As an apartment investor, you’re likely always on the lookout for changes that can reduce expenses and increase your bottom line. However, in recent years, the hunt for opportunities to decrease your spending may have dwindled to almost nothing.
Before becoming the CEO of a proptech platform for apartment investors, I, along with my brothers, ran a successful property investment and management company. This experience has given me unique insights into the pain points associated with cutting costs and growth. Because of this, I know every apartment investor is facing the same problem: Rising costs are killing profits — particularly in these five key areas.
The face of marketing has changed, completely altering the way apartment investors used to advertise their properties. Now, there are several factors that you must consider when trying to market your properties. To keep up with the competition, you’re likely looking to invest in a social media marketing manager or a small marketing team. Or, maybe you already have.
As digital marketing continues to grow and transform the way we advertise, so, too, do the costs. Unless you’ve decided to invest money into a marketing division to advertise your properties, it falls upon your property manager or yourself to create content that generates leads.
2. Administration & IT
Every business has their tools of the trade, including apartment investments. Your staff needs basic supplies, including paper, copiers and more. These can seem like small costs, but it’s estimated that the average office worker goes through thousands of sheets of paper per year.
Without functional technology and basic assets like paper and other office equipment, the business end of your investment is at a standstill. Because these two features are vital to a profitable business, costs to find and hire people to fill these roles and buy these products have risen exponentially.
3. Office Payroll
In addition to having outstanding administrative staff, you also need great office staff for your properties. In the vast majority of cases, your residents will spend most of their time communicating their needs to your office staff, rather than your administrators. Your office staff needs to be friendly, professional and proficient.
Levels of education needed for office roles can vary, but as competition and employment costs rise, more and more job seekers are looking for businesses that can provide better wages and benefits, which could increase your hiring costs.
Consider putting all of your information into online software and cloud storage to eliminate the costs associated with administrative and accounting needs, including payroll and rent collection. Not only does this reduce paper-based expenses, but it also provides you with a view of your property’s financial standing at any moment.
4. Management & Accounting
As with your administrative team, your management and accounting teams are vital to a profitable investment. In most cases, apartment investors hire property management companies to handle their management and accounting needs, but these companies take a chunk out of your revenue. With each passing year, many management companies raise their rates, pushing you away from your goal of higher profits.
5. Damages, Delinquency & Evictions
All three of these words make any apartment investor wince as they each take chunks out of your cash flow.
There will never be a guarantee that a tenant will not damage an apartment, fall behind on their payments or need to be evicted, and because of this, property owners are often left to fix the problem and take the loss. A thorough vetting process decreases the number of residents that might fall into one of these three negative categories, but this doesn’t promise that your tenant will properly care for your property.
Using technology for maintenance needs can provide an organized way to handle the repairs required for your units. Technology allows for tracking maintenance requests and sharing photos to clarify repair needs.
How To Cut Your Losses & Maximize Your Profits
These costs may seem unavoidable, but it is possible to boost your NOI (net operating income) and increase your apartment profits through technology. When trying to determine if a proptech company or service is the right solution for your needs, here are some key questions to ask:
• Do you provide marketing tools that generate leads?
• Does your proptech cut costs by removing or diminishing my need for administrative supplies like paper?
• How does your software handle accounting needs?
• Is payroll and rent collection done through digital means and factored into your accounting service?
• Do you provide a service that will run background checks on potential leasees?
In addition to asking questions about your potential proptech solutions, consider the process of implementation. If you’re held back by a lack of IT support, worried about training staff, or curious about the integration with existing software, look for proptech solutions that are easy to implement, have a short learning curve and are already able to integrate into the software you currently use.
Some companies offer training for staff to help onboard them into properly using the software as well. I would also encourage you to look for up-and-coming proptech solutions that replace your outdated software to provide ease of use and streamlining in your IT department.
Switching to a new technology solution can cause pain points in any property, but with a checklist, you can ensure a smooth transition.
1. Familiarize your staff with the software and changes.
• Host a training session.
• Provide detailed documentation.
• Create a resource center for staff.
• Ensure communication between your staff and the proptech company.
2. Prepare your tenants.
• Clearly communicate the changes that are going to be taking place.
• Provide resources for tenants.
• Provide FAQs with answers.
3. Make sure everything is working properly before launching.
While the change from traditional methods to tech-based ones may seem jarring at first, proptech can play a beneficial role in the way property owners manage their businesses.