How Property Management Can Drive Multifamily NOI

By Laura Khouri

In times of economic uncertainty, many multifamily owners look to increase NOI through strategic operational analysis and adjustments. During these times, owners can drive efficiency, distinguish their assets from the competition, and improve cash flow by addressing operational inefficiencies through quality property management. 

The right property management teams can creatively and successfully solve multifamily owners’ pain points and implement innovative techniques that meaningfully impact the bottom line. In today’s financial landscape, owners are discovering how partnering with experienced property managers can help with addressing operational inefficiencies and boosting cash flow, while distinguishing their apartment communities from others in the market and adding lasting value to those assets. 

As one of the largest multifamily property management companies in the western U.S., with more than 65 years of expertise, our company has witnessed the industry patterns, challenges, and emerging trends in this sector of the industry time and again. We are fortunate in that our company leadership has ownership interest in approximately half of the communities we manage and we utilize that unique perspective to understand landlords and deliver what they want and need, which is especially critical in less favorable phases of the real estate cycle. We’ve identified several issues multifamily owners are facing and how sound property management strategies can be applied to enhance NOI. 

Tamping down rising costs 

High inflation and interest rates, along with rising costs for labor, materials, and insurance are driving multifamily owners to seek out innovative ways to increase NOI without sacrificing quality and service to residents at their communities. As cash grows tighter, apartment owners are looking to their property management teams to help preserve capital, while ensuring residents receive the high quality and service they have come to expect.  

Seasoned property managers who understand the market where the property is located, the resident demographic, and how to position the property for success can prevent excess vacancy, keep communities operating efficiently, and minimize downside risk. This allows owners to optimize their income stream and satisfy both investors’ and residents’ expectations, regardless of the economic climate. 

Insurance, in particular, is fast becoming a major pain point for multifamily property owners as premiums skyrocket. As damages from natural disasters including fires, hurricanes, earthquakes, and tornadoes rise in various regions throughout the country, insurance firms are passing on to their customers the expenses of paying claims on these damages, which has in some cases prohibitively increased the price of doing business for multifamily operators. 

Since we manage our own portfolio together with third-party client portfolios, we take maximum advantage of our size and apply an economy of scale to procure insurance. We maintain a master package encompassing various types of coverage, limits, sublimits, and SIRs, resulting in minimizing gaps, loss exposure, and, ultimately, premiums. 

Other methods we employ to reduce insurance costs for owners include monthly tailgate meetings and premises safety walks conducted by the onsite teams as well as a complete and formalized loss control and prevention plan that includes annual unit-by-unit, garage, and exterior loss-prevention control inspections, accounting audits, and even quarterly Regional Manager inspections. This “belt and suspenders” approach has been proven to reduce our losses and our premiums consistently. 

Diminishing wastefulness 

Operating methods that are not efficient can end up costing multifamily owners dearly in wasted time and money, particularly as their portfolios grow. Instead, property management teams can utilize centralization as a way to minimize inefficiencies portfolio-wide. 

Because our company manages more than 165 apartment communities comprising over 22,000 apartment units, centralized communications are an essential element of our operations practice. We have centralized operations at the corporate level and provide site-level support through numerous support departments, including a credentialed risk management department, certified training department, a compassionate yet best-in-class human resources department, an intuitive marketing department, a hard-driving purchasing department maximizing our bulk purchasing, and a CapEx department responsible for all things capital, among many other teams. These support departments are indispensable to property-level employees, who then do not need to be “jacks of all trades,” but rather can focus on the assets and our residents. 

Choosing the right technology 

Today’s multifamily communities are tremendously reliant on technology to help them operate faster, better, and more effectively for residents. But identifying the right proptech—not just “technology for technology’s sake”—in this ever-changing sector can be difficult and time-consuming for many owners. 

Property management teams can help by evaluating proptech on a case-by-case basis to determine which products enable streamlining operations while aligning with ownership’s current and future goals. We also utilize our own proprietary data system to track the markets where we manage multifamily communities and the performance of those properties—this is part of our tailored approach. 

AI is another fast-rising form of technology that stakeholders must consider. While AI has the potential to be used effectively in all segments of the industry, it will never replace human interaction where it really matters. Instead, property managers should rely on AI for more rote or mundane tasks, such as market research, ordering supplies, generating leases, handling rental payments, managing residents’ service requests, and a host of other functions. Our goal with AI is to use it where it makes sense, allowing us to maximize efficiencies while we work to nurture the personal relationships that are so important in this industry. 

Elevating NOI has quickly become a top issue for multifamily owners today. By partnering with property management teams that expertly address rising costs, inefficiencies, and technology, owners can improve operating income while delivering high-quality apartment communities and service to residents for years to come. 

Laura Khouri is president of Western National Property Management.

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