount and cutting resident services, it doesn’t have to be that way. The key, is understanding how to use your resources more efficiently.
Being a maintenance software provider, we think a lot about how to create efficiencies within our industry’s processes. What we’ve determined is the key to driving efficiencies is to leverage software solutions that are focused on optimizing your underlying processes. What doesn’t work is software applications requiring companies to define their processes based upon the features of the software, or having multiple software applications that don’t talk to one another in support of your turn, maintenance or operations processes.
The types of solutions we see to help the expense side of NOI are:
· Process Optimization:
- Collect data electronically instead of on pieces of paper, so information can be readily available to your entire team and can be reused to support your process
- Buy smarter by negotiating pricing for standard items such as appliances, plumbing fixtures, floor covering and more
- Obtain guidance on what to buy (enforce standards) based upon inspection or service request / work order results by utilizing software such as FacilGo®
- Utilize software that helps you record fixed assets, warns you when replacing items still under warranty, allows you to easily capture product shortfalls, and helps you efficiently charge damages back to residents when appropriate.
- Effectively capture product performance to continuously refine/validate standards
- Communicate more effectively with residents when working on inspections and service requests by utilizing integrated messaging and calling within your inspection and service request / work order system
- Work smarter by leveraging systems that provide you with better information and photos, so you can resolve issues faster than before
- Have the solution tell you which assets are close to end of life to support budgeting
· Management Oversight Optimization:
- Dynamic dashboards, turn boards, etc. provide you an overview of what is happening with your process, what is missing, and what needs to be done
- Efficiently deploy resources to maximize utility and reduce operational risk
- Having insight to effectively offer help throughout the portfolio at the right time
- Getting the right mix of data and pictures to better assess and communicate an issue
- Exposure to better data that can unlock true cycle time and exception information
· Resource Optimization:
- With software tools allowing your staff to take less time to get things done, you can reallocate them to spend more time taking care of your residents’ needs
- Empower staff to be resolve issues faster increasing resident satisfaction
- Leverage your residents and suppliers to gather data for you
- Shift staff towards preventative maintenance tasks to cut down on expensive emergencies – becoming more proactive than reactive
- Assign personnel to perform revenue generating audits such as lease file and amenity audits
The economy will change, so be prepared. Start working on your process efficiency strategies, so if demand starts to drop, you’ll still be increasing your NOI.